I remember back in the day (read: dot com pre-bubble) when a business plan and a naive investor could get you seed money. Most of those deals were very similar to the housing bubble in that they both relied on “sight unseen” mentalities and very little information was transferred before a decision was made to invest. Looking back we can see the error in our ways. Very little thought was put into logistics, design, architecture, project management, marketing, and every other segment of running a business.
The business deal went more like this, “Dude, I was taking a shower today and I have this AMAZING idea for a diaper delivery service. How many babies are there in the world? Like 8 billion…and they all diapers right? RIGHT!?!?! We’re going to be the next Excite!” So they pitch the idea, get some start up money and fail hard.
How much was their million dollar idea worth? Well, not a million dollars. Idea.worth = (Seed money)*-1 – (Time.invested x $perhour) plus a bunch of other accounting line items like depreciation on goods purchased and loss of reputation to all involved.
The moral of the story is that ideas aren’t worth very much. The value is in the execution.
As a developer I am approached weekly if not daily to help out with the next big thing. They have an idea and I have the skills to make the idea a reality. Most of the time however, the idea holder wants to retain most of the equity in the business and I’m a little confused as to why.
Say you and I were having dinner downtown and you say to me, “Wow, a western themed bar and grill would KILL down here. We should totally build one.” The caveat is that you only think it’s a good idea. You lack the capital, resources, and know-how as to how to make that happen. I, however, can design, build, and operate said restaurant and so I think about it, talk with my business analyst and decide that indeed it is a good investment and continue to build it out.
After the ribbon cutting it does actually turn a profit. It does so well in fact that we end up franchising and make millions of dollars. It’s about this point when the “idea guy” shows up again and says, “You stole my idea! I’m going to sue.” Don’t get me wrong. I’m not condoning IP theft when the theft is a patented idea or source code but I’m speaking of getting out what you put into a business. I’m sure some people out there will rebut saying that it can take a lifetime of training and education to have the mental capacity to be able to formulate the next big thing and there IS some merit to that. However, the time and energy that is put into a project from the development side can make or break the idea; either taking it to that next level or driving it into the ground.