the goose

The allure or a ‘brilliant’ idea is something else. You can just about picture how – with the right idea – you don’t realy have to work that hard – the idea can do the work for you. If an idea can make you a fortune, then surely the idea itself is worth a fortune?

Not so of course. The reason for this is that it comes down to good old fashioned supply and demand. How many people do you know with a good idea for a brilliant product? If you haven’t – take a Dublin taxi some day and you’ll catch up real fast. The place is coming down with opinions on what would people would buy. Therein lies the problem. The supply of ideas is actually pretty plentiful. The problem is finding the idea that can be implemented successfully. Then of course – when you have found it – actually carrying it out is where 99% of the real work goes on. Take a look at your average patent licensing fee to recognise that.

You need to harvest thousands of ideas before you’ll find one that is worth while. You can take the effort of finding that idea (in terms of time) divide it across all the ideas out there and you end up witha reasonable valuation. Let us say that there are 100,000 ideas with the potential to generatea cool 1,000,000 in clear profit every year. Admittedly – such an idea is probably more rare than one in 100,000 but we’ll put that aside for now.

So you’ll have to wade through all of those other ideas to find the one that will hit the big time. Assuming a 5x profits valuation on the end cashflow – you need to divide 100,000 into 5,000,000 to come up with its value. That turns out to be €50 per idea. Thats €50 for a million dollar idea.