In the past, I have heard pitches of “the next big disruptive idea”, “the future of social networking,” or an idea “ten times better than Facebook” (seriously, I am not making this one up). Entrepreneurs seek to attract capital with these claims, either venture capital or angel funding, to make their project reality. The point they often miss is that pitching ideas is a waste of time and a huge turnoff to experienced investors. The adage of ideas being cheap still holds true. Pitches of ideas may be amusing at best, but they can shut the doors to investors before the first minimum viable product has been tested. With “pitching ideas” I do not mean talking about a fresh idea with a friend and asking for his or her feedback. I mean the belief that an idea alone is enough to attract investment. You learned throughout this book what it takes to engage third parties with confirmed value propositions. If you stick to what this book suggests you do, you will not feel compelled to pitch ideas.
During the dot.com boom ten years ago, the story was a little different: Just to get an online presence needed upfront investment of server infrastructure, database license fees to Oracle, and experienced staff that was hard to find. The initial costs of an Internet startup could amount to one million dollars. Luckily, we face an entirely different reality today: Cloud and scalable VPS hosting, even designated servers can be had for less than a hundred dollars per month. CMS and databases are a dime a dozen, most businesses can pick among a widespread offering of free open source or inexpensive solutions. Relevant experience is also much easier to find: Basic coding and front-end user experience is now simple with WYSIWYG and widget programming. Job fairs like elance.com or odesk.com offer competitive skills for hire. Rapid prototyping is quickly becoming the norm with workable prototypes for less than fifty dollars.
If you are an entrepreneur, you need a prototype today. If you are still pitching ideas to attract investment, no matter how sophisticated your pitch deck and the financials look, it is hard to attract funding today. More important than putting together that killer presentation is just getting started, and leaving the building to test your hypothesis right there in the market. Once you have a couple of prospective clients for your product, you can start to iterate, tweak, and jumpstart grassroots marketing efforts. It is not rocket science anymore to put an idea on the ground and test it, and we want to see entrepreneurs do exactly that.
Expertise is the New Venture Capital
Because there is almost no investment needed to start, it has become more critical for young companies to focus on finding advice for product development, scalability and marketing. An experienced entrepreneur or investor will provide you with a professional network to make use of. This is usually more important than funding. If you have a minimum viable product that shows initial traction, you have much more leverage to attract qualified advice. To come across as a doer, not a talker, you must prove you can deliver. And when you do that, you are no longer pitching ideas. Only then can you engage those to get on board with you who can help your startup.