After 15 years of growing and leading Branders.com, I recently sold the company. Now I’m on to my next project. I may have time left for two, or at most three, more endeavors.
Does that sound like enough? Consider this: About 75 percent of startups fail. Not great odds. Which is why I’m focused on a way to improve them.
Some might think an entrepreneur’s greatest fear is to pass on a winner. I fear placing my bet on a loser. Each of us has only so many years to spend on any given project. Investors can gamble on several fronts at once and spread their risk accordingly. But an entrepreneur has to go all-in. As a result, the cost of picking or staying too long with the wrong opportunity is far greater for the entrepreneur. It’s possible to recoup a bad investment, but you can’t recoup lost time.
I am hoping a checklist will improve my odds of choosing correctly, in the way checklists are used to guide decision-making in medicine. I want to determine in advance what a good business looks like so that my natural optimism about a potential idea doesn’t mislead me.
To that end, I’ve teamed up with a world-renowned ad man and leaned on my venture capitalist friends to develop a checklist to evaluate business opportunities. The goal is to create a concrete tool that can identify exciting ideas and weed out the clunkers.
Developing this checklist has required me to think carefully about what it takes to build a successful business. I want the checklist to ask questions such as the following: Who is the intended customer? What are that customer’s needs? What is the problem he or she is trying to solve? What are the existing options? Is there room for significant improvement? How, precisely, will the proposed business provide that huge improvement? Can that promise be articulated clearly, succinctly and persuasively?
Meeting a clear need
My experience building Branders has convinced me that the key to building a successful business is finding a product or service that can deliver a huge increase in satisfaction to a significant number of people. As such, any new, prospective business I consider must meet the needs of a clearly defined and targeted customer.
I will also restrict myself to ideas that ride contemporary but long-term emotional currents.
Seventy years ago, advertising executive James Webb Young noticed that the public seemed to be revolting against the modernity of the day in favor of a farm-inspired, early American aesthetic. In his “The Diary of an Ad Man,” Young wrote: “When an advertiser taps such an underground current he gets a sure flow of business; and I wonder why more have not divined the existence of this one.”
With that observation from Young in mind, I’ll be sensitive to the idea of these currents in my next project.
Readers, I’d love to hear your thoughts. Have you been in my position? What do you think of creating a checklist before looking at opportunities? How did you find your next project? What was your vetting process for promising opportunities? As I keep you posted on my journey, I’d welcome a dispatch from yours.
Jerry McLaughlin is the co-founder and former CEO at Branders.com.