I took a wonderful class on entrepreneurship in grad school.
We learned to build business plans, conducted live consulting projects with area startups, and developed the talent of summarizing information in as brief a memo as possible.
Working with area businesses brought in a wealth of knowledge and sound advice.
It also brought in its fair share of crappy ideas.
It’s the X of Y
Most of the investors we met sold us the same story. They’d met with budding entrepreneurs who failed to adequately summarize their business model, plan or competitive advanced and, consequently, failed to raise any seed money.
One phrase an investor was particularly fond of used another product already in the market as an analog for a new product offering.
“It’s the Facebook of your private intranet.”
“It’s the Apple of car audio systems.”
“It’s the Amazon.com of mail-order distribution.”
His assertion was that, by using an existing product or service as an analog, you could skip the majority of your sales pitch and get right down to business. Investors already know who Facebook, Apple, and Amazon were and what they do. Explaining your business in the context of their business, but with a different market focus, frees you from needing to educate the investor.
It was a principle embraced by the majority of my peers. It led to an amazing brevity in sales pitches, 10-word elevator speeches, and business proposals you could fit on a cocktail napkin.
It was also complete crap.
Entrepreneurship is Innovation
If you can only describe your business in terms of what another business is already doing, then you are absolutely and unequivocally failing to innovate in the market.
Using an existing in-market analog to begin a conversation helps to quickly educate listeners as to what you do. Except your innovation – your entire business plan – is built on taking someone else’s idea and applying it to a different market.
You didn’t create or envision anything. How can investors (or customers) trust the vision of an entrepreneur who is merely stealing someone else’s visionary ideas?
Using an existing market offering also limits the scope of where you can go. If you start with “we’re the X of Y,” then you’re limited by the scope of what X has accomplished. Once you try to reach beyond those limitations, your pitch becomes “we’re like X, only different” and you lose the attention of anyone who was hooked by the first statement.
Do the Hard Work
Don’t be Facebook unless you’re already Facebook. Be who and what you’re going to be, and invest the time to learn how to describe that succinctly to interested parties.
Before Facebook, there was no successful social networking analog anyone could have used to describe it.
Before Amazon.com, there was no comparable service offering to explain a massive direct-to-consumer online distributor.
So before you start telling people you’re the next Steve Jobs or your website is the next Facebook or your app is the next Angry Birds, take some time to think. How exactly are you innovating? How can you describe that innovation in a way that doesn’t limit you to the innovations and visions of those who came before?