We see good ideas in abundance. Just think, if there are more than 1.2 million apps in the App Store, how many ideas for apps are out there (both vocalized and in people’s minds).
It’s not that ideas aren’t important: far from it. They are the spark that ignites today’s most successful businesses. Mark Zuckerberg wanted to change the way humans communicate (at least after creating the ‘hot or not’ website which allowed visitors to compare two student pictures side-by-side). Elon Musk’s idea is to put people on Mars (yet to be realized). The key thing is that both Zuckerberg and Musk are still working tirelessly to achieve their vision.
Sparks need fuel to get going and that fuel, in this entrepreneurial analogy, is execution. To corrupt the famous Thomas Edison phrase, ‘innovation is 1% inspiration and 99% execution’.
But execution is an ambiguous term. As investors, there are particular things we want to see that demonstrate the ability to put an idea into practice.
If possible, having a prototype or working model of a product or service shows the ability to translate an abstract idea into a real thing. Being able to see something in action also enhances understanding of a product and the whole vision.
For an early stage company, traction is not always financial. Traction means having validation of an idea. Traction can appear in many guises such as early paying customers, lots of trial customers, a jam-packed pipeline or even heavy engagement among a small set of users.
Execution comes from people and people are the foundation of success in a startup. Harvard Business School professor Noam Wasserman, in his book The Founder’s Dilemmas, stresses the importance of healthy professional relationships, clearly defined roles and a stable rewards system among a founding team. His vast body of research has shown that discordant team dynamics dramatically decreases the probability of a startup’s success.
Professor Lawrence Hrebiniak of Wharton Business School states that “implementation is more important than strategy formulation. It should not be a question of developing a strategy and hoping it works, but of developing a strategy and following a logical plan to reach it.”
There is no doubt that having a structured plan is essential. But there is no use dwelling on the minutiae of a bloated business plan. Time can be better spent on the Build-Measure-Learn methodology or in traditional terms ‘learning by doing’.
When ideas are in the comfy laboratory of the mind, they have the luxury of being static and idealized. In reality, startups (and founders) need to be able to iterate according to changing needs and conditions. There are countless examples of successful pivots. As Bryan Roberts, VC at Palo Alto-based fund Venrock, says: "The successful companies are the ones that can take that initial idea and morph it one, two, or three times into a better version."