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I think a lot of startups put too much weight on what an investor thinks of their idea. Airbnb is a prime example of carrying on in the face of rejection, even

I think a lot of startups put too much weight on what an investor thinks of their idea. Airbnb is a prime example of carrying on in the face of rejection, even if people are saying "it's a stupid idea". I know a lot of founders who, after being told by many of the Valley's finest angels that their idea is no good, would just give up. It just goes to show that you can create a $1 billion company, even if no one really gets it in the beginning, and in my eyes at least, they are actually justifying it (making a lot of money in a lot of different places).

IsaacL 15y ago
Yes, it's quite inspiring to see how much it succeeded despite the overwhelming negative feedback. Just goes to show that judging the viability of ideas is hard, no matter how many experts there always seems to be in the TechCrunch/HN peanut gallery. I've really tried to train myself to answer "do you think this is a good idea?" with "I haven't a clue."
- thaumaturgy 15y ago
  I don't think anyone can predict what's going to be big, and what isn't, and that's why bad VC/investor/coach advice is so pernicious. Let's look at the progression: Google shows up, makes a big splash among the tech elite but attracts little attention in the popular market until their obscene IPO, and investors collectively say, "Damn, well, I don't want to miss out on the next Google!" Then there was Facebook, and again, investors collectively say, "Damn, well, I don't want to miss out on the next Facebook!" Now there's Airbnb, and investors are saying what now? (I'm skipping over a ton of other big to almost-big examples in this progression; hopefully someone more knowledgeable will fill in some gaps, but I don't think it will diminish the point.) The thing is, Facebook wasn't the next Google and Airbnb wasn't the next Facebook. None of the breakout hits have been entirely original ideas, nor would an early-stage pitch have been compelling to anyone with the ability to be a significant early investor. There were zero signals that would have worked as a strong early indicator of future success. The more I observe this industry, the more it strikes me that any investor that's investing in the hopes of being part of The Next Big Thing is simply gambling. Just as in gambling, if you study the game and the rules carefully enough, you can tip the odds in your favor a bit, but there's still no such thing as a guaranteed win. When I hear people say, "We're looking for the next X," my eyes roll back into my head a bit.
  - hitechsites 15y ago
    Airbnb joins a long line of startups that became big in spite of initial rejection. In fact, it almost seems that a necessary - though not sufficient condition that your idea maybe the next big thing, is that it is initially rejected by everyone you pitch it to!
photon_off 15y ago
I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a losing hand. There will always be false negatives, ideas that are rejected by angels but which later become enormously successful. However, if the industry's finest angels are all passing, and you can literally find nobody to invest, it is probably a wise decision to give up. While angels are far from being 100% accurate in choosing what to invest in, overall they have to have some sense of what's a good idea in order to sustain themselves. If they're all passing, better off hitting the drawing board.
- pg 15y ago
  I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.
  - spicyj 15y ago
    Why are you more likely to be able to accurately judge a startup than other potential investors?
    - palish 15y ago
      Most investors want to play it safe. YC wants founders to succeed. Sure, there's money in it for them, but that's not why they're doing it.
    - pg 15y ago
      I have so much more data. I've been watching their trajectory for 4 months, while other investors (especially those that chose not to invest) may only have seen them for a few minutes at Demo Day.
      - robg 15y ago
        But without something as quirky as the cereal story, you would have rejected them?
adambyrtek 15y ago
Taking it the other way around, most startups put too much weight on their valuation, which is a quantification of what investors think about their company. Of course assuming their primary goal is to really make a difference, instead of just selling out as soon as possible.
hitechsites 15y ago
Totally agree. Ultimately the only test for your startup idea is market acceptance and resonance - and experience repeatedly shows that no amount of prior experience and knowledge helps in predicting correctly what the next big thing will be. After the fact, it is easy to look back and rationalize and attribute certain factors for all the big successes - but no matter how many times this happens, we always miss the next big thing. Market resonance is very hard to predict - since there are so many parameters for success.
- hitechsites 15y ago
  The success of Airbnb and many others like it raises the interesting question - How many other billion dollar ideas, never got off the ground because investors thought they were awful ideas? We may never know. But it should give every entrepreneur something to think about and not be discouraged by rejections. Your idea does not need to be accepted by investors - only by the market! So if you really believe in your idea launch it and see if the market accepts it. If not tweak the parameters till it does. Build a minimum viable product and try to fail cheaply. If it works, investors will come running to you. A good way to look at it is that your startup is like an experiment and your product/service is the hypothesis you are testing. If it fails, your hypotheis is wrong - so change it and try again.

