Editor’s note: This article was first published in February 2014. The 19-billion-dollar WhatsApp sale and Snapchat’s rejected 3-billion offer were recent news, and Dixon’s role at Andreessen Horowitz, Airbnb “still expanding” and “Google has eaten Yahoo” describe the situation in 2014.
A couple of entrepreneurs sell their idea for 19 billion dollars (WhatsApp), while others turn down an offer of 3 billion (Snapchat). A kid working from his bedroom builds a billion-dollar business (Tumblr’s David Karp), while many other students drop out of university to turn their million-dollar ideas into reality.
Meanwhile, you’re racking your brains for a good idea that will make you a success, because, after all, you know that’s what you need: a good business idea, right? Wrong. According to Chris Dixon, a partner at the venture capital firm Andreessen Horowitz, what you need isn’t a good idea but an idea that sounds dreadful. He himself sold a terrible idea to eBay for 80 million dollars a few years ago. The “trick”, nicely reasoned below, is very logical.
You need an idea that most people can’t see, except you.
Dixon’s theory, set out in Business Insider, is that the best startups are good ideas that look like bad ideas. If an idea looks like a good idea, you’re done for, because the big companies would already be working on it. And those companies have far more money, resources and staff.
For example, imagine you’re working on an improved smartphone battery. It would be naive to think that Apple or Samsung don’t already have one ready and have simply decided to shelve it so as not to push up the price of the product or disrupt the production line. You pour your hopes into your super-battery, Apple sees the threat and decides to launch its smartphones with the battery it had shelved. And it does so before you can earn a single euro.
See also: Disobedient children are more likely to succeed
Go after the ideas that, for some reason, others aren’t pursuing.
Dixon gives the classic example of Google. When Google was created, it was offered to Yahoo, but Yahoo thought a search engine wasn’t a good business and would be a waste of time. Ironically, Google has since swallowed Yahoo.
Then there’s Airbnb, an idea written off as crazy (letting strangers into your home?), yet Airbnb has proved to have a solid, profitable business model. And it keeps expanding.
One of the reasons good ideas look like bad ones, according to Dixon, is that only passionate hobbyists are working on them, and they don’t have big companies behind them with giant R&D departments like Apple’s or Google’s.
They also look like bad ideas because they tend to go against social norms or what has been accepted until then. They move into unknown territory, so to speak, and the truth is that innovation scares investors and, at first, end users too.
How do you find those good ideas that look like bad ones?
According to Dixon, entrepreneurs should stop following industry trends and arrive at these ideas by running into problems. The biggest business ideas were born from entrepreneurs who came up against a problem directly, from personal experience. The business opportunity lay in solving that problem. And those solutions didn’t always sound convincing.
Of course, there’s a very fine line between a good idea that looks bad and an idea that looks bad because it really is terrible. At the other extreme there’s Theo Paphitis, who advises you not to waste time looking for original, innovative ideas, since he has never had an original idea in his life. His secret, in his own words, was to copy other people’s ideas and execute them better.
Further reading
- The 4 stages of a revolutionary business idea
- 10 simple products that made their inventors millionaires
Featured image: TechCrunch, CC BY 2.0, via Flickr.
