As our Lean LaunchPad for Life Sciences class winds down, a good number of the 26 teams are trying to figure out whether they should go forward to turn their class project into a business.
Given that we’ve been emphasizing evidence-based entrepreneurship and the Investment Readiness Level, I guess I shouldn’t have been surprised when someone asked, “After we figure all this data out, should we pursue our idea based on the numbers?”
I pointed out that the “data” you gather in 10 weeks (talking to 100+ customers, partners, payers, etc.,) are not the first thing you should look at. There are three more important things you should worry about.
(see 0:30 in the video below)
1. Do you want to spend the next 3 or 4 years of your life doing this?
(See 1:03 in the video below)
Now that you’ve gotten to know your potential channel and customers, regardless of how much money you’re going to make, will you enjoy working with these customers for the next three or four years?
One of the largest mistakes in my career was getting this wrong. I used to be in startups where I was dealing with engineers designing our microprocessors or selling supercomputers to research scientists solving really interesting technical problems. But in my next to last company, I got into the video game business.
My customers were 14-year-old boys (see 1:30 in the video). I hated them. It was a lifelong lesson that taught me to never start a business where you hate your customers. It never goes well. You don’t want to talk to them. You don’t want to do Customer Development with them. You just want them to go away. And in my case they did – they didn’t buy anything.
So you and your team need to feel comfortable being in this business with these customers.
2. Is this a scalable business? And if not, are you OK with something small?
(See 2:03 in the video below)
Is it a lifestyle business while you’re keeping your other job? Is it a small business that hits $4 million in revenue in four years and $8 million in 10 years? Or is it something that can grow to a size that will result in an acquisition or some liquidity event?
You need to decide what your personal goal is and how it matches what you think this business can grow into. And you and your cofounders need to have that discussion to make sure that all the co-founders’ interests are aligned—before you make any decision to start the company. If one of you are happy making $500K/year and the other has visions of selling the company to Roche for $1 billion, you have very different goals. Without clear alignment, one or both of you will be really unhappy later when you try to make decisions.
3. If I Didn’t Make Any Money After Four Years, Did I Still Have A Great Time?
(See 4:36 in the video below)
If your company fails, would you still say you had one hell of a ride? Founders don’t do startups because they’re searching for a huge financial windfall. They do it because it’s the greatest invention they can imagine. Most of the time you will fail. So if you’re not going to have a great time with your team and learn and build something you are truly excited about – don’t do it.
- Do you want to spend the next three or four years of your life doing this business?
- Is this a scalable business? And if not, are you Ok with something small?
- If you didn’t make any money after four years, did you have a great time?