Ideas Marketplace

Eureka Ranch Technology is launching an ideas marketplace, Planet Eureka for brining together individuals with ideas and small businesses and big corporations looking for ideas. As the WSJ says, it is meant to help “small businesses looking to find a hot idea — or trying to sell a hot idea to big company”

Their site says, “Research indicates Small Business start-ups are 10 times more successful executing innovations than corporations (SBA, Journal of Mkt. Research, Ranch Research).”

I question the premise and the conclusion they draw from the research. The first point is trivial, correlation does not mean causation. The other main argument is that Eureka is only looking at data on successful ideas. What about the unsuccessful ideas? What proportion of the failures come from small businesses?

They do not provide link to the research and the data they looked at. Even if the claim can be taken at face value, what does it say about the ideas themselves? How is a big corporation going to find the needle in the haystack?

I believe ideas are not that difficult to find, especially for businesses that know how to execute profitably. If the idea is to link the patented ideas with executioners, doesn’t the patent database already fill that role?

I found some of the research alluded to in their website at SBA.gov, it is in the 2004 report to the president(PDF), page 183. The article has this important caution:

A few preliminary words must also be said to avoid misunderstanding of just what it is that is to be explained. It is not the hypothesis here that a large percentage of entrepreneurs employ innovation in the new firms they create. On the contrary, the evidence, imperfect though it is, suggests that most new firms are virtual replicas of many firms already in existence, and there is nothing innovative about them. Second, there is no suggestion here that even among that relatively uncommon species, the innovative entrepreneur, the preponderant focus is on anything that can reasonably be deemed breakthrough innovations. Here again, casual empiricism indicates the reverse—that the bulk of the novelties they introduce are only slightly better mousetraps.

that among the (rare) innovations that can be considered to be radical, a disproportionate share is provided by independent innovators and their affiliated entrepreneurs.

It does not say anything about successful execution of ideas but does say a lot about the quality of ideas.

Ideas marketplace is not a new idea and an unnecessary execution.

Business Plan Doctor

Who is a business plan doctor?
Professor Rashi Glazer of UC Berkeley said he has a reputation as a “business plan doctor”. When many of the startups whose business plans get rejected turn to Glazer for help. He described how the typical call would go,

Founders: We heard you are the business plan doctor could you help us?
Glazer: Let me ask you something about your business plan.
You say in your plan you have a great product,
you describe the founders as smart people from Berkeley and Stanford,
in the market section you show hockey stick growth,
and in your competitor section you have three words, There is none.

Founders: (very excited that they got the right guy), Yes on all, so would you help?

Glazer: I just told you what the problem is. Your market description and competitor section do not agree. Any market that is growing at the rate you describe is going to have competitors. Saying there is none convinces the VCs that either you did not do your work or that the market isn’t really there. If you think it is indeed a new product with no competitors think about the substitutes. No one is going to believe you when you say there are no competitors. When there are no competitors there are no customers too.