IsaacL 15y ago

Yes, it's quite inspiring to see how much it succeeded despite the overwhelming negative feedback. Just goes to show that judging the viability of ideas is hard, no matter how many experts there always seems to be in the TechCrunch/HN peanut gallery. I've really tried to train myself to answer "do you think this is a good idea?" with "I haven't a clue."

thaumaturgy 15y ago
I don't think anyone can predict what's going to be big, and what isn't, and that's why bad VC/investor/coach advice is so pernicious. Let's look at the progression: Google shows up, makes a big splash among the tech elite but attracts little attention in the popular market until their obscene IPO, and investors collectively say, "Damn, well, I don't want to miss out on the next Google!" Then there was Facebook, and again, investors collectively say, "Damn, well, I don't want to miss out on the next Facebook!" Now there's Airbnb, and investors are saying what now? (I'm skipping over a ton of other big to almost-big examples in this progression; hopefully someone more knowledgeable will fill in some gaps, but I don't think it will diminish the point.) The thing is, Facebook wasn't the next Google and Airbnb wasn't the next Facebook. None of the breakout hits have been entirely original ideas, nor would an early-stage pitch have been compelling to anyone with the ability to be a significant early investor. There were zero signals that would have worked as a strong early indicator of future success. The more I observe this industry, the more it strikes me that any investor that's investing in the hopes of being part of The Next Big Thing is simply gambling. Just as in gambling, if you study the game and the rules carefully enough, you can tip the odds in your favor a bit, but there's still no such thing as a guaranteed win. When I hear people say, "We're looking for the next X," my eyes roll back into my head a bit.
- hitechsites 15y ago
  Airbnb joins a long line of startups that became big in spite of initial rejection. In fact, it almost seems that a necessary - though not sufficient condition that your idea maybe the next big thing, is that it is initially rejected by everyone you pitch it to!

photon_off 15y ago

I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a losing hand. There will always be false negatives, ideas that are rejected by angels but which later become enormously successful. However, if the industry's finest angels are all passing, and you can literally find nobody to invest, it is probably a wise decision to give up. While angels are far from being 100% accurate in choosing what to invest in, overall they have to have some sense of what's a good idea in order to sustain themselves. If they're all passing, better off hitting the drawing board.

pg 15y ago
I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.
- spicyj 15y ago
  Why are you more likely to be able to accurately judge a startup than other potential investors?
  - palish 15y ago
    Most investors want to play it safe. YC wants founders to succeed. Sure, there's money in it for them, but that's not why they're doing it.
  - pg 15y ago
    I have so much more data. I've been watching their trajectory for 4 months, while other investors (especially those that chose not to invest) may only have seen them for a few minutes at Demo Day.
    - robg 15y ago
      But without something as quirky as the cereal story, you would have rejected them?

adambyrtek 15y ago

Taking it the other way around, most startups put too much weight on their valuation, which is a quantification of what investors think about their company. Of course assuming their primary goal is to really make a difference, instead of just selling out as soon as possible.

hitechsites 15y ago

Totally agree. Ultimately the only test for your startup idea is market acceptance and resonance - and experience repeatedly shows that no amount of prior experience and knowledge helps in predicting correctly what the next big thing will be. After the fact, it is easy to look back and rationalize and attribute certain factors for all the big successes - but no matter how many times this happens, we always miss the next big thing. Market resonance is very hard to predict - since there are so many parameters for success.

hitechsites 15y ago
The success of Airbnb and many others like it raises the interesting question - How many other billion dollar ideas, never got off the ground because investors thought they were awful ideas? We may never know. But it should give every entrepreneur something to think about and not be discouraged by rejections. Your idea does not need to be accepted by investors - only by the market! So if you really believe in your idea launch it and see if the market accepts it. If not tweak the parameters till it does. Build a minimum viable product and try to fail cheaply. If it works, investors will come running to you. A good way to look at it is that your startup is like an experiment and your product/service is the hypothesis you are testing. If it fails, your hypotheis is wrong - so change it and try again.