Which Deep-End to Jump Into

In early 2007, I was beginning to get ready to depart the warm blanket of my former employer to dive into freezing start-up waters.  There was still a huge amount of Web 2.0 startup-excitement here in California, and I was a amazed at the number of “companies” trying to be successful on what amounted to a small feature vs. a sustainable business.  I saw an endless stream of them come through Adobe at the time hoping that our conversations would end up in acquisition.  Instead, it ended up being a great education for me and highlighting what became a pretty common blueprint for these web 2.0 companies:

• Identify a feature, and build a service around it
• Call yourself a company, and then raise a bunch of money to drive users and usage
• Hope to be acquired before anyone realized you didn’t have a sustainable business model

I am almost as guilty as the people on the list above, since I tried to develop a business using that same model.  Fortunately, along the way, I had the opportunity to pitch the idea (a CRM-related concept) to the godfather of CRM himself, Tom Siebel.  About one minute into my pitch, my hopes and dreams for this “next-big-thing” in CRM were destroyed when the conversation went something like this:

“Michael, I get it.  It’s a good idea, and there’s a need for it.  However, if I saw that in the market, I’d put a few engineers on it and give it away for free as part of my CRM suite.”

The painful but correct translation:  “It’s a feature, not a business.”  That pretty much ended the discussion on that topic, but since I had his attention for the next couple of minutes, we ended up talking about the various kinds of businesses one could go after when starting something new, and why I really wanted to jump into the startup experience.  I was able to quickly conclude that I wasn’t interested in a feature-business (my internal monologue after that first minute of pitch was clear), nor a business predicated on being acquired, so that left me with one clear idea:  build a sustainable business based on stand-alone profitability.

In a future post, I’ll talk about my experience in trying to identify what that “sustainable business” was going to be, and how I arrived with my co-founder at the idea for ConnectSolutions.