In early November of 2013, I was sitting at my desk at one of the largest financial firms in the world thinking about the conversation I was about to have. I kept playing and replaying over and over again how I was going to tell my boss that my startup had just received a seed round of funding (if you can call $100k a seed round these days) and that I was putting in two weeks notice. I was 15 minutes away from taking the plunge and pursuing my dreams. Then I got a text:
*Hey man, our angel just pulled out.*
Crushed.
I sat at my desk for 20 minutes or so trying to understand my feelings. I was stunned that the deal I worked so hard to put together fell through, and I was horrified that I was 15 minutes away from quitting my job for a startup with $0 in the bank. I had an amazing role at a prestigious financial company, an amazing and supportive girlfriend (now fiancé), and a whole host of expenses to pay for. Not the least being an engagement ring for said fiancé. So what was I doing nearly throwing away the career and life I had worked so hard to obtain?
I deeply love entrepreneurship. I love the thought of building something that I have ownership of, and I love being in the trenches, fighting for traction with my cofounders.
That love, however, nearly betrayed me. Because I nearly dropped everything for an idea that not even I was sold on and a team that would eventually dissolve due to petty disputes. Looking back, I assumed we’d just figure it all out, but we never did. I was ready to jump before we had any validation. I was ready to jump before I validated whether the product would make any money (just because an angel gives you money, doesn’t mean you have a product that will sell). I wanted to jump before I validated whether or not I was truly passionate about the idea and was ready to spend the next five years of my life building. Most importantly, I wanted to jump before I validated whether myself and my family were personally ready to take this journey.
My love of entrepreneurship nearly drove me to make the same mistake I feel thousands of otherwise brilliant entrepreneurs are making. Quitting your day job before you truly have validation.
True Validation Always requires a credit card
My team spent months building a product we thought customers wanted. We conducted customer interviews, released surveys, and drove traffic to a landing page to validate our little SaaS App. We got people to sign up to a mailing list… so we must have a validated idea and product/market fit, right?
Wrong.
We released our product to our list of over 1,000 signups and received very little interest, and 100% churn from those who chose to sign-up. Still, we thought with a seed round of investment we could “figure it out.” So we took our business to some angel investors and somehow got a bite.
The problem with this plan, however, is we’d be burning investor money while we continued to attempt to pivot and find some traction. This means by the time we found any sort of traction, we’d likely need even more investment in order to scale. As a startup, you should be scaling with other people’s money, not trying to figure out what it is that you can build that people will want to buy. While you have a steady income from a day job, you need to HUSTLE to gain traction. For SaaS, that means sales because at the end of the day that’s the only thing that matters.
Our lack of customer validation through traction was a huge red flag, but not the only red flag.
Validate Your Own Passion
I like music. I listen to Spotify for a few hours a day while I work and while I’m at the gym, and I’ll attend a concert every now and then. I however have never met a concert promoter and I’m not even sure how the concert event industry works. Yet I was going to be the main co-founder of a company that sold an app in the concert venue space.
That wasn’t the real issue, however. The real problem is I didn’t want to learn anything about the concert venue industry. I didn’t want to learn about the industry because I didn’t have a passion for the space or the product. I was happy to rely on my team to have industry expertise, and I’d just learn what I needed to from them. Even worst than that, I was already thinking about an exit. Nevermind the naivety of even thinking we had a shot at a profitable exit at that point. How could I be starting a business that I couldn’t wait to exit because I didn’t like the industry it was in?
Looking back, I cringe at the excuses I would make in my head as to why I was even pursuing this idea. I wasn’t excited about the thought of coming home from my day job and working hours to build this business. I tried to be excited, but I never validated my passion for that product.
We’ve talked about product/founder fit in the past on the Nugget blog, and this was my first-hand lesson in how important it was If you aren’t willing and excited to work nights and weekends like a sleepless maniac to launch your startup, you haven’t validated your passion. If you don’t dream of working in your space for at least the next 20 years, then you haven’t validated your passion.
Want to build a million dollar business? You better have passion.
Check Your Personal Validation. Are You Really Ready?
The people closest to me have always been encouraging when talking about my entrepreneurial aspirations. However, when it’s time to quit your job, tones tend to change. Those that once were your biggest cheerleaders may turn into the one’s questioning you the most. You can’t just lump them all into the “They just don’t get it” category because most of them are truly concerned with your future.
I have a supportive family and a wonderful fiance that I thought would be 100% onboard with the idea of giving up the huge raise, signing bonus, and benefits that I spent $100k and four years in school getting. Unsurprisingly, they were less than enthusiastic. It probably didn’t help that I only had about four months of personal runway to live off of, and as stated above, clearly no passion for the space.
It’s critical to have a support system around you when you are making such a drastic decision, emotionally and financially. You don’t want to be worried about where your next meal ticket will be coming from while you’re trying to build a unicorn, and you’re going to need someone to vent to when another growth project goes up in flames. So make sure that you are financially ready to pursue your dream. Have an exit strategy that includes going back to a paying job, and please, embrace your family, don’t push them away. You’ll need them to pick you up when you fall.
How do you know?
I learned that for a founder, validation doesn’t just mean building a landing page, driving traffic, and getting a few signups. Thoughtfully consider these questions before you’re sitting at your desk, 20 minutes away from quitting your job for an invalidated product.
- Have I reached X product traction goal
- Do I have Product/Founder fit
- Am I financially ready to take this plunge
- Do I have the emotional support system around me to be able to take this plunge
- Are you ready for endless sleepless nights and stress-filled days
If you want it, you will find it
I thankfully missed that opportunity to quit my job by about 15 minutes. I instead took a skill I had been building for years and started to monetize it to a point where I could support myself and my family. I built the business until I could comfortably quit my day job and I wasn’t stressed about getting any last minute texts. I’m not on a constant vacation, in fact, I work more than I have ever worked in my life. However, I love what I’m doing and know that I’m building something that I’m truly proud of.
To be an entrepreneur, you must take big risks. However, you must take smart risks. Join a community like Nugget to start thinking about customer pain points and brainstorming ideas. Then validate every aspect of your startup and every aspect of your life before you jump. When you finally do, buckle up and enjoy the ride. It’s going to be a roller coaster.
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Nugget is an online incubator & community. We help founders start and grow profitable side projects.