'One thing I learned as an investor is that good ideas are overrated'
Big ideas are for dreamers, says an investor turned entrepreneur – instead, find a small, urgent problem that you can solve
Aspiring entrepreneurs often think they need an original idea before they can set up on their own. They're wrong, and I'm betting my career on it.
I used to work for a venture capital fund, where my job was to find the best startups around and to help them become big winners.Now I've launched one myself. My idea is hardly new; the Yellow Pages lists 153 companies in my postcode that have pipped me to it. But one thing I learned as an investor is that good ideas are overrated. Mine – Housekeep, an online service that provides trained, vetted and insured cleaners – at least has the virtue of simplicity: we're going to get really good at cleaning people's homes.
From an investor's point of view, a startup based solely on a Eureka moment is a concern. Successful startups regularly change and refine their proposition in the early days. Twitter started out in podcasts, Nintendo in playing cards, and Nokia in rubber. Adaptability trumps obsession with a particular idea.
The trick is to solve an important problem for your customers, even if there aren't many of them to start with. In the beginning, Facebook was only open to Harvard students – there were just a few thousand users but they loved the platform and were willing to put up with the beta version. People with big ideas often make the mistake of trying to offer everything to everyone, which means they run the risk of not delivering anything to anyone. So it's important to discover early adopters who will give you the insights you need to get off the ground. Mark Zuckerberg started small; now one in six people on the planet are users.
Venture capitalists back teams, not ideas. As investors, my colleagues and I were looking for teams who understood their market better than anyone else. The teams we liked best were always ahead of us – they already had answers to questions that kept us awake at night and were tackling problems of which we hadn't even thought. These teams would surprise us with insights about their business and would never stand still. Between meetings their progress would be substantial.
But these teams didn't generate this insight by accident. They immersed themselves in their industry and were committed to continually testing hypotheses, learning what works, and then reshaping their business to match. Confronted with a problem to solve, these entrepreneurs get their hands dirty. Airbnb was on the ropes when the founders wondered whether poor photography of the apartments was holding back bookings. They might never have found out if they hadn't decided to hop on a plane, shoot some beautiful imagery, and watch bookings double as a result.
My time in venture capital emphasised the importance of being an expert in your chosen industry. With Housekeep, this meant getting my hands dirty and donning the marigolds. On one of our first jobs, I was summoned to the rescue of an alarmed, mop-wielding client who was being terrorised by a mouse. A City career doesn't provide much preparation for chasing mice, but at least we now know it needs to be included in our training manual.
Traumatic though some of these experiences have been, spending that time as a cleaner built credibility with investors. They put us through our paces to see if we could really clean better and faster than they can (tidying the cutlery drawer always makes a customer smile). More importantly this approach is guiding how we build the business. We are continually trying to figure out how we can improve our customer experience and how we can make the job more efficient for our housekeepers.
So if you want to start your own business my advice is this: find a small group of people who have an urgent problem that you can solve. Big ideas are for those who dream; the future belongs to those who try, test and learn.