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04/27/2010

The Entrepreneur's Echo Chamber

Last night, I attended the Entrepreneurs Roundtable at NYU. In a packed room of 100+ people, we went around the room and introduced ourselves and our businesses. While the span of startup ideas was extensive, one thing was clear, everyone believed their idea was "The Big One." It showed in the way they introduced themselves, the tone of their voice, their body posture, and their pride. The sad reality is nine out of ten will probably fail.

The main speaker, Chris Dixon, said brushing off naysayers is a mandatory entrepreneur skill.

After Chris spoke, five startups received five minutes each to pitch their idea and receive feedback. Again, each entrepreneur thought their idea was the next best thing. The audience feedback was not so optimistic. But I'll bet all the entrepreneurs will keep going.

Based on the five pitches, I'd probably invest in only one.

It's easy for entrepreneurs to get into an echo chamber within a startup and with co-founders. It starts by building tough skin against the naysayers. You become passionate about YOUR idea. You put YOUR resources into YOUR idea. By expending a lot of personal resources (emotionally and physically) into our ideas, we build up a great resistance to the fact that maybe YOUR idea just sucks.

Knowing if your idea is a good business is simple:

- Do you have paying customers?
- Are they happy?

Paying customers are the most objective opinion you will find. Users are great, but if they aren't paying customers, then you don't have a business, you have the equivalent to a pick up soccer game. The best way to know if your idea will work as a business is to ask a potential customer, or a current user, to pay you $x for your product. The sooner you move from launch to paying customer, the better. The longer you wait, the harder it will be to let go if you need to. The echo chamber naturally happens, let paying customers be your reality card.

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