Editor’s Note: In the new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business -- and at Entrepreneur.com, entrepreneurs are responding with their own ideas and experiences on our hub. This week, we’re discussing Hoffman’s theory: the most scalable ideas often seem laughable at first glance. Listen to this week's episode here.
There’s a meme floating around the internet that states: “The next time you’re afraid to share ideas, remember someone once said in a meeting, ‘Let’s make a film with a tornado full of sharks.’” The humor here is that the Sharknado film franchise, which sounds ridiculous on paper, has made millions of dollars and is currently working on its fifth entry.
This isn’t just a creative phenomenon, either; there are hundreds of businesses that, logically, sounded preposterous when they were first considered. There are the truly zany ideas, like the Pet Rock, which enabled creator Gary Dahl to become a millionaire selling ordinary rocks at ridiculous profit margins. Then there are the breakout hits.
For example, it’s hard to imagine life without Google, but when it was first conceived, it sounded impossible. The idea of basing a business on a site that only sent traffic to other sites was bad enough -- and Google entered the market at a time when there were 20 other competing search engines. Twitter, which has seen better days but rocked the world with an initial $30 billion valuation, was thought to be a “stupid” idea by its engineers, and even one of its co-founders.
So why is it that such good, scalable ideas are often laughable when you first hear them?
The distinction factor
What makes something laughable in the first place?
For starters, it’s different than the norm. If you come to an investor with a business model for a company highly similar to dozens of successful businesses that came before you, you won’t raise any eyebrows; it’s a proven model. But, if you come to them with something completely unique -- a difficult feat -- you might be seen as naïve for the attempt.
However, in the business world, that distinction can be a huge advantage. It’s safe to build a business that follows the same model as a dozen others, but your customers won’t be able to distinguish you from your competitors. If you, instead, come up with something new, you’ll instantly be the thought leader -- the first and only person to specialize in this area -- and your competition won’t exist.
Preparing for shifts
When Steve Jobs first started showing off the prototype for the modern iPhone, critics were quick to point out the problem of a touchscreen keyboard, afraid that the public wouldn’t accept such a feature when physical key-based boards were the norm. His response? “They’ll get used to it.”
It’s a cocky reaction, but it illustrates an interesting concept that relates to the public acceptance of new technologies and new products. Generally, the spark that ignites a new trend isn’t the first product to hit the market; for this product, the timing is too early. But, sooner or later, there’s an explosive trend -- a tipping point -- that leads to the widespread adoption of some new feature that previously went unnoticed. Before the public is “ready” for an idea, and up to the point they “get used to it,” it seems ridiculous, but once it takes off, it’s undeniably brilliant. Everything new seems strange at first.
Related: Will Your Big Idea Make You Money?
The many vs. the few
Scalability is an interesting quality because it isn’t inherently good for a new business. If you’re a one-person operation working with one or two big clients, you’re going to be using different strategies than a multi-million dollar corporation operating internationally. If you try to use large-scale tactics on a small scale, you have a high chance of failure; your profit margins will be slimmer, your audience will be frail and volatile, and your brand won’t have the stability or reputation to manage its “scalable” structure.
However, if you can manage to get past those early stages, the value of that scalable approach will kick in -- and suddenly, your abnormal small-scale model will seem brilliant now that it’s projected on a large-scale screen.
So what can you learn from this, and how can you apply those lessons to your business?
- Be bold with your ideas. Even if they sound stupid in your head, they may not be. Prove the strength of your ideas with more than just the fleeting opinions of others.
- Strive for perfect timing. Laughable ideas that succeed often succeed because they nailed the timing factor; hearkening back to my original examples, can you imagine a successful Sharknado franchise spawning in the 1960s? Can you imagine a new search engine rising to prominence today to dethrone Google?
- Recognize scalability for what it is. “Scalable” ideas aren’t magically better than their non-scalable counterparts, but they lend themselves to higher volume operations. High scalability at a low volume is risky, but if it pays off, it pays off big.