Your Ideas Aren’t Worthless, but They’re Pretty Close
I read an article yesterday from the Financial Times via Hacker News at YCombinator. In it, the author Kevin Allison argues that in order to keep a lid on your great idea, you should guard it as something valuable when pitching to investors and the like. Nonsense I say.
Entrepreneurs have a tenancy to place a tremendous amount of value in the ideas they generate. While this is helpful and motivating, it also places the idea itself on an undeserved pedestal. The truth is, you probably aren’t a genius and your idea isn’t unique. There are 6 billion people on this planet, and the odds are quite high that your unique idea has circulated in the heads of many people before it made it to you.
Thinking Millions
People like Paul Graham put zero value in ideas. For them, execution is all that matters. I’m not as harsh in my thinking, but it’s safe to say that ideas are like penny stock; there’s always potential.
There’s little more than potential until you act, however. That acting isn’t continuing to dream and build out the idea, it’s putting it into something that can be tested. When your idea is in motion, you begin to make assumptions about how that idea will play out. If you figure the idea is poor, you tend to berate it until you figure it isn’t worth perusing. On the flip side, if you figure your idea is strong, you build it up to the point that you’re heading a 100 Million dollar company in your head. Everything working just as you envision - all thanks to your idea!
Projecting your million dollar vision into reality doesn’t really help matters, because nobody really shares it. It doesn’t exist.
Stop Thinking and Do
The fastest way to get over your insecurities is to put them in motion. For many people, this becomes the time for operating in “stealth mode” for extended periods, or looking for VC’s to give you money, while at the same time not sharing too much of your grand master plan. Someone might steal it after all.
Once you get into this trap, you start to impart value onto what might be and not what is. One of the biggest assumptions that you made when you came up with your idea is how the market would react to it. You assumed this, because if you actually had empirical evidence of how exactly the market would react to your product, you wouldn’t have an idea, you would have an existing business.
You were most certainly wrong in this assumption. No matter how well you know your space, you have no idea of the subtleties in market preference that will emerge in reaction to the change you’re about to introduce. You need to be able to react to these and take advantage of them. Your business isn’t going to be what you think it will be, the goal is to make sure that whatever it is you build is successful.
Fail Fast and Prove Your Assumptions
The best way to avoid placing too much value in your idea is to remove that market assumption as soon as possible. You can do this by taking your master plan, reducing it to its core elements and building and releasing a real product. These days, the entire iteration could be done by a dedicated team (or individual) in less than a month. That means you’ll release your idea into the world then, warts and all. If there is interest, you can develop it. If there isn’t you can re-evaluate it. Either way you’ll start to judge a real product and not a figment.
You’ll be one month ahead of the game when it comes to the competition. If it took you a month to get to this point, it will probably take them just as long. If Big Corp loves your idea, they’ll probably ship something next quarter - if they are lucky. Odds are if they’re smart they’ll just invest in you.
There is no reason to hide your idea, because you now have a product to evaluate.
But I Need Money!
No you don’t. You need time and effort and a real product, but not money. You can worry about money at a later stage, once you have something to actually invest in. The research is in, and the less money you spend up front, the more likely you are to succeed. Take a look at this.
“Only 65% of the companies that started with more than $100,000 were in the black in 2001, compared with 83% of those businesses that were launched with $1,000 to $10,000.”
Those are pretty compelling numbers.
Ideas Are Nothing Until They Are Something
The idea in your head isn’t worth much more than you are right now until you make it worth more. You do that by creating a business from it. The only way you can do that is to expose yourself. If you choose to attach a value to your idea, you’re only attaching dollar figures to an arbitrary notion instead of an actual product. In other words, you’re wasting your time.
If your idea has passed the “you” test (i.e. you’ve thought it through and figure it has potential) you should be building. You need to know if you’re right. Once you’ve done that - then you’ve created value.
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Thanks for the reference. When I first saw that I had a link from an article titled “Your ideas aren´t worthless, but they are pretty close” I thought it was a personal attack
But now that I´ve read it, I wholeheartedly agree with the points you make.
I firmly believe that the right way to launch nearly any business is small, fast and with the idea that it will be a very fluid undertaking. Once you see what works, you can invest more cash, and you can cut loose the dead ends and worthless parts you originally thought were so important but turned out not to matter.
The advantages of doing it this way are numerous, but the most important are that 1) you try to solve problems creatively, instead of with money, which usually ends up providing a better overall solution, and 2) you can change direction to meet the actual demand, not your anticipated demand, without much loss of capital or time or heartache.
Great article David!
August 30th, 2007 at 2:14 amThanks Matt,
I agree. Flexibility decreases as you receive more money, so really what you’re doing when you take funding is saying that your idea is solid, marketable and tested.
You can’t do that if you don’t have a product!
August 30th, 2007 at 7:45 amI disagree.
But maybe what I disagree with is the way it is presented.
Ideas are priceless. But it takes execution to bring it to fruition is probably a better way to put it.
I don’t know how one can say that Bill Gates idea of building a software company in 1975, Fred Smith’s of building a global fleet, Steve Jobs of computer being used for animation etc. were anything but priceless. They could have executed on any number of worthless ideas and got nowhere.
So my input is that a great idea is only part of the equation. You need execution to realize the potential of the idea.
-Augustus
August 30th, 2007 at 11:18 amGreat article!
I’ve been studying start-us for a while (I work as a techology strategy consultant for my day job) and what you say rings true.
I’ve also done a few start-ups. I would add one caveat: if you have a week or two of coding required to put up your vision “warts and all” for godsakes be careful who you talk to. Not because your idea is so great, but because other peole likely do not have your vision, and many people will gladly burst your bubble for no reason whatsoever. Constructive criticism is great, but just stay away from negative people until you get some momentum. Passion and vision is all you got — once you have something working the naysayers will still rain on your parade, but it doesn’t hurt so bad then. Just the voice of experience talking. My opinion only.
August 30th, 2007 at 11:36 am@Augustus: I think we’re presenting the same opinion from a slightly different angle. Where you attach the word “priceless” I attach the meaning “no monetary value”.
Regardless of the connotation I think we’re of the same mind.
@Daniel: I think when you’re at idea stage, you can’t get too obsessed with what people say either way. If you can’t put any value on an idea, how can anyone else? There are many ridiculous ideas that have made it big, and many great ones that have floundered. Only the market knows which ones are which.
August 30th, 2007 at 12:06 pm