It’s 1 a.m. I should be in bed getting kicked around by my 2-year-old who, for some reason, we decided not to train to sleep on his own. It’s (probably) our last child, we thought, so we’ll never have a baby in our bed again. Bad idea.
Like all bad ideas, at first it felt good. But if we knew then what we know now, we’d probably choose evenings to ourselves.
And that brings me to the idea coursing through my thoughts, keeping me awake. Isn’t it all about recognizing bad ideas from good? If you accept that promotion, quit your job, launch a new business, or sign up to head a new project, your trajectory rises or falls based on your ability to recognize the good idea from the bad.
This afternoon I interviewed two people who know how to do this well. Sacha Labourey was CTO of and part of the team that built JBoss, which sold to Red Hat in 2006 for at least $350 million. John Vrionis, a managing director with Lightspeed Venture Partners, has a long list of accomplishments as a tech investor including being named a top investor in the cloud market by GigaOM in 2012.
Sacha and John have a proven record of identifying good opportunities early and both are now behind CloudBees, a software firm looking to disrupt the middleware market.
I asked each how they recognized a good opportunity early and got surprisingly similar answers. They pointed to three factors you should consider, which might give you the insight you need to prioritize the right project. I am hoping it will give me some clarity as I juggle raising capital for my digital strategy tool, finding investments for my Outthinker Fund, doing more keynote speeches, launching my TV show, supportign my training program, and doing more consulting.
1. Look for new land: Why fight for old land when you can stake out your homestead on newly created uncontested territory? Sacha and John have both seen how cloud computing has disrupted the software stack and yet middleware—the software that sits between operating systems and applications—has remained relatively unchanged. Fast forward to a world where Software as a Service (SaaS) really dominates and you will see that middleware will need to go through a radical transformation. What is more, traditional players are so invested in the old approach, they will resist destroying their businesses to go where they know they must go. This gives CloudBees a runway free of real competitive pressures to build a leading position.
What current trends tell you your idea is pursuing new land?
Of the irons I have in the fire, only my digital tool gets "new land" points. With everyone now connected and accustomed to social collaboration, they will naturally next want to collaborate in a structured way—not just bat around ideas, but focus on efficiently co-creating a strategy. The TV show and fund get partial points.
2. Bet on the team: Poor management, skills, habits, culture, or interpersonal dynamics will kill off the value of any opportunity. But if you can build a team with skills that fit a "new land" opportunity, you may become unstoppable.
Are your skills and team uniquely aligned with your opportunity?
In my case, I have an amazing team behind the fund and awesome representation for my speaking and training. The key is to ask, for the other opportunities, what is the probability I can find equally capable partners or teammates?
3. Go to the money: Even if you attack new land with the perfect team, there is the risk that the land will be worthless. As Warren Buffett said, "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
Every business has unique margins and economics. Which opportunity holds the greatest payoff for you?
In my case, I see three. My speaking fees would give me more than the salary I want. The digital tool offers the biggest near-term payoff potential. Making money from the fund will take five years of proving ourselves, but then I we can launch a substantial fund that makes more money than any of my other opportunities. So this lens says I should pursue three horizons: speaking to create cash flow, digital tool for near-term payoff potential, and fund for the long-term.
To decide which priority you should focus on today, consider three lenses:
1. Where is the new land?
2. Which land is your team uniquely capable of attacking?
3. How valuable is that land?
What other frameworks have you seen that can help us identify good ideas early...and avoid bad choices?
[Image: Flickr user anyjazz65]