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Monthly archives for September, 2009

Light bulbs are falling on my head, pt. 2



So, in my last post, I talked about how good it would be to have a service that does basic research and validation of ideas.  Now I want to take that a step further:  I’m imagining a service that can start with an idea and give you a company, complete with a product line, manufacturing, customer service, advertising, and distribution.  It takes the liquid mess of ideas, prototypes, distribution deals, customer insights and customer service houses and gels it into a easily transferable entity.  For fun, let’s call this proposed service Idea Coagulation.

As in the Idea Validation service, the heart of this idea is in outsourcing.  Here’s how it would work, step-by-step:

  • An ideator submits an idea to the service.  Let’s use, as an example, a toaster that sings opera.  When your toast is done, it belts out an aria from La Boheme
  • Idea Validation is a subset of this service.  It kicks in here, and working with the ideator, starts doing market and user surveys in proposed target markets around the globe
  • Idea Validation finds that people love this idea in Japan, but they’d prefer the toaster to sing songs from Man of La Mancha.  They talk this over with the ideator and hash out a concept everyone’s happy with and wants to prototype
  • The ideator can use the initial market data to start looking for preliminary funding, but I imagine this process to be cheap enough that a single, relatively well-off person could bootstrap it well into the distribution phase, especially if clever payment terms are worked out (more on this later)
  • Idea Coagulators sets up a company in the target market area.  This will be in the ideator’s name, but with someone from Idea Coagulators as acting CEO, or maybe VP.  The customer should be active here in selecting a board and figuring out the company structure, but Idea Coagulators will act as an interpreter between the ideator and whatever legal formalities the target country has for setting up a company.
  • Pulling from a global network of contractors, Idea Coagulators finds someone in the target market area–Japan, in this case, to build a prototype.  Ideally, this contract designer will be working under a larger contract manufacturing organization that has the capacity to scale as the product becomes fleshed out.
  • The ideator can check out the prototype and go back and forth with the contractor until it’s at a revision everyone’s happy with.  The contract manufacturer should start shopping the design around and getting quotes on small-to-mid scale part sourcing, assembly, packaging, shipping and customer service.  With any luck, the contract manufacturer can at least do the packaging and shipping in-house.  Customer service is easy enough to outsource, especially with someone at Idea Coagulators acting as a liason between the ideator and outsourced customer service center.  The contract manufacturer should also know a number of product assemblers that could do the job, although Idea Coagulators might have some proven firms that they suggest, as well.
  • Unless it’s a very simple product, it’s a good idea here to roll out a couple hundred beta units, both to test the manufacturing line and the product itself.  Idea Coagulators can find beta users, but it’s probably best for the ideator to get feedback on the betas directly.  It might be possible to use a service like Get Satisfaction to pull in beta feedback, if the ideator doesn’t want to do as much hands-on work to get feedback.
  • The ideator at this point should decide how the initial product roll-out will work, if it’ll be small-scale and partially bootstrapped, or if they’ll find a backer, plunk down for a large order and roll the thing out in scale.  Either the customer or someone working for the Idea Coagulator should be working out distribution deals for a couple months down the line when the product will be coming out of the factory.
  • This is probably the most complicated step of the development process–working out production contracts with all the players.  It depends on what the ideator’s operating cash is, and how long they can go between when they place an order and when they sell the product.  It’s pretty reasonable to expect one to two months between when you place an order with the contract manufacturer and when it ships out to a distributor, so if you can wrangle standard net/30 (pay within 30 days of placing the order) payment terms, the ideator only has to have about a month of operating cash on hand
  • The product starts rolling out and selling.  At this point, most of the company framework has been erected, and Idea Coagulators can start stepping out and handing it off to the ideator.  All the ideator has to do is decide how to scale the rollout, and as they grow, renew and maybe tweak (they can use Idea Coagulator’s help here) the contracts with the contract manufacturer and assembler

That may not be the way every product comes out, but it gives you an idea of how the outsourcing would work, and the role Idea Coagulators would play.  Ideally, all the ideator would have to do is wrangle the cash (and potentially, as it gets more established, Idea Coagulators could work for part royalties and part cash).  The ideator, of course, can be more involved in the process, but where this concept really shines is in a “describe the idea and hand it off” kind of situation.

There are, of course, already contracting/consulting firms that do this kind of product development.  I worked with one of them in the States.  What I envision Idea Coagulators doing differently is to take advantage of the global arbitrage in design and manufacturing.  It’s astoundingly easy to spend $100k in the states with a product development group just to get up to the brink of manufacturing, and that is simply absurd when you compare it to the prices elsewhere in the world.  There are countless cheap design firms and manufacturing houses around the world, especially in India and China, and you can get a design done and a manufacturing line built up for easily a fifth the amount you’d spend with a company in the states.  Yes, it’s a little weird working with people from a different culture halfway around the world, and Idea Coagulator’s big value-add is to smooth out that weirdness, just because they’re already experienced with this kind of work and they know the game.

At the end of the day, what Idea Cogulators would offer is the most direct, efficient route from idea to market.  It’s not a route for the perfectionist–by outsourcing pretty much an entire company, the ideator has to trust Idea Coagulators to make a reasonably good product, since it’ll be relatively hard to make changes once the company is already set up and running.  But it will work, and it’ll be an easy, well-defined way for someone who constantly comes up with ideas to get those ideas out to the world, especially when compared to the grinding, 3-to-5 year process of building up a startup from scratch.

