May 13, 2021
 in 
Entrepreneurship

A Counterintuitive Approach to Idea Valuation

George Howard

I’ve said many times that most business books would have been better as a tweet or two; ideas (good and bad) stretched to book-length duration is a frustrating time-waste for the reader and a transparent money grab for the author/publisher.

It’s rare that the opposite is true: an idea presented in a tweet that deserves to be unpacked via a full-length book format. 

However, such is the case of this tweet that I was fortunate enough to notice:

The author of the tweet, Sahil Lavingia, is the founder of Gumroad, an early entrant into the developer of tools for the “Creator Economy”; think of Gumroad as a progenitor of Shopify.

The Gumroad product is impressive, but Lavingia’s transparency with respect to the travails of navigating a venture-funded company that was perhaps a bit early to market (it predates Shopify et al. by some years) is essential reading for all entrepreneurs and artists. It can be found — not surprisingly — as the pinned tweet on his profile, which links to a Medium piece entitled “Reflecting On My Failure To Build a Billion-Dollar Company.” Frequent readers of E&A articles will recognize a kindred spirit via this piece’s emphasis on Lavingia’s version of “Purpose Not Product” and how transparency can lead to a tighter bond between brand and consumer and thus a durable business in a commoditized world. Read it. Then read it again.

So, yes, Lavingia is a fellow-traveler, but what of his koan-like tweet? It hit me hard when I read it, and I scrolled through the comments, which were an equal mixture of appreciation and recognition of the wisdom and bafflement. This only validated how incisive the tweet is.

Few things of value are apparent at first glance. Most things of value have a postdictive — “Aha!” — characteristic; a sense that something is there that transforms into a flash of insight only after mentally squinting for a while; that moment when you “get” the theme of the crossword puzzle and you smack your forehead as you rapidly fill in the empty squares.

I presented this tweet — slightly reworded — to the students in my Innovator’s DNA class this week. Some grasped it quickly, others after a time, and all eventually and rewardingly, somewhat aided by the foundation that they have been provided by my pushing Christensen’s Job To Be Done theory on them relentlessly. It will now be part of my arsenal in my teaching, the running of my own businesses, and advising others.

If you haven’t noticed, I’ve preambled quite a bit. This was intentional. Have you figured out the wisdom of the tweet during this digression? If you have, you probably stopped reading early on. If you’re still here, you haven’t.

Here:

“Well, I mean, you could walk, but it would take you literally days,” one imagines Henry Ford telling someone on the fence about purchasing a car.

“Well, you can have email and organize them by subject and put them in folders and CC the relevant people, and of course, you can also have a separate instant message client,” one imagines Stewart Butterfield saying to a potential Slack consumer.

You get the idea.

Far too often entrepreneurs have “solutions” that are looking for problems. Far better to look at existing “solutions” and develop products, services, or art that provides a better experience for the customer than the existing choices.

When viewed this way, I think it will help entrepreneurs and artists not only asses the market potential for their work, but also help people understand seemingly abstract concepts like bitcoin/crypto (try the above yourself from Satoshi’s perspective explaining how you could use fiat, but….”), and, of course, the topics du jour like NFTs, creator tokens, and the metaverse.


George Howard

George Howard is the former president of Rykodisc, the world’s largest independent record label, and cofounder of TuneCore, the world’s largest independent digital music distributor. He is also the cofounder of Music Audience Exchange, which comprises a team of digital marketers, engineers, and music lovers, using technology to redefine the fundamental structure of brand-artist relationships.