I’m currently evaluating a 2 (maybe 3) exciting opportunities to start a new business venture in Australia.
I decided that I would objectively evaluate these opportunities, as if I were a venture capital investor. I.e. don’t just go on gut, but spend a few weeks doing some decent “Due Diligence” on each of the ideas.
Of course, there’s a risk of over analyzing, especially once you have a bit of experience starting up businesses and you’ve faced plenty of customers saying “No!” to you and your amazing products!
So it was refreshing to read Fred Wilson’s post on A VC about how he missed a great opportunity because of Too Much Due Diligence!
In particular, he called up some of the major publishers to ask if they would use FeedBurner for their RSS feeds. They all said “No!”, as it would mean a 3rd party would have access to their analytics. Because of this customer feedback, Fred passed on investing in that round. Then this happened:
About six months later I ran into Dick at an industry conference. We decided to grab lunch together and during lunch he said to me “you know those dozen publishers you called?” I said “yes, what about them?” He said “every single one of them is on Feedburner now.”Fred was still able to invest in FeedBurner, but at a 50% premium. In 2007, FeedBurner was acquired by Google for $100 million!
So what did I learn from this lesson? First, trust your gut. I was using Feedburner and knew it was a very useful service. I felt that others would see that too. They did, but it took some time. Second, I learned that a service can get traction with the little guys and in time, the big guys will come along.