This is the first article in a series of articles from entrepreneurs that have been through Incubate, the University of Sydney Incubator program. Alex Stamp launched Cloudherd.com along with Mike Titchen and Luke Fries in 2012 as the first group of businesses in the Incubate program. Cloudherd is trying to solve the problems that farmers face when trying to sell their cattle, it’s a very inefficient market that seems to be stuck in the 1900s and Cloudherd is trying to drag it into 2013 with an online Auction system and cattle inventory application.
Hi, my name is Alex and I’m an entrepreneur. Sounds like something from Alcoholics Anonymous doesn’t it? Well let’s face it, entrepreneurship and start-up culture can be downright crazy sometimes, especially if you’ve just starting out in your professional or working life. There’s a lot to learn and not everyone is so fortunate to have the learning experiences that can transform people’s way of thinking about business and technology. That’s why I’m writing this short series of articles, to help the young entrepreneurs and even aspiring entrepreneurs save a lot of time, grief and heartache. I’ve been very fortunate myself to learn from some top quality mentors, especially through Incubate, (the student business incubator launched by the University of Sydney Student Union), whilst I’ve been working on my start-up CloudHerd but there were still many things that I wish I had learnt beforehand.
This post is mainly about the first stage an entrepreneur goes through, the ideas stage. The next posts will cover the execution of the idea and finally not what to do. I hope you find it informative.
The old tired cliché is that ideas don’t matter. This is a meme propagated by various guilty parties, most notably investors looking for the most sweat equity out of you as possible, programmers who want to be free to reuse code in lots of different projects and rapacious industry giants looking to steal your idea and throw resources at it. The idea matters, the execution matters more, but the idea still matters. If you build a house on sand or if you don’t let a tree establish a solid root system then you will have an extremely poor root structure indeed. Lots of countries essentially monetise ideas through the patent system, so how can an idea not matter?
I spent a lot of time in Matt Barrie’s Technology Venture Creation class at University of Sydney thinking through a whole
range of ideas. Knowing what I know now, some of them were idiotic, some of them were too hard and some would never make money. So you probably have a great idea about now and you’re reading this article to figure out how to go forward with it. Just don’t. Stop and do some due diligence first, stop and prepare some documents and stop and canvas your idea with some relevant people.
Matt thought 2/3 of my initial ideas were terrible and I was one of the lucky ones, we all got hammered about stupid ideas in his class. You probably won’t be as lucky to have access to someone who can hammer you so hard as to refine your idea into pure, naked steel but you need to work out whether or not your idea has potential. I would recommend the following structured brainstorming process, in addition to the various lean business canvas propaganda that keeps floating around:
- Does your idea solve a real problem? The corollary to this is that sometimes you have to lead the market a bit. Ideally you should have some first or at least second-hand experience in this area, otherwise you will have difficulty designing product features. Investors might also laugh you out of the room, despite the value of an outsider’s view.
- Will your idea make enough money to cover its costs and support your team? This whole start-up business is too hard outside cushy fiefdoms like Silicon Valley, where the revolving door of big tech companies and venture capitalists makes entrepreneurship less risky, to slave away for nothing. The investor wants a return, make sure you get one.
- Will the physical/software implementation of your product be within your capabilities within a time period that will not drive you over the edge? So it’s cool that you have an idea about a sonic based sensor network for rural applications…..but do you have any idea how to make this? Do you know if it is even going to work? What about software for it? This is something that we should have spent a lot more time on; if you can’t get information on this make sure you ask an expert.
- Will you actually be able to make any money out of the first version of your product? When we finished our first release of the Cloudherd inventory system no one would use it, even for free. It just didn’t have enough features for our test users and as such we were really flogging a dead horse (Ed: or cow…) with our marketing and other business development activities. Make sure you can make money with version one of the product unless you have a big trust fund or some other form of support, see point below for more on this.
- Will my financial resources stretch far enough to let me work on the project for as twice as long as I think it’ll take? No one cares about your product, you got fired from your part time job, you have no money in the bank and you have to pay the rent. What do you do? The project will take a lot longer than you’d think if you are a first time entrepreneur or relatively inexperienced developer and as such you need to have some fallback for life’s necessities.
Of course I could continue the list forever and waffle on about this subject for hours but I’m going to try and focus and bring the story back on track. Focus is something you, the baby entrepreneur, should be fanatical about.
You can have side interests, side projects, or spend time on a few dead ends but in the end you can’t spend too much time on side projects if you want your main project to succeed. You do need to preserve your mental health and retain some identity outside of your start-up so a few other interests are good. If you don’t, you’ll be depressed once demo day happens and no one wants to invest. This does happen, especially in Australia.
Indeed focus begins at the idea stage, don’t try to include every possible feature in an attempt to differentiate your product or you’ll fail at about month six or seven.
Focus on your team’s technical skills, if you have a team, and focus on what you can actually implement. Moonshots are not recommended for your first start-up, even though you should always have ambition. I’ll talk more about doing and the actual implementation in next weeks article, which has an expected arrival time of 7.5 days,(the 0.5 is wiggle room, you always need some wiggle room as a start-up).