What's The Value of An Idea?
It’s fairly common to hear folks in "Startup Land" state that ideas are “a dime a dozen.” Most of us are taught to think that it’s all about execution, the ideas are a given.
There’s some truth in this logic. For every good idea you hear about there are usually a handful of other teams chasing the same concept. Innovation is incremental and everyone is staring at the same horizon. The result is that there are typically a dozen teams working on the same concept at the same time. And despite the number of attempts, usually only one or two teams win. So clearly the execution does matter. Otherwise all of the teams chasing each good idea would succeed.
But here’s the thing. The scenario I describe above assumes that the idea is good. The best teams succeed when chasing viable concepts. But so many founders are going after concepts that will never work.
Related: Starting a Business: The Idea Phase
If you don’t have product-market fit (startup speak for a product that your target customers actually want to buy) or a viable addressable market, even flawless execution won’t make you successful.
“OK…so you’re saying that it has to be a good business concept? Duh. That’s a given.”
Well, if it was so obvious then why do so many smart and capable founders chase bad ideas? I would venture to guestimate that 50 percent (or more) of all capable founders are working on bad business ideas. They are literally wasting their time. If these same folks were redirected and pointed at viable business opportunities many of them would succeed.
Identifying and selecting good opportunities is no trivial task. Most folks need to see a lot of businesses to see the patterns well enough to identify good concepts. You need a lot of exposure to develop an eye. It took years of venture investing before I felt like I could see the true difference between good and bad ideas.
But even once you have a developed eye, when you get to close to an opportunity everything can get blurry. Excitement, confirmation bias and wishful thinking can color even the savviest founder’s vision. The result is that great founders waste years of their life chasing bad business opportunities.
So what’s an idea worth?
Well, if it saves a founder years of chasing a bad concept -- probably a lot. If the right idea enables a founder to have the confidence to start a new company and avoid settling for a real job -- probably a lot. If it means that investors generate a return on their capital -- probably a lot.
Ideas are easy to discount. Especially since an idea only takes a moment to produce while a company takes years to build. There are a lot of good ideas out there. But there are also a lot of good operators. You need both. The companies that win don’t have only one or the other; they have both.
I don’t know exactly what an idea is worth, but it’s a lot more than zero. A good idea can change put a great team on an entirely different trajectory. So, next time you’re dismissing the value of an idea think twice.