You hear it all the time. You’ll be out with a friend and the conversation turns to topic of some billionaire and technology company founder who struck it insanely rich building a product that’s changed the world.
Mark Zuckerberg. Bill Gates. Larry Page. Kevin Systrom.
And someone will say, “I want to build a company like that. All I need is a really good idea.”
But that’s not exactly right.
Not according to several prominent venture capitalists in Silicon Valley.
Their view is that actually, you need an idea that sounds really bad. Awful.
The trick is: it’s not actually so bad. It’s brilliant. It’s just that most people can’t see. Most everyone, that is, except you.
This is Chris Dixon. He’s a partner at Andreessen Horowitz, a venture capital firm that invests in startups. Dixon also sold a company to eBay for $US80 million a few years ago.
Dixon’s theory is that best startups are good ideas that look like bad ideas.
You might think good ideas that look like good ideas are a better bet. You’re wrong. Big companies are already working on those, and they have a lot more money and workers. For example: A smartphones with a better battery is a great idea that looks like one, and Apple and Samsung are on it.
Entrepreneurs and startup investors are in the business of left-overs, says Dixon. They have to pursue the good ideas that, for some reason, others won’t.
Dixon says one classic example is Google. When Google was created, big companies like Yahoo thought of Web search was a loss-leader. They thought of it as a service that annoyingly sent users away from their site.
A more recent example is Airbnb. It’s turned out to be a good idea, but it looked like a bad idea because everyone thought of couch-surfing as a weird thing hipsters did.
Dixon said he’s noticed three characteristics of good ideas that look like bad ideas.
One is that powerful people will dismiss good ideas that look bad as “toys.”
For example, telegraph company Western Union could have purchased telephone technology, but it decided not to because it thought phones weren’t as good for business as telegraphs.
Another reason people will dismiss a good startup idea as a bad one is that the startup provides a single service that is ordinarily provided as part of a suit of services by an existing, large company.
For example, The New York Times probably thought it was a bad idea to *just* bring their classifieds listings online, and not all their content. But Craigslist provides *just* that service, and it’s proven to be a very good idea.
Sometimes, says Dixon, good ideas look like bad ideas because only hobbyists are working on them — not big companies with big R&D divisions. That’s how Apple started — with the Homebrew PC club.
Good ideas will also look like bad ideas because they go against social norms.
For example, it used to be that when you uploaded a photo to a photo-sharing site, the default was for that photo to be viewable online only to you. The default on Flickr was public, and it got huge. Likewise, people were alarmed by the Facebook News Feed, which they viewed as a stalking tool.
To wrap it up, Dixon said the best way to come up with a good idea that looks like a bad one is NOT to follow industry trends and read reports. That’s all built on consensus. It’s better to come up with ideas by encountering problems and opportunities through direct experience.