Mike Brenner was kind enough to ask me to be a judge at Startup Weekend this weekend. I passed, but I never really told him why. I was talking to an entrepreneur this past week about his ideas and I better articulated my thinking. I thought I would document it here because I think my conclusions have interesting implications for some of Startup Weekend’s participants:
Judging start-ups at an early stage is a bullshit business. Having said that, lots of people do it. But they invariably take a portfolio approach and invest only in areas they feel like they can understand. Because usually they are guess wrong.
Everybody knows it. The best one can really hope for is to understand if the business might be interesting to you.
Josh Kopelman has probably made as many early stage investments as anyone in the country over the last couple of years and he passed on Twitter.
I probably talk to an entrepreneur or two every week, so I hear a fair amount of ideas. Here is the trick: most ideas, your average idea, it is hard for me to tell if it is a good or bad idea. All I can really tell is if it is an idea that I could, if time were invested, come to a conclusion regarding whether it is good or bad. The answer to most of these is no: I can probably never tell if your consumer Internet app is a good idea. I can usually never tell if your enterprise software app is a good idea. In fact, the closest I can probably come is that most online advertising start-ups, given time, I could probably determine if they are good or bad ideas.
Unless they are in the affiliate space. Then I wish I would be able to figure it out, but I probably won’t be able to.
The good news for founders is that most people think most ideas are terrible. That means nothing.
If Ev had taken JoshKopelman’s rejection personally, no more Twitter.
Josh passed on Deconstruct Media, which I subsequently grew and sold!
Josh is a better judge than anyone else that is going to look at your start-up and he is wrong all the time.
The only judgements that matter are the yes’s that lead to people writing checks – and the best kind of checks are customers.
The last place team after 54 hours could easily be the most financially lucrative. Don’t trust outside opinions. Unless they are right!