Idea Evaluation

TL;DR

A great idea rarely drives startup success on its own; a cohesive, passionate team that can execute matters more, and a bad idea not grounded in a real need is crippling. The strongest ideas start from personal pain or industry knowledge, then get validated by real customer feedback and iterated when the market signals a different, often simpler, need.

Transcript

morning uh the gentleman on the panel have quite a bit of very relevant experience for you so I I think you're going to enjoy the discussion as a way of background I graduated from the Stanford Business School in 1997 I have uh been a founder of four different entities uh company called Optical engineering making industrial CO2 lasers drugstore.com... Read More

Key Insights

• Idea generation is often harder than idea evaluation, according to students the moderator has spoken with over the years; the core questions are where great ideas come from and how you know you have one.
• The idea is important but not the most important thing, per Bob Fell, who cites Edison's 10% inspiration and 90% perspiration; implementation, the management team, and the entrepreneur's passion matter more.
• A useful test for an idea is whether it sticks with you two days, five days, or three weeks later, and whether you stay passionate enough about it to do the basic market research.
• A cohesive team with the ability to execute is more important than the idea itself, and a passionate team is easier to recruit for because people rally around a morally compelling initiative.
• Ideas are dangerous because people get wedded to them; many teams start on one path and pivot to something very different and successful six to twelve months later.
• A bad idea is crippling, especially one not based on a real need; people tend to think in solutions and jump to answers, so early vetting requires honesty about whether the need is real.
• Ideas often come from personal pain, as with Outright.com, which began when the founders found doing finances on QuickBooks painful while working from home and heard others say there had to be a better way.
• A common caution is that founders solve problems that matter only to themselves, not big problems; leveraging industry knowledge and relationships, such as knowing retailers must hit monthly numbers, surfaces bigger opportunities.

Questions & Answers

Q: How important is the idea versus other elements of a startup?

The panelists agree the idea is important but not the most important thing. Bob Fell cites Edison's 10% inspiration and 90% perspiration, emphasizing implementation, the management team, and the entrepreneur's passion. Others rank a cohesive team that can execute above the idea itself, noting that many teams pivot from their original idea to a very different, successful business over six to twelve months.

Q: Why is idea generation harder than idea evaluation?

The moderator says that in conversations with students over the years, the most common feedback is that the evaluation side is easier while the idea generation side is frankly harder. People repeatedly ask where great ideas come from and how you know you have a great idea. Evaluation gives you criteria to test against, but originating a substantial idea worth building a lasting company around is the harder creative challenge.

Q: Why does the panel say ideas can be dangerous?

Justin Fisher wolson argues ideas are dangerous because people get wedded to them and go down a path that determines the big success or failure of the business. When a small early-stage team is still figuring things out, the specific idea probably does not matter as much as the people, since a great group can start on one path and build something very successful on a completely different one six to twelve months later.

Q: What makes a bad idea so damaging to a startup?

Kevin Reath says a bad idea is crippling, especially one not based on a real need. By nature people think in terms of solutions, wanting to jump to the right answer and take a shortcut, so they get wedded to an idea and excited about it. If it is not grounded in a real need that many reachable people have, the venture will be challenging, which is why honest early vetting matters.

Q: Where do good startup ideas usually come from?

A common source is personal pain. Outright.com started when the founders, running a web development company and doing finances on QuickBooks from home, found it painful and thought there had to be a better way. Talking with clients and vendors confirmed others felt the same. Another source is industry knowledge and relationships that reveal big problems outsiders would not know, such as retailers needing to hit monthly numbers with rebates.

Q: How should founders use customer feedback to shape an idea?

Founders should test the idea early and be willing to change direction. Outright.com put mockups on the web and asked people to check them out, but the original concept did not get the expected reception. The bigger market opportunity turned out to be something much simpler, so listening to feedback, recognizing the first premise did not resonate, and iterating was critical. If you do not get the feedback you need, you move on and adapt.

Q: What is the risk of solving a problem that matters only to you?

Justin cautions that people often find problems for themselves that are not necessarily big problems. Because most of us are consumers who understand consumer needs, it is easy to mistake a personal annoyance for a large market. Solving a genuinely big problem often requires leveraging industry knowledge or relationships built over time, for example knowing that retailers must hit monthly numbers or that certain products carry huge rebates.

Q: What kind of company is this idea advice meant for?

The moderator clarifies this is not about ideas for companies you might sell within a year or quick momentum plays that fit today's zeitgeist. It is about building a lasting business, one that would be viewed as a remarkable company. Within that context, advice like building a great team is essential; if you planned to sell in twelve months, some of that advice, such as a broad team beyond core engineers, would matter far less.

Summary

This video discusses idea evaluation and generation for building successful and remarkable companies. The panelists share their experiences and insights on the importance of ideas, strategies for coming up with ideas, discussing ideas with others, and common mistakes in idea evaluation.

Questions & Answers

Q: How important do you think the idea is compared to other elements of a successful business?

The panelists agree that while the idea is important, it is not the most crucial element. The implementation, management team, and passion of the entrepreneur are equally, if not more important. Ideas need to stick, be researched, and have a market to be successful. Passion and execution can outweigh a seemingly great idea.

Q: How do you come up with ideas for a business?

Ideas can come from personal pain points, industry knowledge and relationships, identifying big problems in big markets, leveraging consumer needs, and being aware of data points in everyday interactions. Brainstorming sessions, conversations with others, and researching potential areas of interest are all effective strategies for generating ideas.

Q: Do you share your ideas with others or hold them close to your vest?

The panelists generally agree that sharing ideas with others is beneficial. It allows for feedback, validation, and potential recruitment of team members. While protecting trade secrets is important, open discussions and telling a compelling story about the idea can help attract the best people and refine the vision.

Q: What are some common mistakes in evaluating an idea?

Some common mistakes include staying with an idea too long, picking a management team solely based on background rather than compatibility, getting the timing wrong, and not considering the behavioral aspects or real need in the market. It is important to be realistic, open to feedback, and constantly evaluating and adapting ideas.

Takeaways

The evaluation and generation of ideas are crucial for building successful businesses. While the idea itself is important, it is not the sole determinant of success. Implementation, passion, and a strong management team are equally crucial. Strategies for generating ideas include identifying pain points, leveraging industry knowledge, staying aware of consumer needs, and engaging in brainstorming sessions. Sharing and discussing ideas with others can provide valuable feedback and help attract the right team members. Common mistakes in evaluating ideas include not being adaptable, picking the wrong management team, and getting the timing wrong. Overall, being realistic, open-minded, and constantly evaluating ideas are key to building remarkable companies.

Summary & Key Takeaways

• A panel of entrepreneurs and investors at the 2010 Conference on Entrepreneurship, moderated by a Tugboat Ventures founder, discusses idea generation and evaluation, framed around building a lasting, remarkable company rather than a quick company you sell within a year.

• The panelists broadly agree the idea is not the primary driver of success. Execution, a cohesive team, and the entrepreneur's passion matter more, and a good team can pivot from a weak starting idea to a successful business.

• The main caution is that a bad idea not grounded in a real need is crippling. Strong ideas come from personal pain or industry knowledge, then get validated and reshaped through honest customer feedback, as Outright.com did when the market wanted something simpler.