I like it but I think the order should be reversed,
before building the MVP, I would have built a landing page for each idea (after filtering the good ones), spend some money on marketing first and see if it gets beta sign ups traction (developer commits that if it does, they'll build it), only then pay for building it (I would also offer to sign an NDA with the developer protecting their idea if the deal doesn't execute, and also give them a shared user account to the analytics of the landing page for being 100% transparent)
This way you risk only $3000 (or less) instead of $8000, and the developer will be much more motivated to build it knowing it's already an idea with a real potential market.
That system has worked in other creative endeavors as well, the whole 'landing page/sign-up' thing is a way to de-risk concept development but that may not be the issue here.
One has to optimize for the 'harder' thing being done. So if the challenge is getting the MVP written, then this order makes sense, the risk on the $3000 is less than the risk on the $5000. If the challenge is getting people to understand it, then doing the landing page first makes sense. From hmexx's point of view $8,000 is at risk either way, except he "knows" he can do the customer acquisition part but doesn't know if someone can do the "MVP" part.
One of the realities this discussion has highlighted is how little young engineers (and some older ones too!) value the whole marketing/customer acquisition thing. But the beauty of it is that when the risk arbitrage is low enough, that doesn't matter. One has to ask is there a 'funding round' that is earlier than a 'seed/angel' round? Maybe an 'idea' round. Two people come together, one proves they can execute on building an MVP and one proves they can execute by acquiring customers, then the pair take the next step (assuming the thing works and customers are found). This really side steps the whole "I've got a great idea if I could just get it off the ground" discussion into "What are you willing to bet?"
> This really side steps the whole "I've got a great idea if I could just get it off the ground" discussion into "What are you willing to bet?"
That nails it perfectly. I like the OPs proposition. I like it so much that I'm now wondering what would be a better counter offer, and I've failed to come up with anything so far. This little trick could kickstart a whole new phase in the start-up world.
Potentially yes, but not likely in my opinion (and in the opinion of people I talk with) and the fact is that most do it, usually they do it when they actually start building it, but we all know that many even big companies, sell first, develop later. Those who develop first and hope they'll find a market, sometimes just end up with a great piece of code with no way to make money out of it.
sell first develop later is a sound strategy, especially if you are building a product/service for enterprise. Sometimes you can even get a prospect to finance the development process. However, i don't really see how you can do the same thing if building a b2c product - except through a kickstarter campaign.
If someone "beats you to the punch" then they would have beat you anyway. If you have an idea that's so simple that it can be easily replicated from a signup / info page, it probably wouldn't last.
First mover advantage. In the time it takes for you to do market research, others may already have a leg-up in starting something which may converge to your idea before you launch. And having that initial traction may completely squelch your launch
Hah hah, yeah that really worked for Lycos and Excite being a web search engine site before Google. It also really worked for Friendster and Myspace being a social network site before Facebook. It really worked great for Qualcom having a PalmOS based smart phone and RIM with the Blackberry smartphone and Microsoft's Windows CE smart phones before Apple's iPhone and Google's Android came out?
First mover advantage, sometimes you show the Johnny-come-latelys all the mistakes they can avoid, and how they can improve upon your product by examining your weaknesses and flaws because you rushed it to market.
If you are a first mover, consider having in your business plan what you do when the 'heavy hitters' decide to copy your product and do it better. They most likely will so plan on it. Do a total quality management on your product and improve on it every chance you get before the copycats do it better.
I'm skeptical that "first mover advantage" is very important. There are many examples of products and services that were not first, but became the best and won.
Kevin O'Leary says pioneers get slaughtered and settlers get rich. First to move well on a proven idea - and keep moving on it - may have the advantage. First to act? Not so much.
There are pros and cons to being first mover or second mover and examples of successes and failures of each. I prefer second mover, as someone else has de-risked, educated the market, etc. Now it's just to improve/differentiate, and capture market share (all things that are easier said than done!).
First mover advantages are actually very rare. They're only relevant for markets with extremely strong network effects and lock-in. Even then, Facebook wasn't the first social network.
It's always a problem and a catch 22, you want to get customers, but also avoid competition, but I think the trend today is that stealth mode is not that helpful, there are so many ideas and if you believe what they say in the news, not enough developers to build them, your big enemy is a market with no customers, not a market with competitors. if you launch 3 months after someone in today's world, even if they manage to get a few thousands customers ahead, it doesn't make much difference in my opinion if you build it better, you'll catch up.
As someone said here earlier, idea is just a multiplier of execution.
You could also find a niche market that has little to no competition and develop to that. I remember when the Desktop Publishing market was new, and the Commodore Amiga had Deluxe Paint and a few third part desktop publishing apps in 1985. Then later in Adobe made Photoshop in 1989 for the Macintosh that copied the ideas of desktop publishing software on the Amiga. Not only that but Newtek had a Video Toaster and Video Editing software for the Amiga, and later on Apple copied it with iMovie and other stuff. But back in 1985 it was a small niche market, and it grew so much that it migrated to the Macintosh and became best selling products that promoted the Mac over the PC.
The Amiga was basically a launch platform that went away for many niche market software. If the companies that developed those for the Amiga had developed them for the Macintosh, they'd still dominate today.
This way you risk only $3000 (or less) instead of $8000, and the developer will be much more motivated to build it knowing it's already an idea with a real potential market.