Ideas Matter
k9.vc
k9.vc
When people say that execution matters more than the idea in a startup, what they're really saying is something fairly complicated: that you need both a good idea and good execution, but that (1) since good execution is rarer, you should worry more about that, and (2) good execution will tend to fix bad ideas, because if you pay attention to users and iterate fast, you will in the worst case end up with a good idea by successive approximations.
The other thing to note is, there is a confusion, I think, that the people have and is — the books and press kind of work this way in that we think about "an idea." When we think of ideas for movies, we think about ideas for products. And it's usually thought of as some singular thing.
But the reality is, these successful movies — as with all successful products — have got thousands of ideas. It's just all sorts of things necessary to make it be successful. And you have to get most of them right to do it. And that's why you need a team that works well together.
People enjoy paying for what they want; they resent paying for what they need. Ideas uncover 'wants.'
Frank Lloyd Wright. Ideas. General Patton. Ideas. Sir Richard Branson. Ideas. Sun Tzu. Ideas Clausewitz. Ideas Edson. Ideas. Ford. Ideas. Larry Page. Ideas.
Sometimes, great ideas come from those who implement that idea, sometimes the ideas come from those outside the industry. Either way, it's the idea that is at the center of the product the market wants.
* Startup: launch of a web-based application.
I'm not sure how the military commanders (or Frank Lloyd Wright) fit into this, but every entrepreneur you listed was very much a "technical founder".
I'm pretty sure the carbon filament in the light bulb was not Edison's particular creation.
Of course, none of this decreases the importance of execution (see any of a handful of Android tablets for an example). But the market player that had these ideas first got a huge head start on executing them.
"Well, it is about the idea. The idea is the seed. It is the kernel that is the start of something new."
There are lots of details in the execution, and semantically you can refer to those as "ideas," but that's not what people generally mean when they say "an idea doesn't matter."
The Newton had a custom mobile operating system in 1993 [1], by the way. The iPhone did all of those things in 2003, eight years ago.
So why did the iPad take so long? There's a lot of technology inside that took a long time to get right. No one brilliant idea can be pointed to that's the "seed" that made the iPad work. Instead it's hundreds of hours of design and testing and iteration -- i.e., the execution.
If anything, the Idea behind all Apple products is that style, presentation, and user experience matter. But even that idea is worthless without a good execution.
Part of the motivation from the post came from watching some otherwise excellent teams working on some rather mundane, me-too ideas. Another part of it came from hearing some awesome ideas, but realizing that the team didn't have the DNA to execute on it.
The discussion on HN seems to be very bipolar with respect to the value of ideas and execution (people execute, so you can call it either people or execution), which ignores my point about ideas and execution needing to happen hand in hand.
All too often we 'simplify' things to the point where they begin to loose the original intent/meaning. If this post makes people have a discussion around this, and makes you explain the 'fairly complicated' thing that people are saying when they do say execution matters more than the idea, then my job with writing the post is done.
> We often talk about the Number One startup killer at TechStars—making a product for which there is no interesting market. TechStars accepts just 10 of more than 600 startups that apply and presumably they are among the best. But still, we find that at least one-third of those startups are attempting to build a product that they want, or that no one wants, instead of what the market wants
So it seems the ability to select a good idea is by no means something to discount. Lots of people can code "pretty well", but it appears that it's more difficult to come up with even a "pretty good" idea.
However, the point was regarding people pursuing bad ideas, and at that, people who had already been selected out of many to participate in Techstars, so not just random guys on the street. If bad ideas are so prevalent even among such a crowd, it leads one to think that perhaps good ideas are not that common and that finding one is not so easy.
Does the 'idea guy' deserve no equity or less equity? Thats the question to be answered.
The problem I have with something like 'ideas don't matter' is I think it misleads some people to over value their contributions. And when someone puts the additional weight of Paul Graham behind it, its difficult to negotiate.
(One may argue that the odds of a startup succeeding are really low and people should not worry about equity etc. But really thats the first step unless you are starting up with buddies. Don't you think?)
