Two recent articles made me wonder about the relationship between an entrepreneur’s ideas and passion. As you’ll soon find out, I feel they are a little like chicken and egg – nobody can quite agree which comes first!
No passion without an idea
How important is it to have an idea you believe in before you ‘become’ an entrepreneur? A debate on FastCompany responded to Wired’s coverage of a panel talk. The debate centred on a quote from Dustin Moskovitch, co-founder of Facebook and Asana:
According to Moskovitz, the biggest problem in Silicon Valley culture is the fantasy that entrepreneurship is something you aspire to, in and of itself. “It’s total nonsense,” Moskovitz said. “I’m not really sure where it comes from, but every time I meet someone who says ‘I really want to be an entrepreneur’ but has no idea what they want to do, I really just think: ‘This person is totally aimless.’”
Strong words, particularly to an impressionable crowd of college interns, but perhaps Moskovitz has a point. Can anyone decide to be an entrepreneur before having an idea? The ‘glamour’ of being a tech startup entrepreneur, as affirmed by films like The Social Network and the upcoming jOBS, is certainly enticing.
Editor Chris Dannen strongly disagreed, and said that the decision to be an entrepreneur was a statement of intent “to work hard on something they are passionate about and make progress quickly” that was far from aimless.
Unfortunately for Dannen, the rest of his staff agreed with Moskovitz. You can read their opinions here, but to summarise the consensus, having a core idea was most important. This is because entrepreneurs should create something they believe in and want to see in the world.
However, there is another perspective.
Passion for ideas is overrated
Patrick Salyer, CEO of Gigya felt that VCs too often use an entrepreneur’s passion about their idea as a deciding factor for investment. His own experience, as founder of two startups, was that he was simply happy to work in an entrepreneur role, had a general passion for the business and that this should be enough.
What I found really interesting was Salyer’s evidence to support his belief – the pivot.
First, think about this question: How many startups pivot at least once? Research shows that startups that pivot once or twice raise 2.5 times more money and have 3.6 times more user growth than those that don’t pivot.
As evidence, Salyer brought out the big guns. Dating site ‘Tune in, Hook Up’ pivoted to become YouTube. Podcasting platform ‘Odeo’ pivoted to become Twitter. His argument is that initial product ideas aren’t, on average, the ones that lead to high growth, so why do VCs look for passion here? Particularly if such a passion blinds the entrepreneur to pivot opportunities.
The chicken and the egg
So, which comes first? Is it the product idea that fires up an entrepreneur’s passion to take it to high growth success? Or is it an entrepreneur’s general passion for tech that helps them discover the high growth product?
My view is that entrepreneurs should have a passion for ideas in their field, not simply their first idea. Entrepreneurs certainly must have a solid and well-thought-through product before launching their startup. What they must understand is that this initial idea might not be the high growth idea.
Take FreshBooks, for example, which provides simplified invoicing software as a service. The passion in this case came when the graphic design studio founder realised that other small businesses found billing a hassle too. This prompted FreshBooks founder Michael McDerment to design his own software for the studio, then take that idea to market, even living in his parents’ basement to see the startup through to success.
Would the high growth online billing idea have come to McDerment if he hadn’t first set up the design studio? Probably not. But I would venture that his determination and passion to have a successful business – evident by living and working in a basement for three and a half years – would have been clear to a VC from the outset.