This Isn’t Rocket Science
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There’s a lot of great business ideas out there and I’m fortunate to see a lot of them. I’ve talked before about the need for a good team… how good business ideas fail because the wrong people are behind them, and how having the right people often results in the great success of some relatively shitty business ideas. However, instead of the people, I want to briefly talk about the idea itself. More specifically, I want to talk about the value proposition of an idea and how, as I’ve seen over and over, even the most sophisticated investor can lose his or her investment by losing sight of one simple fact: this isn’t rocket science.
Enter John Smith. John is a seemingly well established business person with an unverifiable track record to back up his self proclaimed ability to take investment money and generate a very attractive return. After sitting through his pitch, I can’t help but feel like I’m missing the point entirely. How does this complicated combination of private equity, institutional debt, venture capital, patent licenses, mergers, acquisitions, and hostile takeovers lead to increasing value? The fact of the matter is that it’s easy to over analyze anything (and everything) in business, but you should always end up back at the basics. What are we providing? Do people need it? Can we charge more than it costs us? Without the fundamentals, the advanced structures and “strategic plans” are nothing more than a smoke screen to mask the truth.
Explaining how you are going to make money shouldn’t be difficult, complicated, or require an MBA refresher. It also shouldn’t take more than thirty minutes. If it does, I’m probably going to lose my money.