What’s up, readers? how are you doing? Here I am back with you to continue with the last column “The idea is worth zero”. To remind you guys a bit (because it’s rained since it was published), Zorro and I were at Stanford in the middle of the worst financial crisis since 1929 wondering what the hell we were going to do after our MBA. Big timing! (sarcasm).
Everyone who goes to an MBA arrives on the first day thinking: I’m screwed! However, the minute you change that mentality to “How the hell did they accept me, they sure screwed it up in the process, how am I going to compete against all these people?” After a couple of months your paranoia subsides and your attitude changes a bit to a “How the hell did they accept that one?”. Ha ha.
One day in the winter of 2008, Zorro, El Abuelo, and I were in a Debt Markets class with a professor named Darrell Duffie, who had the great ability to send us emails at different hours of the day explaining to us why the world as we knew it had ended since we were practically going to return to barter.
Imagine one of those religious pastors, but instead of giving sermons that we were all going to hell, Professor Duffie would yell, “Everything is broke! General Motors, Ford, AIG, Freddie Mac, Fannie Mae, Morgan Stanley, Citi, Merrill Lynch, Bear Stearns, and Lehman Brothers had already gone bankrupt. According to me, he thought: “Poor souls, they paid to study an MBA and no one is going to have work coming out”. Anyway, her class was fun.
In this regard, a gringo friend named Ben Sloop gave a presentation of the company where he had worked during the summer. The firm was dedicated to the restructuring and renegotiation of credit card debts. Finishing class, Zorro asked us what we thought of what Ben talked about. I replied that he had made a considerable effort not to pay attention, since Duffie’s class was causing me a lot of stress. Grandfather replied that this idea could only pull in the United States and “that in Mexico it could never work.”
Although the status quo of Grandpa is to be a bitter and curmudgeon, saying that something is not going to pull is the answer for default of most people. It is always easier for human beings to think about why something is not going to work than to find out how it could. pull . That’s why entrepreneurs have to be people hyper optimistic, for when it sets eyelet the thing does not panic. In defense of Grandpa, I can say that he is a great entrepreneur and founder of a successful student loan company (Laudex).
That night, around one in the morning, I was finishing a task and I got distracted to look for information on the internet about credit cards in Mexico. I came across several articles indicating a significant deterioration in consumer debt and got excited (the eyelet ). I applied the typical copy paste what I had found and just as I was going to send it to Zorro, I received a e-mail from him with similar information.
Immediately afterwards I responded with what I had found and the mutual thought was: “if at 1:00 am this dude has nothing better to do than look up Mexican bank details, then he is interested in the subject and is serious about it”. We don’t send Grandpa emails, because that dude is more like a fax. In fact, I don’t know if the one I sent has already arrived.
Many times we have had conversations with people who tell us that they would love to undertake, but that original idea has not occurred to them. From our point of view, much of the success comes from the execution of something and not so much from a brilliant idea. Undoubtedly the idea is important, but in our experience, the execution is equally or more important.
Adam Grant, in his lecture The surprising habits of original thinkers, It talks about the relationship that exists between people considered original and people who try many things. There he exposes a graph in which classical music composers are compared by their success and the volume of works they produced. Did you guess the result? Generally the older ones were the ones who experimented the most, since this gave them the opportunity to fail, learn and innovate.
I remember a phrase that warns: you would have to be a very stupid person if you think that your idea is unique and no one of the 7 billion people on earth had thought of it before.
As you can see, thousands of proposals are generated all the time in the world, the problem is that we don’t execute them because we are afraid of what they will say.
For example, Airbnb was born because the founders did not have enough to pay their rent and they offered accommodation on inflatable mattresses to be able to collect some wool ( Air Bed and Breakfast ). They then decided to make a website and it took off when they served at the 2008 Democratic Party Convention.
Imagine the questions they would have asked and the responses received to validate their idea. “How do you see if we make a website where you can rent rooms in your house to unknown people? And obviously those people are going to prefer to stay at a stranger’s house and not in a hotel” No! brainer !
Jonathan Beekman, a friend from Stanford, started a company called Man Crates with $1,000, which was the only thing his wife let him spend because he had already done badly as an entrepreneur. He had no product, just photos and a wooden box in which much of his $1,000 went.
People wanted to buy from him and Jon had to call them back saying, “Thanks for your purchase, but I’m testing an idea and I don’t have anything to sell you.” During the call he took the opportunity to ask them what they liked about what he “offered” and surprisingly many people stayed on the line for a long time explaining what had caught his attention.
When we arrived in Mexico to start Resolve, one of the first things we were looking for was the validation of our idea. How to know if he was going to pull? You have to ask the bankers to see what they think, we said. So, we look for “Guajo” who is the father of our good friend “Lingüini”. El Guajo has been a kind of professional mentor for me. It is important to mention that during the more than 20 years that I have known Guajo, I have never said Guajo to his face (always behind his back. Hahaha!). So I hope you’re not reading this column. He’s pretty old now, so I don’t think digital publishing is his thing.
After presenting our idea to him, Guajo told us that he found it very “interesting” and referred us to more bankers. Zorro and I immediately called Linguini to see what his father had told him. His exact words were: “That you are well stupid , dude . And what if you went to Stanford for that?
Although on that occasion feedback It was not very wise, over the years I have continued to pester Guajo every time something important gets stuck. His advice has been invaluable. (If you are entrepreneurs, I recommend that you look for a mentor, it has pulled me from little mother).
In retrospect, what we have learned from that experience is that it is very difficult to be sure if your idea is good or not. That is indicated by the market and many times it is unpredictable. Someone with experience can tell you if the income and expense model makes sense, but they can hardly guarantee that people will buy or hire out there.
Today, despite the fact that we have served more than 100,000 people with more than 1,000 million restructured pesos and in three different countries, many bankers continue to say that we are not necessary. We don’t even argue with them anymore, we turn to see each other and think: “Yeah, godinator . Whatever you say”.
Therefore, if you have an idea… Go ahead now! Try to prove the demand and don’t spend it looking for validations from other people. Remember, our human nature encourages us to think that it will not pull. Zorro and I have lost count of the number of people who have approached us to say: “What you do had already occurred to me a long time ago.” Congratulations wey! Today, YOUR IDEA IS WORTH ZERO .
This text is part of the series of monthly financial columns in your language from the founders of Resolve: ‘Start Ups and Downs’.