12
Nov

Bulletproofing Your Ideas: Part 1 – The Quick Screen

As entrepreneurs, we all have great ideas and we love turning them into reality. Unfortunately, most people spend more time justifying why their idea is great rather than questioning whether it is great. Here’s an example:

    1. Have brilliant idea, e.g. Curling Rink Management Software

by Reverend Aviator (cc)

  1. Daydream about becoming the Microsoft of curling
  2. Write business plan about how you will dominate the curling software market
  3. Convince poor souls to jump on board your curling startup
  4. Do an investor road show to raise funds for MyCurlingERP.com

What’s wrong with this picture (besides thinking that curling is just plain wrong)? The problem is that there was never a rigorous process for vetting the idea. This is a missed opportunity because vetting can reveal hidden strengths and weaknesses in ideas.

I use the following quick screen process for evaluating ideas:

  1. Are you an expert in the field? If you aren’t you’re probably overestimating your idea or underestimating the difficulty of executing it.
  2. Does your idea make something 10 times better than the alternative? If your answer is “how am I supposed to measure that?” you’re in trouble already.
  3. Do you understand how the industry makes money? Understanding how people give away things free is not the same thing.
  4. Can you win? Being #17 in an industry sucks.

If you answered NO to all 4 questions it’s a good indication your idea needs major surgery. If you answered NO to some of the questions, it’s time to focus on improving its weaknesses.

photo by Divine Harvester

photo by Divine Harvester (cc)

E.g. if you aren’t an expert in the field take the time to recruit one. Better yet, try to recruit the industry’s best expert. If your value proposition is a combination of ease of use + slightly cheaper + runs on a Mac + is multi-lingual, you’re probably proving your idea is only incrementally better. No one ever switched painkillers because of better taste and they won’t adopt your solution unless the thing they care about really works. Prove that and the UI can be ugly.

Don’t understand how your industry makes money? You probably won’t make any. Before inventing a new revenue model study the revenue models of your competitors and complementors. One tip: if no one is making money in an industry (e.g. curling software) it’s a good sign you won’t either. Finally, seeing a path from your idea to dominating some industry niche is very important. If there are insurmountable barriers to entry or high capital requirements to win, your idea may never get a chance to win. Think about this in advance.

The point of idea screening is not to generate ideas. That’s your job. Screening protects you from your natural tendency to believe that your ideas are great. If they are great, screening will help you prove it.

If you have other ways to screen your ideas feel free to post them.

Comments ( 9 )
  • Bruno Collet says:

    Nice post. It says what most entrepreneurship omit!

    I’d like ti add that team-building is a key success factor for entrepreneurs. In today’s world even simple projects are often too demanding for a single person to realize. Not to mention that it is nearly impossible for the individual entrepreneur to cover the complete skill set to succeed a project.

    The question is when to look for partners. At the idea stage it is too early, because an idea is worth nothing. I am very cautious with people wanting to jump on board when the idea has not proved to be worthwhile (no market test, no technical proof…). It usually means they are desperate to work on something, and this is not the type of partner you’re looking for.

    A few months ago I wrote a short post about how “cheap” ideas are, and emphasizing that execution is the key to success. See http://www.brunocollet.com/blog/index.php?blog=5&title=ideas_are_a_dime_a_dozen&more=1&c=1&tb=1&pb=1

    Bruno Collet
    http://www.brunocollet.com/blog

  • Daniel says:

    Thanks for this of questions. It’s very easy to believe your idea is great and attach your own net worth as an entrepreneur on it without spending the same kind of due diligence you would anywhere else in the process.

    Your first question regarding being an expert in the field is a tough one, because most of the time, at least for those of us who are experts in software development with a great idea in some vertical, we’re not experts in that field. If we are, we are likely not the one who can execute the idea. If we’re not the expert, but we know who is, it’s very difficult to find the capital to hire an expert if we’re still at the idea proving stage.

    Is this a catch 22, or is the motivation here to focus on ideas you can implement as a developer, while trying to base your business model around an idea in one of your hobbies you have at least cursory experience in? I ask because all of my great ideas are in areas I’m not an expert, but as a bootstrapper I can’t afford to hire a top consultant in those verticals.

  • Mark MacLeod says:

    Good screening criteria Raymond. I think its implied within them, but I also look for customers who have money and will pay money to have their problem solved.

  • raymond says:

    Great comments so far.

    Bruno: I don’t necessarily agree that it’s too early to bring on partners at the idea stage. Partners (the right ones at least) are great sources of idea-vetting, especially when there’s healthy disagreement. Ideas are better when they come from more than one person.

    Daniel: You don’t need capital to find an expert in any field to validate your idea. It’s usually easy to find an expert through your network (or LinkedIn) and most people are willing to give free advice. Doing this might also net you a partner if you convince them you have a great idea. If you can’t convince anyone, having capital might bring on people for the wrong reasons, as Bruno mentioned.

    Hi Mark: Totally agree. Too many people use “free” as a business model because they fundamentally don’t believe their product is good enough to pay top dollar for.

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