The Scoring Form is broken into 14 areas please fill out all areas as completely as possibly so we can give you the best analysis possible.

The Size of the Problem

There are many problems in search of entrepreneurial-driven solutions; in fact, that is where most solutions to societies problems come from – the insight, energy, judgment and drive of entrepreneurs. But, problems that can be solved by aggregating people into an online or mobile community are a whole ‘nother kettle of fish.

If everything we need to know to solve life’s many problems already exists, and does not have to be invented, discovered or built, but is “out there somewhere”, then by aggregating people into crowds and accepting the hypothesis that there is great wisdom in crowds, solutions should eventually be found to every problem. Although, this hypothesis cannot possibly be true, because it would assume the finiteness of problems, even if it is partially true – one-tenth true – then there are many communities that can be launched to bring together people to rub up against each other, create molecular energy, let sparks fly, and arrive at some elegant solutions.

For awhile, online and mobile communities will be fun-oriented, and that is to be expected. Every society since the beginning of time has had its music, its games and its art. To these will be added hunter-gatherer activities, food preparation, spiritual events, medical research and the sharing of wealth-protection information and gossip or reputation management in all its various forms. Follow the evolution of humankind, read Foucalt’s Pendulum, study the guilds and associations of the 15th through the 19th centuries, and you will see how problems were addressed through collaborative efforts pre-Internet and cellular phone. Copy one or two of these models, and fasten your seat belt for takeoff.

In measuring the size of the problem that you will attempt to solve, first determine the number of people who suffer from the problem, and assume they would pay $20 per year to eliminate or alleviate it from their lives. If 20,000,000 people suffer from the problem, then the size of the opportunity that you are addressing is:

20,000,000 x $20 = $400,000,000

If you can add several more revenue channels, to the $20 per annum subscription fee, then you are addressing an opportunity in the one billion dollar range. You will definitely want to move swiftly to capture the lion’s share of this huge market.

It is often the case in conceiving entrepreneurial opportunities that your solution can address two needs. For example, I am a fan of the University of Tennessee Volunteers football. However, I live in Northern New Mexico and cannot get a daily dose of Knoxville sports radio talk shows to satiate my need for Southeastern Conference sports gossip, injury reports and the like. I would pay $20 a month to access a content player on the dashboard of my car for 30 minutes a day and then listen to a play-by-play of the game on Saturday. I would visit the community that offered me this, plus “Rocky Top” – the Vol’s fight song – as my ring tone. I am certain that I’m not the only fan of Division 1 sports who lives thousands of miles from the University that he loves; there have got to be hundreds of thousands of old failed jocks like me yearning for the sounds and smells of old Ivy on an autumn Saturday afternoon.

The entrepreneur who brings this solution to me will need to license the content from the Universities, a not terribly difficult assignment, since it is “found money” to them. He will have to line up some advertisers to supplement the subscription fees that I and the other old failed jocks pay. And, then he will have to sell the people like me to pay a subscription upfront, to reduce the need for capital. That’s a three-part sale – license the content from 250 University athletic departments, find sponsors who want to reach this particular market of old failed jocks and collect money from the users. Once the old failed jocks are happily involved in the gossip, jibes, predictions, coaches’ interviews, injury reports and nuances of the season, they will generate a lot of content from their “glory” days on campus and perhaps begin trading memorabilia. New marketing opportunities could open up, enlarging revenues still farther.

Always be open for multi-linear multi-channel entrepreneurial opportunities. They are complex to pull off, and it is often that level of complexity that serves as your buffer and keeps competitors from entering the marketplace against you.

Size of Problem (Please select score from below)

The Elegance of the Solution

It is not only complexity that keeps competitors at bay, it is more often dumbness. For example, when Fred Smith launched FedEx, his solution involved flying all packages to a central hub in Memphis, TN, then sorting them at the hub, and putting them on new planes in the early morning hours to be flown to the intended destinations.

Nobody in the personal health and fitness field copied Jean Nidetch when she started Weight Watchers International on the premise that overweight people would willingly pay her two dollars to drive downtown to a hotel conference room and stand up in a room full of overweight people to complain how fat they have become. In less than five years, Mrs. Neditch’s company and brand had a recognition factor of 91 percent. Her solution was delivered so very elegantly, and she did not brag about it to the media. She kept a very low profile.

A vital component of delivering an elegant solution is to do it quietly and without publicity. If you raise capital, do not advertise it. If you capture one million users, keep your mouth shut. Be silent and remain so until you are much larger. Subscribers to online and mobile communities will give you their trust and some from of payment if you appear small, like a rookie, somewhat naive and iconoclastic of installed old media, rather than a suck-up to old media. They will help you build your community through trust and word of mouth marketing, but you must reward their trust at the most trenchantly gut level – by earning it and never selling them out with old media tactics such as carpet bombing them with ads or renting their names to e-spammers.

Elegance of Solution (Please select score from below)

The Judgment of Entrepreneurs

The greatest thinker and writer on the subject of management, Peter H. Drucker, wrote:

“Managers must know how to do the right thing. They can hire people to do things right.”

When you launch your online or mobile community, you will become a manager perhaps for the first time. The most important actions you will take each day – and there will be 25 or more decisions to make each day – will require you to do the right thing. You will often have to make these decisions on the fly or while multi-tasking. That is very difficult, and my best advice to you is put off the decisions until your head is clear and your phones aren’t ringing off their hooks. If you need to call on the advice of a mentor or trusted friend before acting, then do so. Your judgment will get better over time and you will be able to make decisions more quickly.

