Evaluating StartUp Ideas (Part 2)

I present to you the translation of the second part of the article, authored by Paul Tyma , according to the assessment of StartUp ideas. The translation of the first part is here .

1) Let the ideas ripen. Each new idea seems the most delightful of all the ideas that I have ever had. Usually it starts something like this:
  • Reference point: idea came
  • A minute later: (some details)
  • Two minutes later: I start thinking about a suit in which I will signal the end of trading on the day of our IPO

After I began to admire too many ideas, I set a rule for myself. I reflect on the idea for three days, only after that I voice it. In the first and subsequent days I myself am not excited by excitement, but by the end of the third day I calm down. Or not, and I get the feeling that I really came across something worthwhile. Simply put, ideas always look better while they are "in the heat of the heat." You are looking for ideas that seem great even after the passage of time.

2) Take into account the size of your market.If you read Guy Kawasaki’s blog, then you probably saw his mentions of how often new companies boast about him the sheer size of their new market. Guy scolds them for excessive optimism, but he also knows that it is better to believe that the market is indeed large (and it is possible to exaggerate its size in the conversation), or to forget about it. Numbers of hundreds of millions and billions are good - in reality, you hope to get at least a drop.

Consumer goods markets can be excessively large. If you are a guy from the basement, with an idea that will capture the forty-billionth market - this is a great success. Let's hope you have no misconceptions that you will own the market alone (where there is money, there are competitors, and they will select the majority of the market before you can break into it). But at the same time, the larger the market, the easier it is to find buyers on it.

Specialized markets such as selling hardware, software development and / or delivery of correspondence will never be scarce - it all depends on how quickly and efficiently you penetrate them. A simple rule: more is better. If the market is large enough (and thanks to your idea you occupy a certain share in it), then you may attract the attention of a large company that wants to take your share to itself. This means that you will either be bought or will compete with you - the end result is possible due to the implementation of your idea (and not to her own).

3) “Building a business around a new development tool” is wrong for many reasons. Some markets are not only niche - they live on free land. And I do not mean the USA - I mean the market where people are used to getting everything for free.

The software developer in me continues to come up with ideas for creating software development tools. Occupational disease, I suppose. I know this area and understand how to solve this or that problem. But be that as it may, development tools, in general, are really a bad area for finding good business ideas. Given that things like Netbeans and Eclipse, which took thousands of man hours to create, were donated. The catch is that the developers have created their own culture of free distribution of software products. It is safe to say that there is nothing wrong with that, unless, of course, you are thinking of building a business on this.

With all this, there are niches within the development tools that are even worse than others. Take two dollars, add to them the awesome idea of ​​the Java development tool that ever was, and you can buy yourself just a cup of coffee. Java developers are especially used to getting development tools for free. In contrast, Microsoft has developed a culture among .NET and Windows developers who are used to paying for support. In other words, if you “need” to create a developer tool that you intend to sell, stick to a market segment where there is Microsoft or some other, where payment is an accepted idea.

4) In fact, not all ideas have the price you think.Yes, I know that you are smart. Yes, you are amazing, super-duper creative. But in reality, there are very few ideas that are truly truly original.

Let two technologies (say, the Internet and mobile phones) develop independently of each other. And at some point in time, a simple idea can act as a bridge connecting them. A product will be born. And the sooner you look at this opportunity, the more brilliant your idea will be.

But with each passing day, the distance between these two technologies is reduced, and your brilliant idea becomes a little more obvious. In other words, if someone else has not thought about this opportunity, it will start soon. And the more people see her, the more likely they will come across someone who wants to base a company on this idea.

And the winner will be the one who first launches the product on the market, creates a marketing and sales infrastructure and, in fact, secures sales for himself. Do not rely solely on the idea. Infrastructure must be created. If it does not exist, even at the minimum level, the idea will be stolen (at least in the market sense). Definitely, you can create a world-class company on a good idea and wonderful infrastructure.

A small remark: as soon as progress reaches the point where these two technologies converge on their own (without your idea), your idea is likely to be considered insignificant (hopefully, you will earn on it before this happens).

5) Competition is good. If you have no competition, you have no idea. Competition tells you, and investors, that your idea is not stupid. If you have been working on a product for 3 years and you have no competitors, then maybe they know something about the day when you are going to put your product on sale, which you do not know.

Do not be afraid to take an existing idea as a basis if you have an idea that contains a key difference. Altavista and Google have made search engines. Altavista began development long before Google appeared and probably laughed when they heard that some Goggle was going to hire them. I hate to say this, but the concept of “theft of ideas” in business is very difficult to define. Patents tried to give this concept legal force, but it does not work well (although you need them, of course), so it hardly matters.

Each of your ideas is an extension of an existing one (Every Web 2.0 idea assumes that the Internet exists. Each “mixture” steals the functionality of 2 or more existing web services). How close your new idea to the old ones determines how many people will say that you stole it. And there will always be people who claim this.

As an example, I created Mailinator in July 2003. It was the first email service to allow inboxes to create inboxes. There are currently half a dozen similar sites (some even stole my FAQ section). Does it matter? Could I do something about what happened? Should I have tried to crush them?

The best tactic is simply to throw them out of the market and make new functionality. Protection of the idea is hardly possible, the ongoing work to improve the service is what is required. (And by the way, the idea about Mailinator was not mine. This is Jack's idea ).

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