Not really: The contempt for ideas among venture partners is overwhelming. E.g., KPCB VC Doerr at
http://www.youtube.com/v/nBvuirDPHKA&hl=en_US
claimed that "Ideas are easy" and "plentiful" and "Execution is everything.". Union Square VC Wilson at
http://www.avc.com/a_vc/2011/04/how-to-allocate-founder-and-...
said "Ideas are pretty much worthless.".
For a diplomatic view of what Doerr and Wilson said, mostly by an 'idea' they mean some nearly instant guess at a one sentence description of what would make a good description of a product or service to a customer, and the hope is that the business would be good.
Of course, still these venture partners are being silly: The product or service selected to sell to customers is crucial. Broadly, many products and services can be offered that essentially no customers would want even for free. And there are products and services that many customers would want, but the price would have to be too high. And there can be other problems with the product or service envisioned.
Then there's the claim that execution is so difficult: Obviously this is nearly total nonsense as anyone in the US can easily see. E.g., the US is just awash in businesses, millions of them, supporting families, coast to coast, on Main Street in villages, towns, cities. These businesses sell carryout pizza, repair roofs, mow grass, pour concrete, install or repair plumbing or HVAC, maintain cars, do auto body repair, buy products at a low price per unit in large quantities and sell them at a higher price per unit in smaller quantities (per sale), and on and on. E.g., look at the businesses on the TV program 'Diners, Drive-ins, and Dives' and identify the 'exceptional' abilities in "execution" they have mastered?
From living in several major parts of the US, I have yet to see such a US Main Street where the rate of business turnovers was high or where most new businesses start and fail quickly. So the failure rate has to be fairly low. If execution were so difficult, then the failure rate of these Main Street businesses would be much higher.
Why venture partners are so consistent in getting these issues of Business 101 wrong is curious, frustrating, and disconcerting.
Here is a much better description of what is true: Bad ideas for products and services are easy, and then execution is difficult. Good ideas for new products and services are difficult, and then execution is routine. As Main Street shows, the US is just awash in the ability to do routine execution well.
Then also Kumar misses a crucial point for a business based on a new product or service. So, he writes:
"In fact, most founders tend to take it to the other extreme that they don’t want to share their idea (subject of another future blog post on why Stealth is Overrated)."
So all he sees for an 'idea' is just the description of the product or service. Wildly wrong.
There is a much older, and much more appropriate, description of how to start a successful business with something new:
(1) Problem Idea.
Pick a good problem to solve. To have a really successful business, the problem has to be 'big' enough, e.g., with a few customers ready to pay a lot or a lot of customers willing to pay at least a little.
IBM picked using punched cards from Hollerith to replace huge rooms of clerks doing routine business record keeping.
Xerox picked office photocopying.
Ford picked a car for everyman for a few hundred dollars.
DEC picked small computers for scientists and engineers.
FedEx picked overnight delivery of small packages with excellent package tracking.
Wal-Mart picked big box general store retailing with excellent buying and logistics and locations in smaller communities.
Google picked Internet search based on keywords much like an old library card catalog subject index but aided with 'page rank' as a measure of popularity.
(2) Newness Idea.
Main Street businesses often do well enough without much attention to newness because they can have a 'geographical barrier to entry' and, thus, no competition more than 50 miles away. So do well against competition in a radius of 50 miles and do okay.
Without a geographical barrier to entry, to help avoid competition, it is important to have something new about the business that helps revenue and/or earnings, and this something new should be difficult to duplicate or equal.
For IBM, its punched cards were new. Then IBM did exceptionally well with product quality and customer service.
For Xerox, the electromechanical internals of their machines were new.
For FedEx, they used the CAB regulation for unscheduled air taxi to be the only nationwide company both to operate trucks and fly airplanes and, thus, have full control over the packages from origin to destination and excellent ability to track the packages.
DEC did well with the new technology of printed circuits with discrete components.
(2) Solution Idea.
One source of something new is the solution, that is, the means of supplying the product or service.
If the problem to be solved is really big but not yet well solved, then likely plenty of people have seen the problem but have not been able to find an effective solution.
