Over the course of my career, I have come across entrepreneurs of all hues.
Some are bubbling with inspiration, constantly finding solutions to the problems around them. They have an almost inexhaustible supply of ideas and the energy and inclination to worry away at a problem till they’ve figured out how to solve it. They love to mend what’s broken in the world—the problems no one else has been able to solve. And once they’re done, they can’t wait to move on to the next thing that needs fixing.
I call these people Idea Factories—individuals who generate a stream of ideas with such predictable regularity that it feels as if there is an assembly line churning away inside their heads. The trouble is that more often than not, that constant stream of ideas comes in their own way. With their minds constantly grinding out new ideas, they struggle to buckle down and do what it takes to turn any one of these into a successful business. And so, these entrepreneurs, despite their indisputable brilliance, often struggle to achieve market success.
There is no such thing as a bad idea https://xkcd.com/1721
The second category of entrepreneurs is of the opposite disposition. Not only do they not have a fountain of business ideas to choose from, they are lucky if they come up with even one over the course of their career. Their skill lies in taking the germ of an idea and transforming it into a venture, building a product team, sales force and the whole operational machinery needed to transform a concept into a self-sustaining, revenue-generating business. I call this type of entrepreneur a Factory for Ideas—an individual who has what it takes to transform an idea into a revenue stream.
The first time I meet an entrepreneur, I try and slot them into one or the other category, not because I believe that one is more likely to succeed than the other, but because I know that they each have to take a different paths to achieve that success.
The Idea Factory needs space to create — so that all those ideas can bubble up to the surface and have the opportunity to develop into viable businesses. The business needs to be designed around this notion so that the Idea Factory can achieve its full potential. This calls for a team that can execute on ideas without involving the entrepreneur in any nitty-gritty details of building out the business.
To be clear, this does not mean Idea Factories should be locked away in ivory towers, tasked with doing nothing other than generating ideas. To the contrary, their problem-solving capabilities are invaluable when it comes to finding solutions to hurdles that inevitably crop up. They should, however, be sheltered from the more process-driven aspects of the business—fund raising, HR, building a sales team and developing expansion strategies.
This, however, is exactly what Factories for Ideas excel at. These are entrepreneurs who love to create teams, develop business processes and engage in the interminable negotiations with potential investors that are necessary to keep the business funded. Given a sufficiently fleshed-out idea, there is very little more that a Factory for Ideas needs to turn it into a successful business. However, when things are less well defined, a Factory for Ideas may flounder, unable to successfully pivot when the idea quickly needs to be reoriented to address, say, a shift in market demand.
We often make the mistake of conflating these two type of entrepreneurs. We expect that because our Idea Factories were smart enough to come up with an idea in the first place, they have what it takes to convert it into a successful business. Similarly, we often assume that just because the Factory for Ideas was so successful with the first business, there must be dozens more where that came from. Which is why both types of entrepreneurs often disappoint us when they collapse under the weight of our expectations.
In an ideal world, an Idea Factory should be paired with a Factory for Ideas, so that the ideas generated by one can be efficiently executed by the other. If you look closely at the founding teams of many of the most successful technology businesses today, you will find this sort of pairing. When they work well together, the companies they build will exceed all expectations.
But this sort of pairing is serendipitous. More often than not, entrepreneurs are either one or the other, and need to build a team around them to supplement the skills they do not have.
This is why I make it a point to figure out what sort of entrepreneur I am dealing with before I start offering them advice.
If I am dealing with an Idea Factory, I often advise them to establish licensing businesses. I tell them to register the intellectual property in their ideas so that they can engage someone else to turn it into a product. This way, they can get paid for their ideas without having to build a business to monetise it. And once they’ve successfully licensed it out, they can turn their attention to the next great idea bubbling inside them.
With Factories for Ideas, I see my role as tempering their enthusiasm. I try and ensure that the heady success of their first venture doesn’t lead them to believe that every successive idea will be a similar gold mine. Instead, I encourage them to leverage their experience of having successfully built a business from scratch to help other businesses scale.
It is tempting to believe that all successful technology businesses are fundamentally similar. In reality, this is never the case. True success lies in figuring out which is which.