Start-up Entrepreneurs' Blog

Why Dumb Start-Up Ideas Work

March 31, 2011

There are many dumb product ideas that have succeeded. Why do we think of these ideas as dumb when they are introduced to us, but brilliant in retrospect after they have succeeded?

I’ve had start-ups come to me with their dumb ideas, and honestly I do think a lot of them are dumb. What I’ve learned through experience is that one should never extrapolate the market based upon one’s own personal experience or opinion.

Do you remember pet rocks?

Do you remember the garbage barge floating off on NYC unable to dispose of it garbage, when one brilliant man thought he’d buy it, grind up the garbage, package it and sell it as a novelty gift with a certificate of authenticity of real NYC trash – his only regret was he hadn’t come up with the idea sooner and he made millions.  

Are the bestselling books really the best written, the most entertaining, the most informative, or the best guides? Every publisher knows there are a lot of not-so-good books that are highly successful. The publishing game is more about the marketing than the written word. In fact, many publishers say marketing the book is 95% of the effort.

Twitter is a good example of a dumb idea. When I think about it, it still sounds like a dumb idea, but it works. Imagine having an in-person networking event and everyone had to speak in phrases of 140 characters or less.  I applaud the team for making it highly successful.

Recently I’ve seen start-ups with “dumb” ideas including the cell phone for your dog to reduce separation anxiety between the pet and the pet owner, the surf board with an propulsion assist mechanism so the surfer can always catch the good waves even if they don’t personally have the physical strength to do it on their own, electric and hybrid motorcycles, and the online dating service that is modeled after a bounty hunting system. These are unique dumb ideas.

These are all perfect examples of what seasoned investors have learned about start-ups. It’s not about the product. The keys to success are about everything else that surrounds the product. The entrepreneur may be passionate about the dumb idea of a product, outsiders rarely are – not investors, not employees, not family, and not friends. They may like it or sympathize, but they are never passionate about it.

When investors hear the dumb idea, the often dismiss it because they can tell an entrepreneur a thousand ways it can fail. Investors see hundreds of failures for every success story. They can recount the stories of failure, they can tell you why each of those start-ups failed. But can they tell you why the ones that made it succeeded?

If I think back on all the start-ups I’ve been involved with, what separated the winners from the losers? A winner to me is a company that not only has made a good return for the investors, but also produced a successful product in the market place (Often a start-up is touted as successful if it just does the former).

It’s not money. We’ve all heard the conventional wisdom; businesses fail because they are undercapitalized. I disagree. If money was the overriding factor, most on the venture backed companies should succeed, but most fail. These companies are funded to $5 million, $10 million, $300 million, and beyond – surely that’s more than enough to create a successful outcome. Money and undercapitalization is often the scapegoat.

If it’s not the money backing the start-up and it’s not the product, what is it? It’s the people, their ability to think and their willingness to work through the process of finding a product and a business model that works. Funding people is a big leap of faith, particularly with little professional track records and pre-revenue start-ups. A lesson I learned in management, never reward someone based upon potential, only for actual accomplishments. And if you are going to take a chance on potential then make sure the chance is an inexpensive roll of the dice.

I’m sure you were all waiting for some big secret to be revealed, but the reality of the matter is, there are no big secrets. It really does come down to keep going until you can find the answers.

So if an investor, customer, or anyone rejects a start-up because then at the very least the entrepreneur should get an answer to the question, “What would it take for you to invest in my company? Or buy the product? Or join the team?”

And the final answer as to why we think the dumb ideas are brilliant in retrospect is we love to see the under dog win.

Filed under: From Concept to Start-Up

Tags: product concepts, product ideas, Start Up Funding, start-up success