That moment you realize you have an idea worth a business is a great moment. Sometimes it’s an epiphany on the road to Damascus. Sometimes it’s a slow dawning after a grind lasting several years. But however it happens, it’s time to sit back and go “huh.” It’s an achievement.
Most large corporations interested in continuing to exist generate ideas all of the time, as a matter of course. These ideas, generated by scientists or creatives, are noted, catalogued and vetted. With the promising ones, perhaps the inventor/employee fills out a patent disclosure form and a provisions patent application is filed.
But the rest of the ideas? They are just embodiments of the old adage that you have to kiss a lot of frogs before you find your prince or princess. You never get to the good ones unless you generate a lot of bad ones.
The fact is, most ideas suck.
I’m not writing to talk about bad ideas, though. I want to write about what high-potential start-up technology companies should first do with their good ideas.
Joseph Lassiter of Harvard Business School says a high-potential technology startup is one that plans to hit the $50 million per year mark in new product/service sales within 5 years.”
A new one-off auto battery retail store down the road, no matter how impressive the owners are, is not a high potential technology startup. But, the company that holes up in a garage in an industrial park developing an electricity storage product that is based on an idea that came out of a major university technology transfer office and could disrupt the solar energy marketplace probably is one. It almost certainly wants to sell its products to every big or small solar energy producer anywhere in the world and will do whatever it takes to get there.
Ideas are just that: Ideas. Even the ones that are good are worthless – at least on the day they’re are created. You can’t patent an idea, you can’t trademark an idea, you can’t copyright an idea, and your idea by itself doesn’t make a very valuable trade secret.
We tend to focus on ideas, on genius and creativity, the light bulb, the “Eureka” moment. But let’s be honest. There’s very little more poignant than the unfulfilled “Idea Person,” the person who thinks she could have been a contender in business if she’d just had the time/just had the money/just had the team to fulfill all of the dreams in her head. You have to do something with an idea, and chances are our “Idea Person” just didn’t stick with it – if only to get to the liberating point of understanding that the idea was not, really, in fact a contender.
I’ll be posting a series of blogs laying out five top things a high potential technology founder needs to do immediately if she wants to deliver on all of the high potential her idea might possess. I’ll be addressing the founder as “you.”
Number 1: Decide if you want a co-founder.
The direction here may have something to do with just how big is your idea. If this is the big idea, and if your high potential idea means someone has to develop the app and someone has to sell the product and someone has to be able to do the magic that quants can do with Excel, and this is all starting from scratch, then maybe you don’t want to start off alone.
This very first decision – whether to go it alone or bring one or more trusted folks into the founder’s tent – ties in completely to what resources you have available to you.
When founding a company, there are three basic assets you can make use of: human capital, social capital, and financial capital.
- Human capital means knowledge derived from formal education and the skills derived from prior experience. A founder with a great amount of human capital can reduce the chances he will get blindsided by something he really should have known could happen. Some call it “wisdom.” I believe you can have a lot of wisdom even when you’re 24 if you’ve studied a lot and worked a lot and kept your eyes open. And there are loads of people my age (which is older than that) who are don’t have wisdom. Point is, if you don’t have it, your human capital is less than optimal, and you may want access to it from someone else.
- Social capital means the benefits that come from your place in information and communication networks. A startup must project itself outward, whether it’s to hire people, raise money, sell, or any number of other things. If you are an industry insider, or if you just know a lot of people, or you just love networking events, then you might have a lot of social capital. If you’re someone who just doesn’t get out much, then maybe your own social capital is, shall we say, lacking.
- Financial capital means, well, I think we know what that means. For a founder, if you have “screw-you money,” if you can quit your job and pay for all of the costs of the new company until its projected time to become successful or not, then that’s a blessing. It’s a fairly rare blessing.
A major reason you co-found is to make up for the kind, or kinds, of capital you lack.
One researcher’s long-term study found that solo founders accounted for less than 20% percent of technology startups.
If you are a person with an idea, a sober-minded business plan might lead you to the conclusion that you need one or more cofounders if you are going to create a real business, and you might already know who they are. Or you might need to go looking. Either way, there’s someone close to coming up with the same idea in Portland, so best to get moving.
I’ll follow up soon with the 2nd action a founder needs to take after deciding to make a go of their great idea. Meanwhile, if you have any questions about the content of this article or on any business startup issue, please contact me or any of our business lawyers.