We would all be rich venture capitalists if we had the specific formula, knowledge and insight to decide which new business ideas were destined for millions in sales and which were destined to bring emotional and financial heartbreak to its founders.
As an entrepreneur, how do you know if your idea is the next YouTube or a Jump to Conclusions Mat?
For those of you not familiar with the lowbrow but highly hilarious movie Office Space, let me explain the term Jump to Conclusions Mat. Office Space is a parody of cubicle life. One character named Tom Smykowski has what he thinks is the next million dollar idea to follow the Pet Rock. His dialogue with co-workers goes like this:
Michael Bolton: You think the pet rock was a really great idea?
Tom Smykowski: Sure it was. The guy made a million dollars. You know, I had an idea like that once. A long time ago.
Peter Gibbons: Really, what was it, Tom?
Tom Smykowski: It was a “Jump to Conclusions” mat. You see, it would be this mat that you would put on the floor… and would have different CONCLUSIONS written on it that you could JUMP TO.
Michael Bolton: That’s the worst idea I’ve ever heard in my life, Tom.
Samir: Yes, this is horrible, this idea.
While I certainly don’t have an airtight formula, here are my initial thoughts on evaluating your business idea:
Signs your business idea might be economically feasible, if not destined for YouTube fate:
- It serves a significant need in the market that is real, evidenced by thoughtful research, not speculation
- You have a unique approach, skill or capability that will allow you to serve this need better than anyone else
- When you talk to people who are the target market for the product or service, they get excited about it and ask when it is going to be available
- You have the capacity, resources and support for getting the business launched in a timely manner
- You have chosen an area to which you provide value beyond cheap production price, which could be easily undercut by a competitor
- Your target market is not only interested in what you have to offer, but they have the money to pay for what you are selling
- You create a prototype and it generates buzz and interest
- You have a firm grasp of the financial metrics of your business
- If you require others to build your business, you have a network of smart and capable people who would like to work with you
- You welcome any and all feedback about your business idea, and use it to continually improve your product or service
Signs your business idea might be an expensive hobby, if not a Jump to Conclusions Mat
- You “feel” there is a market based on hunches and a few conversations
- When you discuss the idea with people who would be the target market for your product or service, they are either overcome by an embarrassing silence or are direct like Michael Bolton from Office Space and say “That is the worst business idea I have ever heard.”
- When someone challenges your idea, you get very defensive and immediately change the subject, thinking “They obviously are not smart enough to get my brilliant idea.”
- You spend hours, weeks, months and sometimes years working on the idea without ever bringing it in front of either a potential investor or customer
- You are unable to describe the true need this product or service might fill
- You business success is dependent on huge sales, without which you will quickly lose money
- You have never undertaken a venture like this before AND you don’t surround yourself with people who have
- Your personal network is very limited, and you don’t think anyone you may have worked with in the past would be willing to join you in your venture
- You view your venture as “all or nothing” and will only consider launching one business idea, regardless of feedback from others
- Deep in your gut, you are not sure this is a good idea, but you are too proud to admit it
I really welcome challenge and insight into this topic, since it would be very cool to craft a well-rounded assessment which could help new entrepreneurs test their ideas and see where the gaps are. I am an eternal optimist and hate to squash anyone’s dreams. But I feel a responsibility to not string along someone who has a business idea that truly doesn’t have any market potential.
Any VCs like Sean, if you want to weigh in, that would be great.
As it turns out in the movie, Tom Smykowski gets hit by a car, reaps a huge insurance settlement and is able to produce his beloved Jump to Conclusions Mat product. I don’t wish similar fate on any of you!
These comments have been invaluable to me as is this whole site. I thank you for your comment.
