So you’re having a shower (where all truly great ideas come from) and it suddenly hits you like a blinding light from heaven…..the most incredibly brilliant business idea to build out a domain you’ve ever had! There’s just one problem, what’s next?
So many great ideas remain just that, a great idea and nothing more. Just today I was approached by a domainer to purchase a domain name and as a part of their pitch they told me that it would be fantastic as a particularly type of business. Based upon this “idea” they believed the price of the domain was justifiably inflated.
My immediate thought was to ponder, if it was such a great idea why didn’t they build the domain into a business themselves? Let’s face it, they were trying to price the domain based upon all the work that I would do to create a profitable business. That just doesn’t work for me….
A domain has value but don’t fall into the mistake of pricing in, not just the value of your domain but also the value of a mythical business that the buyer would have to create on it. Many domain owners make this mistake and wonder why they don’t sell any of their inventory.
Let’s put the pricing discussion aside for now as it’s the subject of another blog series. So how do you move from an idea to a profitable business?
For the past 34 years (time does fly!) I’ve been identifying opportunities, developing, selling and building businesses….most of them online or back in the days of bulletin board systems. A solid grounding in my MBA (Master of Business Administration) tempered with experience has helped me to quickly analyse opportunities to ascertain whether they are real or not.
I get pitched ideas all the time but I hate to say it most ideas are a complete distraction from what I could be doing. Every now and then something comes along which is worth further investigation but it’s rare to find the diamond in the rough.
I’ll be completely open and honest so I do apologise if I’m a little blunt. Most successful entrepreneurs DO NOT have a shortage of opportunities. They are in a deal stream that allows them to pick and choose which one to put their effort and possibly finances into. When you pitch your idea to get a successful business person involved then you need to be aware that it has to be really compelling.
Likewise, be careful whom you pitch to. Some people are sharks and will devour you with preference shares and equity ratchets, while others are fair and reasonable. The question you need to ask is what does the potential investor bring to the party…..and it had better not just be money.
As an example, let me share with you how my company, ParkLogic was founded. I will cut a long story short in an effort to focus on the pertinent points I'm raising.
I’d just sold a large domain portfolio which allowed me to enjoy six months touring the USA with my family, get my pilot’s license and do some other really cool stuff. I wasn’t in a hurry to leap into a business for business sake but I was very interested in learning how to improve myself personally. In Maslow’s hierarchy of needs, I wanted to spend some time working on “self-actualisation”…..the top tip of the triangle.
This sounds introspective but it was an important personal goal that focused my attention on why I would found my next business. I did a personal “check up” and concluded that I had a lot of strengths but like most people I also had a lot of weaknesses. Rather than going out solo I decided that it would be in my best interest to find a partner that complimented my skill set. This would allow me to learn how to improve my weaknesses and ideally improve myself.
As I said, I wasn’t in a hurry so I thought about a lot of people I knew and settled on one individual who has been my current business partner and co-founder of ParkLogic for the past ten years. He has an incredible amount of experience and our skills almost perfectly complement one another. Also, high on my list of potential partners was the fact that he is highly ethical.
So how did I get him onboard? I pitched the opportunities in the domain industry and essentially gave him half the business. From my perspective, ParkLogic was worth zero at the beginning and since I wanted to get a partner involved whom I could learn from I decided to make the offer compelling.
So what’s it been like over the years? Ninety-nine percent of the time it’s been fantastic and the one percent has been either one of us learning a great deal from one another. I’ve learned an incredible amount and my co-founder has as well. ParkLogic has grown dramatically and has gone from strength to strength where we’re now optimising domain traffic for people all over the world.
So many people get hung up on equity and how much they are giving away but they really haven’t sorted out why they are getting into business in the first place. They try and drive crazy deals or pitch to anyone that happens to have some money. In my opinion, this is a highly questionable strategy.
Remember, if you really want a partner, don’t rush, and get the right one. Go after them and make your pitch really compelling! Right now, your equity is essentially worthless but with the right partner it could be worth a LOT more. Think about yourself and what you want BEFORE you launch your business.
In the next article, I’m going to use myself as a case study and propose how you may get me involved in your new or existing venture. What do I look for and what do I bring to the table? Hopefully you will be able to use these thoughts to attract someone to your business.
