When Your Skunkworks Project Becomes Your Main Business
Updated: Apr 29, 2020
As I write this in mid-March 2020, the world is in the middle of the COVID-19 "novel corona virus" scare.
Last week, one of my CEO clients asked a very relevant question: "How might we find opportunities in the midst of this scare?"
"If you had one shot...or one opportunity...to seize everything you ever wanted in one moment...Would you capture it...or just let it slip?" - Eminem
The company—in which I am an equity partner—has an innovative kind of insurance for spas, one that uses technology and artificial intelligence to mitigate a very specific type of risk. This allows us to underwrite spa insurance policies for far less than our competitors.
Early last week, our CTO and CEO realized that our team's know-how and technology could be applied to build a new product that would detect fevers in people at a distance using thermographic imaging.
Jumping into action, our CEO called me and the CTO into an emergency meeting to evaluate the idea. The first question to answer: "Could we build it...and how fast?" The CTO predicted that the technology could be built, tested, and deployed within "a matter of weeks." Wow!
Launching a Skunk
The next obvious question was, "Would it sell?" There's only one way to validate any product idea: go out and sell it. And that's exactly what we did.
Within hours, the marketing team published a web page and shareable PDF describing the technology. The sales team (the CEO and me) reached out to dozens of clients and prospects, asking if there was interest.
What came back was overwhelming confirmation: A Fortune 500 hotel chain instantly took the idea to their C-Team and General Counsel. A single post to a Facebook group of small business owners received 29 likes and 32 comments stating some version of, "I'm interested!"...in just a few hours.
Everything was moving now. We froze all work on the main product: All brains and all hands shifted to the fever detection device. We dialed up our inner Eminem: "If you had one shot...or one opportunity...to seize everything you ever wanted in one moment...Would you capture it...or just let it slip?"
Suddenly it was late night Slack messages, lots of coffee, and plenty of high fives. What if we had been wrong all along about the business we were meant to be in? What if this was the main business? How could we have ever planned such a thing on our own? Was something divine happening? Isn't startup life crazy, wonderful, and beautiful?
Returning to Earth...And Skunkdom
And then came first dose of cold water. Late at night, the CEO received this email message:
Unfortunately, [well-known international hotel chain] is not interested at this time. Sent from my iPhone
The next morning, our own General Counsel sent the team this message:
"Probably won’t be what you love hearing, but off the cuff..." followed by a half-dozen reasons why this would be a huge legal can of worms, from consumer privacy to HIPAA compliance to ADA compliance and more.
Worse, our novel fever detection device for the novel Corona virus wasn't so novel after all: there were several companies who had been developing such devices for more than a decade. And they weren't exactly sleeping on the same opportunity that was going to turn our team into billionaires overnight, making supply chain a major obstacle.
The flood of reality turned into a deluge when our tech team informed us that the accuracy of our first fever detection system would be plus or minus 3 degrees Celsius. That's plus or minus 5.4 degrees Fahrenheit. To get to greater accuracy, the devices we would need to use would be much, much more expensive than the equipment we were planning to use (which is why other competitors in the space sell their devices for $20,000 or more).
And the Facebook group of small business owners that gave us overwhelming evidence of product-market fit? We privately messaged every single "I'm interested!" person with a PDF of our product and heard back from—cue the crickets—nobody. Perhaps the (in our minds, reasonable) price of $600 per month per device was an obstacle?
So we did what any great startup would do: we killed the skunk.
A Dead Skunk Bounce
In a single week, our skunkworks project became our main business on Tuesday, had us smelling like geniuses on Wednesday, made us skunk skeptics on Thursday, and skunk killers on Friday.
We lost a week of focus on our core business, which as a startup, is extremely costly.
But I wouldn't describe our project as a mistake by any stretch of the imagination. Plenty of startups and small businesses have pivoted and pounced on side projects that became the main project.
In fact, the faster any business can pivot and test plausible ideas, the more likely it is to win big.
The important thing is to hit it with all you've got, be willing to be wrong more often than not, and kill something quickly as soon as it becomes obvious that you were wrong.
There's no shame in swinging and missing, as long as you keep swinging.
All you need to do is hit that skunk over the fence once.