"Bud, I got an idea." 

He had this huge smile on his face.

There’s my dad, standing in the middle of the kitchen, hair kind of fumbled, t-shirt and jeans, holding three empty water bottles. Pops at this time was an already established entrepreneur but was trying to find new ways so that he and I could eat. And of course, save for climbing adventures which we've gone on since I was a kid.

“I did the research, there is a lot of competition, and there’s, of course, some risk involved. Losing money, time... but I got an idea for a premium water bottle. How great would it be to have the beach on the back of a water bottle, it would look better than Fiji water!”

So he invested... A damn good sum of money, in the 5 figure area. And about 1000 hours of development time, in a year.

He made a prototype - “Here we go bud, take a look: I had Kim paint the picture in the background, looks great doesn’t it?”

He picked the bottle, the cap type, he did the market research, he found suppliers to supply the water, and even had an artist paint a painting for the background of the bottles. To the best of his ability at the time, he was able to identify the risk involved. 

In his eyes it was all ready to go and sell, except - well, it turned out the entry into the market was extremely difficult, with lots of capital needed to initially get going. Also, it didn’t seem that people were all that willing to buy water for a more premium price if they didn’t know the brand. So Dad invested money, 1000 hours of his time, made a prototype, and now it’s the most expensive piece of plastic in his office.

this example represents the way people and companies handle ideas. 

Think of a friend or a colleague that has had a similar scenario. Or perhaps a manager at your company that had a brilliant idea. It happens all the time. Everyone has ideas, and everyone that has an idea, who truly believes in it, will usually never let anyone tell them it’s not a good idea or help them understand the true risk involved. 

They just go and build it. Sad face. 

With private people and ideas, the scenario usually turns out the way my dads did: it hurts, you lose a lot of time and money, potentially losing everything you own, depending on how much you put on the line. But ultimately, you learn from it.

If you’re sitting there reading this while working for a corporate, then you know how different this scenario plays out: 

Manager A has a brilliant idea that will make the company millions. He pitches the idea to Manager B and C using buzzwords like “Agile”, “Tech”, “Apps” (maybe even “Blockchain and Bitcoin”) and “bean bag chairs.” Manager B and C, who don’t understand what those words really mean, think that this will make them look great and that they know how the future will unfold. So they give Manager A the money to go build the idea and to come back in 1 year with successful results, which they define as: 100+ headcount, 1 functioning prototype, 35% increase in budget for expansion of facilities, ROI set at 20% in a minimum of 3 years, and the additional support of a traditional consultancy searching for the next “killer app.”  

To their surprise, after 1 year, a prototype has been built, the idea ended up costing 300% more than the original amount, customers don’t like it and don’t need it, and now it has the attention of the board. Oh boy. Manager B and C are in a jam. They have two clear options: 

Option 1: Reduce funding and learn first what went wrong, before making any further decisions 

Option 2: 

• Replace Manager A with Manager A+, to go fix all of the problems clearly started by Manager A
• Add 300 people to fix the problem
• Set budget at 30 million euro
• Build 3 prototypes instead of 1 

Looks like they’re going for option 2! And the cycle repeats. 

The main issue from both private people, Start-ups, SME’s to Corporates, is the way ideas have been developed, which have been high-risk the entire time.

It’s not the market, or the customer - it’s the natural jump-off-a-cliff and build-a-product mentality in which the idea is developed.

It’s the one where it runs the high risk of not solving a problem, for anyone. 

It’s pretty common knowledge that 90% of startups fail.

48% of them fail because of no market need.

Aka, they’re not solving a problem. 

How about de-risking everything when it comes to an idea: even the phase before my dad spent a penny on his water bottles.

A scenario that when you release your idea you don't wait to see how it does, but rather people call you to tell you what they think. They’re willing to pay for it,  because they see the value in having it as a part of their lives. They talk about it to their friends, they recommend it online: This is what it’s like when you nail the problem space and produce something that people love!

CHANGE YOUR MENTALITY, through science. 

If you read through this site or follow us, Lutz and I talk about the Venture Pyramid a lot. 

It’s a mentality and a guide, which will change the way that you think of developing your idea, forever. Instead of developing ideas on leaps of faith, develop them through assumption validation, experiments and educated decisions. 

Lots of Startups and new Corporate Digital Initiatives out there advertise: "We get shit done." - Such an example of a sign could be seen hanging on their walls in their offices, or in a manifesto they whip out during presentations:

Our response to that is usually: "Yeah, but do you get the right shit done? or do you just produce shit that is actual waste?"

So I changed the sign to a more truthful one, to reflect what they're actually doing. Can you see the change I made? 

We ourselves are entrepreneurs that have been testing this mentality out on ourselves and close friends, with much success. We also have the experience of watching too many companies fail over and over by continuing with this "get shit done" mentality - and, frankly, we just got sick of it.

We realized that with a basic guide, it will help get your mind around this mentality. The Venture Pyramid was born. It's simple really. Start with “What problem am I trying to solve?”, and start to validate each way up. By validate, I mean, prove that each step of the pyramid is complete in your eyes through experimentation and validation of each step. 

What you do with your ideas is up to you - but if you want help, this is what has worked for us, and we’re here for you. 

At least my dad wishes we were there for his water bottle 14 years ago. Could have saved him those 1000 hours too. 

Love you, Pops. 

ABOUT Jonathan

Jonathan Najarian is a co-founder of the innovation consultancy Swan Ventures which offers services that help you climb the Venture Pyramid with speed, low risk and low cost. Jonathan is a serial-intrapreneur and passionate about helping people change. He also writes as if he were sitting next to you, telling you the story in person.

Feel free to write Jonathan here: Jonathan.najarian@swan.ventures (yup, without the .com)