Don’t Believe the Hype
On April 4th, I stood in front of a standing room only audience at City Winery in Manhattan’s SoHo neighborhood and told nearly 500 investors, entrepreneurs, and other members of the New York health care IT community about forMD. In the weeks leading up to the event, Sameer and I rehearsed the presentation countless times. Honestly, I never really felt nervous about the presentation. Putting in the necessary preparation was the most important part because we had great news to share as a company. Not only had we grown as entrepreneurs throughout the 3-month program but we had also expanded our physician network and secured a significant sum of funding for our company. We had also pivoted our business model and were going after an interesting market with very few competitors. So while the moments just before the presentation had me standing backstage with an almost certainly elevated heart rate, as soon as I stepped in front of the crowd the nerves melted away.
In the past month since our demo day for Blueprint Health, things have been moving at light speed. We’re closing our first round of funding from friends, family, angels, and strategic investor the Rothman Institute. We’ve also more than doubled our partnerships from 11 to 25 including some of the top medical schools in the U.S. In addition, forMD has enjoyed some good press in Crain’s New York, Xconomy, and some other technology and business publications. While it’s incredibly humbling to receive this type of coverage, it’s important as an entrepreneur to understand that there’s a big difference between what warrants press coverage and what will make your business successful. Don’t believe the hype. Especially your own hype.
Unit economics, the composition of your team, and choosing the right amount of funding are all incredibly critical to your business’ success but not necessarily sexy nor newsworthy. In today’s start-up environment, it’s easy to focus on metrics that might not really be material for your business. If you scan any of the major technology websites for startup news, it’s easy to become distracted and focus on how much money you can raise and from what big name angel investor or venture fund. Just look at TechCrunch or Venture Beat and no doubt you’ll find an article about how the latest mobile-cloud-big-data-social-analytics-buzzword-buzzword company just raised $20M from Kleiner Perkins. While it’s good to understand trends in venture capital activity as it can certainly have ramifications for your business, the question that most entrepreneurs these days should ask themselves is who the heck cares how much the latest hot company raised? It doesn’t matter who can raise the most money. Many businesses raise too much money and end up drowning in expectations and struggling to scale appropriately.
Press coverage and hype equal momentum. And momentum can be a useful tool to get you toward success. However, simply having this type of attention doesn’t mean that you’re going to be successful. The bedrock of a company is built upon a sound business model, a great team that can execute, hard work, and oftentimes a little bit of luck.
That’s not to say that you can’t derive value from staying up-to-date on the latest startup news. However, common mistakes that many budding entrepreneurs make (I have been guilty of this, too) are focusing too much on what others are doing and trying to raise a boatload of cash just because they can and want to. The new normal in creating a successful technology startup is centered on fundamental business principles.
What’s your business model? How long will it take your company to be profitable? What competitive advantages do you have? Do you have a team that can innovate and execute? The Instagrams of the world, companies that make zero revenue and see humongous exits, are incredibly rare and are often the consequence of serendipity. So, if you’re thinking about becoming an entrepreneur, then by all means do your research. Read the startup sites and start to get yourself acclimated to the culture. Just don’t believe the hype. Creating a successful technology company is becoming increasingly similar to creating any other business.