Interview with Morgan Linton about why you should test your assumptions
It’s easy to fall in love with our own ideas. Lots of entrepreneurs start companies because they have an idea they’re sure is going to be a huge hit. Very few entrepreneurs find success with the idea they started with. Along the way, we learn things that lead us to new ideas, and if we get it right, we find a viable idea before we run out of time and money.
Following Lean Startup principles, it’s important to carefully articulate what you believe to be true and validate that with real people. In this interview, Morgan Linton shares how he learned this important lesson.
Lane: Hi Morgan, thanks for taking time to talk with the readers of the LUXr blog. Can you say a few words about your background?
Morgan: My history with the Internet goes back to 1995 when I started one of the first web development firms to build sites for high-end real estate companies like Coldwell Banker. I started doing SEO back when all you had to do was repeat a word a few more times than your competitor and you could outrank them on Yahoo (Google didn’t exist back then!). In 2007 I started a Domain Investment company in Boston with the idea of using exact-match domain names to build real brand rather than thin parking pages that we often stumble upon while surfing the web. In four year’s we’ve built over 180 brands across just about every niche known to man. We currently operate one of the top kayaking sites on the Internet as well as major blogs in a number of niches like Travel, Wine, and of course – Domain Investing. In 2011 I became very interested in the Lean Startup Movement and attended Eric Ries’s Startup Lessons Learned conference in San Francisco and then had the chance to compete in Lean Startup Machine in New York City a few months later.
Lane: It sounds like you were already a successful and seasoned entrepreneur when you attended Lean Startup Machine. What was the original idea behind CreateGreat.org?
Morgan: At Lean Startup Machine our original idea was to create a website with video pitches given by entrepreneurs that were trying to raise money for their businesses. We wanted to create a contest, similar to American Idol where regular people could vote on their favorite pitches and advance startups to the next round in the competition. We thought this would be well-received by Venture Capitalists who we felt had a problem going through all the various pitches and business ideas presented to them.
Lane: I can see how that made sense to you. You knew that entrepreneurs want to get in front of VCs, why not make this process easier for them. How did you go about figuring out this worked for VCs too?
We decided to test our assumptions because they were just that, assumptions. While we thought that people would want to vote on pitches, and we thought that Venture Capitalists would want a service like this we didn’t know for sure. We knew that to validate our assumptions we needed to talk to venture capitalists and reach-out to regular people to see if they would vote on the videos on our site.
Lane: How did you get started with that? How did you find people to talk to? What did they say?
Since we were at Lean Startup Machine we had direct access to venture capitalists. I can still remember our first discussion with a VC Saturday morning after staying-up until 4AM on Friday building the site. We pitched the idea expecting them to be overjoyed with what we had come-up with. Instead we were shocked to find that not only were they not “wowed” by our idea, VC’s actually didn’t like it at all. We interviewed three VC’s the first day and all three said the same thing, “we don’t want random people deciding which companies we should fund and which we shouldn’t – we’re paid to determine that ourselves!”
Lane: What were the conversations like, did you have a formal or informal process?
The process was fairly informal, we would bring a VC into the room we were working in, present the idea, and then show them the site. We found VC’s were quick to share their opinions, and much to our dismay, shoot down our “great” idea.
We also hit the streets of New York City and gave-out hundreds of flyers introducing our site (CreateGreat.org) and giving consumers the information they needed to vote.
Lane: What were the specific objections you heard from the people you talked to?
The VC’s clearly told us that this was of no value to them. They didn’t have trouble sorting through their deal flow and even more important than that, they didn’t want to have their investments picked by random people off the street.
After handing-out flyers and explaining this to people on the street, blasting it out on Twitter and Facebook we learned that people don’t really want to vote on pitches either. We thought that the most likely reason people didn’t vote is because it would require watching 10-20 minutes or more of video pitches. You’d really have to chisel-out a part of your day to watch these and most people just don’t have the time or interest to do this.
Lane: How did the team handle this feedback? How long did it take before you believed it?
When the first VC told us that our idea was terrible we thought, “what a jerk,” and quickly looked for the next VC to speak with. It’s interesting because even though we had the idea only 48 hours ago, we had grown attached to it. It was almost like someone was insulting our child and we were trying to explain to them what made it special. It was hard to take a step back and think, “maybe this great idea we came-up with (and even named “create great”) isn’t quite as great as we thought!
Lane: What finally got through to you? What was the “aha!” moment where you realized this might not be a viable idea after all?
After the third VC shot-down our idea we had our “aha!” moment. It was the brick wall that people talk about group’s hitting on Saturday during Lean Startup Machine. We were almost in a state of panic, all of us were trying to force the idea, make it work, yet we knew that what we had come-up with isn’t something that people would use. It took about an hour to come to the conclusion but we knew that with less than 24-hours to go if we didn’t have something people liked, we needed to pivot or change our idea completely.
Lane: What did you do next?
We decided to take our idea out back and shoot it (and have a pin to prove it!). It was a really hard decision but one that we felt was right – if our idea wasn’t going to take-off, why put time into it. It was clear that our idea didn’t solve any problems for VC’s and since that was the goal then we knew it was time to jump ship…or throw our idea off the ship depending on how you look at it!
Lane: What new idea came from this learning?
What we did learn from talking with VC’s is that they do have a major pain point, it’s just not related to deal-flow. The pain-point that VC’s expressed to us was finding talented developers to work for the NYC startups they were funding. As we asked more and more people about this problem we found-out that it wasn’t just a problem that VC’s were having, it was a major problem for New York City. Developers on the West Coast liked to stay on the West Coast and getting talented developers to move to NYC was a major challenge. We had a new problem to solve and one that we validated was a real problem…rather than a problem we thought was real.
Lane: So, what happened? What are you doing with the idea now?
This evolved into NYCHired.com which is a company that we are continuing to develop as a way to help startups in NYC find talented developers. We have made new assumptions and are doing customer development with recruiters and startups in New York City. By focusing on customer development first, before building anything, we are learning a ton about how to make our solution and useful as possible, and more importantly, make sure we’re focusing on the most important pain point. Our team meets weekly, divides up our tasks and then shares this with the group in the following meeting. We’re getting ready to launch a blog on our site where we’ll be sharing what we learn, what we’re building, and the state of the startup/tech job market in NYC.
Lane. That’s a great story! In conclusion, what advice would you have for a founder who has a great idea?
My biggest piece of advice to founders who have a great idea is to understand that their great idea is only an assumption at first. So many people say, “I have a great idea, something I’m sure people would use!” When you say things like “I’m sure people would use it,” you don’t really know. It is absolutely critical to take the time to validate (or invalidate) your assumptions to make sure your idea really is as good as you think it is. At the end of the day understanding your customer’s pain point(s) is critical and if you’re solving a problem that nobody really has, you might not see the traction you’d be expecting. There are lots of great ideas out there, just make sure you clearly define your customer and take the time to understand their needs. Your original idea might not work-out, but what you learn from your customers could help you develop an even better idea. Either way, if you know people want what you’re building, and you know your idea solves a real problem, then you know that you truly have a great idea!