Are ideas just multipliers of execution?
You may have heard that ideas are multipliers of execution, and that you need to combine great ideas with great execution to make a business, which is true.
But having a great idea and executing it well does not always make a successful business.
You could have a brilliant idea that you execute brilliantly, and you still end up with a failed business, if you are not serving a large enough market, nor filling a strong enough need.
The size of your market tells you how far your business can grow, and the strength of its need tells you how much you can charge for your idea.
And for your business to succeed, you need enough people paying you enough money.
In other words, businesses are not just multipliers of ideas and execution, they are also multipliers of the market and its need.
Building on Derek Sivers’ brilliant idea multiplier, here is the business multiplier:
BUSINESS = MARKET x NEED x IDEA x EXECUTION
Non-existing market = 0
Tiny market = 1
Small market = 10
Medium market = 100
Big market = 500
Giant market = 1,000
— — —
No need = 0
Weak need = 1
So-so need = 5
Strong need = 10
Desperate need = 100
— — —
Awful idea = 0
Weak idea = 1
So-so idea = 5
Good idea= 10
Great idea= 20
Brilliant idea= 50
— — —
No execution = $0
Weak execution = $1
So-so execution = $10
Good execution = $100
Great execution = $1,000
Brilliant execution= $10,000
A business with a good idea (10) filling a strong need (10) in a medium market (100) with great execution ($1,000) is worth $10,000,000.
On the other hand, a business with a great idea (20) filling a weak need (1) in a tiny market (1) with brilliant execution ($10,000) is worth $200,000.
Derek built CDBaby to fill a strong need (sell music) in a medium market (indie musicians) with a great idea (online store) and a great execution (you should read his book), that’s 10*100*20*$1,000 = $20M.
CDBaby was sold for $22M.
The business multiplier formula also shows that you do not need a large market or a brilliant execution to succeed; You can build a $2M business in a small market, if you fill a strong need with a great idea and a great execution.
