How To Vet Startup Opportunities – Quit Your Day Job With Confidence

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A version of this article previously appeared in Forbes.

As a Professor of Practice in Entrepreneurship at UC Santa Barbara, students ask me dozens of times each quarter, “What do you think of my idea?” My response is typically, “What I think of your idea is irrelevant. Tell me what you think of it.”

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This isn’t a Jedi mind trick, nor is it a symptom of intellectual laziness on my part. Instead, my intent is to determine which sort of student I am speaking with. They tend to fall into three general categories: (A) I am looking for someone to anoint my idea as “great” before I put any work into it, (B) I am looking for meaningful feedback on an idea I am unsure of, or (C) Nothing you say about my idea will dissuade me from perusing it - let me tell you why I love it.

The reality is that what I think about anyone’s nascent idea is totally meaningless. In most instances, an entrepreneur’s initial concept is only remotely related to the go-to-market plan that ultimately proves successful. Thus, spending time opining on an unvetted idea is not time well spent.

Wise And Feld To The Rescue

Fortunately, my students now have a playbook by which they can assess their ideas and determine whether not they are "any good." Sean Wise and Brad Feld's Startup Opportunities, Know When To Quit Your Day Job is for students B and C. As the authors note, the book’s primary audience is readers who, “…have yet to quit their jobs (or graduate from college) and take the leap into entrepreneurship.”

Without question, the book is geared to first-time entrepreneurs, as evidenced by the time taken to define basic terms (e.g., gross margin) and the inclusion of a rudimentary glossary of startup lexicon. Emerging entrepreneurs, students and corporate refugees who have yet to take the plunge will all find Startup Opportunities worthwhile. That said, an experienced entrepreneur would no doubt still find aspects of the book valuable, such as the real-world sidebars written by successful entrepreneurs.

The authors’ primary objective is to answer the question: “Is my idea good enough that I should pursue it?” Readers are guided through the idea vetting process by covering a variety of topics, including: People, Pain, Product, Market, Plan, Pitch and Pitfalls.

The book's primary intent is to help readers with pre-startup evaluations and, “figure out in advance which ideas are worth experimenting with.” This approach encourages entrepreneurs to simultaneously vet multiple ideas in order to direct their energy in the most promising direction. This is consistent to the advice I often given aspiring entrepreneurs to operate mini-ventures in their spare time, before they quit their day jobs.

Looking Over the Ledge And Deciding Where To Jump

BASE jumping is a sport which involves leaping off a high structure, free falling to an altitude in which the safety margin of a parachute malfunction approaches zero and then pulling the ripcord at the last possible moment.

Starting a company is like BASE jumping naked - without a parachute. Just as you must create your startup on the fly, nude BASE jumping requires you to build your parachute while you are freefalling. Once you make the jump, there is no turning back, so picking a good spot to take the leap is important.

Startup Opportunities helps would-be entrepreneurs look over the edge of the cliff before they jump and assess the probability that they can build their parachute in midflight and avoid crashing to the ground. Thus, while still helpful (e.g., chapters on market analysis and team building), it is not an ideal handbook for those who have already taken the plunge.

Things I Like

  • Tactical & Hands-on– As described in Why Most Business Books (Still) Suck, entrepreneurs have limited time to expend reading theoretical business books which do not provide actionable content. In contrast, Startup Opportunities focuses on pragmatic, tactical advice.
  • Jargon Free– It can be difficult to describe a complex subject in simple terms, free of industry jargon. Sean and Brad consistently maintain a straightforward writing style that allows readers to readily focus on the content, rather than parsing dense, rhetorical flourishes.

Don’t Quit Your Day Job If You Are Not…

The book's final chapter includes the following checklist that emerging entrepreneurs should consider before quitting their day job: (Note, I am paraphrasing the authors' checklist.)

  • Passionate about the opportunity
  • Capable of executing
  • Know that the problem is a need and not a want
  • Confident the problem is shared by a large and growing number of people
  • Certain that your solution is ten times better than alternatives
  • Willing to totally leave your “safe” job behind
  • Able to access your target market
  • Solvent enough to live at least six months without an income
  • Capable of gathering the necessary resources to develop your minimum viable product
  • Prepared to do a ton of inglorious work

Startup Opportunities Has Made My Life Easier

The next time a student entrepreneur asks me what I think of their idea, I’ll ask them what they think AND I’ll tell them to read Startup Opportunities so they can obtain the answer that really matters - what the market thinks of their idea.

You can follow John on Twitter: @johngreathouse.

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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