Monkeys, Goats and Sloths - Why Your Idea Is Unfundable - David A

8/27/2014
Monkeys, Goats and Sloths: Why Your Idea is Unfundable | David A. | LinkedIn
David A.
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Founder, SnapCar
Monkeys, Goats and Sloths: Why Your Idea is

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Monkeys, Goats and Sloths: Why
Your Idea is Unfundable
August 27, 2014
August 27, 2014
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Changing the World: ThroatSlitting, Fist Bumps & the Bottle
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It was 1999 and I was commuting to my office uptown. A guy handed me a slip of paper as I
exited the subway. Arriving at my desk I visited the website on that slip of paper and twenty
minutes later a bike messenger arrived with a pint of Ben & Jerry's (no doubt it was Cherry
Garcia). No charge for this--but I suppose they expected I might use their "delivery" service
in the future (which I didn't). It was great while it lasted.
~ my buddy Justin
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Since I'm so old I'm practically dead, in my work I frequently get asked by young
whippersnappers + entrepreneurs if I can help them with their idea for a startup. Particularly
here in France where a lot of people (mistakenly) believe that Americans have unique and
magical insights into creating a tech company. They ask for advice and validation about their
idea, their proposed model, and where to go next. They ask if I want to be an advisor and
could I spend some time with them on it. Maybe they could buy me lunch or a drink? But
mostly what they want is money.
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I don't have any.

Not because I don't like you or because I think the idea is no good. And you're probably
capable of achieving great things. If I was half as impressive as many of you seem to me I
would surely be a lot further in life.
But I don't have time or money for your idea because it's an idea. It is not a startup. And it
most certainly isn't a business.
I don't believe in my own dreams much less other people's, and I doubt you do either. But I
certainly believe in tangible things that demonstrate value. You probably do too.
A good idea is usually at the heart of all great things that develop, but by nature an idea alone
is something you've done nothing to develop. It's like a dancing monkey on the back of a goat:
the image sounds great but what does it actually do for anyone? This article, in which the
author is apparently a nominee for "Business Coach of the Year" (charlatan alert!) actually
does a reasonably good job of succinctly explaining the point. Hey, maybe she can be your
advisor!
https://www.linkedin.com/today/post/article/20140827143449-3125418-monkeys-goats-and-sloths-why-your-idea-is-unfundable?trk=tod-home-art-list-large_0
1/6
8/27/2014
Most reasonable people won't invest time or money in something where there has been no
skin put in the game, and an idea doesn't have skin. In the early days when I was trying to
start SnapCar I quickly realized one thing: People simply didn't care about my idea, except
maybe my mom. It may be the same for you, only yours wishes you would just get a job and
find a nice girl (or boy). She only wants you to be happy, honey.
While there are stories out there about entrepreneurs raising $25m on an idea alone, they're
actually about as rare as this thing (by the way, you must be really slow-moving if you have
moss literally growing on your body). So if you hear about Clinkle raising $25m and think that
can happen to you, think again. Frankly, I'm pretty uncertain that Clinkle's investors are
particularly happy about their choice to put in money. Perhaps a lesson learned.
If an idea is basically an unrealized figment of someone's imagination, a startup is an embryo
of a business. It's something real that incites anticipation, but honestly it's not particularly
interesting. It's like a baby shower, only worse: at least a baby shower celebrates something
that WILL be, and there is good food there. Most people bragging about their startup are doing
so based on something that not only has never made money but is often only weeks away
from death. Who does that?
That said, if you've created a startup then I tip my hat to you: It means you've put real skin in
the game: You've quit your job, gotten paid very little (or nothing) and devoted yourself full time
to developing a product/service. Not a prototype, but a real product/service. That takes a ton
of work, involves lots of risk and is really hard: opportunity cost often being the toughest thing
to swallow. I've lived where you're at and have enormous respect for those who get that far.
But if you have a "startup" today then you most likely just have an embryo. That's not a real
business, and few people are going to invest time or money in something until it's shown it
can be. Like this company, which is a real business and an "overnight success"...after slaving
away for ten years. The founders, who I know reasonably well and are simply smart, nice
guys who committed themselves (surely at high opportunity cost), would tell you that while it's
an overnight success, it was an awfully long night. If you become an overnight success with
your startup you should expect that too.
But let's not get ahead of ourselves.
A real business is something entirely different than an idea or a startup. With a real business
you've built something that has paying customers who make you money when they buy what
you're selling. A high bar, no? This doesn't necessarily mean the whole business itself is
profitable, but only that you're generally selling a product or service for a price meaningfully
higher than what it costs you to provide it.
You may say "Oh yeah? The companies I use most today don't charge me anything for their
products: Google, Facebook, Instagram, LinkedIn, Mozilla, SnapChat, Tinder, Twitter, and
Yelp. And you would be right about that, except that there are people and companies behind
your use of these products that are spending billions to touch you through them. While you
are an unprofitable customer, those who want to reach you are sending them mountains of
cash. That is a real business.
What is not a real business is this. Or this. Or this. Or this, which may be one of the biggest
tech swindles in years (charlatan alert!). As my partner in SnapCar says, you don't have a
real business if you sell something for less than it costs you to acquire it in the first place. See
a previous article that I wrote for a few additional thoughts on that point.
To be clear, losing money doesn't necessarily mean you don't have a real business, and
neither does losing money on products/services that you sell. But you eventually have to
make money to be a real business and you must start by demonstrating that at least in certain
places and cases you know how to sell your key thing profitably. When you can do that every
day you may just have a real business. And a real business is fundable.
In the hullabaloo these days about how great it is to have an idea or a startup a lot of people
have forgotten that. But it's in your best interest to remember it sooner or later because
despite what you may think, ideas and startups don't get funded. Dancing monkeys don't get
funded. Businesses do.
Let's celebrate if you have one (a business, not a dancing monkey). If not, you can always
drop by a baby shower. Everyone likes to party.
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50 comments
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Olivier Millet 3rd

