Things That Don’t Matter

Note: this is a series on making a digital health startup.  The first post is here.

Last week we talked about writing effective survey questions.  This week we’ll discuss the things that don’t matter in the beginning of a startup.

As I mentioned earlier, there are a million potential things your startup needs at first: “legal advice, patent protection, a team, press, mentors, office space, incubation, customers, champions, business cards, a logo, a website, tee shirts, a ping pong table, and a mission statement.”  One of the problems is figuring out how to allocate the little time you have.  You don’t have much extra energy to work on this new germ of an idea you’ve been developing!

Last week I met Zoe, an entrepreneur who was working on an import business for hospital supplies (name and details changed).  Zoe mentioned how busy she was: she had to get a domain name, design a logo, make arrangements with an overseas manufacturer, file a provisional patent on her website’s factory matching system, and register in Delaware.  She mentioned she needed $300,000 for her initial phase of the project, and did I know an appropriate funding source.  She asked: should she be a C-corp or an LLC?

I said I’d be happy to help her with those issues but first wanted to know a little about her business.  How did she get the idea?  Which supplies were she starting with?  What hospital was she piloting with?

She responded: “Oh, I haven’t spoken with any hospitals yet.”  I asked her why not, and she responded, “Well I want to make sure everything is in place before I go out there.”

I told her I didn’t think this was a great idea.  How can she choose a factory until she knows which supplies the hospitals want?  Is it small ones, like gauze, or large ones, like MRI machines, or something else?  And what quality-assurance procedures will she be required to follow?  There are thousands of factories worldwide, and it’d be hard to know which ones to choose until she had a better sense of which supplies she needed to source.

Further, did she really need that matching system?  Maybe on day-one she could do the matching herself.  “Well that’s inefficient and wouldn’t work well with a thousand hospitals,” she responded.  You don’t have any customers yet, and you don’t know which factories you’ll need to work with.  You don’t know whether the interface should be an app, or a website, or something else.

Further, who cares if it’s inefficient in the beginning?  It’d take dozens of hours to make an algorithm and website; that’s a huge time-sink before you really know what you need.  “Do things that don’t scale,” I told her.

But more fundamentally: how did she know that she was making a service people cared out?  She answered: “The idea sells itself.  I can find cheaper supplies than the brand names, so why wouldn’t the hospitals want it?”

I remembered back to my early days with Podimetrics.  I had spent weeks cold-emailing hospitals until I found a first pilot customer.  By no means did the idea sell itself, even as a product that promised to save lives and improve quality of life.

I said this to her, and I suggested she focus her energy on speaking with hospital administrators and establishing that people wanted her service, before she spent time with factories and other things.  Further, emailing hospital admins costs zero dollars, so she wouldn’t need to raise any investment dollars, and since she wasn’t raising funds she also didn’t need to register as a company.  And because she was going to postpone work on her matching system, she could also hold off on filing a patent, registering a domain and making her logo.  All she needed was a powerpoint presentation.

I got an email from Zoe last week: “I spoke with the hospital director, and we have a follow-up meeting this week!”

In summary, the beginning phase of a startup might feel overwhelming, but if you can ignore the distractions, it’s easier to get to manage.  Things that matter: believing in your idea, confirming that people want your product (or searching until you find something people do want).  Things that don’t matter: logos, company formation, patents, funding, websites — basically, everything else.

And when you’re in the beginning, you can often squeak by with little more than a powerpoint presentation.  Forget about money or other resources; if you have the will to make an idea, you can get it going.

Next week we’ll discuss a quick and accurate way to determine whether people want your product.

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