You have a big idea! How much is it worth?
Cinema, journalism, and the wider media often perpetuate the curious concept that ideas carry an intrinsic monetary value. Frequent narratives insinuate not only that ideas hold value, but that they could represent the entire net worth of an enterprise.
Many times, we may find ourselves proclaiming, “That was my idea!”, responding as if our very concept has been misappropriated. The birth of an idea brings with it a subjective sentiment of ‘ownership’. There’s an inherent presumption that others do not have the right to replicate or even execute our ideas
Why an idea has no value
As a friend of mine used to say, “Ideas are like pebbles on the beach – available for anybody to pick one” (Thanks Alex). The real value isn’t in the concept itself, but rather in choosing one and then navigating the arduous path of turning it into reality.
Usually, ideas emerge as answers to pressing issues, thereby necessitating the quest for a smarter resolution. Supposing the problem is universal, the likelihood of you being the only one recognizing this issue and devising a feasible solution is low. Also, there’s a probability that countless versions of your idea are circulating, with some potentially outperforming your concept. Consequently, your brainchild is not unique – it’s merely a commodity.
An idea makes for a perfect launching pad. Yet, suggesting that flour can be evolved into bread requires impeccable execution and the ability to effectively push it into the service market.
Simple ideas bear the brunt of potential plagiarism. This might happen immediately when someone hears about it, during the manufacturing process, or once the product or service hits the market. What resists duplication, however, are the execution experience and customer acquisition. Perhaps this predicament sheds light on why companies opt to acquire other businesses – for their proven expertise in execution and their vital customer base.
But all great companies build great ideas!
Indeed!
Every successful venture we see is merely the visible part of the equation. Beneath the surface lies a multitude of unrecognized but ingenious ideas that never made it to the limelight.
We tend to perceive thriving businesses as a result solely of the original, innovative idea that initially set their wheels in motion. Nonetheless, this is far from the complete picture.
The destiny of an idea lies largely in its implementation. Entrepreneurs must genuinely ask themselves, “Do I have the necessary tools to turn this concept into reality?”
Different concepts demand divergent execution strategies and unique skills. For instance, if you’re kick-starting a Software as a Service (SaaS) business, it might demand intensive one-on-one sales, mainly if it’s a Business-to-Business (B2B) service. However, if it tends more towards a Business-to-Consumer (B2C) structure, the traditional one-customer-at-a-time approach might fall short. In the former scenario, your prowess as a salesperson is paramount, while in the latter, your marketing skillset is key.
Accurately discerning your abilities and aligning them with your true aspirations will decide whether you can or want to navigate the execution of the idea.
Really? An idea is worth nothing?
Certainly not.
Much like other areas of life, investors exhibit a variety of investment strategies when it comes to ideas, startups, and entrepreneurs. There isn’t a universal rule that applies here.
We strongly suggest checking our exclusive conversation with “Alexis Bedoret from “Make it”. His unique principles and approach towards selecting startups for investment are truly insightful.
If your idea fits into Alexis’ investment paradigm, he uses a distinctive technique to vet the idea, even before building anything or drafting a single line of software code. This approach is largely low-tech, specifically curated to measure market reception and potential paying demographics.
Once we verify the relevance of your challenge and its market alignment at this stage, there’s a possibility of investing. At this moment, your concept would be worth a cool $1,000,000 USD – an impressive sum indeed.
As a startup entrepreneur, it’s absolutely vital to find the right investor, someone who can guarantee the maximum sustainability of your unique concept.
There are situations when your concept can demand a considerable valuation, especially if it encompasses a defensible intellectual property that would contribute to the development of the enterprise. To explain it in layman’s terms, if you possess a patent, an exclusive discovery, or a particular algorithm or manufacturing procedure, it’s deemed as an extra benefit for the company.
Conclusion
The importance of concepts should not be downplayed. A well-conceived concept could offer a competitive advantage in the marketplace. However, without proper implementation and customer feedback endorsing its value, it remains just a concept.
Indeed, your target demographic plays a significant role in attracting an investor. You must determine whether having a physical product and substantial traction is necessary, or if your investor is captivated by stellar concepts.
When a concept undergoes refinement and implementation, it acquires value. This denotes an ideal state – owning something of unquestionable worth that both the investor and you can utilize to form a partnership. With just a concept, which becomes tricky to scrutinize or assess, there’s always a risk of one party in the alliance not meeting expectations. Although great ideas are attractive, their real value is determined by the implementation and team performance, integrated with the customers’ readiness to pay. In the long run, attaining profits is vital to maintain and expand a business.
Our fascination for remarkable ideas is unquestionable, yet their real meaning is steered by the team’s flawless performance in execution, and how ready the customers are to part with their money.
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