Owner at Plainview Tech, Founder & Super
Connect
Cormac Cahill
Product Data Feeds | Image Optimisation @ Bright North
Follow button clicked. A much better and informative read than most of the fake feel good crap
on LinkedIn.
A guy I knew who became one of those "overnight successes" (after 15 years) told me to
always keep this in mind - "don't believe the hype". That, and this post just make a whole load
of sense.
Like (9)
Reply
2 hours ago
Stephen Zambo, ALEX OKOUNEV, Tiffany Crosby, +6
Lionel Shiwala
Sales Support Sr. Analyst
Great article, and I love David sense of humour.
Like (3)
Reply
2 hours ago
Christian Meneses , David A., and Nathan Freeman
Amelia Reinhardt
Head of marketing at Charterhouse Uk. Helping business owners fund their enterprise,
especially by using their pension
We ask all our dreamers to sell their product or service to people they don't know. Once you
have discovered that people will buy what you offer then you may have a seed of a business
and next you need to create traction and a team to take you forwards. Only when you have a
team selling your service/ product for a profitdo you have a real business.
To have achieved this we would have expected you to gain funding from family and friends and
of course borrowed from your own pension
Only then should you be trusted with other peoples money!
Like (2)
Reply
2 hours ago
Thomas O'Leary and David A.
Andrew J Falso
Business Development
"Genius is one percent inspiration and ninety-nine percent perspiration." ~Thomas Edison
Like (2)
Reply
1 hour ago
Paul C. Haley and Benjamin Kowarsch
Thomas O'Leary
Strategic Project Manager: Anti-Phishing Solutions at Return Path
I agree with Amelia Reinhardt, that you as an entrepreneur need to have invested in your own
business model with time, energy, and money before you can expect others to do so. The
advice in the above article is great for when you are deciding if your dream is worth investing
your life into before asking others to do the same.
Like (2)
Reply
1 hour ago
Tiffany Crosby and David A.
3/6
8/27/2014
Dan Bish
Experienced IS Executive, Development Manager & PHP Architect
I love the way you think: straight, to the point, and honest. I am frequently approached by
people to get into business ventures with them and more often than not, the deal is not sweet
enough for me because it is just an idea and a promise of riches, "because they know their
industry better than anyone!" If they knew that much, they would have created the industry, not
just be starting as part of it.
Like (2)
Reply
59 minutes ago
Tiffany Crosby and David A.
Brian Church
Sr. Product Support Manager
A long time ago my uncle told me "Don't tell me what you are going to do, tell what you did".
Also - you are not old, you are experienced.
Like (2)
Reply
32 minutes ago
Anurag Verma and Kate Dickman
Benjamin Alexander De Mers

Founder CEO at I Am Marketing and Media Services
Well you must at least feel better now! Kudos on your expulsion of angst. Inspiration is never
worthless. Inspiring team work is how Zuck worked FB into its current position along with
exceptional vision and motivation. While for most this is a much needed slap in the face, I
would never discount the power of an idea. Best of luck to all and keep the dream alive!
Like (1)
Reply
1 hour ago
Xhevaire Dulja
John Barber
President at Barber Media Inc
Great ! cuts it right down to what is real. Thanks JB
Like (1)
Reply
57 minutes ago
David A.
Stephen van Diggele

