Busting the “Idea Investor” Myth, and Other Tips for Aspiring Entrepreneurs
“Startups are desirable again,” says Tony Wright. That sums up the feeling I get whenever I meet with innovators and investors these days. We’re sitting at the Caffe Umbria in Pioneer Square, Seattle. I’m sipping the best latte I’ve had since Le Panier and Espresso Vivace got inconsistent last month. Wright’s drink of choice is an Americano. Last week I posted some of his thoughts on venture capital and software startups, but there’s plenty of stuff I didn’t get to, so I’m following up here.
Being a successful serial entrepreneur—Wright founded and sold two startups before his current gig, RescueTime—he gets asked for advice a lot. Here are three of his quick suggestions for aspiring entrepreneurs, together with my interpretations:
1. Have a clear idea of what “success” means to you.
Does it mean running a profitable company? Huge growth? Developing cool products? Some entrepreneurs want to keep building software, say, instead of “doing what the company needs,” Wright says. If you’re successful by most standards, though, you tend to stop making products and start doing more and more recruiting, public speaking, and fundraising. Which brings us to #2…
2. Don’t fundraise until you have traction in the market.
There’s a myth out there about “idea investors,” at least among inexperienced entrepreneurs. The misconception is that a venture capitalist will give you money if he or she loves your great idea. The truth is, ideas are a dime a dozen. Making them work is another story. “If you haven’t made a VC a lot of money, your ability to get funded for [just] an idea is laughable,” says Wright. “You need a growth curve and some traction.”
3. Don’t worry about public relations—at least not officially.
“Seasoned entrepreneurs are saying, ‘Don’t hire a PR firm,’” Wright says. Public-relations efforts take time and money, and they’re usually not worth it at an early stage. You do need to have a company blog, though, to help connect with your audience and potential customers. (Wright’s latest entry tells of changing RescueTime’s logo—see the new one above—to appease the Red Cross, at the risk of offending the Swiss. Ah, the trials of a startup.)