Today my most interesting conversation was with a young entrepreneur who has conceived an idea with enough novelty and scope to justify funding and pursuing it.  It is always fun to watch a creative mind at work defining a problem, figuring out how to address that problem, and turning a clean sheet of paper into the outline of a startup business.

Our discussion led to a focus on the first customers, the ones who will provide the “traction” that leads to forward funding and real revenue.  Defining that target has everything to do with how much funding is required.  Here are some alternatives we pondered:

• Elephant Hunting – You have a product that could be utilized by a dominant existing player in your targeted industry.  But, in the current open source world where you have very little IP protection, showing it to that player may well result in a “Thank you very much.  We’ll have 50 developers knock this out as soon as you leave the building.”  You must have some special leverage to take this risk: probably the best bet is to be so far along with your product that a buy versus build decision makes sense for the elephant.   And, you get there only if you raise enough money to start with one of these.
• Horde Hunting – Your plan calls for acquiring 100,000 customers right out of the chute to create some critical mass.  You must be very clever using all manner of social media, tech influencers, traditional PR, paid advertising and events to get noticed.  You may try to put some partnerships in place with established marketing channels to help you acquire customers in bulk.  Or you must enlist this celebrity.  You still need pretty big bucks to make this work.
• Partner Hunting – You can identify marketing partners whose interests should be aligned with yours, who can bring you early revenue, and who are not so big as to just walk with your idea.  If you target industry is fragmented enough to allow this approach, this concept is the most capital efficient for you.  You should avoid an industry like this.

I’m sure you can add other angles to this.  You may have something that you can in fact sell to just a few people at a time to get a reasonable start and proof of concept, but things are moving so quickly in the Internet world that anything other than starting with a Boom may leave you as a spectator to someone else’s success.

This is somewhat related, but one of my favorite recollections of my years working with Rupert Murdoch’s News Corp was making deal calls with the EVP responsible for our activities.   We were developing technology for the travel industry in the 80’s (1980’s that is), and this EVP would tell me this:  “Ben, I’m going to propose A to American Airlines; they’re going to object mightily and come back with B, I’m going to tell them why that idea won’t work so they’ll have to agree with C, and they will.”  You know what, he was always right.  He was the elephant, and he had the leverage to make things happen exactly according to his plans.