In now very old terms, the solution might be something that deserves a patent (Xerox) or that should be protected as a trade secret (Google). The solution might be the main source of newness for the business.
Here is the big, HUGE mistake of information technology venture capital: The assumption is that the core technology is just routine software with nothing new that is difficult to duplicate or equal. That is, the technology has no significant 'ideas'.
Instead, the core technology might have solid, new, powerful, valuable 'ideas'. Various parts of our society -- DoD, NSF, NIH, biotech venture capital, the patent system, etc. -- recognize the importance of such ideas, but information technology venture capital, with outrageous hostility, rejects any such possibilities.
The nonsense is too uniform to be just 'natural'. Instead it appears that some LPs had lunch and decided to take a preemptive negotiating position to deprecate to worthlessness anything new from entrepreneurs in information technology.
Here's some of where such venture capital is making a mistake:
(1) New Ideas.
The US research universities remain crown jewels of civilization, and the leading graduate programs provide excellent starts in how to find powerful, valuable new ideas. Indeed, the common criterion for a Ph.D. is some original research worthy of publication, and the usual criteria for publication are new, correct, and significant.
The power of such research has been well appreciated by the US DoD for about 70 years and by the US NIH for nearly that long.
For US information technology venture capital to ignore or deprecate the power and value of such research will have to prove to be a long walk on a short pier.
(2) Solving a Big Problem.
Such new ideas can be the crucial, core 'secret sauce' that is difficult to duplicate or equal and that permits solving a big problem.
(3) Starting a Web Based Business.
Now it costs less in capital equipment to start a new Web based business than a carry out pizza shop, grass mowing service, auto repair shop, auto body shop, etc. These old Main Street businesses essentially never get equity funding, and it's getting to be a strain just why new Web based businesses should seek equity funding.
(4) Execution.
For a new Web based business with a few servers in a spare room, small commercial space, or colocation site, the challenge of execution stands to be less than for most Main Street businesses. Or, if Main Street can do the execution, then a researcher with a powerful, valuable new idea and a Web based business should be able to also.
So, for the entrepreneur, the opportunity is:
(1) Pick a big problem not solved well.
(2) Do some original research and find better means of solving that problem. The research is the main 'idea' and should be difficult to duplicate or equal and protected as a trade secret. That all such ideas are "easy", "plentiful", and "worthless" is insulting, brain-dead, absurd, and outrageous. Nor will such ideas be found by 'pivoting' during 'execution'.
(3) Implement the research in software and run it on servers in a Web based business.
(4) Bring up the Web site, go live, get users, run ads, get ad revenue, and have a business.
For a Series A round, those venture partners will want the business to have so much 'traction' that is already is or soon will be throwing off cash enough to let the entrepreneur grow the business quickly and have a nice living.
E.g., maybe early on the Web site sends 10 Web pages a second, 24 x 7, with three ads per page and with good enough ad targeting for $1 in ad revenue per 1000 ads displayed. Then the revenue in a 30 day month would be:
1 * 3 * 10 * 3600 * 24 * 30 / 1000 = 77,760
dollars. So, the entrepreneur is already doing as well as a Main Street entrepreneur with several carry out pizza shops.
For such an entrepreneur, just why would they want to report to a board of directors with venture partners who just ignore the potential of new ideas from research and generally insist that ideas are "easy", "plentiful", and "worthless" and that execution, done well enough by millions of US Main Street entrepreneurs, is "everything"?
Net, the flip side of this outrageous information technology venture partner brain-dead, deprecating, insulting nonsense is one heck of a collection of good business opportunities.
This incongruous situation is close to inevitable: Really sweet business opportunities can be there only if they are not easy to see. Apparently it is overwhelmingly attractive just to wallow in the nonsense that ideas are easy and execution everything.
When we stop thinking of ideas solely as the germinal stage of startups, and we expand our conception of them into something resembling a wave of constant, innovative inspiration, then we get to the heart of what a good idea really is.
This Silicon Valley 'mantra' (in my opinion) is valid in order to teach people the importance of execution.
You can teach the importance of execution by emphasizing execution.E.g. two teams with the same good idea, one executed and the other one didn't. You don't need to devalue other factors in order to make a point.
