You’ve got a good idea. Awesome for you! Good ideas are… well good. But do you also have a good business on your hands? There are lots of good ideas… really, really good ideas… ideas that everyone in the room nods their head to. It feels awesome when you have one of these good ideas. But here’s the reality — not all of the really good ideas are also good businesses.
There are so many factors that make otherwise-good-ideas turn out not to be good businesses. Some are due to weaknesses inherent in the market/problem/solution that you’re going after and some are due to common failures of execution. There are way too many to catalog here, but here are just a very few:
- The problem you want to solve is just too small to warrant building a whole company around.
- You thought your idea/product was so awesome that users would make it their life’s mission to help you reach a blowout viral coefficient.
- You fail to solve the enormously difficult multi-sided market problem.
- Everyone loves your solution but they are unwilling to pay you for it because they expect a product “like that” to be free.You encounter perverse incentives within your marketplace that want to keep your problem unsolved.
- Sales cycles that take longer than your startup’s runway.
- You didn’t realize how expensive it was going to be to deliver a viable product.
- What do ya know, there are already better solutions out there that you never found because you never looked.
Add to this the ironic twist that our passion for our really good idea can blind us to the reality of these challenges. In my view, we too often mistakenly believe that our passion is both impenetrable armor and mighty sword in our quest for startup success. Passion can be both armor and sword, of course. But at best they are chain male with soul sucking resistance and a +2 short sword.
At first this realization can kinda suck. But it doesn’t have to. Here’s the deal. If you have a really good idea that’s not also a good business… it’s still a good idea. It’s still an idea you can be proud of. After all, lots of people agree that it’s a good idea. Cool. Relish that. But don’t quit your day job, invest all your savings, put your family and your team at risk until you have a good reason to believe that your good idea could also be a good business.
Figuring out if you have a decent reason to believe your good idea is also a good business may seem hard (I hope it doesn’t seem unnecessary.) I don’t think I have an awesome way yet to help entrepreneurs figure this out but I’m always on the hunt for new ways to think about the problem. My current thought is around a compelling story you should be able to tell that include 7 theses.
- Here’s who would buy my thing. (customer)
- Here’s what they would pay for it. (revenue)
- Here’s why they would pay for it. (value)
- Here’s how many of them would pay for it. (market)
- Here’s how I’m going to get them to pay for it. (marketing)
- Here’s what the money looks like if I can get them to buy it. (financials)
- Here’s how I get there. (plan)
If everyone in the room nods when you layout this story, then you have may just have one of the good ideas that you could also make into a great business.
You can (should) spend hours and hours and pages and pages and spreadsheet after spreadsheet working out a compelling story that gets at every single one of these points.
Reid Hoffman is famous for saying that entrepreneurship requires jumping off a cliff and building a plane on the way down. I couldn’t agree more. But that doesn’t mean you shouldn’t design a plane capable of flight before jumping so that what your trying to build on the way down might actually fly.