Step 2: Make something useful

This is a blog series about starting a digital health startup. Last week’s post was here.

Last week’s post was about Step 1, believing in your idea.  This week begins a few posts about Step 2, what to make.

The second major step to making a startup is to make something useful. Make something people want. This is classic Paul Graham, and he’s a genius. You need to make something people want, because if no one wants your product eventually it will fail, and you might as well learn as quickly as possible whether you’re making anything useful. Most inventors are blind to the indifference of the world to their idea. They have faith in the utility of their idea (see last week’s post), and they will not be deterred by even obvious signs of failure.

The problem is it’s hard to know if you’re making something useful, because most of the “experts” you tell the idea to will lie to you.  If you’re working on a new idea, the natural thing will be to find a venture capitalist or industry participant and pitch the idea, and unfortunately in my experience the data I get back from those conversations tends to be pretty bad.

The rest of this post will talk about why these conversations are usually so useless, and next week’s will describe an approach I like to use to really find out what people feel.

Why People Lie

It’s unfortunate that it’s way easier to be nice and encouraging than to be honest. It’s hard to tell someone you don’t like their idea and much more palatable to lie. I first noticed this phenomenon as I pitched venture capitalists for MatchLend, a failed startup I worked on a few years ago. Save one or two exceptions-to-the-rule, every VC told me s/he liked my idea. Everyone told me to keep working on it, and to come back in six months. “You’ve got something.” “There’s something there.” “It’s so interesting.” “I love it.”

This was 2010, and the economy was still reeling from the housing crisis. I needed a job, and I needed proof that this startup was going to become a salary for me. Luckily, the venture capitalists liked my idea, and so it was going to work. What a shock, then, when I approached these same folks for investment and everyone turned me down. Not a single one of these people, who in phone conversations and coffee meetings expressed their substantial support for my project, not a single one wanted to invest.

Wow! I couldn’t understand what happened. Had I incorrectly heard the words of these folks? No — I looked back over my notes and the words had been there. Had I spoken with the wrong people? No — these were venture capitalists in my sub-sector. So what then?

I spoke with a venture capitalist a few years later, and she explained why VCs lie.

• First, she said, it feels bad to tell the truth. It’s not fun to tell someone you don’t like their idea.
• Second, I could be wrong, and in six months you might be a major success. Why would I burn the bridge today.
• Third, you’re an entrepreneur and you’re stubborn, so you probably won’t even listen to my feedback.

This third piece of advice deserves a bit more digging. What did she mean, I asked. Well, she explained, most times when I try to give advice to a startup it becomes an argument. I’ve told you why I don’t like your idea, and you try to tell my why I’m stupid or wrong. You’ll leave the meeting angry, and you won’t even incorporate my (generally wise) advice. After this happens a few times, it just starts to get tiresome to give honest feedback. I love your idea, come back in six months — it becomes the standard “no” for the industry.

I’m an entrepreneur, and I hate when people lie to me, and even I’m guilty of doing it. I think your idea is silly, but I don’t say so, because maybe I’m wrong, and what’s the point, especially if the person I’m speaking with sounds crazy or unwilling to listen? So I tell them I love their idea, but it needs more testing. Or come back after you’ve run an experiment or two.

I don’t think this is a bad thing, per se. It might be difficult to receive honest feedback all the time. Maybe this desire to please, to shield others from criticism, is a deep seeded human survival mechanism. It’s a little like procrastination; I’m not unhappy about the underlying thing, but I do have a few pieces of advice for counteracting it. First, listen. You need to get good at listening to the meaning that underlies the words people say. People feel things, and they use words to try to explain (or, as we see above, to try NOT to explain) those feelings. But these words are not necessarily reasonable proxies for the underlying feelings. You need to listen, to gently probe, to really empathize, in order to understand those underlying feelings.

Second, those conversations are really useful if you can pull out the relevant criticism. Someone has told you a reason s/he doesn’t like your idea. Ok what’s the underlying root cause? If you can use the criticism to improve your product, then you’re a step closer to making something useful!

So if asking people about your idea isn’t a good way to know if you’re making something useful, then what is?  Next week we’ll talk about experimentation, my favorite technique for figuring it out.