All of them average to about 30%.
But yeah, you’re right, you won’t get 30% ROI because they already have all the capital they need and so shares in one will be very expensive.
What do you guys think about pitching an idea/method/invention/product to an existing company? And then your business plan/model wouldn’t technically be about starting your own business PER SE, but how your idea/etc can be assimilated in a business environment? Wouldn’t that be a lot less risky than starting your own company? And if so, why do so many people attempt to start their own companies when they could just do it this way?
Any tips on protecting your idea or divvying up ownership? A company is easy to sell equity in, but perhaps an idea is more difficult?
There’s are patents but those are so risky and difficult esp nowadays where everything’s set up to suck every penny out of the inventor and give nothing back. Especially with an “abstract” idea like mine, which by the way is a unique use of Augmented Reality (technology where you put on a visor device and see holographic visuals all around you in real interactive 3D for many different purposes.)
You guys are great, thanks for all the info!
Nobody cares about ideas. You’ll quickly find this if you’re in “pre-startup” mode and try to get investors to sign NDA’s. Ideas are cheaper than a dime a dozen, and essentially worthless. The real rarity in this world is high-quality execution.
Indeed, companies won’t even LISTEN to ideas in the way you propose - not only are they worthless, it opens them up to a small risk of hassle / liability because some kook will try to sue them for stealing “their idea” when the company had that idea in R&D for the last 3 years.
The sole exception are the patents you dismiss, and even a lot of those are very difficult to monetize, and rarely end up getting you paid unless you have a fleet of ravening attack-lawyers at your beck and call. This is because Conglomco, the big company who you would have tried to pitch your idea to, can come up with alternate ways of doing your patented idea if it’s all that great.
All in all, this just isn’t a workable path to riches or recognition. If you really want to get paid for all your clever ideas, start working on getting really good at high quality execution. If you can do THAT well, then you’re set, and your ideas will actually do you some good.
I’m not seeing that in your linked article. (It looks like 19% to me, in the table they give. And that’s for one year - I believe Rx companies have boom and bust cycles as new drugs are brought to market and come off patent.)
Well that is disgustingly depressing.
What I’m struggling with now is what balance your advice should should be:
A) heeded
B) ignored, by the infinitely-refrained axiom by people who succeed “Don’t let anyone tell you it can’t be done”; for example, some of the advice in this video:
50 Entrepreneurs share priceless advice
E.g. (paraphrased) “Understand that nobody cares about your idea; it’s your job to go out and convince the world (etc)” which addresses the first line in your post “Nobody cares about ideas”.
There aren’t any easy paths to taking over planet Earth and making your idea a multi-million or -billion dollar enterprise. Why is approaching businneses any harder than starting your own company? I’m one person, you need a team to execute as you say an idea. People work at companies. How am I supposed to find people who don’t work at companies? The homeless? If Bob is a valuable team member and likes the project, why not ask him to ask around the company he works for if anyone else likes the idea? Like his boss?
Can you define “idea” and “execute” bit more? What if I have solid groundwork, such as concept images and video, patent drafting, a website, business plan, etc., etc.? Is that all an “idea” still, or is any of that “execution”?
Do you have an actual product, real sales, an approved or pending patent? What you listed doesn’t really sound like much, and doesn’t make sense to me. If this is an idea that you want a business to just pay you to start using, what do you need a business plan and website for?
What you can do is to get a patent and a prototype. Then try to sell it to existing businesses. You can do a licensing deal where they manufacture the item and pay you a certain amount per item or manufacture them yourself and sell them to the business.
The reason ideas are worthless is that everyone has ideas. It isn’t your idea for your product that will make you successful, it’s all in execution. I used to work for a guy who literally came up with 3-4 business or product ideas every day for years. Out of that he had developed one into a very successful profitable company that got bought out by AOL back in the early days and made him a ton of money. When I worked for him he was trying to develop another idea. Out of the hundreds of ideas he had, and dozens and dozens of patents, he had worked hard on just two of them. Probably he could have tried to develop some of his other ideas into workable businesses, but he was a mortal man who could only work 18 hours a day, and he didn’t have time to work on his side projects when focused on his main business.
Anyway, there are lots and lots of profitable businesses out there, and most of them aren’t profitable because they have a great idea. If you run a profitable car wash or doughnut shop it’s not because you came up with the idea of washing cars or frying dough in oil, it’s because you know how to manage the business. This is why people always say that ideas aren’t worth anything. Even if you have a great idea for a product that people would buy, can you turn that idea into a profitable business? The first is easy, the second is extremely difficult.
All of that is just at the level of an idea. There needs to be some reason for investors to believe you can deliver on that idea. Anyone can create ideas for amazing products, but making them a reality is hard. Someone like Elon Musk can get funding based on just an idea, but that’s because he has a history of taking an idea to reality.
What you should be doing at this point is making your idea a reality somehow. Start creating prototypes. Get your friends involved and motivated to work for free (or shares of the company). At this beginning stage, you shouldn’t need much money. It should be you and some buddies spending long hours trying to make something work to demonstrate your idea. Once you can demonstrate some prototypes to wow investors, then maybe you can get people to actually buy in.
If you and your assembled team don’t have the skills necessary to create the prototype, then it’s unlikely you’ll get funding. So make sure your idea is something which you and your team could actually create.
Think about Facebook. It started with a bunch of college kids recruiting their friends to make the website. They gave shares of the company in exchange for that work. Once the website started to gain traction, then they could get investors interested. But if they had gone to investors when it was just an idea of a website for your friends, no one would care. They had to make it a reality before they could get any investor interested.
