An Idea is not a Company
An idea is not a company. It does not matter if it’s a bad idea, like a $200 battery operated Jonathon Perrelli (JP) designed water bottle and connected phone app that feeds fuel pods to humans (in other words a glorified liquid PEZ dispenser). A bad idea is not a company just as a great idea like sliced bread is not a company.
There are several requirements to qualify as a legitimate company and those requirements include engaged constituents, team members, customers, industry partners. and a product. Sorry JP, but an idea is not a product and LifeFuels is simply a bad idea with no product, no customers and no sales is neither a product nor company.
The other day, I was approached by young ideator (having an idea does not make you an entrepreneur), in search of the answer to the question, how to turn his idea into a company.
He began his presentation by citing all the societal and health benefits of his product. They were easy to understand and yes, it could improve health outcomes. I got his point in two minutes. It was a good idea. Unfortunately for him, an Idea is not a company.
Now even though I kept assuring the lad that I saw the benefits of the product, he kept piling on benefits and research until my ears were bleeding. For 15 straight minutes, he continued with his monologue piling on benefit and research data without taking a breath until I said… timeout… I get it! I get it.
I said, “I fully understand how it works and why it could be useful. But, you’re also telling me you need $40 thousand dollars to build a prototype, and that prototype will either prove your products works or not. So we don’t know if the idea is technically feasible. Once you proved the technical feasibility you’d have to prove that there are enough people willing to pay you more than your costs of goods to buy your product. If you could do that, you have the start of a company. I’m sorry, but an idea is not a company.”
This young ideator was passionate about his idea, he must have thought I didn’t see the brilliance of the idea because his answer to that was to go back to all the reasons why it’s good, why it’s needed, why the world would be better if he could take it to market.
Unfortunately, this kid was about twenty ifs away from finding out if maybe his good idea could be a commercial success. He was 20 ifs from a maybe. His first problem.. why would any for-profit-minded investor place any capital on this good idea that may not work and if it did work may not sell? His idea had multiple risk hurdles to cross before probably failing.
Here’s the biggest problem to his idea, it was an elegant, high-tech, expensive method that could be accomplished much more simply. It’s like a water bottle that connects to your phone to tell you tell you you drank 12 ounces of water after you drank 12 ounces of water from a 12-ounce water bottle. The problem with that idea, if a person didn’t have enough brain power to realize that drinking 12 ounces of water out of a 12-ounce bottle of water means you drank 12 ounces of water… how the hell would they figure out how to use a phone app? Shoot, if you don’t know drinking 12 ounces of water means you drank 12 ounces of water, you barely have the intelligence to breathe in and out, much less order a liquid PEZ dispenser online.
The biggest hurdle to this kid turning his idea into a company was that even if he could raise the money to build a prototype, the prototype would only prove that low-tech, existing methods weren’t going to be displaced by his over-engineered expensive idea. No one wanted a better mousetrap. So there was no need to design a Rube Goldberg improvement to something that is simple, affordable, and effective.
And still, he went back to the research. This ideator was in love with the idea and didn’t seem to care that it was not a company. An idea is not a company.
Great he has passion, go follow your passion… unfortunately, passion is a lot like an idea… it’s not a company either. With the exception of bordellos, passion does not pay bills.