90% of Feedback is Crap

When you ask successful entrepreneurs about how to discover the next great startup idea, many suggest solving a problem you face on a regular basis — to build something that ‘scratches your own itch.’ Nat Turner, co-founder of Flatiron Health, has a different approach. He has built a unique methodology to systematically find the next great thing without being what he calls “a visionary founder.”

It’s already worked once before — with his first company, Invite Media, which sold for a reported $80 million to Google in 2010. Now he’s back at it again with his second venture-backed company, Flatiron Health. He’s recently raised his first round of $8 million, led by First Round (that’s us) and Google Ventures.

The Process

Turner’s entire process can be boiled down into a handful of key steps:

  1. Begin with a general space of interest and look for any seed of an idea
  2. Network like crazy in the industry and take introductions extremely seriously
  3. Create a deck and start pitching anyone smart and relevant you can find on the specific idea – and be sure to take meticulous notes and follow up
  4. Tweak the deck between every meeting and hack together a demo and start pitching (pre-sell software that doesn’t exist yet but will)
  5. Find a trusted group of advisers to discuss key learns from the field and get feedback
  6. Continue to iterate as hard and fast as possible on the feedback you’ve received

Finally, hope you’re smart and good enough to make it happen

Pitch and Iterate

The challenge with this approach of intensive pitching and listening is you get a tremendous amount of feedback. The market will tell you lots of things: some right, and some wrong. It’s your job as an entrepreneur to separate the signal from the noise.

“Being a good entrepreneur requires having a hundred conflicting data points in your head and being able to still make a decision.”

That’s the gift. Turner explains, “If you’re going to be successful as an entrepreneur, the biggest thing is being able to take in conflicting feedback from all these people, many of whom are jaded or have bad habits, and some who are spot on. You have to be able to sit there and distill that information into something valuable. The hard part isn’t coming up with ideas; it’s distilling all the information you have, 90% of which will be crap, and finally figuring out what is the good 10%, recognizing that the good 10% may change rapidly depending on the industry.” Turner and Weinberg look intently for the valuable 10%, build a demo, pitch it and then repeat the process of iteration as fast as possible. They tweak the demo and the slides even during the scant hours between meetings. Every time Turner takes a new meeting, he updates the deck with fresh feedback from the previous one. His current company, Flatiron Health, is on deck version number 30 (with working software now!).

The hard part isn’t coming up with ideas; it’s distilling all the information you have, 90% of which will be crap, and finally figuring out what is the good 10%, recognizing that the good 10% may change rapidly depending on the industry.

Circle of Trust

In the process of meeting with hundreds of people, Turner and Weinberg utilize a trusted group of advisors. They’re not the typical “figurehead” advisers whose names are thrown into a pitch deck to puff it up. Rather, these advisors serve as a sounding board throughout this idea refinement process.

Domain Expertise is Overvalued

Turner and Weinberg’s last two companies were both in spaces that they knew little about at the beginning of the process. All too often you hear from investors about the importance of “domain expertise,” but Turner doesn’t really buy it. He’s found that while a bit of experience – roughly under a couple of years – can be helpful, most of the time it’s actually a detriment. Turner says, “If you’ve been a doctor for example, one end of the spectrum, I think you’re pretty much going to be a questionable entrepreneur because you’re so used to the constraints of the industry, how the whole system works and the incentives, that you can’t see through the mess. You also spent 5+ years getting an overdose of a specific skillset, as opposed to the diverse skillset you need to start a company. There are obviously exceptions, but it’s more of an uphill battle.”

Full Article

Check out the full article, “90% of feedback is crap: how to find the next big startup idea” from First Round Capital.

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Bret Berson
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Brett leads First Round's Platform team - which focuses on transforming a collection of individuals companies into a hyper-connected community of entrepreneurs. In addition to building the platform team aggressively over the past 12 months, he has lead initiatives such as Network, the software platform that connects the First Round community online, CEO & CTO Summits, as well as broader Platform strategy.
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