The internet is an entrepreneur's dream. Thanks to the web, a greater number of individuals around the world have been given the opportunity to start a new business.
But while the internet has helped bring entrepreneurship to the masses, the internet hasn't changed the difficulties entrepreneurs face in starting a company, and arguably, it hasn't improved the odds of success.
According to Adeo Ressi, who founded the venture capital rating site TheFunded and the entrepreneur training program, The Founder Institute, starting a new online business can be done with less than $2,000 by following 10 simple steps:
- Buy a domain and email.
- Develop some wireframes.
- Create a logo and corporate collateral.
- Develop a PowerPoint pitch deck.
- Build a landing page.
- Set up a blog.
- Perform some test marketing.
- Survey prospective customers.
- Plot a roadmap.
- "Ghetto launch".
Easy, no? But is this really a recipe for success?
Not quite. In my opinion, it is somewhat pointless to promote the notion that you can launch a new business for $y in x steps. While there are certain basic tasks that just about every entrepreneur must complete when starting a business, such an approach ignores the fact that no two businesses are exactly alike and each new business will have different requirements. It's also somewhat disingenuous to pretend that putting together good wireframes, PowerPoints, etc. is 'free'. Entrepreneurs may be willing and able to invest sweat equity, but the cost of that sweat equity is never free.
In response to numerous comments questioning his game plan on TechCrunch, Ressi responds that his approach is really just a way to test a market:
If you do not test your market and your positioning before building the final product that may take months or years, then you will definitely fail. If you watch the presentation, the end result is not a finished product. It's a startup alpha launch to test the market. Big difference.
While it is absolutely true that many entrepreneurs spend lots of time and money building out products that will never fly, I think most entrepreneurs would be ill-advised to follow Ressi's approach. The reason: you may be able to create the impression that you've got a business, but at some point you actually have to deliver the goods. If you don't have the time, money and skill to do that, you've just wasted everyone's time, including, most importantly, your own.
Knowing this, creating a landing page, buying advertising via AdWords and Facebook, conducting surveys and trying to acquire "beta customers" when you don't even have the most rudimentary alpha ready to go is sort of like promising the delivery of a new house next month when you don't have construction tools.
To be sure, Ressi's concern over investing too much in building a product before validating demand is a legitimate one, but Ressi seems to ignore any concern over investing too little. As a result, he quite literally offers a 'fake it until you make it' plan of attack. For obvious reasons, this isn't going to work for anyone who can't sell water to a whale (which, truth be told, is most of us).
Fortunately, entrepreneurs do have a middle ground option. By focusing on unmet needs in markets in which they have expertise, relationships and skills, entrepreneurs can often minimize many of the unnecessary risks that come with building something before there's any validation whatsoever that it might be viable. In short, expertise, relationships and skill can each be used to provide enough validation that convinces the entrepreneur to make a greater investment in the opportunity he or she thinks exists.
But no matter which path entrepreneurs take, it's wise for them to do away with the fanciful notion that you can eliminate all risk. It can't be done, and at the end of the day, a new 'business' that is all smoke and mirrors will share the same fate as a 'steakhouse' with no meat and bones, no matter how good the idea behind it.