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November 18, 2010

Turning Ideas into Companies

For years I have been giving those with good ideas (I won’t call them entrepreneurs because they haven’t necessarily decided to drop everything to pursue their dream) the following advice: share, listen, revise, share, listen, revise, rinse, repeat…

I have often found that wannabe entrepreneurs are frequently obsessed with issues of confidentiality, which renders discussions awkward and generally a waste of time. “What if somebody steals my idea?” is a common refrain. Well, let’s put it this way: somebody with this mind-set NEVER gets funded, so there should be no concern about anybody stealing anything. For first-time entrepreneurs (and I’d argue second-time entrepreneurs and beyond), crowd-sourcing the refinement of your idea and plan is what will help make it a reality.

An idea is simply that: an idea. It isn’t a company. It isn’t an execution plan. It isn’t staffed by great people to help drive design, development and monetization. So many inexperienced to-be entrepreneurs are over-focused on the idea without the essential understanding that EXECUTION is what makes ideas come to life. Execution is what drives happy customers and enables them to be monetized. And if you are inexperienced in how this transformation process works, you’d better get a group of smart people on your side to help you or your idea will amount to nothing, regardless of its potential.

This was my answer to the following question on Quora: I have a billion-dollar business idea; which investors should I speak with?

I think you need to approach the problem as any start-up entrepreneur would. Use your networks to get to a group of respected, high-integrity individuals in the angel and venture investing communities, get feedback and begin refining your plan. If you are hung up about confidentiality, forget it. You will get nowhere. The way to address confidentiality concerns is by speaking to good people. High quality angels and VCs don’t rip off others ideas. In my 6+ years of investing I’ve never seen it happen - once. Whether this happens outside my circles I have no idea, but I can say that professional investors respect confidentiality and really try hard add value, regardless of whether or not investment is in the cards. 
So to answer the question: it is not about firms, it is about people. Network to the high quality angels and VCs in your orbit (or the orbit of those in your network), plainly lay out the idea and the plan, collect feedback and begin to sketch out a more detailed execution framework. There is no more valuable process for turning an idea into a company than speaking to lots and lots of smart people about it. Every time you hear yourself talk about it and incorporate feedback from your previous conversations you get better and better, both at pitching and at really understanding what it will take to execute your plan. There is no substitute for this; no way of short-circuiting the time and effort it takes. This process is healthy, necessary and what will give your vision the best chance of being realized.
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