Everyone has a few good ideas and a dream or two they'd love to test. The really good ones are gems like Google or the iPhone. The not so good ones (like the Segway) eventually take a nosedive off a cliff, or never make it past the “Have I got a great idea!” stage.
Let’s say you think you have an idea that may be worth turning into a company. It might even generate some revenue. How do you decide if that idea is worth pursuing?
I spoke with four young, yet seasoned, entrepreneurs who started and sold their share of wildly successful businesses about how to take that innovative leap and test a brilliant idea.
Avoid the “Blue Ocean Strategy” and make something average better and more affordable.
Finding an area where there is no real competition is virtually impossible in this entrepreneurial climate. So Chad Troutwine, co-founder and CEO of Veritas Prep and the soon to be live Freakonomics Media, focused on improving what already existed in the standardized test prep world. He realized what was missing was a higher-quality product and turned mediocrity into something better than what was already in play.
Seth Adam Cohen, the founder and executive producer of Covalent Productions created his company out of necessity. Like many savvy entrepreneurs he could not ignore the Internet's effect on society and industries. He saw how the Internet had changed the entertainment industry as a filmmaker and producer, and recognized that video now plays a large role in many industries.
“Having a video enriches and enlivens your company from a business and a PR side,” says Cohen. “Going through the traditional Hollywood method is just too expensive especially for a startup. They can cost a million bucks a pop. We saw that the need was huge and that we could deliver the same work and better because traditional Hollywood has too many cooks in the kitchen putting their two cents in to your project. We work directly with the client so there is a centralized vision. We better represent the brand and do it for a fraction of the cost.”
Always do a “Gut Check.”
Cohen’s Covalent is a collection of eleven directors he united under his company that he implicitly believes in. Realizing that starting a film company was not a surefire way to make a lot of money, he recognized that his goal was not to do it just for the money.
“To my core I believe in each of these guys,” says Cohen. “They share my passion for doing what I do. You can do your market research that you would find in a Business 101 course, but then at the finish line you need a ‘gut check.’”
Cohen always makes sure to ask: Do I believe in this? Is there passion there?
“You have to find your niche, but more so you have to believe in the company and endeavor and really determine if you have the passion to see it through. You have to wake up every morning to run the company. If true passion isn’t there, when hard times hit the weak will fold.”
Avoid “Opportunity Gluttony.”
The great battle entrepreneurs face is sifting through all those great ideas and deciding which ones are worth pursuing.
“I see businesses fail from ‘opportunity gluttony’ all the time,” says Aaron Rasmussen, the co-founder of Harcos Laboratories, which creates energy drinks and products around the video gaming industry. “When you decide to do too many ideas you overextend yourself and the whole thing collapses. As an entrepreneur you acquire a group of friends who then kick around their ideas and suggest that you get involved with them but the answer should more often than not be no. You have to stay focused with your own idea.”
Squeeze more out of an already successful idea.
Sometimes when something works, it’s a good idea to milk more out of the idea. Troutwine has taken his entrepreneurial mind to Hollywood and produced several films. He brought together six filmmakers for the film Freakonomics, which is based on the book of the same name written by Steven Levitt and Stephen Dubner. Troutwine is expanding the Freakonomics concept into a brand and media channel a la Martha Stewart, Jim Cramer, and Arianna Huffington.
“I’m taking something that already existed and squeezing more out of the lemon,” says Troutwine. “We’re taking one thing done extremely well and building a brand to successfully extend it into several more things.”
The best ideas are the ideas that are flexible.
We’re now enmeshed in a generation of hyper competitive markets and fast-moving technologies. In order to compete, great ideas need to be flexible.
“You start with an idea and you tweak it along the way,” says Brian Norgard, founder of Namesake, a social network for entrepreneurial types. “A good idea is a synthesis of hundreds of ideas forming together into a compound. The great idea is a myth. You take one kernel of truth and twist it 50,0000 different ways. An idea is a great kernel of passion, but it's what you do with it and how you mold it over time [that matters].”
Keep an eye on trends and personalize them.
I'm not saying you should steal someone's idea, but it's common to be inspired by something and make it your own. Troutwine hails from Kansas City, Missouri and decided to buy a warehouse back home and convert it into loft-style condos.
“We’d watched the trend as it happened in other cites and decided it was ready to be in our city,” says Troutwine. “Watch what works in another geography and see if you can emulate it in your town. We were watching Chicago for what was happening and figured it was coming soon to Kansas City and that we wanted to be the first in it."
Find people who hate your idea.
Balance is paramount. Of course your friends and family will love your idea. Putting your idea in front of people who want to poke holes in the concept you believe in will help you make it stronger.
“You don’t want to be blind to potential pitfalls so you want to talk to a lot of knowledgeable people in related industries whether they like your idea or not,” says Rasmussen who is a big fan of using the online poll. Rasmussen suggests Mechanical Turk, where you set up a task to fill out the survey and then poll people as to whether they'd use your idea or not.
Don’t worry too much about getting your ideas ripped off.
Start sharing ideas to test their merit and don’t worry about idea hacks. You have to take the risk or you’ll never know. If you’ve done your research then you have something that no one can touch.
“Nothing is going to happen if you never put it out there,” says Rasmussen. "I like to use my customers as alpha testers so I can then revise what works and doesn’t work on the next time around.”
Make some assumptions about your business.
Find out if the idea is something that actually solves a problem and if the idea is timely.
“After you’ve made those assumptions you can test them out on the public,” says Norgard. “You want to know who will switch to your brand, and if it is something that solves their problem.”
Let go of the emotion.
Emotion is great for coming up with the idea and building it. But once you’ve gathered the data asking the aforementioned questions you need to analyze that data. Emotion has to be free of the analyzing process.
“That’s the hardest part,” says Norgard. “It allows you to reason and vet properly and accurately."
Read the wisdom of some tried and true experts.
“They’ll help you vet the concept you are looking at,” says Rasmussen. “And determine if you can handle putting together something from nothing.”