I thought I was ready to meet with two of my first choice investors and introduce them to my fresh startup, as a decision has been made to change the whole plan. Take two giant steps back and revise.
I’ve been working on my new venture for the past 4 months. Along the way I partnered with a CTO so I am not entirely alone, although I’m full time here and he is still employed elsewhere. The direction was clear and precise and we need this funding urgently, so my CTO can work full time, along several more team members. But when the time came to prepare for investors I did it. We did it. We started to question and doubt everything: I started to ask myself the toughest possible questions. I re-examined my model, crucified the creative ideas, criticized the result – that Game Design Document (GDD) we’ve been working on and decided I wasn’t pleased enough to take it up with investors just yet. It might have been good enough to get some production budgeting, but it’s not good enough to win an investment. Too many holes.
It often happens with startups. I know so many stories of a startup that started with one idea and diverted to another direction along the way. Reasons may vary. Although it has tremendously slowed us down, or rather sent us back, I am happy we have found this diversion now, rather than in another 10 months for example and after we has spent a lot of our investors’ money.
Not many people can afford twists and turns along the way. I really like the story of Paypal, which I got to hear from Max Levchin, one of the cofounders, at a GarageGeeks event in Holon some 3 years ago.
Fieldlink is the company which later became PayPal. It was founded by Levchin, an online security specialist, and Peter Thiel, a hedge fund manager at the time. The two met in 1998 when Levchin approached Thiel in New York for financial backing for a company that would develop a system for transferring money using such wireless devices as cell phones and palm pilots. Levchin and Thiel joined forces, obtained $3 million in backing from the Nokia Corporation, relocated to Silicon Valley, and opened Field Link, which produced encryption software for handhelds. Unfortunately, the idea did not win a lot of popularity. So the founders decided to go towards another direction, with another name, Confinity. In October 1999 it launched PayPal, a service by which money could be sent electronically by handheld devices. PayPal didn’t get much more than Field Link.
But the real twist happened a little later, when the two partners realized that there is not yet any means for electronic payment online, while ecommerce is booming around. A payment system tailored for the web, they realized, is something the market not only lacked, but needed urgently. And the rest is really history, as Confinity was acquired by X.com in March 2000 and the company that was created then, Paypal, was acquired by eBay for $1.5 billion in stock.
May more entrepreneurs do wisely and gain big.