The Price of Ignorance

A few weeks ago it happened again. I ran into an acquaintance who enthusiastically started to pitch 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. At least not right there at the spot.

What followed was

What followed was a concept for a social app, as most ideas are nowadays. This doesn’t have to be a bad thing, and fortunately, I rarely meet someone who claims to be on the verge of unsettling Mark Zuckerberg. Still, building a successful social app is not easy.

To the contrary, it’s extremely hard. And it’s not only the 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 this catch-22 to be a real issue. From their perspective, the main challenge is getting it designed and built. So they turn to me and ask me what it would cost to execute their idea. Just like this acquaintance did.

Business model > pixels and bytes

The first I told him after listening to his pitch was that he needed to develop a realistic business model before even thinking about pixels and bytes. I’m all for moonshots, but at least be aware of all challenges and risks associated with the project.

Next, I asked him a series of questions to get a sense of the scope of the project. A positive answer to each of these questions added another € 10.000 to my mental cost projection.

When I had an answer to all my questions I asked one more question: “What’s your budget?”.

And there it started: “Of course I’m not telling you! I’m not showing you my cards so you can maximize the price!”. The acquaintance-in-question thought it would be the dumbest thing ever to share his budget with me.

When I get this reply I smile on the inside. No, I laugh my ass off, on the inside. Because this response just shows a total lack of business sense. Here’s why.

Stop wasting time!

First of all: stop wasting everybody’s time! Do you really want to go through the whole requirements specification and sales proposal phase (easily costing up to 60 hours for medium-sized projects) only to find out that there’s a huge budget-mismatch at the end?

Secondly, distrust is not the best way to start off a partnership. And building something as complex as a social app is nothing less than that. You’re not in a regular client/vendor relationship. The investments on both sides are going to be far bigger than just time and money. Being completely fair and transparent with each other is essential for success.

Lastly, if you really think that you’re talking to a slick Glengary Glen Ross sales guy who maximizes his profit out of every deal without considering the interests of the other party, you should not be talking to that person in the first place!

Make it count

Ideas are like assholes: everybody has one. The only thing that counts is execution. 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 completely fair and transparent with your partners.

Then, maybe, you’ll get lucky.

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