Entrepreneur Office Hours - Issue #169
Before you can read this issue, I need you to sign an NDA
After a dramatic uptick in the number of NDAs (non-disclosure agreements) I’ve been asked to sign in the past few months, I’ve decided to get back on one of my least favorite soapboxes this week and shout to entrepreneurs everywhere that they need to stop asking people to sign NDAs.
More specifically, I suppose I should write that they need to stop asking people like me — entrepreneurship advice givers, mentors, investors, and other similar types of people in the startup ecosystem who regularly speak with tons of startups — to sign NDAs. If you’re one of those entrepreneurs waving around and NDA before you’ll say two words about your company, you need to read my article in this week’s issue about why that’s such a bad idea.
If you’re not one of those entrepreneurs, you’ll probably enjoy reading the NDA article, too, because you surely know someone who does it. Heck, you were probably one of those people, and you’ll enjoy the opportunity to laugh at yourself. However, you’ll probably get more value from the second article where I talk about a concept I call product-marketplace fit.
As the name suggest, product-marketplace fit is related to product-market fit, but it’s not quite the same. It’s also just as important! In other words, if you’ve never heard the phrase before, take a moment to find out what it means and why it matters.
What kinds of risks do founders take when they pitch their startups, and are those risks worth the trouble of an NDA?
Having a great product doesn’t matter if you’re not spending just as much time thinking about how customers will find it.
Office Hours Q&A
I’m going to tweak the format for this week’s Q&A slightly because the question comes from an in-person office hours I had with a student/entrepreneur who was showing me the app he’d created.
The app was, admittedly, very cool. In fact, I was jealous I didn’t come up with the idea myself. But that’s not the important part. What’s important was the question he asked after sharing it with me. He wanted to know, “Do I have enough to go fundraise?”
Except in rare circumstances (e.g. regulated health tech), having a cool piece of technology does not mean it’s time to fundraise. Why? Because the technology isn’t the difficult thing to create. It’s not valuable!
Consider, for example, the app my student showed me. Even though it was cool and I was jealous of the idea, it was something I’m perfectly capable of building myself (and I’m a decidedly mediocre software engineer!). I’m sure thousands of other software engineers could build it, too, so why would an investor invest in the technology? If investors really just wanted their own versions of the tech, they could simply pay someone $10,000 and be done with it.
The valuable thing my student needs – and that you’ll need if you’re in the same situation – is customer traction. Your ability to get customers is what’s interesting to investors, not your product.
By the way, when I told my student this, his response was: “But getting customers is really hard work.”
It sure is! That’s why having customers is the thing investors value.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!