July 02, 2005

Is your idea a project, product, or a company?

Adam Shah has some good advice:

Before getting too excited about your latest idea, ask yourself if it's a project, a product or a company.
A project is some useful and innovative tool or service, but unlike a product, it's unclear if anybody will enough pay for it to justify its manufacture (and delivery, i.e. through channels) -- much less whether this is still true in the presence of substitutes and knockoffs. Products are projects that are sellable-- they have financing, designs that incorporate feedback from prospects or customers ("people who can pay enough"), reasonable quality controls and processes, legal representation, etc.
A company is a product with headroom: infrastructure to grow, a fleshed-out management team, the ability to create multiple products, etc. Since companies can be tiny and have one product, the real distinction between "product" and "company" is whether the financial returns of the product justifies the corporate structure necessary to make it successful. A classic problem is starting a company that doesn't attract enough capital or talent to give it life beyond the founder's personal investments in time and money, thus starving the company of longevity, the ability to weather storms, the plethora of different skills to execute on the vision, etc.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.