Top 10 misunderstandings of entrepreneurs summarized by a Venture Investor

 

I recently became a Venture Investor, so I often encounter some mistakes that entrepreneurs [1] often make when they start a business. To avoid repeated preaching over and over again, I would like to summarize these errors here:

Myth 1: A good idea will make you a lot of money

The fact is that good ideas are neither adequate nor necessary for commercial success. Microsoft should be a typical commercial success, but it cannot find a completely original "Good idea" throughout its history ". In fact, Microsoft has grown step by imitating the ideas of its competitors and defeating them in the competition. Google does have some originality, such as page rank, ad-words, and cheap machine clusters. But none of them were created by Larry and Sergey. This does not mean that Larry, Sergey, and Bill are not smart enough. In fact, the three of them are better than anyone else. However, if you think they just get inspired one day and then make a fortune, you can only say that you are crazy.

Myth 2: Something will naturally be used by someone
Sometimes this is true. Google is a good example. However, companies like Google are rare. More companies cannot sell their products for one reason or another. I have such a painful experience. It was the first company I created in 1993, named flownet. It is also the name of a new high-speed LAN communication device. 10 m transmission speed was the standard at that time, but flownet provided a transmission speed of up to M. In the next five years, flownet has always been the most cost-effective network device. It even provides a built-in video streaming service that can ensure the image quality. If flownet becomes popular all over the world, today's video streaming media will be much better than today's.

However, while flownet can beat any competitor at the technical level, it suffered a huge failure in business. We didn't even sell one piece. The reason is simple: it is not compatible with lan standards. If we do our homework and do some market research, we will know that compatibility will be a big problem even if it is not fatal. In this way, we will not waste tens of thousands of dollars on patent applications and sample production.

Myth 3: If you do not apply for a patent, others will steal your thoughts.
In fact, no one will be interested in your ideas unless your ideas prove successful, but it was too late to steal scholars. That is to say, someone really agrees with your ideas, but if he is smart, he will naturally choose to cooperate with you. If not, what he does will not threaten you.

Sometimes patents are a bit useful: They make investors feel safe. However, I strongly recommend that you handle patent applications by yourself. Through some learning, you can do better than patent application agents and save a lot of money.

Myth 4: Your opinion is very important.

In fact, you and your partners have no significance in their views on your products. What is important is what customers think about your products. We naturally assume that if you and your guys think that your product is good, then thousands of other people will think that this is the case sometimes, but most of the time is not. The reason is that you are so smart that you can design such a good product, so you are different from the users of those products. Compared with you, your customers are more mediocre and their tastes are more mediocre. If your product is intended to cater to those who care about what you care about, your user base will be very small.

Myth 5: profit models are fake.

This is also true sometimes, just like myiser.cn. As Carl Sagan often said, "predictions are the art of failure ". You will never know how much your business will make or how much it will take to occupy the market. The reason for the profit model is to let you think comprehensively and make sure that your investment will be rewarded. If you find that, even if you only want to keep your user base at no loss, it must be 10 times larger than the current market, you may need to reconsider. As Howard said, a plan is useless, but it is indispensable to make a plan.

Based on this, many entrepreneurs will make a typical mistake. They often say, "As long as we possess even 1% of the market share, we will make a lot of money ". Such a statement directly exposes that you have not carefully analyzed your needs. You may also say, "at least one of the 100 customers will buy our stuff (or, frankly speaking, this is not certain )". In this way, we cannot increase our self-confidence.

Myth 6: knowledge is more important than people you know.

You always refuse to deny this. From small to large, you believe that intelligence is more important than anything else, and you do not believe what your mom says: "Learning to get along with others is more important than learning achievement ".
Fact is: interpersonal relationships are more important than knowledge. This is not to say that you are smart and knowledgeable. Your Knowledge determines to some extent who you will be recommended ". But in the end, you know and trust, and more importantly, trust you. People will have a greater decisive role in your future than your knowledge. Business activities are extremely complex. No one may have all the knowledge and experience needed to complete a business decision, so the savvy people will delegate their power to others. When they choose to delegate, the first thing they think of is people they know and trust.
<A comparison between C programmers and lisp programmers is omitted here>

Myth 7: doctoral titles are useful

In fact, having a doctorate title can only prove that you are not inferior. In my experience, having a doctorate only negatively impacts business success. This is because the method of academic success is the opposite of that of commercial success. In school, your colleagues decide your success. In business, your customers decide your success, and your customers are basically certain, not your colleagues.

Myth 8: I need 5 million yuan as the startup Fund

In fact, unless you do hardware, you don't need any startup funds. Paul Graham has said a lot about this, and I will not start it. To say a few words: You don't need to start the Fund, but you must do it yourself. You must implement your own ideas. No one will do it for you, and no one will pay for it. The reason is simple: if you do not want to give up your rest time for the commercial potential you want, why do others take the risk of using the money they have earned.

Myth 9: A good idea is the most important part of my plan.

In fact, there is basically no significance for a good idea. The important thing is:

Who is your customer
Why do they want to buy your product?
Who are there in your team?
Risks

Myth 10: No competitor is better
If your industry has no competitors, the most likely reason is that it cannot make money at all. There are hundreds of thousands of people in the world, and there is almost no profit market that anyone can find.

The best news is that your competitors are very popular. Most companies are not doing very well. They make fake products, cheat customers, and their employees are all dumb. You can always easily find market opportunities, enter, and defeat competitors. You don't want to have no competitors. You want poor competitors. You can rest assured that they have more to do.

 

Extra rewards, myth 11: going public will make me happy
If you get tired of starting a business, you probably won't succeed. It is so hard that if you cannot find fun, it will exhaust you. Even if you get richer through dirty transactions, when you look back on the past, you will only regret the passage of youth. Antiques and sports cars bring happiness for a short time. There is only one kind of happiness that can be bought with money: When you listen to a young guy as an investor, he is excited to tell you about his new business plan.

All of these can be summarized into one sentence: what matters is the customer. Business Success is not just a good idea, but a good idea is everywhere. Business Success requires a good idea, a good team, an idea into a product, and finally sell it to the customer. Very simple and complicated.

Good luck!