This document discusses the dilemma entrepreneurs face when deciding whether to pitch an idea for a new product or a developed prototype. Pitching an idea early allows entrepreneurs to get feedback but risks intellectual property, while a prototype shows confidence but requires more resources. For experienced entrepreneurs with credibility, either approach can work, but novices are better served starting with a more developed product to signal quality and confidence to buyers wary of legal risks from an early idea pitch. The document advises governments to loosen IP laws to encourage buyer participation and help novice entrepreneurs get their ideas heard.

1. ETREPRENEURS’
DILEMMA
PITCH PRODUCTS
OR
IDEAS FOR PRODUCTS?
A HARVARD BUSINESS SCHOOL INSIGHT hbswk.hbs.edu
15- Apr – 2016

2. How much to invest in development before showing it
around?
Should they create, say, a working prototype or pitch
the idea for the product and see if there is enough
interest to go further?
Key Questions Entrepreneurs Face
Let’s evaluate each scenario…

3. Early feedback from a seasoned buyer
The seller avoids wasting time and
resources if the buyer is lukewarm.
Seller does not risk a huge sunk cost,
strengthening his bargaining position
Intellectual Property Protection :
disclosing an idea at its nascent stage
becomes a risk.
For inventors, a patent provides
strong protection
Pitching before the product is ready
PROS CONS

4. The Buyer’s Perspective
Evaluating an idea not only involves physical costs and the
opportunity cost of time, having knowledge of an idea could
expose buyers to potential legal disputes which creates a
barrier for relatively inexperienced sellers.
The choice of selling a more complete idea signals to
the buyer that the inventor is confident enough to
make a real investment in the idea before trying to
sell it. This is especially important for relatively
inexperienced sellers.
PROS
CONS

5. Advantages of Prior Success
Successful entrepreneurs have the luxury of capturing a buyer’s attention whether an idea is a
nascent-stage pitch or a fully formed product. The model suggests that if a entrepreneur
already has a buyer’s respect, it makes sense to spec the better ideas and pitch the secondary
ones.
The intuition is that when a entrepreneur is sufficiently confident about the idea, the incentive
to capture a greater slice of the pie (because a spec is better protected) outweighs the
advantages of pitching (such as getting early feedback).
However, inexperienced entrepreneurs would have trouble participating in the pitch market.
Their most immediate problem is how to get the access, and how to get their ideas heard?

6. Advice For The Novice Entrepreneur
The timing of the sale is found to be an
important indication of quality. Thus, it
seems prudent for buyers to avoid
options to buy early ideas from sellers
who face no difficulty in selling at any
time.
Finally, stronger IP protection may
actually hurt novice sellers whom these
policies are often intended to protect
because buyers might be more reluctant
to meet them for fear of more idea-theft
suits. Smarter government intervention
might loosen the buyer’s participation
constraints.