The Idea Dude


Monday, November 24, 2008

Find the next big idea

Came across a quote by Linux Pauling, "The best way to have a good idea is to have lots of ideas".

He's right of course. If you ask any successful entrepreneur, he or she will tell you that the idea that made them successful wasn't the first one they had and in all likelihood not the one they thought would make it big. The key is that they never stopped coming up with ideas and if you believe that "if something is inevitable that it will eventually happen" (quote from American Beauty), then you will be successful. BTW: this isn't the "if you build it they will come".

The thing about startups especially technology or internet based ones, is there is no magic formula. In some ways it is better to be a venture capitalist than the entrepreneur. If you believe in Taleb's Black Swan concept then trying to predict that one big event is foolishness because internet success, at least the ones that return billions of dollars and millions of users, is in fact a rare event. We'd like to believe it is a common occurrance but the dotcom bubble quickly showed that it was not.

The problem isn't that we are all playing the game in the hopes of being that one big winner but like in today's global financial crisis, our greed has made us forget about sound business principles. Taleb calls it living in the Fourth Quadrant where we should not be fooled by simple statistics, where rare events happen albeit rarely and unpredictability is the name of the game. The best advice I found from his discussion about dealing with the fallacy of a single event probability?

"...Avoid optimization, Learn to love redundancy..."

Nature is wonderful in teaching us about redundancy without which evolution would have killed us all by now.

Actually there is one more quote that is great.

"...Avoid prediction of remote payoffs..."

Recently, I read several business plans that had 3 year projections before a line of code was even written. We do this because investors require it. It makes them comfortable that their investment is safe and the return is so big, it swamps any doubts they might have had. Invest in the Thanksgiving turkey because if you look at the first 364 days of its life, there is no indication to the turkey that life one day may change quite radically.

In reality, life in a startup is an S-curve (or maybe even a series of S-curves). 99% of the time, the uptake is slow and painful (unless you have huge marketing dollars or an established player). Assuming you survive, the successful ones transition at some point via a steep climb to the next level. Ergo the S-curve.

I always say, "it's never as fast as you think and yet it could be faster than you ever imagine."

I am by nature a startup junkie. I love the excitement, the freedom and the lure of the big event. But to survive, I can't fool myself I know what the next big idea is. I live in Taleb's Fourth Quadrant of Unpredictability. The only way I will survive is devise a system of idea redundancy. Dream big, dream a lot but make sure I don't follow one dream with blind fervour.


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