You have a great idea. It’s not just any great idea. It’s a GREAT idea. A break-the-bank idea. A Shark Tank feeding frenzy idea. But before you start picking out the pocket square you’re going to sport for your Fortune magazine cover story in which you prove you’re smarter than Mark Cuban and Marcus Lemonis combined, you need to know one thing: Your great idea isn’t good enough.
We don’t mean to burst your bubble or pour cold water on your dreams. We want to help add some pragmatic strategy to your great idea so that you can turn your idea into real money.
We’ve talked to enough startups and companies to know that an idea is far from a guarantee of success.
Now for the good news: A great idea is a great start. And at Worthwhile, we have worked with enough startups and companies launching new products to help you take your great idea and turn it into something truly valuable.
So congratulations on your great idea. Now let’s get started on your to-do list with these five things.
(By the way, this list is specifically tailored for people launching a startup or new product with a digital aspect. But I think any entrepreneur can find some helpful thoughts below.)
1. You have to build a loyal audience.
Your idea isn’t going to go anywhere if you don’t have a loyal audience. And the dirty truth of startups and inventions is that no one else is going to build that audience for you.
In our experience with startups, one recurring theme is how little thought the founders have paid to the difficulty of filling a marketing funnel that will lead to sales.
This audience needs to be numerous, and it has to be loyal enough to click a button to make a purchase.
I learned this the hard way when I was with a previous employer. We were helping a partner company launch a new product. It was innovative, creative, and cutting-edge. We had loaded it with quality and were looking to build buzz.
So we launched a funny promo video on YouTube—and it exploded. YouTube made it a featured home page video, and we hit 1 million views in about four days.
This was back in 2006. In today’s numbers, that level of vitality would probably be equal to 10 million views in a week. It’s not quite Pokemon Go-level viral, but we had a lot of eyeballs.
We thought we were set for a great launch. Joke’s on us, because we could not have been more wrong.
We sold less than 50 subscriptions of this online product, and it was dead within four months. This great idea wasn’t good enough, and even a great idea that went viral was not enough.
Why did it happen? Because our audience wasn’t loyal. We had a lot of rubberneckers, but not a lot of purchasers. When you’re evaluating the audience you’re building, you need to understand how many of them are just window-shopping and how many are actually willing to make a purchase.
When you’re thinking of purchases, don’t just think about the final step in the checkout process. Everything you ask an audience member to do is basically a sale. And every one of these sales will knock people out of your funnel.
Want someone to sign up for your email list? That’s a sale that will knock out a huge portion of your audience. A SumoMe analysis earlier this year showed that the average conversion rate for this particular request is just 1%.
That means for every 100 people in your audience, you get one email address. And you haven’t gotten a nickel out of the person behind that address yet. Like I said, it’s hard to build a loyal audience that’s actually ready to buy.
Maybe you don’t want a nickel out of that person. Maybe you just want to get that person to download an awesome free mobile app so you can sell advertising.
Well, getting someone to download an app is another sale. That’s because iPhone and Android storage space is a valuable commodity—maybe more valuable than a nominal download charge of $1.99 or $4.99. The Ringer recently broke down the dilemma users face in terms of phone storage because of the proliferation of photos and videos that eat up space.
This is why you need more than an audience—you need a loyal audience. You need an audience that wants to hear what you have to say enough to give you an email address. You need an audience that thinks your idea is so great that it will delete a selfie from last year’s beach vacation or forgo a Pumpkin Spice Latte in order to use it.
Without enough of those kinds of loyal people, your idea is going to fail.
2. You have to convince investors.
Building a loyal audience isn’t the only crowd you’ll need to gather. You’ll likely also need to gather an investor or group of investors who believe in your idea enough to put money behind it.
Typically, the first round of funding comes from the idea’s founder, or maybe from a small collection of friends and family. This money may help you create a prototype to advance your idea and show how it will work. It probably won’t be enough money to fully get your idea to market.
Before long, you’ll likely find yourself in front of angel investors—people willing to put relatively small amounts of money into new ideas in hopes of hitting it big.
A good idea is not enough to convince investors. You need to make a clear case and show how your idea can actually turn into a product or a business.
Getting angel investment is a nice step forward, but that’s usually only enough money to get started. And it’s far from a guarantee of success. The secret is that angel investors plan on hitting it big on only a small percentage of investments. One angel investor network leader puts it this way: “You have to swing at enough good pitches to hit home runs that make up for the strikeouts.”
Make sure you don’t miss the underlying point here: while you see your great idea as a home run, angel investors see scores of ideas and know that lots of great ones strike out for any number of reasons. They won’t be attached to your idea, so you need to make a compelling pitch to them so that they give you money and then continue to support you and help your idea grow.
You’re not just an entrepreneur with an idea—you’re a sales person, at least at this stage. And the truth is, your success in moving past this stage probably has more to do with your sales skills than with the quality of your idea.