Nope. Those things are way, way off. I need to find people who can put the idea to hardware, help protect it legally, and then eventually sell it. Consider all the projects that take years of development before they reach the market. I’m one person and this will take a team. I’ve been at it for 6 years part-time, so all of that groundwork has weight. I think a big point is when you have something OF SOME SUBSTANCE, then there’s usually a way to get other people on board to add to that. If I have X, Y, Z, A, B, Q, items, then other people can look at all that and say “OK, cool, I see what this idea is about, let’s hand this to some other people and see what they can do with it.”
The website is just a medium to put up all the material so people can access it (privately, in the sense I don’t want it publicly on the web).
Why is a business plan/model ever a bad idea? Every idea anyone’s ever had could theoretically be used as the foundation of–or as a component of–a profitable business. A plan/model just says “This is how this idea can be assimilated into the business environment”. Even if a company is just going to be using it, it still makes sense to quantify the product in terms of business, e.g. what TEAM is needed to execute this idea, or what MARKET does it apply to, etc.
But what if I’m penniless and NOT an engineer? A lawyer and engineer are skills I hope to attract to my project.
Why is what I’m doing NOT already execution? I’m already taking care of multiple roles, such as
A) the legal role of drawing up (some) patent drafting
B) the role developing hundreds pf conceptual images that show what the idea looks like
C) creating videos that “pitch” the concept to investors, in a seminar-way
D) the business-etc role of drawing up a business plan/model
E) website building & SEO
Those are roles executing the basic “idea”, right?
What I need to attract is engineers that can put the idea to hardware, and lawyers who can help polish/submit the patent.
Can’t you have enough groundwork to convince someone, somewhere to throw money at the further development of a project? People aren’t completely stupid. What if I had a blueprint for the best skyscraper ever?
What the heck is the difference between recruiting my friends, and emailing other people on Earth to see if they want to be my friends and help with this process you’re talking about of making the idea into reality?
It’s just the reality of getting people to work on your idea. Friends and acquaintances are going to be more likely to commit to doing the work. Random people aren’t going to work for free unless there is some good reason to join. But who knows? It could work. There’s always a chance.
Some games are developed like you mention from random people, but that is because the founder has some sort of track record. So if you find out that the developer of your favorite game is writing a new one and looking for volunteers to help, you might jump on board because you want to contribute.
How does anybody know that a building made from that blueprint will be strong, durable, and affordable? If you want to attract investors, build a prototype. If it costs money to build a prototype…well, that’s the catch, ain’t it? This is why founders often live wretched lives for a few (or even many) years before their idea starts attracting investors: they’ve got day jobs, but they’re putting all of their spare time and money into developing Version 1.0 of their software or hardware in the hopes that they can find an investor who doesn’t think their project is insanely risky.
Want investors? Convince them that your idea will probably make money. The most convincing (and least risky) case is a finished (if slightly rough) product that’s getting good reviews from a limited rollout and needs money to tool up for large-scale production and marketing. Slightly less convincing (and more risky) is one-of-a-kind prototype software or hardware that demonstrates the concept doesn’t violate the laws of the universe, along with an analysis that says “we should be able to make these for $X and sell them for $Y” (where Y>X). Least convincing (and most risky) is a drawing that indicates “this is how I think it can be made, and it should work.” The only way that last case works is if you’re a person with a proven performance record
The greater the vision required by investors, the fewer investors you’re going to attract.
By “execution” I just meant going from the idea to establishing a profitable business. You don’t have a profitable business yet. A business plan is a plan for how to turn your idea into a business, which is great, but it’s just a plan.
If you don’t have your patent yet, check out Patent It Yourself. Even if you decide you want a patent agent or patent attorney, it will walk you through the process so you won’t be surprised.
Thanks SO much for all your help, guys. A lot of useful information. Still have to throw in a dose of “don’t let people tell you it can’t be done”, but overall, very helpful!
I’d define “execute” simply as “prove that real people will buy your product or service for more than it costs you to deliver it to them”.
Once you can do that, established players will be interested in buying your project. Then you decide if you want to cash out or keep riding the train to see if you can become the next Mark Zuckerberg.
No one is saying it can’t be done. What they are saying is “It’s incredibly hard work, time consuming and fraught with peril. Most people fail. If there was an easy way to do this, everyone would be successful at doing it.”
As many posters have been saying, only ONE thing on this list has to be air-tight, and then diving into the morass (metaphor alert :)) of pre-seed, seed, and VC rounds with people who have money and a passing interest in the general technology.
Door D. They think about that, pass it round and run the numbers.
You might want to look into something like Kickstarter. You don’t need anything more than idea. If people think it’s good enough, they’ll contribute to make your idea a reality.
Kickstarter is close-but-no-cigar for me. The rules/etc say you need a solid ending point. My project is something that could takes years of development until it’s a final consumer product. Actually the bigger minus would be exposing the world to my idea before it’s patented.
Yes, but you lack anything of substance. You’ve got an idea and have drawn some pics, but you don’t have a prototype, any sales, or really anything to show that this idea is actually worth money.
So you what you need is to attract is people to do the actual work to make your idea into something valuable. Why would people choose to do work to benefit you instead of either working at a regular job with low risk, or working on their own idea?
You don’t have a blueprint for the best skyscraper ever. You have an idea of making the best skyscraper ever, and some concept art, but you’re looking for an architect to actually draw the blueprint for you. Sure you can do groundwork, but you need real groundwork, like a patent, a prototype, or actual sales.