A few weeks ago it happened again. At a party I ran into an old acquaintance enthusiastically pitching me The Next Big Thing™. All he needed was “someone to build it for him”. This was one of the brighter of his species. He didn’t ask me to sign an NDA. Well, not right there at the party at least. Nor did he describe his idea in terms so broad that they could apply to anything between sliced bread and space exploration.
What followed was a concept that fit in the social category. Nowadays, most of the ideas that get pitched to me fall in this category. I’m not saying that ideas in this area are necessarily bad ideas. And fortunately only rarely I hear someone claiming to be on the verge of unsettling Mark Zuckerberg from his throne.
But I know from experience that building a successful social app is extremely hard. Not only does it involve a huge number of technical challenges, the biggest problem of all is that of the chicken and the egg. What comes first? The audience or the content?
Most of these would-be entrepreneurs don’t consider the chicken-and-egg thing to be a real issue. From their perspective, the main challenge is to get it designed and built. So they turn to me and ask me what it would cost to execute their idea.
Business model > pixels and bytes
The first thing I do is telling them that they need to come up with a realistic business model before even thinking about pixels and bytes. I’m all for moonshots, but at least be aware all challenges and risks associated with the project.
Next, I ask them a couple of questions to get a sense of the scope of the project. A positive answer to each of these questions adds another € 10.000 to the cost projection I’m building in my head.
When I have an answer to all my questions I ask one more question: “What’s your budget?”.
The answer to this question always falls into one of the following three categories:
- The given budget corresponds to the cost projection in my mind. Unfortunately, this happens rarely to never.
- The budget is less than 10% of my cost projection. This is what I get most of the time.
- The third response is the worst of all, and I get it quite often as well: “Of course I’m not telling you! I’m not showing you my cards so you can maximize the price!”.
When I hear this I smile on the inside. No, I laugh my ass off, on the inside. Because this just shows total ignorance on their part. Here’s why.
Stop wasting time!
First of all: stop wasting everyone’s time! There’s no sense in going through the whole requirements specification and sales proposal phase (easily costing up to 60 hours for medium-sized projects) only to find out at the end that there’s a factor ten budget-mismatch.
Secondly, distrust is not really a great way to start a partnership. And building a serious project is nothing less than that. You’re not just in a regular client/vendor relationship. The investments on both sides are going to be bigger than just time and money. So being completely fair and transparent with each other is key to success.
Lastly, if you think that the person you are talking to is the slick Glengary Glen Ross kind of sales guy who maximizes profit out of every deal he makes without taking the interests of the other party into account at all, you should not be talking to that person in the first place!
Make it count
Ideas are like assholes: everybody has one. Only the execution counts. So, make it count. Have a realistic business model in place. Know what the risks and challenges are. Seek for mutually beneficial partnerships. And always be fair and open to your partners.
Then, maybe, you’ll get lucky.