May 07, 2006
What Are Your Rules of Opportunity Recognition?
I just listened to a great interview on Venture Voice with Fabrice Grinda.
One part of the interview that I really liked was when Fabrice talked about his nine rules for recognizing business opportunities. My personal philosophy revolves around the chart below:
I want opportunities that align an economic opportunity with my passions and strengths and lead toward my vision. This chart was adapted from the hedgehog principle in
Good to Great, which was a tool that good companies used to become great.
Below are my personal rules for aligning business opportunities:
- A Relatively Uncompetitive, Slow-Growth Market That Could Benefit from New Technologies. I'd rather be in a market where my competitors are set in their ways and don't see the potential of the Internet. If I were to choose a quickly growing market, I'd probably be competing against lots of really smart people in a winner take all market and need to raise a lot of capital just to compete. Personally, I'm interested in building a lifestyle business where the core values can be continuously be followed. A barrier to entry in this market is having to fight cultural resistance to change.
- Bootstrappable. I want to build a company that lasts for a long time and where I have the decision freedom to operate around a vision and core values. With that said, I want to be able to get into the business without giving away controlling equity to outside investors and I want to be able to grow the business at a pace where outside investors are not required. The downside of this approach is slower growth and probably less prestige.
- Scalable. I want to be in a business where I can scale the impact and the profit.
- Based on Strengths. I want to be in business where I can leverage one or more of the following strengths: knowledge/contacts/brand in internet technology, book publishing, speaking, and entrepreneurship education.
- Based on My Passions. Makes a large, lasting difference and where I can have a lifestyle that allows the maximum personal growth.
What are your rules for recognizing opportunities in your life?
Hat Tip: Dan Koifman for pointing me to the hedgehog principle. He has a great blog entry with activities you can do to recognize opportunities in your own life.
Posted at May 7, 2006 06:06 PM
Michael,
I agree that was a great interview, it actually is what prompted me to interview Fabrice on TrueNYC. It is a 28 minute interview where we talk about entrepreneurship and his success; including the 9 rules he looks for when starting a business. The link is below -- On a side note, only two weeks left until I graduate New York Law School!!!
http://www.truenyc.com/interview/lawline.html
Best,
David Schnurman
Sorry, I missed this David. I just watched the interview. Great job!!
Interesting, I just posted an entire series on how I discovered my Hedgehog Concept (through feedback from others). It's posted under my 'Articles'.
Excellent post, Mike. Your ways of looking at business and opportunities make a lot of sense to me!
Thanks.
Dave
Great post Michael!!!
It's incredible how many people jump into business ventures soley due to the economic opportunity.
I screwed up big time on this back in my Sophomore year. My buddy found a killer deal on some kitchen knives at a liquidation sale. We decided to buy in bulk thinking we could sell them on ebay and cash in huge. Who was I kidding!?! I wasn't interested in kitchen knives, nor was I experienced at selling stuff on ebay. Long story short - I never got around to even listing the knives on ebay... in fact, I think they are still collecting dust at my old college home. ha ha.
I have learned that it's not until you take a step back and see how well the opportunity fits with your passion, purpose and big picture dream (as your model clearly portrays) that you get a true sense of the potential the venture offers.
I like to 'lean into' potential ventures and see how well things flow. I have found that opportunities that are directly linked to my purpose usually 'flow' wonderfully well... and opportunities that don't 'flow' are usually unrelated to my purpose and passion. Sometimes opportunities that are linked to my purpose and passion still don't 'flow' and I take this as a sign that it isn't meant to be.
Here's an interesting point on why PASSION is so important and why I LOVE how you included it in your model:
Studies show that people with passion for their work are 127% more productive than who aren't. Therefore, if we don't have a strong passion for the venture, our competitors will out-produce, out-sell and out-perform us by 127%!
I remind myself of this statistic when choosing new ventures as passion is a BIG part of my criteria. Here are a few other criterium I have found helpful:
- Do I Like, Respect and Trust the people involved with this venture?
- Does this venture have potential to create a significant stream of residual income?
- Will this venture equip me with knowledge and experience that will help me on the journey to my long term dream?
- Does this venture allow me to focus on my strengths and leverage the experience I have to date?
- Is this venture align with several of my Values, Interests, Skills and Ambitions?
Hope this was helpful. Again, great topic Michael. Luc and I will be hangin' in NYC in a few weeks to promote our book and do some media... look forward to catching up then.
Andrew Hewitt
Co-author of The Power of Focus for College Students
Passion and market opportunity. Great post and comments on the passion part, but you need to make sure that the opportunity truly does exist. You need to take a look at the margins, start up costs, barriers to entry, market growth rates, etc.
I like to talk about my idea to as many people as possible before i start. I talk to friends, family, potential customers, potential investors, advisors, etc. I also read a lot about the area from books and the internet to gain a comprehensive viewpoint. Then I take a hard look at myself and see if I really have something that others don't to launch this venture. What is my differentiator, how will I sustain and grow against competition, etc.
