What Is The Value Of An Idea? How Do You Sell It?

Just about every conference I go to where there are serial entrepreneurs and business owner the question about the "Value of an Idea" pops up in one form or another.  It usually isn't that direct.

Normally it starts out with someone approaching me and telling me their great idea.  They will spend several minutes elaborating on how this idea can be monetized and how they are going to get rich.  At some point the conversation turns and they say something like this, "So what do you think?  Do you want to take this and run with it?"

To begin with my answer is always a resounding "No".  The funny ones are the people who come back year after year.  Sometimes they are worried I will "steal" their idea.  One guy wanted me to sign an NDA before telling me anything.  Obviously I have no idea what his great idea was.

When this happened last week it occurred to me that all these people are really asking is "What is the value of my idea?"  They are also indirectly asking if it is good enough for me.

I have a couple of simple rules that I live by, mostly because I figured out doing otherwise meant I ended up working for free for someone else.  The first rule of course is "follow the money".  Anytime I see something crazy on the news or in politics, it is easy to follow the money to find the real issue.  Most people won't do the homework though.

The second rule is that I don't take financial or business advice from anyone making less than I do.  In fact, I use 5x as a rule.  All of my coaches make at least five times the money I make.  Yes the coach has a coach.  In one area the coach makes less than I do overall, but makes several times what I make in that specific area, which passes the litmus test.

So how does this relate to the value of an idea?  Basically if your track record is that of Sam Ginn, then I'll listen, and maybe want to get involved.  The first time I met Mr. Ginn, I wasn't following that rule and it cost me.  Instead I listened to me. The same was true when I met Sandy Lerner.  Two strikes is all I needed.

For everyone else, until you have proven that YOU can add value to an idea, it is just that, an idea.  Nothing more than electrons in your brain moving around in a way that only you can truly understand it.  Even if you have a working product, it may not have any more value yet.

The value of an idea has two main variables.  First is the number of people it solves a problem for.  The bigger that number, the bigger the potential value.  Second is a factor on which you are able to execute.  If your ability to execute on your idea is zero, and you know how to deliver clean water to everyone, guess what?  The value of your idea is zero.

Last year a friend of mine presented a nice little office product.  It was something he wanted and felt the world needed.  I looked at it for several days, talked about it with other potential users and asked if they would buy it.  The answer was no across the board.  The problem it solved wasn't a pain point with any of us, so the idea, while nice, needed to compete on price alone with existing products.  How fun is that?

Occasionally someone gets lucky and sees the value of an idea and buys it or rents it from the person who had the idea.  Bill Gates saw the value of PC-DOS and bought it, making himself among the richest in the world.   Ever hear of Seattle Computer Products?  Didn't think so, they created QDOS and later PC-DOS which is what Bill Gates bought to create MS-DOS.

To Seattle Computer Products, PC-DOS was a necessity for them.  They didn't see the real value.  What they did though was have a working product that someone could buy, and Bill Gates did.  Even PC-DOS was more than an idea when Microsoft took it over.

The genius of Microsoft was asking IBM for a very small cut of the PC sales at IBM in exchange for MS-DOS.  I am amazed at how many times people ask me to take over their idea and give them 50%.   50% of an idea that has no value is still $0.  The value isn't the idea, it is the execution.  The idea is simply the starting point.

That is why Bill Gates, Warren Buffet, Sam Ginn and Sandy Lerner can all give me advice anytime.  They know how to execute.  The value is 99.995% in the execution.

So what is the value of an idea? Nothing.  Absolutely nothing until you build it to prove it works to solve a problem or convince someone else of its ability to solve a problem.  Even then the value is still very close to .005% until you execute.

While it is true you can't execute without an idea, the idea doesn't solve a problem for one person without exection.  Solving problems is where the money is hiding.