When considering starting a new company, the entrepreneur needs to step back and answer one simple question: Is this idea the basis for a feature, a product, or a company? Unquestionably some great ideas can fall into any of three categories. The simple test to determine the idea’s category is to consider its sustainability. It has nothing to do with how good the idea is or how well it is accepted in the market place. There are multiple paths from the idea stage to acceptance by customers.
Here is a personal example. Anyone with an email account has fallen into the “Reply All” vicious cycle; perhaps it happened to you today or yesterday. It all starts out with the original email author sending an email to multiple recipients. Upon reception at various times, some or all of the recipients feel compelled to respond, so they do with the “Reply All” feature available on virtually all email systems. Others do the same thing while others “Reply All” to the first or second or third “Reply All” message. And so it continues. To show how this situation can grow without bound, assume that one person sends the original email to five people and each of them respond to all five of initial recipient’s list and those five respond in return, a total of 31 emails would be generated. Many of the comments will be out of sync with comments made by others and confusion begins which can quickly evolve into an “email comment war”. So, my idea is to either disable the Reply All capability or add an option that allowed the originator to designate all recipients as “For your information only” or “Please comment”. Virtually every time that I share the problem and my solution with others, they all agree that it is a great idea. Clearly, this idea falls into the category of being a feature. It is hardly the basis for building an entire email system to compete with Hotmail, Gmail, or the many other well-established products that are currently available. Attempting to build a company on this idea would be even less likely.
Unfortunately, many entrepreneurs do not think through the “what’s next” step in implementing their idea and waste time and energy in the pursuit of a feature idea that clearly is best implemented by others as a logical extension of an existing product or service. Some will go so far as attempting to patent the idea. Sometimes, after two or three years or longer, a patent is granted. However, as discussed in the article in this series “Patents: Are They Worth It”, an issued patent may not provide any protection or value because of the ease of circumventing it or the cost of defending it. In some instances, the entrepreneur may be able to sell their idea or patent to an existing company. This can occur, however, it only occurs rarely. We often hear of the few successes but rarely hear of the overwhelming number of failures.
The same concept applies if the idea involves the creation of a product based on the entrepreneur’s idea. In this case, the entrepreneur may decide to form a company and be successful. However, the entrepreneur must carefully think through “what’s next” and determine if the product is a “shooting star” that has some appeal to a group of prospects or if it has long-lasting value and can continue to grow and be unique or can be leveraged to expand in different, probably related directions. Microsoft is a good example of a company that had a long-term vision but started with a single idea; a BASIC language interpreter software product that has grown into a giant corporation. At the other extreme are most of the products featured on infomercials or in As Seen on TV stores. At some point virtually all of us have seen and may even have purchased one of these unique products.
In the past few years a new phenomenon has appeared that can dramatically impact the “idea to money” path for entrepreneurs. It involves iPhone and Android apps. Today there are over one million apps available with the number growing every day. With prices ranging from free to a few dollars, many independent developers are certainly making money. Many companies are too. Data from Nielsen indicates that consumers only access, on average, about 24 applications per month. The market is, indeed, crowded and the likelihood of any new app gaining significant market share is increasingly difficult.
So, perhaps the question that an entrepreneur should ask is “should my idea be pursued as a feature or product”? After that decision is made the next question is “should it be pursued as a hobby, part time endeavor, or as a company”? The question is not intended to be judgmental about the uniqueness or value of the idea but a simple practical economic consideration that should be made.