In business solid execution is harder to get than new ideas, so it's true that having a good idea is important making it work is more so.
The article says:
"For Google, it was the idea of PageRank. Did search engines exist before? Sure they did. But it was that little spark of innovation, coupled with years of execution that got Google going. In fact even Google “borrowed” it’s idea of search advertising from what used to be called Goto.com and then became Overture.com. (Kudos to Bill Gross here for his role in Goto.com). That is a perfect example of how the idea mattered, but it also needed the execution to make it flourish."
Which I think undermines the who 'ideas are important' theme. What was important about PageRank was the insight that it was an analog for social intent, and that social intent provided a useful ordering out of an otherwise random set of documents. Using that insight to design as document retrieval system which scaled and could operated cheaply enough made the insight useful.
Its all mental gymnastics however until you put your money down. Then it becomes real. And its really hard to hand a check to someone you don't think can actually produce the thing they are talking about.
Edison's great idea wasn't the electric light; many knew that was a good idea. Edison's idea was the industrialization of research; solve the problem by brute force. He used many good ideas along the way, many not his own.
It is understandable from Manu's or other experienced entrepreneur's perspective, ideas are important. I don't deny that. That is because they have been through startups over and over again, these people understand the work that goes into the company months/years post-idea-conception.
I would say a good portion of the people who are reading this site won't fall into that category. As a matter of fact, very few people do. Most of us are just budding entrepreneurs trying to our feet wet and trying to find our way to "make it".
If you feel you fall into the latter category more than the former, read Manu's post with a grain of salt, it's _not_ really meant for you.
I'd argue (with my limited knowledge) that it's more important for young entrepreneurs to know that ideas are a dime a dozen. By the time you come up with it, 10 other people have thought of it as well. What separates great ideas from good ideas is that you have a clear competitive advantage that can allow you to out-execute those other 10 people. This competitive advantage can be your passion, skill set, domain knowledge, connections, etc.
So if I have to sum it up, and to modify Manu's post to fit the eyes of the budding entrepreneurs:
It's not the idea that matters, it's the people + the idea that matters.
You can't be in your basement grinding with one other person for four months just to find out you misappropriated your customer base, or the problem your software solves, only to find out there's nobody has that problem, nobody cares, or some amalgamation of that and many other factors.
I see this elsewhere as well. People want to be a model their whole life but never had a hope from the getgo. They want to be an architect but their frame of reference is so off they'll never have a chance. Not saying that work can't make up for a lot of it, but I'll never in the NBA. Talent dictated that. There are several other dictators that create the same boundaries as well.
Ideas, as in the process of thinking of new things, also known as design and creativity and other words people like, vs
The Idea, which is an untouchable monolithic safety blanket common in startups, where the founder(s) are unwilling to challenge their core assumptions. This is usually because they think of creativity as a one-off moment of inspiration type affair and, through fear that it won't strike twice, stop trying.
Truthfully, you have to execute a process to have good ideas, and processes for execution are ideas themselves. There's no dichotomy except what we make when we put The Idea (or perhaps even The Execution) up on a pedestal.
The second result, "Ideas are just multipliers of execution" is actually a very insightful answer to the idea/execution "question."
For example, many here believe the future of Microsoft's consumer business is in trouble.
I'm sure many have great ideas as to how to fix it.
I even bet there are several senior people inside Microsoft who have great ideas as to how to fix it.
But none of that really matters. Because the stuff that's getting shipped sucks.
Thus, the execution is a central part of the "idea" process. Being an "idea" person without being an "execution" person leaves you open to a bunch of dangers - the biggest one being a sense of inadequacy. If all that you bring to the table is your idea baby, it will be really hard to kill it off and go with something else, even if it's the best decision. So either be good at "adapting" your idea, at times to the point of complete transformation, or start learning to execute.
Perhaps startups should spend much time experimenting with, pivoting with, possible ideas before focusing on one single idea 100%.
Searching for the beautiful idea using a breadth-first rather than a depth-first approach.
Though I'd love to think The Algorithm was key, their main idea was to put serving customers before monetizing them.