The Illusion of the Great Idea and What Beats It All Day Long

Finding the Great Idea is Like Hitting the Lottery. I can’t tell you how many times people have shared with me their “killer, billion-dollar” ideas. Some were interesting and most were not. And they usually follow it with something like, “Hey, cut me in for a big piece of the company if you do something with this!” 

First, Let’s Address the Elusive - and Usually Illusory - Great Idea. Sure, there have been some. Uber, Airbnb, Amazon, Facebook, to name a few. What are the common characteristics?

·      They addressed a clear unmet need in the market. In other words, they were in a “demand-pull” (as opposed to a “supply-push”) environment. The demand was massive.

·      They had a business model that allowed for rapid growth and expansion. They were highly scalable.

·      They happened to enter the market at a highly opportune time, riding technological, demographic, or social trends.

·      They had massive disruptive potential, challenging established industries or creating entirely new types of business.

·      They benefited from network effects. As the network grew, the value increased for all users.

·      They leveraged technology to their great benefit.

·      They were user-centric, and responsive to changes in their user base.

·      They were highly adaptive to changing market conditions, boldly pivoting when necessary.

·      They innovated, inventing new ways of making money and delivering value.

·      They offered a compelling value proposition, offering benefits over alternatives.

·      They had visionary, strong, courageous leaders who knew how to execute.

·      They were able to raise large amounts of capital – a Herculean feat that few appreciate - and they managed their capital very efficiently. 

·      They built strong, recognizable brands.

So, what do you think the odds are of any one Great Idea succeeding? Almost zero. Not quite zero, given we do have these unicorns (billion-dollar companies usually built on a Great Idea). But I’d venture to say that for every several million ideas, one becomes a unicorn. It’s in the realm of lotteries.

Is the Great Idea Worth Pursuing? Hey, it’s fun to think of ideas and flesh them out in your mind. I’ve done it all my life. But I’ve never been convinced, after some reflection, any one of them would meet the criteria of a unicorn. And I know that successful, highly profitable companies can be built without the Great Idea. My advice, then, is to continue to think about Great Ideas if you find that fun, like I do. But don’t make your entrepreneurial adventures depend upon them. For those, just find an Executable Good Idea. 

Pursue and Execute Well the Good Idea. I have heard some entrepreneurs say, “I look for the idea that everyone hates. That means I have something valuable and I should pursue it.” I agree with this up to a point, and that point is where research begins suggesting that everyone hates the idea for a good reason. So, be a pioneer and be bold. But do your research. This will help you pull the Executable Good Idea out of the pile of just plain Good Ideas.

GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market.  Visit us here.

For a short video clip on this topic, click here.