You need three things to start a company

I was lucky enough to be in prime bar drinking age when the iPhone came out. When you are drinking at a bar in DC in your 20s, the first question anyone asks is “what do you do?”. Sometimes I would say “I make apps”. Looking back now, that makes me sound super lame.

This was before people realized that they don’t actually want an app for everything so everyone was trying to think of an app for anything. So oftentimes the reaction was “I HAVE THE BEST IDEA”.

Me: “Great. What is it?”

Them: “I AM GOING TO CURE CANCER WITH THE IPHONE”.

Or something along those lines.

It was after seeing many apps succeed that I never would have thought would work, many fail that seemed like a slam dunk, and having a ton of these conversations that I realized you need three things to start a business.

Anyone can start a business, but generally I think you need three things to have a reasonable chance at success.

The idea

This is the thing that everyone has and it is the only thing most people talk about because they have no idea they need the other two. I guess by definition it is still required, but it is definitely the easiest one to get of the three.

The Expertise

You need to be knowledgeable enough in a field to know that it will work. Said in a much more offensive and academic way: you need to make sure you aren’t firmly so high on the Dunning Kruger curve that you can’t even see the bottom.

This is also why I would look at an app think, “that is so stupid. Why would anyone want an app that makes you look like a dog when you stick out your tongue?” Well, I did not know enough about people to know that millions of people wanted that. I was not an expert in that domain so I never could have made it succeed.

The Data

If you have the idea and you are an expert in the domain, you are way ahead of most people. You can’t even see the non-expert idea people from where you are standing. But, data puts you even farther ahead. When I met Nick, he had the idea for a tech enabled freight forwarder, he was running two successful logistics companies, and he had tens of thousands of rows of documntedverrors that were made by logistics companies over the course of a decade that was carefully curated. To put it simply, it was the greatest jumping off point to start a company, ever,

We immediately had our road map. There was no struggling for product market fit. We sorted a spreadsheet by count and started at the top. Of course, then we had to execute, but that is a different post.

So my full bar conversations usually went something like:

Them: “what do you do?”

Me: “I make apps”

Them: “I HAVE THE BEST IDEA”

Me: “great. What is it?”

Them: “I am going to cure cancer with the iPhone”

Me: “are you an oncologist?”

Them: “no”

Me: “do you have any data to suggest that is possible?”

Them: “no”

Me: “good luck”

And that litmus test has served me very well to this very day.