What Constitutes a Great Idea for a Web-based Business? It has to be unique, right? The market must be huge! There needs to be a great way to monetize the idea so investors can earn back their investment in 3-5 years. The business should fall in a sector where there are many well-capitalized firms to potentially buy it. Of course, the hot ideas need to be in alternative energy. Isn’t that what everyone is talking about?
So which of the above do I think are the most and least important?I HAVE NO IDEA. But my guess is that none of them are most important. It has to be unique. What about Google, Facebook, YouTube, Amazon, eBay? There were other search engines, social media sites, video sites, book sellers and exchanges well before any of these sites were launched. But look, each of these are runaway hits. What about the large market argument? Yeah, this one probably has some merit, but in many of these cases there was no market before the sites became successful.
When I’m being pitched web-business ideas I first want to see that the entrepreneur is both passionate about his/her idea AND knows the space inside and out. Preferably, they are experts in their space and have years of inside knowledge. About a year ago a friend introduced me to a senior executive from a large east coast-based company. The company was in the memorabilia space and was very successful. They were a mature company with over $40 million in annual sales. Their CEO put this guy in charge of finding out how they could get into the online dating space. Why? Because he read an article about plentyoffish.com, a free dating site started by a young guy who is making millions of dollars a year with ZERO employees (take a look at this Inc Magazine artcle — warning, prepared to be jeolous!).
These guy knew nothing about the dating business or the web, had zero experience with online marketing, Google Adwords, SEM, SEO, etc., etc. I suggested that if they were to enter the online space that they should focus on something they knew, which was plenty given their success in their current market. I don’t think the guy liked my advice because I never heard from them again! Sure investors look for great ideas, in establshed markets and business plans that have clear exit strategies. But above all, they are looking at the team behind the idea. A team that is knowledgable about the space and passionate about their idea.
Looking for some inspiration? Here are two great places to start. Techcrunch’s Elevator Pitch site showcases 60 second video pitches by CEO’s who are looking for funding. Go2web20.net is a search engine directory of new Web 2.0 web sites — presumably many of these sites were recently funded. What do you think? Do many of these ideas make sense? Will they turn into sustainable companies? Can you do better? I believe you can!