Finally, imagine what would happen if Idea Coagulators was financially secure enough to act as a venture capital firm.  For a VC, it’s a perfect setup–all someone does is show you some potential IP, and then you have a proven, well-controlled process to build up the concept and turn it into a company.  It’s a granted that you put in your own CEO and pretty much get to call the shots in the process.  It obviates the power struggle between a VC and a company’s founders by changing the independent inventor/money holder dynamic, which is very open-ended and often adversarial, to a customer/service provider dynamic, which is much more defined, and everybody knows, more or less, what to expect.  Of course, there are nuances and obstacles, but this could be a complete game changer, leaving the big-money VCs struggling to match the cheaper, more nimble methods of idea development that Idea Coagulators can provide.

I’m very excited on this concept, and I expect to be writing much more on it.  This is certainly an unpolished thought, due in no small part to several consecutive sleepless nights in India and a midnight flight across the world tonight, but hey–every revolution’s got to start somewhere.

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light bulbs are falling on my head



Ideas are worthless.  It’s a credo of the startup community.  For overexcitable, inventive entrepreneurs with no free time, an idea, no matter how exciting it may seem, will in all likelihood end up tossed out, discarded as a casualty to the relentless onslaught of new, cooler ideas and work that has to get done on current projects.

This philosophy never sat well with me.  I love ideas.  The cocktail napkin doodling is my favorite part of the creative process, and by now, I’ve got a backlog of about 20 ideas that I think could make for viable, if not revolutionary products or businesses, plus gazillions of fun ones like the radio-controlled ice boat and the erection tweeter.  What I really want to do is bring the value back to ideas, and I’ve got a notion of how to do it.

There’s a quick and easy version, and then there’s a more capable, harder version of this plan.  I’ll start with the easy one:

Let’s say you’ve got an idea for, say, a 3D display you can touch.  You know, intrinsically, that this is very sexy tech–it’s a holy grail for haptics and TUI people, and over beers with a couple friends, you can dream up applications from gaming to medicine to nanomanipulators.  So now what?  As an inventor type, the urge is to go and build it.  I don’t want to discourage building, but in my experience, a mad, energetic launch into making a complicated prototype with no structure, detailed knowledge of markets and users, funding or other people ends a couple of weeks later with a half-finished prototype on your bench and a couple hundred dollars spent on parts online.

The ‘right’ thing to do, once you have the revolutionary idea, is to enter an ‘idea validation’ phase.  Even if you make a working prototype, there’s still no guarantee that you can actually get your idea into the hands of people for whom it makes a difference.  The US Peace Corps has implemented 47 water purification projects around the world, and not one of them is still functional.  Why?  Not because of the tech–that was fine.  It was because of, say, a group of villagers worrying that using the shiny new solar distiller would offend the spirits in the river, a problem not even on the radar of the project leaders who set everything up.  Take a second, check out the IP space, make sure you’ve got a novel idea, and then research the markets you think you can reach.  See who else is in them, where you see opportunity to out-perform the status quo, and sketch up a better definied idea of your user, what they need, what they can give you, and then–only then, move into proto mode.

Speaking as an idea-generator type, though, I don’t want to do this.  I think it’s boring.  And I’m kinda bad at it.  I would like (and here’s my big idea) to outsource my idea validation.

Imagine that you can take your idea, in its semi fleshed-out state, write it up, and hand it off to Idea Validators, Inc.  Idea Validators is a group that has ready access to good background researchers, patent searchers, and generally smart people who are capable of some basic market research.  Idea Validators will do the basic fact-checking for your idea, looking for similar products and patents.  Based on your description, they’ll give you some backgrounds on the markets you think you can hit–demographics, suggested niches, the current state of the art for your genre.  If your idea is solid enough to express to users, maybe they’ll even do some basic market surveys for you.  A few weeks later, they give you a write-up and a brief on what they think your idea is good for, and what you should do.  In return, you give them some cash.

In the long term, I like the idea of Idea Validators working for a share of your idea, if it succeeds.  But you need a lot of operating cash to pull that off, so in the beginning, it’d have to be cash.  I could imagine something like paying $10k for a year of all-the-ideas-you-can-validate, or paying by the idea.  The numbers vary, but you get the picture.

I got excited about this idea after reading Tim Ferriss’ “The four-hour work week.”  It opened up my eyes, and the feasibility of making a company like Idea Validators, by introducing me to one word:  outsourcing!

I think this is a golden opportunity to use a virtual assistant service like Your Man In India or VA4U, to name a couple.  For something like $4/hour, you basically get an intern, but a pretty good one.  College-educated, smart people in other countries will do tasks for you at very cheap rates by US standards.  It’s a great resource to do the grunt work on this kind of info gathering.

You couldn’t just hand it off–you’d need an orchestrator.  Someone who could get a good grasp of your idea and split it up into manageable tasks you could outsource, but the orchestration is a much more manageable task when you don’t have to get lost for hours doing patent searches and the like.  And even more excitingly, it’s something you could pull off without much working capital–even bootstrapping completely!

So–that’s the simple version of the idea.  There’s a full version that’s much harder to put together, but more capable and  exciting to me, but that’ll have to wait for the next blog post (it’s 2AM here in Udaipur)

Before I sign off, I want to hammer home the true utility, the revolution that a service like this would bring about.  There are very few tools to aid entrepreneurs, and the dream here is that a company like this could take the 5-10% success rate for startups (replace those numbers with whatever makes you feel comfortable) and drastically increase it just by ‘aiming’ the startups a little better as they’re gathering momentum.  Ideas are often great, just overlooked or discarded, because there’s an awful lot of gruntwork, organization and different areas of expertise in between ideation and beginning to address the problem you want to solve, and that overwhelming amount of work kills many ideas in the cocoon.  The dream is that, with tools like this one, I can simplify and improve the development of relevant solutions to the problems around us.

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The motorcycle tweets



I’m biking across the friggin Indian subcontinent.  Follow me on (I can’t believe I’m saying this) twitter!

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