3. Solve your personal pain points and problems.
After building a client their first multi-user blogging platform, Karp realized that blogging was too hard, according to PBS.org writer Dorian Benkoil. He then started building a “tumble blogging” product and purchased the URL Tumblr.com. Later, according to Benkoil, Karp “said every product he created is something he wanted himself.”
This is a lesson that many successful entrepreneurs learn first-hand. The source of a great business idea starts with identifying solutions to everyday problems. However, it is essential to focus on problems that affect a large number of people in a significant way, and then develop innovative solutions.
Janet Attard, founder of Business Know-How suggests, “If you’re longing to start a business, and want it to have the best chance of success, don’t start by asking yourself ‘What business can I start?’ or ‘What business will make a lot of money?’ Start by asking yourself ‘What problem can I solve that a lot of people have?’”
4. Don’t take VC funding before you’re ready.
In late 2006, Karp was approached by Spark Capital and Fred Wilson of Union Square Ventures to strike a deal. “‘Those guys wanted to do a typical VC deal, and David was a little uncomfortable with that in terms of giving up control of Tumblr,’ Seibert recalls,” in a recent PBS.org post. Instead Karp decided to take a smaller amount of capital from angel investors – to the tune of a few hundred thousand dollars.
Taking on venture capital is not the right move for every company. And when you are ready it is all about timing. “Currently, there’s a lot of competitive pressure for VCs to move down-market into smaller tickets. This leaves a lot of founders confused and considering VC deals or pitches when they absolutely shouldn’t,” according to Sascha Kellert , co-founder and CEO of printing app ezeep.
“It’s understandable, as most VCs have big brand names that come to mind when you’re looking for cash and there aren’t enough ‘super angels’ … to pick up the slack. [But] the first time you reach out to a VC that puts you on the map – you’re in the system and they’ve started tracking you. Delay that for as long as possible…,” he says.
Connect with Erica Nicole on Twitter.
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