Yes, it is challenging to think that someone would spend their time and money in a firm that does not genuinely meet the needs of its customers, yet it occurs all the time. Every time. What exactly is a "customer requirement"? Customers must resolve issues that are wasting their time and money. We get many company pitch decks, and the first question I ask is, "What problem are they solving?" I would estimate that about half of the decks never mention the real consumer problem or how their product addresses it better than alternative options.

The most typical error made by an "entrepreneur" is, to begin with, an idea. They fall in love with their concept since it is their own, unique, or one of the few ideas they have had. Usually, it is a mix of all three. People I have worked with have heard me say this a lot:

"Ideas are inexpensive."

"Most ideas are bad."

Many entrepreneurs place a disproportionate amount of emphasis on "the concept." Wrong. 

One in every ten good ideas has the potential to become a business. One out of every ten ideas is an excellent one. Here is how much an idea is worth:

1% of financed firms become "unicorns" (weary and despise the term!)

My calculation reveals that an idea is worth roughly $5k-10k if the entrepreneur owns about 5% of a unicorn. Many beautiful things must occur for that $5,000 to become $50,000,000.

A straightforward way to circumvent this stumbling block is, to begin with, the problem. When I need to tackle an issue (such as inventing a new product), I always begin with "the problem" we are attempting to address. Innovation is providing a solution (a product) to a significant problem (customer need).

There is no "truth" in life, or at least not in the market. Every notion is a hypothesis, and you must refute it as fast and inexpensively as possible. Why waste years and millions of dollars disproving your idea when you could have done it in an hour? An innovative entrepreneur is always impartial and prepared to confront their own beliefs.

When individuals approach me as a CEO or VC with ideas, I consider myself a "skeptic." I am dubious since "most ideas stink" (a hypothesis that has stood the test of time). People are surprised by how vigorously I tackle an idea. How will you succeed in the market if your concept cannot withstand a vocal challenge? How will you lead your firm to market triumph if you cannot defend your idea? The market is a noisy, busy environment filled with hyperactive individuals. Do not be overly sensitive since the market is cruel and will devour you.

As venture capitalists, we see business proposals from almost every industry. We cannot reasonably be experts in every field. Customers, we have discovered, are the best litmus test for whether an idea genuinely addresses a problem. Customers are experts in their fields, and if they are prepared to pay you for your goods, it is a solid sign that you have avoided the #1 problem that kills businesses. Your product meets a market requirement.

Was this all painfully obvious? Absolutely.  So here is another catchphrase for you:

We frequently ignore the obvious.

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