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!