Although we are familiar with the outcome and cosmetic features of million dollar ideas, we often ignore their boring yet important aspects. This ignorance is a result of our society culture that celebrates success but ignores failures. For every successful million dollar idea there are numerous ideas that died with a whimper.
And owing to this ignorance many entrepreneurs fail to truly understand the nature of such ideas. So when it comes to their search for the life changing idea, they end up looking at the wrong place. Hence, I am taking this opportunity to highlight some of the boring yet important characteristics of such ideas.
First of all, Million Dollar Ideas are not always Unique.
Somehow the Silicon Valley and Shark Tank has implanted us with the idea that if any idea has to be worth a lot, it has to be something that has never been done. In fact a lot of ventures in the Silicon Valley have taken previous ideas and just made them better. Social Media existed before Facebook, Security and Privacy prevailed before the iPhone and Coffee was a big business before Starbucks!
What does NOT make the Idea Worth, the magic is in the HOW!
Dunkin Donuts sold coffee but what makes Starbucks different is the HOW. The same goes for what makes McDonalds or Burger King different from from the amazing burger joint across the street. Similarly AOL (America Online), Orkut and hi5 connected people but Facebook did it differently, perhaps better.
The HOW has a lot to do with not only the process but also the perception in the consumers mind. This is debatable and needs a deeper discussion, but feel free to drop your thoughts in the comments. But this brings us to the point that you can take any monotonous item like coffee or painful task like workouts, revolutionize the HOW and make it in to a million dollar idea.
Combination of Right Time and Right Place!
In simple words luck! Now imagine an iPhone on the EDGE network, well it simply would not work. And that is what happened with the first two iPhones but by the time the iPhone 3G came out, most networks upgraded their technology to support the internet bandwidth required by iPhone. Now try to imagine booking an Uber with a BlackBerry, or purchasing on eBay without PayPal.
Although the Silicon Valley has numerous examples of excellent as well as poor timing, this prevails not only with Tech but also with other industries. Can you replicate the success of Westing House Electric today? or build an Oil and Gas giant? or become a legend like Sony?
Similarly, what works in China may fail in India and startups that succeed in Silicon Valley may struggle in Bangalore. This idea of place corresponds to market reciprocation, for instance, westerners assemble their furniture while Indians hire help to build furniture, based on this premise imagine how Indian market would have reciprocated had Ikea been founded in India.
Contextual factors play a significant role to help businesses ride upon the wave of success.
Most Million Dollar Ideas cost Money, a lot of Money!
If you are still stuck with the notion that bootstrapping in the garage works out and if this notion were true, it would just eliminate one of the greatest challenges of economics called ‘Capital Inequity’. In simple terms, along with the inefficient distribution of capital, inequality in capital availability and distribution starves numerous potential businesses and innovations.
Although bootstrapping works out in few cases, it is not true for majority. For instance, it costs significant money to convert a prototype in to a production model. Because unlike the 1980s when you might get away with using a wooden chassis for your computer motherboard, today the customer has numerous options and your product has to meet certain minimum acceptable standards.
Certain Businesses (Models) are Inherently Flawed
In simple words, only GOD can scale them. Scaling requires higher margins but once the market competition has squeezed the margins or the market leader has achieved disproportional economies of scale, scaling any business in such market is next to impossible. Similarly when scaling requires capturing new markets, if the product has entered its retirement phase it may not succeed in the newer markets.
In the previous decade when BlackBerry was losing ground to Android and iOS in North America, it successfully captured new markets in Asia. In the previous decade the developing economies had been the dump ground for obsolete technologies, however, today the speed of adoption has increased and lag between the first world and developing economies has reduced.
Hence, the competitive forces of the market and fading relevance of product or concept, cause certain inherent flaws in the business models that hinder scalability.
Although there are many more aspects, these were the important ones. And you can always improve your odds of succeeding in business with better understanding of Business Fundamentals and Pricing Strategy. Or access more courses on SkillShare, by using this link you can get first month FREE.
Feature Image by Karolina Bobek ✌ on Unsplash
Savvy Munshi 