Angel investment isn’t the end of the road. You may still have to pitch to venture capitalists or potential acquiring companies before your idea is an established, successful company or product.
It’s a long road with lots of pitches. And it’s an unavoidable part of making your great idea an actual success (that is, unless you’re independently wealthy).
3. You have to build working software.
If your idea is a digital product or service, you have to get your idea to work before you can sell it to potential investors or potential customers.
Our experience at Worthwhile tells us that many people struggle to think conceptually. In other words, they need to start seeing a website or web app or mobile app actually working before they can begin to understand its potential power.
No matter how excited you are about your idea, a large chunk of people won’t really catch the fever until it works—at least in prototype form.
So how do you do this? You have some options:
- Hire a developer to build software for you.
- Figure out a way to build software yourself. If you’re building a website, this is easy and inexpensive thanks to tools like Squarespace, Wix, and WordPress. If you’re building a mobile app or web app, you might have more of a learning curve to climb.
- Build a working prototype that shows front-end functionality. This can be a quicker solution. While it doesn’t have all the features, it will give people a taste of how your idea will work.
Regardless of which approach you choose, it’s wise to start small with an MVP. Don’t spend time or money building added features that are bells and whistles instead of the core of your system. Users may show you different ways or even different features that will work better than what you are planning.
Remember, the goal here is to give a taste that gets people excited. That will let you build momentum and keep your idea on the right path.
4. You have to admit you’re not the expert about your idea.
The thing that makes entrepreneurs excited about their ideas can also be a blind spot that endangers that idea.
The team behind Meerkat shows the power of this message. In 2015, they created a live video app and made a huge splash. But within months, a competitor emerged in Periscope, and then Facebook added Facebook Live. The market got crowded quickly.
The Meerkat team, however, saw what was happening and was ready to pivot. While many entrepreneurs would be so focused on one great idea that they ignored the changing landscape, the Meerkat team was different. So they focused on Houseparty, a group video-chat application, for six months before news got out. By the time they closed Meerkat in mid-2016, they already had a million Houseparty users. They were ready to gain success with a new idea instead of clinging to the original idea that was going down the tubes.
Why did they pivot? Because they understood that their users knew more about their idea than they did. Co-founder Ben Rubin put it this way: “The category of broadcast wasn’t breaking as a daily habit…it’s too far away from the everyday user. The mission of our company has always been to connect people in the most human way possible while physically apart. Not only do we believe that Houseparty is a better manifestation of that vision, but also the market has shown us that too…spreading the app simply by word of mouth.”
Rubin is basically admitting that users had a different idea of what they needed than Meerkat did. So the team pivoted. If it hadn’t, they would be dead in the water now.
Too many entrepreneurs hold their ideas too preciously. You need to listen closely to user feedback—as well as what experienced entrepreneurs and investors are saying—and be willing to pivot. Otherwise, you’ll go down with the ship, when there were clear seas ahead had you changed course by a few degrees.
5. You have to have a realistic exit strategy.
It’s easy for entrepreneurs who have a great idea to get blinded by the dollar signs of other startups who hit it big. That leads them to think too highly of the real-world value of their business at the moment, and expect someone to write a check with a lot of zeroes just to get in on the action.
You’ve seen this happen on Shark Tank—people who completely overvalue their business and get mocked for it by the ruthless sharks. Veteran entrepreneurs call this the exit—the moment when you sell and let someone else take your idea and run.
It’s wise to think through an exit strategy. How long can you fund your idea on your own, or with the funds you’ve secured? As importantly, how long do you want to run a business built around this idea? Is that what you want to do for the rest of your life, or would you prefer to get it off the ground and into the marketplace and then hand it off to someone else?
Use these questions to determine a realistic exit strategy. Then use that strategy to help determine your decisions at the beginning. Do you need to secure intellectual property with patents and trademarks? Do you need to push for the most possible revenue, or show profit by keeping expenses especially trim?
These questions will make your desired exit possible. But to get there, you’re going to have to deliver on getting the idea to solid state. And you’re going to need to have a realistic view of where your company’s value is—not what it could potentially be in an ideal world at some point in the future.
I hope you don’t see this post as a couple thousand words designed to crush your dreams. Instead, the goal is to present an extremely practical view of what has to happen for a good idea to become a successful product or business.
When this is done well, it can really pay off. The New York Times demonstrated how MailChimp has done this with skill, precision, wisdom, and realism. You can do it too.
Are you the entrepreneur who’s good enough to take a good idea the distance? If you don’t know yet, talk to people or companies who have been there before, and find out what steps you need to take next.
As a consumer, I want to see more good ideas in the market. As a strategist, I want to see you get your good idea to the market. So let’s all get to work getting our good ideas into the marketplace.