Why Great Ideas Are Worthless
An idea combined with successful execution can change the world. An idea by itself is worthless. It’s one reason VC’s are hesitant or refuse to sign non-disclosure agreements (NDA’s). Why bother? They don’t have time to implement your idea. And if your idea is so easy to implement that the only barrier to entry is competitors not knowing about the idea, then they don’t want to invest in it. An idea only has value when combined with proper implementation, which includes the right team in place to perform the implementation. If you need further proof, consider my own experience.
Over the past 15 years I have created some of the most innovative companies on the planet. These include WordPress, iStockphoto, and AngelList.
WordPress. Oh, you thought WordPress was launched in 2003 by Matt Mullenweg and Mike Little? Wrong. I created WordPress in early 2001. It’s true that Blogger was launched in 1999, two years prior to my invention, but I had never heard of Blogger at this point. The entire concept of blogging was something I created on my own.
iStockPhoto. In 2003 my firm was hired to redesign the Garage.com website. Imagine my surprise when they asked us, instead of using expensive stock photography from Getty Images, to use cheap photos from a relatively unknown startup named iStockPhoto (Getty acquired iStockPhoto in 2006 for $50M). It was one of their portfolio companies, and it connected independent photographers with consumers of stock photography. The photographers could post more or less whatever they wanted, and consumers could buy it, with iStockPhoto being the facilitator in the middle and getting a cut. Simple, genius, and the reason it was surprising was because it was my company! I had created the business plan for the company in 2001, even going so far as to reach out to photographers and pitch them on the idea.
AngelList. Launched in 2010? Hardly. It was launched in February 2001 under the name MyAngelInvestor. Seeking to connect entrepreneurs with investors, my website allowed both groups to create profiles and pitch each other to create dealflow.
2001 was a good year for me when it came to great ideas. The only problem is I never did anything with them. In some cases I got as far as launching a preliminary website or writing a business plan, but I never put together a team, raised funding, or acquired a single paying customer. These were just ideas, and nothing more. As a result, the total revenue generated to date from my great ideas is a whopping $0.
I’m sure I wasn’t the only one who “created” WordPress. 100 other people likely had the same idea and never executed, or executed but didn’t get far for one reason or another. Mullenweb and Little had the idea and combined it with brilliant execution, which is why WordPress today powers 22% of all new websites.
Perhaps you have a great idea. You’re considering pitching it to investors, but you don’t want them to run away with your idea, so you’re going to bring in an NDA. When the investor smirks or refuses, now you’ll know where he’s coming from. He recognizes the value is not the idea, but a combination of the idea, the team that wants to implement the idea, and external factors. The idea is an important part of that combination, since nothing gets started without one, but by itself it’s worthless. Understand this and it may not seal the deal with a potential investor, but it will help you to avoid being written off as ignorant and immature.
What I’ve shared above is nothing new. I learned this the hard way over 10 years ago. At the time smart entrepreneurs didn’t just pitch an idea, they pitched a great business plan, a great team, a great market opportunity, and a great idea. Today even this isn’t enough. I recently attended a pitch event in Hong Kong which has a relatively undeveloped tech startup scene. Every one of the six presenters was pitching an existing company with paying customers. Having a great idea is all well and good, but if you were an investor who had to pick between a great idea and a company that has a great idea and is proving it by making money, which would you choose?
If you’ve got a great idea then get busy and launch it. Start executing. You’ll be infinitely better placed to land an investor, and in a best case scenario you’ll discover you don’t need one. Maybe that’s because you discover your idea isn’t as great as you thought it was and you quit. Maybe it’s because you become profitable and are able to bootstrap the operation. Either way, you’re better off. Let me know how it goes.
What’s a great idea you’ve had that you never implemented? What did you “create” only to see someone else beat you to it?
