Do Ideas Matter?

Chris Dixon writes today of a metaphor that helps us get beyond the untruth that ideas do not matter in startup innovation.

Ideas are more than the Eureka moment — they are working out that initial Eureka moment through the idea maze:

In other words: a good idea means a bird’s eye view of the idea maze, understanding all the
permutations of the idea and the branching of the decision tree, gaming things out to the end
of each scenario. Anyone can point out the entrance to the maze, but few can think through
all the branches. If you can verbally and then graphically diagram a complex decision tree
with many alternatives, explaining why your particular plan to navigate the maze is superior
to the ten past companies that fell into pits and twenty current competitors lost in the maze,
you’ll have gone a long way towards proving that you actually have a good idea that others
did not and do not have. This is where the historical perspective and market research is key;
a strong new plan for navigating the idea maze usually requires an obsession with the market,
a unique insight from deep thought that others did not see, a hidden door.

That is from the work of Balaji Srinivasan.  Ideas are process rather than point in time.  Chris’s post talks about using analogy, history, academic thought, and direct experience to work one through the idea maze.  Complement this process by wrestling with Elon Musk’s notion that identifying too closely with history, analogy, and current thinking kills creative thought.

The A16Z Aha

If this is how they roll, who wouldn’t want to work with Andreessen Horowitz?  This is Scott Weiss, a General Partner there:

All great pitches have a few things in common: the founder/team is wicked smart, the idea is big and a breakthrough, and the market is potentially enormous.

But the best pitches are also usually non-obvious and unique to the particular entrepreneur’s story and background. “Founder/market fit” is important. Does the founder’s life story, educational background, personal struggles, Ph.D thesis, or prior work experience somehow qualify them to unfairly prosecute the opportunity they are pursuing? At our firm we always start off our meetings with a deep dive into the entrepreneur’s background, and the most convincing pitches literally pour out of them with some deep connection or “aha” that led them into the business they are explaining.  By doing so, the idea is unique/original and is presented authentically versus a canned sales presentation.

A lack of originality and authenticity is probably the biggest turnoff. Stereotypically, this can be a couple of MBAs that have been churning through different business ideas in order to find something that might make them rich. Or it could be a hired gun/former sales VP as the CEO adopting or explaining someone else’s idea. In both cases, they typically have done a superficial, McKinsey-esque market analysis but have no passion or connection to the business.

Another important quality of a “perfect” pitch is when a founder exudes in many different ways, the confidence and courage to go the distance, against improbable odds, to make an enduring or lasting business. They come off as expertly informed, determined and unflappable during the hard questions. And they usually lay out a series of chess moves that reveal an even bigger ambition: “If we do this, then we can do that…”

A lack of confidence is also a huge turnoff – usually typified by a single slide in the deck entitled, “Exit Strategy or Exit Options.” This is the kiss of death for our firm.

Thumbtack

Thumbtack’s business model seems to be:

Scraping -> Database -> Client Lead -> Referral fees

While they weren’t the first to notice that people have “bought and sold local services in the same ways for the last 50 years,” as Swanson puts it, their twist was to develop software, instead of using salespeople, to scour the Web for service professionals and invite them to join Thumbtack’s database. From there, the workers are vetted by the company’s 30 U.S. employees and some 200 full-time contractors based in the Philippines.

Thumbtack says it gets about 2 million monthly visitors who request referrals and provide their Zip Code. It sends each request to relevant workers in its system, who pay up to $15 each time to have their names appear in the particular customer’s list of referrals. The company likens the fees to Google’s AdWords, which sells ad space to the right of search results for desired words and phrases. (Yelp is ad-supported; Angie’s List charges users for subscriptions.)

If its database doesn’t include a qualified service to meet the customer’s needs, Thumbtack’s software crawls the Web to find one. “The hard part is finding the right service professional who is trusted and is available at the right time and at the right price,” says Bryan Schreier, a Sequoia Capital partner who is leading the investment. “That is the art of Thumbtack.”

 

Too Busy Making Plans

Fred’s view, today:

If you can’t get product right nothing else matters

I have seen brilliant strategic plans wasted with terrible product execution

I’ve lost too much money investing in brilliant plans

And I’ve made fortunes investing in brilliant products that had no plan

Both products and plans essential, but former has an edge if choosing one at inception.

Ideas Versus Problems

From Eric Paley:

So are ideas worthless? I wouldn’t go that far.

Every company needs a starting point. I encourage entrepreneurs to focus more on falling in love with the problems they want to solve rather than their initial ideas. As founders dig deeply into that original hypothesis, they will learn, adapt, hit walls, adapt again, and build critical expertise that they never considered when starting out.

Navigating the Cusp

Failure is really about failing in ambition rather than results.

