Tuesday, February 12, 2008

The Start Up 101 Series - The Opportunity

Last week, I posted a little bit about what makes an entrepreneur, and that's the drive to succeed, stay focused and know when you see a good opportunity.
There's a joke that I hear often in Silicon Valley that whenever someone says "I have a good idea," the common response is "You should start a company and get some VCs on that."

A lot of times they don't mean it and anyway, it never matters what your friends or family say if you have an entrepreneurial idea. The only exception to that rule is if your friends are in the market that you want to appeal to.

It's important to get it straight: opportunities and ideas are two different entities. An idea is something creative, fun and can certainly spark opportunities, but opportunities mean that you have something with which to create a business.

Here's an example:
At the Girl Geek Dinner hosted at Google, Katherine Barr of Mohr Davidow Ventures made a great suggestion to me. "If you think you have an opportunity, do some research first, test out your idea and ask them if they will buy your product or service."

Let's say I am a former veterinarian with lots of experience and I decide that I want to sell fancy, customized natural dog food diet because I find that it's easy to make at home in manageable batches in my home oven.

Will anyone buy it? If I do my research, I could go to a dog park and chat with the owners because that is where they all hang out and ask them, "I have this great customizable dog food product that is good for your dog, would you buy it?" It's best if I find places where dog fans, breeders, and owners hang out. Maybe at a dog park or a breeder's association gathering.

If I talk to one hundred people and they all say "yes, I would buy it" then I have an opportunity. If they all say no, then I have a great idea but no opportunity. Maybe you have an 80 out of 100, then your chances are still high.

Basic, but hard to put into practice. Next week, we'll talk about risk and revenue models specific to Web 2.0

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