Friday, April 27, 2007

Business Ideas R.I.P.

This entry is about ideas I killed because there is a business or technical problem with them.

I was contacted by another man named Michael Langford, from Nevada, and he mentioned this blog has been vague about what was being done and not being done (although also read my other blog, Grog and Vittles, where I'm anything but vague).

What often happens with Rowdy Labs is that I start with an idea for a product. I throw together a line drawn mockup of it, then look for the following things while developing the technical side of things:
  1. Someone selling it already
  2. Someone is developing it already
  3. The business models it would be compatible with
  4. Estimates of the capital it would require
  5. Other businesses in the past that tried and failed (and why)
  6. What stimulus in my environment generated the idea

Someone selling it already

Yup. It happens. For instance, product #1, a hydroponic herb grower for your kitchen (have you priced the herbs that the supermarket sells?). As one of the only people I've met who has never smoked weed (a fact my parents teased me about when they found out when I was 22), the most prolific users of hydroponics didn't even cross my mind.

The idea was to work off the razor blade model, sell the hydroponics at cost, sell software and fertilizer packs to keep the kits going.

First of all, market research turned up who *REALLY* would buy this system. I don't have a moral problem with that, just I didn't really want legal problems with that. However I think the number of people who'd go to a Sharper Image or William Sonoma and was high enough that I'd be okay on that angle.

What really killed this product was the fact I saw it already being sold to the exact market I wanted to sell it in. It was in the "Buy all this stuff" magazine they put in the back of airplane seats on a flight back from Miami.

Someone developing it already

While many people say competition is an indication of the existence of a market, I say that the easiest markets are one where you're not fighting off someone 100 times your size all the time. I am an engineer, so I have a better chance of cheaply entering a new market with a novel product (especially a software product) than someone who'd have to pay for that. Then again, if someone is developing something that is functionally equivalent, however doesn't want to or can't focus on your particular implementation style of the idea, then I say go for it, especially if you can cheaply, and all the other stars align.

Just because Showaholic already does find all the local shows of your favorite bands, doesn't mean I can't do it too if I can do it cheaply enough, do it with a different angle (like finding nearby chow or finding cool people with common interests who'd also like to go to it), and do it at all (by myself or with a partner). And yes, this was another idea that got put off (but not originally for this reason).

The business models it would be compatible with

How can this idea make money? The first web boom suffered horribly from 2 things: Venture Capitol being invested stupidly and no business models. Really, these companies had no idea how to make money with their inventions and companies.

So the idea is to figure out how you get money from the idea, and why that's going to work. For instance:

  1. Design Hydroponic Herb Grower
  2. Manufacture Hydroponic Herb Grower
  3. Create Web Site Selling Hydroponic Herb Grower and Herb Fertilizer
  4. Promote through adwords, advertisements in in-flight magazines, high-end interior designer magazines, and through grocery store displays
  5. Profit from the markup on the Fertilizer and a small markup on the grower itself.

  1. Provide way for people to see their saved wishlist on their cell phone and even buy items off it.
  2. People do some comparison shopping/real world examination of the object in the store.
  3. People buy the object through their cell phone web page while out in the store and are shocked by the higher prices.
  4. Revenue comes from Amazon associates

  1. Start technical blog on how to do different types of embedded programming (that means programming that goes inside devices that aren't desktop or laptop computers).
  2. Write blog about that
  3. Sell in-depth ebooks on the topic

See all the above have something in common: They have a point where you get paid.

I'm almost to the point where I am going to publish for stealing what I've previously put out as "The Big Idea" for other people to implement, as I can't see the profit anymore after a recent trend in banking fee changes (although I think it would make the US in particular a much better place). It might be repairable though, so I'm going to sit on it for a bit.

Estimates of the capital it would require

Some ideas take money. Some don't. I like the ones that don't, as I think venture funded companies often sacrifice a lot to achieve scary growth. Innovations of late is what really makes web 2.0 companies do well. Innovations making this number smaller all the time include: Easy to use programming libraries, commodity priced server space hosted and backed up for you, and as I read today, Amazon will even warehouse and fulfill orders for you. Today is the day to run a company, as the price of business is lower than ever before.

Other businesses of the past that have tried this (and failed)

Who says an idea has to be original? Many online pharmacies died in the 90's, many today are alive and well. Blogging platforms have failed and failed. Some have succeeded. The key here is to find out these reasons were accidental or related to actual fundamental business or technology features of the businesses. Today is not yesterday, many things are fundamentally easier (or even possible today) where they were out of reach in 1998.

What stimulus in my environment caused the idea

Contrary to some people's illusions of their own grandeur, ideas are combinations of previously existent ideas. Sometimes these are very off the wall ideas, so the combination is extremely novel, but at heart, our brains are combination machines. (This isn't my idea, this is Arthur Koestler's)

The reason why this is important because I don't want to be either a> inadvertently stealing an idea from the web that I can't do better, or b> doing something that has been exposed to so many people I'm going to have 1000 instant competitors. Also, if it comes from another person who'll talk to me, they also could be a very fruitful partner it the pursuit.



Blogger Justin said...

Wandered over to showaholic yesterday. Gone.

June 07, 2007 7:46 PM  

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