Tuesday, May 05, 2009

Thoughts on Ideas and Competition

Thanks to @ubiquity I came across the Forbes article Is Your Great Idea A Real Business?. I have to say, I'm less than impressed.

The article opens with a case study:

"We were trying to find businesses that would want to buy our software, but it was hard to get new leads," says Moodley, 36. He figured other sales organizations would be willing to pay $30 a month to drum up new business through his site, which would offer more targeted information than, say, mainly free sites hosted by Bloomberg and Schwab.

Good idea, terrible timing. About four months later, after plowing $2,500 and putting hundreds of hours into a prototype, Moodley watched in horror as Google ( GOOG - news - people ) launched its own finance site, called Google Finance. "It literally looked exactly like my site," says Moodley. "I had a sinking feeling in my stomach as I clicked around and realized that their site was completely free, and I was planning to charge for the same information."

The article then goes on talk about how your business idea needs to have a strong value proposition to turn it into something more than an expensive hobby.

What I can't square is how the case study proves out their point. Look, it would have been great if Moodley had been the only game in town, but it's foolish to pretend that he'll never have a competitor. As I often tell my customers, think of yourself as a restaurant: yeah, it would be great if you were the first and only Chinese restaurant in town. But, what's stopping someone from coming, tasting your food, and saying, "hey, I can do this better."

And while brands and patents, as the article suggests can be valuable protection, the only real answer to a competitor is that you need to have a better product or service.

So yes, I'm sure it was terrifying to see that Google Finance appear. But what makes Google infallible? Just look at how NetFlix handled one of the worlds largest retailers coming into its territory. And why not leverage Google for comparison's sake ("this service is so essential, Google's offering it. Though, our service is better, and here's why...")?

The article continues with the classic refrain: most businesses fail, so before you get started, really think this through.

Exactly how is this helpful advice? Yes, you absolutely need dedication to see your idea through - but there are far more helpful ways to figure out if your business idea is worth pursuing. In fact, here's 4 suggestions to getting started, if you're looking for that sort of thing.

Maybe it's this dreary day outside that's putting me in a sour mood, but I just wasn't impressed by Forbe's advice. I think they can do better.

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