“Signs your business idea might be economically feasible, if not destined for YouTube fate:
1. It serves a significant need in the market that is real, evidenced by thoughtful research, not speculation”
“Signs your business idea might be an expensive hobby, if not a Jump to Conclusions Mat
1. You “feel” there is a market based on hunches and a few conversations”
How do you differentiate between these two? What is “thoughtful research”? How many people are enough to talk to? Assuming that you are targeting “people in cubicles”, do you realize they won’t have hours and hours to talk to people about their ideas? Who doesn’t go off of a hunch? Did Google people *know* they had the best search engine?
I’d recommend you to take a look at “myths of innovation (scott berkun)” to get a real feel for how things happen.
You had an interview with Guy Kawasaki and he said it bluntly. “Noone knows! You gotta give it a try, test the waters”. Just don’t bet your life savings on it all at once if you are not 100% sure. Save some for other future ideas.
Office Space is such a funny movie. I loved the part with the Jump to Conclusions mat.
There always seems to me to be a tension between being completely convinced that you’ll be successful (having the confidence in your idea) and just being delusional (sticking with a dumb idea even when it’s going to fail). Sometimes there’s kind of a gray area between the Jump to Conclusions mat and a brilliant idea.
I love this post! Nothing comes easy for sure. Very comprehensive though. Thanks Pamela.
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I spent a lot of money and time on a conclusion mat idea. Or at least a conclusion mat company. It has left me bitter and unhappy. I’ve had a taste of how I’d like life to be and in the same experience I’ve learned that I am unlikely to ever get there. The reality is that being successful at your own business is extremely difficult. I wish someone had told me that in a very direct way, early on. I wish I’d had a Michael Bolton in my life.
I think it’s funny that he needs to become a millionaire first, *before* creating his prototype. 🙂
And doesn’t one of the squares say “LOOSE A TURN” or something like that?
Nice article. It is the case that 80% of all millionaires did not earn or inherited their wealth. Unfortunately the media only glorifies a few ways to achieving wealth; sports, Hollywood, lottery, or something like Google. If you look at wealthy people you will see low-key folks that are frugal, own their own business, and took sometime to accumulate their wealth. However, the path to this kind of success is slow and usually boring.
I couldn’t agree more with #1 above. Don’t invest in something you have no idea about. This is the easiest and quickest way to lose money. Find what you are good at and expand on it. Like the article states, find a niche and become the best in that area. You may not be a millionaire overnight but you’ll do better than a jump to conclusions mat.
Thanks for this article!. I’ve had many jump to conclusions ideas go through my head but then I wasn’t able to tell which will ones will actually work or which ones will not and whether I am just putting these ideas on the side because I don’t have the resources such as money, network of people, or knowledege to start the venture.
And a final point to add – if you think you can build a business that makes money while you sleep, but aren’t willing to work on it when you’re awake, chances are its not going anywhere, no matter how much money you spend on PPC.
Building a company of any size takes hard work. Forgotten in the craze of MySpace and YouTube successes were how many hours were put into their creation and marketing.
Having money to invest and a good idea are just parts of the puzzle. Far too many people who want to be millionaires are looking for that easy money, and it does not exist.
This post really clicked with me. The 10 points you make are basically the thought process one needs to prepare for the next step, a business plan.
Couple of years ago, I read in Time that something like 75% Americans believe they can be millionaires. I think that’s another point worth mentioning; that this may not just be about money. It may end up that way, as in the case of YouTube (which was a garage start-up), but considering how many new businesses fail, passion and enjoyment should also be key components in the process. Those , as echoed in this blog, are the true elements of success, personally and financially.
I have a hard-time with #8. Though most companies usually do have one other person to help them get off the ground (Hotmail, Google), that would still be a limited network. Just because someone hasn’t developed a huge network of the “right” friends doesn’t mean that their business idea is a bad one and can’t take off. That just seems like a propaganda system that VC’s and the other MBA’s want you to believe in order to make themselves more viable.
I think a lot of people are guilty of #3, even the good business ideas. I know I have been. It’s your baby, your kid, you don’t want someone railing on your kid. But you’re right, that’s something that you quickly have to get over if you want to succeed.
For the JtCM list: You want people to sign an NDA to see your company logo!