International Project Management & Risk Specialist
I wish I could go through life like that monkey - riding on everyone else's backs without having
to do a thing myself!
Like (1)
Reply
56 minutes ago
David A.
Bryan Patton
Graduate Associate in Entrepreneurship Center at MSU
A great article! Should be required reading in our office!
Like (1)
Reply
55 minutes ago
David A.
Dorina M. Morcan
BOSCH
why so cynical, dahlin' ?
Like (1)
Reply
1 hour ago
Thomas O'Leary
Xhevaire Dulja
Lecturer at Agricultural University of Tirana
Totally agree. The best startups start with a great idea, which over time is supported with
analyses, specific objectives, a practical program and activities and resources including time
scheduling!
Like (1)
Reply
54 minutes ago
Thomas O'Leary
4/6
8/27/2014
lewis pusey
Project Manager, Accounting Manager, Data Quality Analyst, GIS Specialist, & Artist
It's cruel to be kind ; )
PS: I have some great embryo's to barter, bro.
Like (1)
Reply
53 minutes ago
Tiffany Crosby
Yuri Brigadir
Designer at Fluid Software
Some startups don't even earn money. They just release a product, it gets a lot of buzz in the
media, and then the whole team gets bought out by some other company. Even in more
extreme examples, investors pour money into teams, not even products. So sometimes it's not
about creating a viable idea. You can also create a team that can deliver value
Like (1)
Reply(1)
52 minutes ago
Elvis Valla
1 Reply
Elvis Valla
Chief Technology Officer at Allen Holdings & Investments Ltd.-Innovation
redefined through Process development
Very good observation, being in the investment biz my team focuses on the people
not the the idea & we always end up funding the team not the founder. By focusing
on what the funding is for (paying the talent to develop the product/business not for
the founder to buy yachts & luxury cars) one is more likely to successfully fund the
startup.
Like
28 minutes ago
Michael Hammer
Security and Anti-Abuse
Interesting article - and pretty much dead on. As an investor, I look at all sorts of startups and
invest in very few. There are two hurdles: 1) The business has to make sense as a business
proposition. 2) It has to make sense for the investor. That is, the returns have to justify the risk.
At the moment I see lots of what I consider crazy ideas getting funded at insane valuations.
Like (1)
Reply
56 minutes ago
Elvis Valla
Jeff Holman
Patent Attorney & IP Strategy at Wilson Ham & Holman
Great article. I deal with a lot of people who love to dream and invent things. And they want to
start a business, but they don't know where to start. As a patent attorney, I have to help people
understand that the patent process can be a very beneficial part of their business strategy, but
only if they have an underlying business model to generate revenue. Otherwise, without the
revenue, the patent process is more likely a distraction than an asset, preventing them from
tackling the real issue of generating revenue.
Like (1)
Reply
2 hours ago
Kelsey McKernie
S A Vance
Owner at Green Capital
Great article! There are so many great ideas out there, and this is a refreshing take on just what
it means to be a business start-up as opposed to a business idea. Yes, I agree...there IS a
difference.
It would be wonderful to have a place where EVERYONE can exchange ideas about their
projects and collaborate with like minded professionals. Oh, wait...we have that! :-) Thank you
LinkedIn for allowing us to do exactly that! No ideas should be discounted; every idea should be
explored. Who knows where the next great "must have" innovation will come from.
Like (1)
Reply
54 minutes ago
Kelsey McKernie
5/6
8/27/2014
Karolina Reiss
Social Enterprise Founder - Author - Brand Strategist
David, stop trying to make sense. Those tech hipsters won't listen anyways. Their bubble of hubris is
impenetrable. I agree with you 100%. Btw, thanks for the laughs. The problem that I have with "start-ups" is
that collectively they extract (and waste) significant amounts from investors - funds that could have been
otherwise used to fund (un-cool, un-hip, un-sexy) real companies that solve real problems and create real
value for various stakeholders in the long term.
Like (1)
Reply
36 minutes ago
Ed Palmeira
Sol Bobst, PhD DABT

Leader, Mentor, Actively Seeking Management Opportunities
Nice summary. In my entrepreneurial coursework, we studied the McKnight Scorecard from
Will It Fly. First stage of any idea is if it has business sense, then a believable business model,
then a business plan. Due Diligence isn't sexy, but it does help.
http://www.prenhall.com/willitfly/
Like (1)
Reply
20 minutes ago
David A.
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Olivier Millet 3rd

Stephen Zambo, ALEX OKOUNEV, Tiffany Crosby, +6

Christian Meneses , David A., and Nathan Freeman

Thomas O'Leary and David A.

Paul C. Haley and Benjamin Kowarsch

Tiffany Crosby and David A.

Tiffany Crosby and David A.

Anurag Verma and Kate Dickman

Benjamin Alexander De Mers

Stephen van Diggele

Sol Bobst, PhD DABT

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