Sean Wise - Hot or not : how to know if your business idea will fly or fail?

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Published 2011 by the Ryerson Entrepreneurship Institute

http://www.ryerson.ca/rei/

REI was created in 2008 to leverage the efforts of our award-winning Students in Free Enterprise (SIFE) team and the Entrepreneurship and Strategy Department of the Ted Rogers School of Management to make innovation and entrepreneurship support more accessible to all students and alumni from the university across diverse faculties.

REI is a university-wide program, initiated by the Office of the Provost, to motivate students and alumni to actively discover new for-profit and non-profit innovations and act on them to start up new businesses, non-profit organizations or community programs.

Copyright, Legal Notice and Disclaimer:

This publication is protected under the US Copyright Act of 1976 and all other applicable international, federal, state and local laws, and all rights are reserved, including resale rights.

You are not allowed to give, copy, distribute or sell this book to anyone else. In order to ensure compliance, a digital watermark has been inserted automatically upon download.

Please note that much of this publication is based on personal experience and anecdotal evidence. Although the author and publisher have made every reasonable attempt to achieve complete accuracy of the content in this guide, they assume no responsibility for errors or omissions. Also, you should use this information as you see fit, and at your own risk. Your particular situation may not be exactly suited to the examples illustrated here; in fact, it's likely that they won't be the same, and you should adjust your use of the information and recommendations accordingly.

Any trademarks, service marks, product names or named features are assumed to be the property of their respective owners, and are used only for reference. There is no implied endorsement if we use one of these terms.

Finally, use your head. Nothing in this book is intended to replace common sense, or legal or other professional advice. It is meant to inform and entertain the reader.

Copyright 2011, 2012, 2013
Sean Evan Wise, Toronto, Canada

This is the first in a series of Entrepreneurial Field Manuals from the Department of Entrepreneurship & Strategy at the Ted Rogers School of Management at Ryerson University. This book was made possible by:

Find out more at: http://www.ryerson.ca/ent/

To My mysa,
finder of all things lost,
most of all My heart.

The Cold, Hard, Truth by Kevin OLeary

For more than two decades, not a day has gone by for me without a pitch. In airports, in limos, in tea houses, even in an outhouse, total strangers come up to me and pitch what they promise is going to be the best thing I ever saw! So for more than two decades, not a day has gone by without my having to tell some hard working entrepreneur that their idea sucks.

The truth is that truly great ideas, ideas that lead to creative destruction and change the world forever, are few and far between. Over the last five years, Ive probably heard more than 10,000 pitches (through O'Leary Funds, Shark Tank and Dragons Den). That is a lot of pitches, folks. And, truth be told, most of them sucked. Yes, there have been some nice investments. But how many were truly disruptive ideas? How many were truly game-changing opportunities? How many were ventures that led to huge returns? Few. Great opportunities are few and far between.

It pains me to see good entrepreneurs chase bad opportunities. After all, time, energy, bandwidth and, most of all, M-O-N-E-Y, are all scarce resources. Today, there simply isnt enough time, money, or energy to pursue every idea. And that is a good thing. It leads to evolutionary economics, where only the most agile survive and only the best thrive. It is because of this scarcity (in both great opportunities and limited resources) that one has to be extremely careful of where one invests. That is true no matter what you invest: money, time, or energy. It doesnt matter if you are an investor backing a Startup with seed capital or an R&D manager deciding where to allocate limited resources to maximize innovation. You have to be picky.

As the Merchant of Truth, it is my duty to help hard working people put down their rabid dog of an idea and move on. It is my duty to hold them accountable to themselves. It is my duty to help them see the folly of their ways.

Why? Because it pains me to see talented people wilfully blind themselves to the flaws apparent to all. It hurts me to watch a family go bankrupt because their business dreams have become an entrepreneurial nightmare. It hurts me to see scarce resources like seed capital squandered. For all those reasons, and so many more, I help people find the winners and run away from the losers.

So how do can you know which opportunities to back and which opportunities to whack? How can you pick the ideas to go all in on? You can find some of these answers in the pages that follow. This book is a concise and accurate tool for opportunity evaluation. It will explain how to separate the best from the rest. If you love Dragons Den and Shark Tank, you will love this book. The advice within will save you time, money and, most of all, heartbreak.

_______________________

Over the last ten years I have spent the majority of my time evaluating entrepreneurial opportunities, first as Director of Ernst & Youngs Venture Capital Advisory Group, then as a venture capitalist for a New York based private equity firm, and most recently as the Industry Advisory for the hit business reality show, Dragons Den (a/k/a Shark Tank). Ive chaired national venture conferences, judged dozens of business plan competitions, and worked with over 15,000 entrepreneurs.

In total, I estimate that Ive heard more than 10,000 pitches. As a result, I have become very good at picking apart presentations, based not on their delivery but on their flawed content. But there are only so many hours in the day, and for every pitch I am able to coach, there are dozens that get lost in the process. I wrote this book hoping to share the tools Ive created with others.

Perhaps after using these tools investors will make better funding decisions. Perhaps after reading this entrepreneurs will be better equipped to shape their ideas into opportunities. Perhaps after reading this you will have a better understanding of why some opportunities fail while others fly.

No matter who you are (entrepreneur, student or investor), Im hoping that you will enjoy reading this text, and I hope even more that it will help you make better decisions about where to invest your precious, scarce resources (your time, your money, your mental bandwidth).

Im always looking to upgrade this text with more examples. If you have an example that you feel would be of value to include, please email me directly. Should you have any questions, concerns or suggestions, please feel free to contact me directly:

Onwards and Upwards!