The truth about business ideas
Ideas are useless, unless acted on. Get more insight about the truth about ideas from Omar Mohout, author of From Idea to Product/Market Fit.
Ideas are useless, unless acted on
An idea is not that big a deal. Millions of people get them every day. You can come up with business ideas any time.
We don’t want to offend you, but rather help you adjust your expectations to the harsh reality of the business world. A business idea is just that, an idea - until you do something with it.
A big idea is like betting all your money on a single number at the casino. It’s a big bet, but you can win big too. It’s a better strategy than a series of small bets, since the odds are structural in favour of the casino.
But entrepreneurship isn’t a casino. It’s both art and science. Focusing on a big idea may not be to your advantage. Instead you could come up with small ideas and combine them, as long as the end-result makes an impact.
No matter how great your idea is, if you can’t execute it, you won’t get their money. Luckily, the cost of getting business ideas out is getting lower and lower.
Expertise is a key factor in successful startups
Startups have better prospects of succeeding if one of its cofounders is a domain expert.
If a founder with 20 years’ experience in the insuranceindustry, knowing all the ins-and-outs, wants to shake up the insurance industry by starting up his own business, his chances of succeeding are good. He understands the nuances of the problem in that specific market, and has both credibility and connections. Compare it with a software engineer who wants to shake up that same insurance industry without any prior knowledge in that domain. He has very little chance.
In an age in which technology is widespread and accessible, learning how to build a product is a lot easier than learning the intricacies of an industry.
Y Combinator graduate Leaky failed to shake up the car insurance industry due to lack of industry expertise, while Larry Page successfully built Google as a researcher focusing on the problem of scoring a web page based on links from other web pages.
It isn’t about the idea
Investors increasingly show interest in the founders, not necessarily in the idea. They bet on the jockey, not on the horse. A good jockey can select a great horse, but even the best horse in the world can’t choose its rider.
The educational background, a PhD in the relevant field or prior work experience qualifies you for the founder’s job. Understanding a market without relying only on a big-five-style market-research study is key.
This deep connection between the founders and their ideas is called “Founder/Market Fit”, where the founders personify the company. If you’re not confident yourself that you’re the best person to execute the idea, perhaps it’s a sign that this particular idea isn’t the right one for you.
It’s like building something that you yourself need versus a cohort of MBAs fresh from university who are churning one idea after another, hoping that by throwing enough ideas against the wall, one of them will stick.