David Heinemeier Hansson recently gave an awesome talk titled The secret to making money online at the Y Combinator Startup School. Aside from being entertaining, David keeps hammering at the VC-fueled dreams of today’s web entrepreneurs. David has been at this for a long time, and what he is saying is obvious and common-sense (and David will tell you so).
And yet, we always hear people talking about the Money Maker, or how they are going to target 1% of a $10 billion industry, or other self-defeating filters. If you find yourself uttering those kind of phrases in response to your own ideas or the ideas of others, stop.
Refocus on what the idea is, and evaluate it on its merits. Thinking about how to build a GYM acquisition or targeting a market that will attract $10 million in VC funding is a waste of your time.
Should you ignore pricing and profits? Maybe; if you do look at them, examine them in a reasonable context — what do I need to just run the service on a minimal server? With no paid staff? With minimal time commitments? How would it look like if I had 100 customers? 1000 customers?
Yes, this means you are no longer playing in the VC startup space1. Cool. If you really want to play there, you will be much better off playing there after you already have those 100 customers.
1 I am unsure about investors like Y Combinator, as they seem to be advocates for this way of thinking.