Identifying New Business Ideas Take Discipline
December 10, 2006
Case categories include: Strategy & Planning
By Robert Sher
The dream of starting a company is shared by millions, but few actually ever do. Of those that do, the majority fail to get very far. Brent Dusing had been at a couple start-ups and then was working for venture capital firm Menlo Ventures, looking at investing in other startup companies. His dream, like so many, was to start his own business.
Cellfire is the manifestation of that dream. The firm delivers paperless discount coupons to you via your cell phone. This was not an idea that begged for a business. It was a passion to start a business that found this idea. There is much to learn about the process that Mr. Dusing and his business partner Preston Tollinger used to find and settle on the optimal idea upon which to grow a business.
Ideas are Hard Work
The two men mutually selected each other after being friends for some time. Mr. Tollinger was the technologist and Mr. Dusing was the business executive. Making a careful assessment of the critical skills and experience you’ll need to start a business is paramount. You don’t have to invite everyone to be partners (if you can afford to pay them a market salary), but without the right people involved, you’ll make big mistakes that may well precipitate failure.
The process started with a $50 investment in a white board. Every three to four weeks, the two would come together to sit in front of the whiteboard. The expectations were clear. Between meetings each had an obligation to discover new ideas for the business, as well as to research the best ideas from the previous session.
I can’t emphasize the discipline these entrepreneurs exhibited at this stage. Finding a great idea for a business is not easy. It takes focus, deep thought, investigation, and most importantly, a process of working through each possibility. Everybody does it a bit different, but most successful launches are quite deliberate.
The white board would fill up with new ideas, then empty out as ideas were vetted. For eight months, they kept up the meeting and research progress. After months of searching, Mr. Dusing was beginning to get frustrated, but held it in and kept moving forward. They stepped up the frequency of their meetings and raised the level of expectations for accomplishments between meetings. The balance between a desire to get started soon and selecting an excellent opportunity was a regular discussion item.
But when is an idea good enough? When does one become guilty of analysis paralysis? Some answers that must be addressed honestly:
1. How do prospective customers react to the vision that you have?
2. Do the customers really need what you are proposing? How strong is their demand?
3. Can you make money?
4. What is the competitive landscape?
Trying to make a business work that is based on a flawed idea is very painful to everyone involved. It will make the frustration and despair of not having a great idea when you want one seem mild. Be sure that you’re researched all aspects carefully, and that a vast majority of the indications are very positive.
In October, 2004 the Cellfire idea made its first appearance on the white board. In total, there were four ideas still on the board, and one of them was looking good. Soon Cellfire jumped into the lead, and by mid-December, they were ready to commit to the concept that would become Cellfire. Spending the time off for the holidays from their full time jobs, they finished the due diligence by the end of 2004, and gave notice in early January, 2005. The firm is moving forward, working nationwide in thousands of retail locations (like Hollywood Video, TGI Fridays, and Bath and Body Works) across the country, running on hundreds of handsets, having gotten a second 10 million dollar round of funding led by Menlo Ventures, and just announced a partnership with Verizon.
This entrepreneurial dream, now real, started with a deliberate, disciplined search process by a pair of dedicated men with different skills sets. That, and a $50 white board.
• You or your team must possess all the key skills sets.
• Create a disciplined process that you follow to control and manage the search process.
• Maintain high standards for the quality of the idea you invest in.
Robert Sher is principal of CEO to CEO, specializing in assisting CEOs and business leaders as they navigate critical passages. He is the author of The Feel of the Deal; How I Built a Business through Acquisitions. He may be reached at Robert@ceotoceo.biz.
Company and Case Facts:
Company: Cellfire, Inc.
Person: Brent Dusing, CEO
Alliance Member since: 2005
Business Founded: 2005
Head Count: 30
Service: Cellfire Inc is the leader in mobile coupon technology and applications
Typical Customer: Consumers with cell phones
Written: December, 2006
Address: Cellfire, Inc., 2890 Zanker Road, Suite 200, San Jose, CA 95134