Your Great Startup Idea Is Worthless

“So, what do you think?” the investor asked me.

“I’m really impressed with the technology,” I said. “I think I might invest.”

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Picture: Depositphotos

The investor smiled and we shook hands. Then I left.

I went home, and I thought about the company some more. I really, really liked the idea the company was pursuing. And I really, really liked the technology. But I wasn’t sure about the CEO.

I thought some more, and then it became clear what I would do. I called the investor, and I let him know I would invest.

Your idea is worth nothing if you can’t execute.

I wrote a sizable check, and I became an angel investor in the company. About two years later the company went under. My investment would now turn into a tax write off.

It was the same mistake I had made a few other times as an investor. And it was the same mistake I’d made a few times in my career. I had underestimated the importance of having a great CEO to run the company.

When was I going to learn my lesson.

It’s not enough to have a great idea because without a great CEO leading your company, you will fail.

Andy Rachleff, late of Benchmark Capital, has a rule that is known as Rachleff’s law. It goes like this:

  1. The #1 company-killer is lack of market.
  2. When a great team meets a lousy market, market wins.
  3. When a lousy team meets a great market, market wins.
  4. When a great team meets a great market, something special happens.

Let me delete Rachleff’s rule number 3 and a new rule number 3:

Rule Number 3: When a lousy team meets a great market, the lousy team will still fail.

It’s just not enough to go after a big opportunity with a great idea. There are plenty of other entrepreneurs that likely have the same great idea you do.

For example, I’ve been working with “Ray” for the last two to help him build his company. He has an unbelievably clever idea to go after his market.

But Ray has, get this, 50, yes 50, direct competitors. There are 50 other startups pursuing the same market Ray is, and some of these startups have over $100M in funding.

In a market like that, your great idea isn’t going to be worth much. Ray’s going to have to have flawless execution if he’s going to win. You don’t execute well unless you know what you’re doing.

But there’s one more thing you’re going to need need to succeed. That’s why I’ve added a rule number 5:

Rule Number 5: You need a great idea, a great team, a great culture, and you need some luck if you’re going to win.

So, there are really 5 rules for startup success. I’ll call these rules Rachleff and Fox’s law:

  1. Company-killer is lack of market.
  2. When a great team meets a lousy market, market wins.
  3. When a lousy team meets a great market, the lousy team will still fail.
  4. When a great team meets a great market, something special happens.
  5. You need a great idea, a great team, a great culture, and you need some luck if you’re going to win.

These five rules explain why it’s so important for you to be a great CEO:

  1. A great CEO will pivot to great market, and…
  2. A great CEO will recruit a great team, and…
  3. The great team the CEO recruits will execute flawlessly, and…
  4. The great team, focused on the great market, will give the company a chance for something special to happen, and…
  5. Even a great team with a great CEO, a great idea, and a great culture still needs some luck to win.

Your startup is fragile. There are so many things that can trip you up. The scary thing is that most of these things are out of your control, especially your competitors.

The most important thing for you to remember is you can only control yourself. That’s it. Everything else, especially your competitors, is out of your control.

So move fast, hire a great team, and execute flawlessly. Oh, and whatever you do, don’t neglect your culture. Because, you’ll soon realize that a great culture is the most likely indicator of a successful startup.

That’s your best chance of success.

For more, read: What Are The 19 Wishes Every Founder Needs Granted?

Written by

I work with startup CEOs to help them grow their businesses . I built several businesses from $0 to >$100M. Learn more at www.brettjfox.com

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