Is My Idea Worthy of a Startup

Today I had the privilege of discussing with a group of researchers, students, professors, and technology commercialization professionals a subject titled, “Can My Innovation Become a Startup?”  As a conversation starter, I put together the following slides.

  1. Product vs Feature – Is the innovation a product or a feature? A Product has a shorter less complicated path to monetization since it had fewer interdependencies than a feature.
    1. Product – A product provides sufficient value on its own to be used by an end-user. It stands-alone on its own merits.
    2. Feature – A feature enhances a product and can’t stand on its own. As an example, car brakes stop a car… they are not of much value on their own.
  2. Is There Value – This can be summed up in a simple equation:
    1. W = A > F
    2. W = Win – profitable product
    3. A = Attraction – defined as the depth of the pain created by the problem that the product addresses compared to the pain-reducing effectiveness of the product
    4. F = Friction – are the forces that could slow adoption including but not limited to: cost, product completeness, ease of installation, ease of use, competition
  3. How Big or Profitable is the Innovation – Represented by this equation:
    1. WS = AL x MS
    2. WS = Win Size 
      1. AL = Attraction Level which is PL x RL
        1. PL = Pain Level ( how big a pain)
        2. RL = Relief Level (how much the product relieves pain
        3. MS = Market Size
  4. Attraction vs. Friction – Another way of looking at the value of a product is to define attraction or level of pain relief.
    1. Vitamin – is nice to have. It may improve life. It is not essential.
    2. Aspirin – it is possible to live without aspirin but it relieves headaches and other pains and reduces fever.
    3. Anti-biotics – Saves lives!
    4. compare the attraction versus the friction of a Segway to a Lime Scooter
      1. A Segway is a slow-moving urban pedestrian transport that costs thousands of dollars. That’s low value and high friction.
      2. A lime scooter rental, are readily available on most city block streets, they move faster than an Uber in city traffic and are far less expensive
    5. Distance – Less than a year to go to market or 5
    6. Number of Hurdles
      • Raising Capital
      • Gaining Customers
      • 2 – Sided Market
      • Demand Exists
      • Availability of Talent
    7. Hurdle Height
      • Requires $1Mil or $100 Mil
      • Requires a team of 2 or a team of 200
    8. Size of the Purse – $100 Mil Exit or $1 Bil

Question? Let’s say you were thinking about an Electric Water Bottle Pez Dispenser that took $25 million and 5 years to go to market. Would you create something that stupid? No one needs it. No one wants it. How big a market is there for dumb idea like that? That’s like a marathon high hurdle race where the hurdles are set at pole vault heights while running with your feet super-glued to the track. Good luck with that.

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