How Good Is Your Idea?
- Posted by Jeff Carter
- on February 12th, 2013
People have ideas all the time. How do you know if it’s a good idea? By good idea, I mean a scalable business startup idea.
First, you can socialize the idea with your friends and see what they think. However, most of the time, friends won’t give you an honest opinion. They will tell you that it’s great because they are afraid of offending you. If you want to know how good they really think it is, ask them for money to pursue it. If they write a check, odds are they believe in it a little-or just have enough guilt that they will part with some capital for you.
Then build it.
Sometimes, it’s possible to build the idea before you get cash from anyone. If you can do that, go ahead. Building it first is actually a little better because you can put a beta product in the hands of your friends and they can give you an opinion on how useful it is.
Return Path is one company that built the product and found that it was so useful, they were up and running in a couple of weeks.
Once your product is built and you find some beta users, find out if their lives would be different without it. What if your product didn’t exist? Would they miss it? Would they clamor for a product like it? If they don’t care if your company exists or not, you probably don’t have a good scalable idea.
For example, in Andy Kessler’s book Eat People, he talks about a person that invented sunscreen in soap. When you showered, you were applying sunscreen so you could save yourself a step in the bathroom. Longer term it would help people get less skin cancer. Cool idea.
But that idea isn’t something that you could absolutely live without. Even though it could save your life. After you bathe, you can lather on sunscreen and walk out the door. It only takes a few minutes.
That’s an example of an idea that should be sold to someone else that can make it a really big idea. There are lots of those out there. You can make money selling good ideas to bigger companies, if you know how to sell and navigate a corporate bureaucracy. Big corporations can wear out good entrepreneurs-and so can selling into governments.
Great ideas are ones that are so useful and elegantly simple that after they are invented you can’t imagine living in a world without them. People pick them up and can use them easily without a lot of training.
Remember this, even if you think that you are the only one in the world with this really great idea, you aren’t. There will be other similar ideas out there trying to solve a similar problem. Don’t be discouraged. That just validates your idea. It means there is a market ready willing and able to allow your idea to create value.
Once you see there are competitors, it’s all about execution. Basic business blocking and tackling.
If you have already launched a startup, ask your customers what they would do without you. First, you’ll get good feedback on their problem, your solution, and probably your competition. You can make your product better using the input they give you. If they can live without you, you need to iterate your idea-or find something else to do.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)