What do I look for in an idea?
Over the past 12 years in business, Idea Buyer has helped commercialize over 1,200 ideas. Additionally, the company has generated over $100 Million for intellectual property clientele.
That’s really solid at the surface, but it doesn’t share the heartaches that had to be learned from.
Idea Buyer is selective in which projects the company is willing to work with. Over the years, I’ve picked some real turds. (And that’s why I get to write the article.) No one has a crystal ball. You go on the little that you know and the potential it could have. Sometimes that positive outlook can quickly slap you in the face with reality.
A horrible reality at times. Where the company lost a ridiculous amount of time and money. To make matters worse? The “Inventor/ Innovator/ Entrepreneur” that was so enthusiastic, so willing to hustle, determined to see their idea flourish, is now miserable to work with.
Sticking with my positive nature and optimistic outlook on life… they’ve been the best ones to learn from. (All of my employees are probably gasping right now because they too, have had to deal with these “lessons”.) Without them I wouldn’t have become better at vetting the right people with the right ideas.
Here are the five questions I ask when evaluating an idea:
1 Is the idea provocatively unique? Does it make you think, oh shit, that’s a good idea? More so, would more than 50% of consumers think it’s a great idea? Even if they don’t have the exact problem that the product is solving, could they see the value in it?
2 Does it solve a real problem or make people really happy? A solution to a painful problem can be one of the best products. Think Otter Box phone cases. The first time you drop your beautiful new iphone and pick it up to see a shattered screen. Ugh, painful memories. Solved by an Otter Box.
However, even if it doesn’t solve a real problem but it makes people really happy… I’m on board. Like Glow Bear. Is it solving a problem? Sure, kind of. It adds light in a kids room. Ultimately, it just makes them really happy because it’s one of a kind. And it sold over 50,000 units last year… because it makes people happy.
3 Is it demonstrable and easy to explain?
Could anyone understand the product well enough to explain it after 60 seconds? I look for things that are easy to explain so that people can immediately see the value. You can have the best product in the world, but if it’s not easy to showcase and explain, it won’t be easily marketed and definitely won’t be easily understood.
*** I once invested over $300k into a tool that took 30 minutes to explain the mechanics alone. It was an egregious failure.
4Is it economical?
Can the idea be economically brought to market? Let’s assume the idea is absolutely genius. That 99% of consumers would understand it and want it. Great. So what is it going to take to make it happen?
If your product has a high hurdle to enter the market, it can quickly deplete startup resources. I’ve done this before, remember the astricks from number 3? No entreprenuer wants to think “what if” and especially not at a huge finacial loss.
- Does it have extremely high entry costs (i.e.- Tooling costs or technology development)?
- Does it have a high margin to support growth through channels other than direct to consumer?
If it costs too much to develop and manufacture, has a low margin that won’t support retail or distributors, or needs to sell for a rate, substantially higher than the competition/substitutes, it’s a red flag for us.
Idea Buyer looks to work with ideas that can be brought to market efficiently and cost-effectively, to mitigate risk for everyone involved.
Last but not least, and most importantly…
5 Does it Have a Solid Creator?
Some of Idea Buyer’s biggest failures, rather, greatest lessons, come down to good ideas with terrible human representation.
Unfortunatley, there are countless stories to tell (more detail in future articles):
- about deals we brought to the table, the human cut our company out of discussions and the deal was off the table as a result.
- about deals that were turned down by these humans, despite previsous agreed upon numbers, tarnishing our relationships with players like Nike.
The worst though, are wawapreneurs.
Those are people that expect the world but don’t put work in. They believe they are owed something, even if that something isn’t realistic. We’ve worked with around 40 people that fit that bill. They’ll bad mouth anyone who doesn’t give them exactly what they want, until they are blue in the face. (If you’ve ever had a toddler or a teenager, you can relate.)
Again with the positivity, it still always seems to amaze me when they wonder why their idea didn’t take off. No one, big or small, wealthy or unwealthy, successful or unsuccessful wants to deal with, let alone help a personality like that.
With innovation, failure does happen. In entreprenuership, failure happens. Work with people that understand the concept of failure, the best ways of preventing it and treat it as a lesson for the next go-around.
Every “lesson” seems to generate a more rigorous evaluation before we even touch a project. Are you committed? Are you willing to take the risk? Are you willing to adjust to market feedback? Etc.
Do that evaluation on yourself. Decide if your idea has what it takes and whether you’re the right human to stand behind it.
To Your Success,