Breakthrough ideas are not easy.
As the saying goes "ideas are cheap, execution is everything" these numbers express how difficult it is to go from a simple idea to run away success using patents as a means of measurement. While it is difficult for massive corporations with huge budgets to come up with breakthrough products, it is nearly impossible for the lone entrepreneur with a great idea and no money to create that game changing idea.
Even if you manage to be one of the lucky teams that actually ships a product, you are still not guaranteed success. When I say success, I mean breakthrough success. Very few products you see sold on Amazon are immensely profitable. Most just hobble along, generate a small profit margin that keeps the lights on somewhere in the world. Never returning the initial investment of time and money. Most of my Fortune 500 clients are filled with low margin and negative margin products which everyone hopes that this is the year where one of them just takes off. And almost no company has the guts to do what Ford Motor Company just did with it sedan line up.
Going back to the lone entrepreneur, back when we built consumer goods in our Xiamen factory, once a month, a bright eyed entrepreneur would show up at our gates with the next greatest golf club or widget. Some had great financial backing, others mortgaged their house to pay for tooling and that first order. Rarely did we ever see that second order. No came back with a third order. Folks used to complain that we never shipped the full order, the truth was, we were saving them being stuck with huge inventories of unsellable products. Worse was my four car garage stuffed to the ceiling with other people's unsellable products.
Even when Telsa came knocking on our doors in the very early days, we said flat out said no to them. They hadn't even shipped a car yet. Only years later do we supply them with millions of ultra low margin parts. It is nothing exciting, it keeps the lights on. The life of OEM manufacturing.
So now when entrepreneurs pitch us on some brilliant idea. We barely look at the products, the first questions out of our mouths is "show me revenue" or "show me legally binding sales contracts". Something that will indicate that there is verifiable value behind the idea and sustained traction. Until they can prove that they can sell the idea, and convince someone else to buy it at a decent margin, do we even consider investing more time to learn more about the product.
Even if the entrepreneur has raised huge amounts of money, we won't consider any deals unless we see sales contracts. There is too much easy money chasing too many very bad ideas. In the past ten years, we have been burned by so many Green Tech Startups that have raised untold millions of dollars, only to burn it all on fancy offices, incompetent staff and expensive travel to ritzy conferences to hobnob with other entrepreneurs burning investors money. Neglecting to live up to promises made and pay their bills for the people actually designing and building their products.
(If anyone interested, we have an entire grave yard of broken dreams. Along with the release of ownership and global licensing release for defaulting on the terms of the deal.)
Circling back to the point of my article. Close deals before you worry about designing or manufacturing a product. Once you have a legally binding proof point will anyone serious ever consider your idea as being legitimate. If you can't get anyone to buy, learn how to sell better. AND NOTHING REPLACES HARD WORK AND DISCIPLINE.
Credit for the data behind the infographic goes to Rob Bernshteyn, the CEO of Coupa. He was quite passionate about this space and is a wealth of knowledge.