How startups are different: Promise vs. Value
Distinguishing between promise and value was another session in our VC’s seminar that I wish every entrepreneur and startup employee could attend. This seminar created a distinction, the lack of which I have experienced multiple times while advising and working in early stage companies. If you are starting from scratch, you and your team are full of promise and potential. It’s that feeling of excitement and anticipation of a successful future that helped you secure funding, get a team together and kept you motivated as you built out your first product together. But there is a huge difference between real value and the promise of value. If you aren’t able to distinguish this difference, your company is doomed even before it’s first launch.
I can’t write enough about how many times I’ve heard startup teams talk about why the competition’s product is bad, why the competitor's business model is flawed, why “ours” is better, why we will win, how we will dominate the market in the future, how we can do all of these amazing things going forward and the easy path to $1 billion in market value. I’ve literally been trapped at advisory lunches, on the phone or in meetings where the team or co-founder was so enthusiastic about their new idea or product that I almost drowned in the tsunami of Kool-Aid they had been drinking and spewing back at me.
I can say this because I admit to having behaved this way in my local-social-mobile startup years ago, all while watching Yelp and Groupon grow and execute. Power and too much money can be a dangerous thing. We had the promise to create a lot of value, we talked about creating value, we executed with the intent of creating value, but we did not create value. The ideas were all great, and we showed great promise. We were doing a lot, we had a ton of activity, but we simply needed to get the results to create the value. It’s only executing and getting the results that turn a business plan with a lot of promise into a business with a lot of value.