I was heartened to read Fred Wilson’s post on diligence ("You Can Do Too Much Due Diligence") after I wrote my last post because it echoes exactly what I have been thinking.

In it, he talks about his due diligence back in 2004 on Feedburner, which provided services around blogs’ RSS feeds. But when he did research (“due diligence” in industry lingo), a dozen or so major publishers that had blogs said they wouldn’t use the service. So he and his firm passed.

Six months later, Fred caught up with Feedburner’s CEO, a nice fella named Dick Costolo (now CEO of Twitter), and asked how things were going. It turned out that everyone Fred had spoken with was a Feedburner customer.

"So what did I learn from this lesson?" asks Fred:

…First, trust your gut. I was using Feedburner and knew it was a very useful service. I felt that others would see that too. They did, but it took some time. Second, I learned that a service can get traction with the little guys and in time, the big guys will come along. I have seen that happen quite a bit since then. And finally, I learned that you can do too much due diligence. It’s important to talk to the market and hear what it is saying. But you have to balance that with other things; the quality of the team, the product, the user experience, etc. You cannot rely alone on due diligence, particularly early on in the development of a company and a market.