What is an Entrepreneur?
“An entrepreneur knows the difference between an idea and an opportunity” – the late Jeffry A. Timmons – Professor of Entrepreneurship – Babson College
As the phrase goes, truer words have never been spoken and after another weekend of looking at “pitch decks” I wish every entrepreneur (or would-be entrepreneur) would take these words to heart. For those who are new to the startup game, the concept of being an entrepreneur has been around for quite some time. I had the honor of serving on the Scholastic audit team many years ago at EY and I remember the then Chairman “Robbie” Robinson asking me if we still worked with incubator accounts because that was what Scholastic was in the 20’s and Robbie was the consummate entrepreneur.
I have read a great deal about entrepreneurship and while it has been practiced forever, it wasn’t until the 70’s and 80’s that people like professor Timmons started to add appropriate content to this emerging field of study. I heard him lecture on the subject and in addition to it being thought provoking, this quote of his said it all for me. In fact, I used it so often, I had it as a scrolling screen saver for about 30 years.
So, what is it about this phrase that struck a chord with me? I think it was the simplistic yet powerful message and I must admit as I go through my decks today, I am struck by how much they contain fantastic ideas but perhaps are not real opportunities. I think startup entrepreneurs at times overestimate the desire of the customer to seek out a solution to what the entrepreneur perceives as a problem, but which the customer may not. One such deck I reviewed is a solution that (if all the stars are aligned) can save a major institution up to $300,000 a year – and for this they want to charge $100,000 annually. Unfortunately, their target user in this case probably operates a budget in the $1 billion range and their perceived “problem” is basically a rounding error. In essence, this is an idea that has not reached the level of an opportunity.
So, my advice is simple. Make sure you spend your time truly developing what the problem/market is. Perhaps, the problem above causes more pain in a $100 million institution and maybe that institution will spend $50,000 to solve it, but don’t overshoot your model hoping that an investor will abandon good old logic and not see that perhaps you are overstating your problem to get the revenue numbers investors like to see. Keep that concept of a true opportunity in mind (few people pay just for ideas) because if it is not, you will not get funded and your pitch will just add on to that great pile of ideas that every investor has in their junkpile.
