How Much is an Idea Alone Worth?

There's some bizarre mythology that's been created in the startup realm that ideas themselves have an incredible monetary value. Spoiler alert: they don’t.

August 1st, 2019   |    By: Wil Schroter

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If you had the idea for Facebook before Mark Zuckerberg, you could have been worth $40 billion like good ol' Mark, right?.

Except, you couldn't. Because the idea alone isn't worth jack.

Not so sure? Ask Jonathan Abrams the incredibly talented Founder who created Friendster in 2002, around the time good ol' Zuck was graduating high school. Friendster was absolutely Facebook before Facebook, as was Hi5 and MySpace.

But unless you're a band from the mid-2000s, you're probably not maintaining a profile anywhere but "the Facebook."

Oh, and technically the idea wasn't Mark's either, but that's a whole other movie.

Why isn't an idea worth mullah?

Think of the idea like a seed.

The seed alone has the potential to be something great, but by itself, it's just a seed. The idea alone can't compete in the marketplace. It requires a ton of resources and execution for it to grow into a beautiful flower — and more often than not, very few people are capable of nurturing it properly (see MySpace, hi5, Friendster).

But aren't great startups born from great ideas?

Not the way people think they are.

Often the idea is what gets the startup formed and moving, but the difference between the initial concept and what often becomes the behemoth that we know today is vastly different.

So the idea as a standalone has very little to do with the company that it will one day become. It's just a spark, not a "this will absolutely happen" blueprint.

But I've heard you can value an idea when forming a company...

That's actually true in some cases.

Sometimes there will be some defensible intellectual property that is contributed as part of the formation of a company. If the idea comes in the form of something defensible, such as a patent, or some kind of unique discovery — like a proprietary algorithm — then it's treated more like an asset than a concept.

So my Double Decker Couch idea isn't worth a billion dollars?

It is — the moment you decide to become the person who takes it to market and beats all your competitors.

In Case You Missed It

How to find your billion-dollar idea. Alex Kistenev — Co-Founder of Standuply — shares his own personal set of techniques to coming up with better ideas for a startup.

What’s my seed-stage startup worth? How can anybody possibly place a value on something that really doesn’t exist yet, while recognizing you eventually have to put a value on it? Mike Belsito — author of Startup Seed Funding for the Rest of Us — explains.

Came up with a great startup idea? What next? Neeraj Joshi, Head of Product at Spinny — India’s largest dedicated portal for pre-owned cars — outlines 6 key steps to validate your business idea.

About the Author

Wil Schroter

Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes BizplanClarity, Fundable, Launchrock, and Zirtual.  He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement).  After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do.  He's a seasoned expert at starting companies and a total amateur at everything else.

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