Putting together an entrepreneurial team is critical. You will need allies “to do things right” such as a CTO and a bookkeeper or CFO, and perhaps a head of sales and marketing or of content licensing or someone to work with the wireless carriers. The stronger the skill sets of your first two or three hires, the more successful your company will become.

At the risk of being reiterative, the purpose of being in business, rather than being a poet or Andean trekker is:

To make your product or service a substitute for all other competitive products or services and to make their products or services no substitute for yours.

Change “your” and “yours” to “our” and “ours”, type the phrase in boldface print, and paste it up on the water cooler in your new office. For there is no other reason to go to work every day than this.

Entrepreneur Experience (Please select score from below)

The Eight DEJ Factors

Briefly, “DEJ” stands for Demonstrable Economic Justification, and there are eight factors that make up this test.  If your new company has fewer than six DEJ factors, it will require tens and perhaps hundreds of millions of dollars, and its probability of succeeding is less than 60%, and descending, as the number of DEJ factors descends.  The eight DEJ factors are as follows, with very short explanations:

a.  Existence of a Large Number of Receivers

1. Are there many potential consumers of your solution, and are they aware of the problem that your solution addresses?

b.  Homogeneity of Receivers           

1. Will the consumers of your solution accept a standard product or service, or will you have to customize it?

c. Existence of Qualified Receivers

1. If you select a market in which the receivers don’t know they have a problem, you will need megabucks to educate them. You want buyers who do not have to be told they have a problem; they know they have a problem, know they have to pay for a solution.

d.  Existence of Competent Providers

1. Will the solution delivery system require expensive sales persons and a long cycle form just presentation to the sale, or can merely competent sales persons make the sale quickly?

e. Absence of Institutional Barriers to Entry

1. Is there a restriction that must be removed before the product or service can be introduced to the market?  An example would be the United States Food & Drug Administration that must approve all new drugs and medical devices prior to their sale in the U. S.

f. “Hey, it Really Works!” Factor

1. Will marketing the product or service require advertising on a grand scale, or will the benefits of the product or service get passed along by word of mouth?

g. Invisibility

1. Can the new company be built stone by stone quietly, or will news either leak out to possible competitors accidentally or intentionally, the latter, because of the company being publicly-held or the subject of publicity and conversations with the press?

h. Optimum Price-Cost Factor

1. Does the product or service have a relatively high gross profit margin – above 80%, for instance – so that there will be considerable cash flow to deploy toward marketing?

 
The scoring system is the function of multiplying the values of the three factors in Silver’s First Law of Entrepreneurship and adding the quotient thus derived to the sum of the DEJ Factors.  For instance, if the quotient is 3 x 2 x 2, or 12 and your new company has 7 of the eight DEJ Factors, your Silver score is 12 + 7 or 19, a moderately high score.

DEJ Scores (Please select each that apply)

Float

Is one of the entrepreneurs’ favorite words.  It means using the customers’ payment for awhile before delivering the product or service.  Some of the solution delivery methods that are based on customer financing include (a) subscription selling, (b) franchising, (c) membership clubs, (d) facilities management and (e) party-plan selling (this is sometimes referred to as multi-level marketing). Most businesses launched by women rely on float, because women have not been favored with venture capital, and thus have ineluctably asked their customers to pay up-front.  Vendors who are willing to wait 120 days to be paid also provide float.  Once you study the many methods of using float and expanding the sources of float – and there are many  -  your new company will  be able to minimize its reliance on venture capital and increase its probability of success.  Ray Kroc, builder of McDonald’s was the master of float, which he codified as franchising and obviated his need for venture capital. In creating an online community you must establish upfront that the community provides benefits to its members. Many communities will be launched with the sale of annual subscriptions for $1.66 per month or $20 per year. You will be able to do many good things for your members if they provide you with $20 per year.

Many

Means that there are numerous channels through which to generate revenues for your new company’s service, but you have to explore these opportunities and then grab the ones that provide cash up-front.  There are certain kinds of solution delivery methods, or business models if you prefer the simpler phrase, that expand the market with each sale your company makes, and there are others that shrink the market with each sale your company makes.  Most new companies are launched with the shrink –the –market business model.  But, they can be converted to the expand-the-market model from the outset by opening five, 10 or 20 additional channels up-front. In other words, if you capture a new member, you have shrunk the universe of potential customers by one. But, if you gain multiple revenue channels by having added the one new member, you have expanded your market by one. Licensing large, related companies to market your company’s product or service in foreign or selected vertical markets is one way of achieving this.  Launching a users group and having customers join the users group and pay a users group fee is another means.  There are dozens of strategies for opening new cash flow channels, and with each one that you open you increase your probability of success and reduce your reliance on venture capital.

The Club Newsletters

Are another means of raising the prospect of reward by lowering the risk.  Many entrepreneurs miss the opportunity to ask their customers subscribe to a monthly newsletter that catalogues the events of the month, provides the names of turnstyle jumpers and provides a “suggestion box” in which members suggest means of improving the community. Once the newsletter becomes something that the members look forward to, it can be expanded into a magazine, with ads, and from there into a trade show. Now you’re talking big dollars. Trade shows are living magazines. The combination of magazines and trade shows can generate up to 24 additional cash flow channels for the new company including subscriptions, advertisements, classifieds, endorsement fees, sponsorship fees and many more.  For the entrepreneur who adds newsletters/magazines to his or her business model, multiple revenue channels bring in cash every day and night of the week while the employees are sleeping, much of it at very high gross profit margins, thus enhancing the company’s probability of success while minimizing its reliance on capital.