One of my favorite quotes about ambition and “failure” is by Google’s Larry Page:

“His intelligence and imagination were clear.  But when you got to know him, what stood out was his ambition.  It expressed itself not as a personal drive (through there was that, too) but as a general principle that everyone should think big and then make big things happen.  He believed the only true failure was not attempting the audacious.  ”Even if you fail at your ambitious thing, it’s very hard to fail completely, he says.  ”That’s the thing that people don’t get.“”

This is by the other search engine founder – Gabriel Weinberg of Duck Duck Go and it reminds me of Larry Page:

hinking back, a lot of my motivation has to do with a feeling that I’m on the cusp of something big. I pretty much always feel this way. If we just do x, y, z then this is going to be big. There is always something around the corner, within grasp.

For this to work you can’t be completely delusional, only partially. The difference is having a plan.

Of course plans change and things don’t always work out. That’s why picking an ambitious idea is advised; in a huge market almost everywhere you turn you are on the cusp of something big.

 

Finding Critical Mass

Seth Godin reminds us today that the critical mass of users depends on the idea.

For a site directed at consumers whose tastes pass quickly, critical mass may be millions of users; for a site directed at professionals who are herd-like, critical mass may be in the single digits of the right people.  Seth says:

In the idea business, critical mass is the minimum size of the excited audience that leads to a wildfire. People start embracing your idea because, “everyone else is…”

For every idea that spreads, it turns out that the critical mass is different. For example, if I want to start a yo-yo craze at the local elementary school, critical mass might be as small as a dozen of the right kids yo-yo-ing during lunch. In an environment that small and tightly knit, it’s sufficient.

On the other hand, the critical mass for a better word processor is in the gazillions, because the current standard is so deeply entrenched and the addressable market is both huge and loosely knit. The chances that you will launch a new word processor that catches on because everyone else is using it are small indeed.

Creating that reaction also requires smarts from the entrepreneur.  Godin says, reminiscent of Paul Graham’s “building something a small number of people want a large amount”:

If your idea isn’t spreading, one reason might be that it’s for too many people. Or it might be because the cohort that appreciates it isn’t tightly connected. When you focus on a smaller, more connected group, it’s far easier to make an impact.

Towards Always On

There is a one-way vector in internet access.

At first, to do something like buy a book, we had to return to our desktop and boot it up.

Then, with smartphones, we, in almost real time, pull our phone out of our pockets and launch an app.

We are almost always on.  The smartphone behavior opened up many more behaviors — some we didn’t even realize were an issue to being disrupted by networks, by reducing the friction from perception of problem to network access.  Think taxi-hailing apps, which wouldn’t make sense in the desktop or laptop era.

The rule is that the less friction there is to internet access, more behaviors open to digital disruption.  The ease and the unobtrusiveness of getting on the network corresponds to getting on for the smallest of real-world behavior.

This is why, that despite reaching what seems like a minimal level of friction with the smartphone, there is a push toward wearable devices, most notably Google Glass.  Moving towards the era where humans were “always on” the network would open even more of the real world to digital disruption.

 

 

10% or 10X

From the intro to a Wired Opinion piece by Astro Teller:

Here is the surprising truth: It’s often easier to make something 10 times better than it is to make it 10 percent better.

Yes … really.

Because when you’re working to make things 10 percent better, you inevitably focus on the existing tools and assumptions, and on building on top of an existing solution that many people have already spent a lot of time thinking about. Such incremental progress is driven by extra effort, extra money, and extra resources. It’s tempting to feel improving things this way means we’re being good soldiers, with the grit and perseverance to continue where others may have failed — but most of the time we find ourselves stuck in the same old slog.

But when you aim for a 10x gain, you lean instead on bravery and creativity — the kind that, literally and metaphorically, can put a man on the moon. You’ve all heard the story before: Without a clear path to success when we started, we accomplished in less than a decade a dream several generations in the making. We chose to go to the moon, John F. Kennedy said, not because it was easy … but because it was hard. Suddenly everyone from schoolchildren to the largest institutions were rallying behind the mission. Kennedy understood that the size of the challenge actually motivates people: that bigger challenges create passion.

And that, counter-intuitively, makes the hardest things much easier to accomplish than you might think.

That’s what 10x does that 10 percent could never do. 10x can light a fire in hearts, and it’s hard not to get excited and think that other, seemingly impossible things might also be possible.

Conviction

Excellent thoughts by Eric Paley about sharing the process of conviction — identifying the correct ratio of instinct and early validation of instinct with customer data — with an investor:

I don’t think the investor process to get to conviction is that different than the entrepreneur process to get to conviction; the challenge is at the pitch stage, when VC and founder are at vastly different points in the conviction process.  I advise entrepreneurs to take investors through their own process of getting to conviction.  What made them want to drop everything to build this business? Hopefully that process was a good combination of instincts and various forms of customer validation of those instincts.  Entrepreneurs driven completely by instincts will typically struggle to find an investor who equally shares conviction purely based on the same instincts, unless they share similar experiences that shape how they think about the opportunity.  It’s way more effective to frame instincts as hypotheses and then show interesting early customer development data that helps validate the hypotheses.