There’s no such thing like a good idea
There’s no such thing like a good idea
Arriving at an idea happens in wondrous ways. Here's to knowing when we arrived.
A brainstorming session. Again. Like every year, it’s off-site in a sumptuous hotel conference room in Mayfair. Bitter coffee from chrome dispensers next to soggy M&S biscuits. Amelia Armageddon, a friendly woman in her 40s introduces herself as a product discovery coach (name changed for dramatic effect). She stands in front of white boards along one side of the room. Hastily wiped scribbles remain faintly visible on one of the boards. I can just about read the word “leverage” with arrows pointing downwards like a dead octopus. On the table in front of her lots of sticky notes and Sharpies. One of them without a cap, filling the air with fumes of toluene and urethane resin.
After introducing herself and sharing her impressive experience she says something dreadful. Her words have the good intention of encouraging us to be open and outspoken in the coming two hours. “There’s no such thing like a bad idea” she says. I cringe. “There is”, I think to myself. “I’ve seen it with my own eyes. Many, many times”.
In fact hindsight tells us that most ideas are bad, but purely by looking at an idea it’s impossible to know how the future unfolds. Ideas are wobbly hand written words on a sticky note. They are not yet good or bad before they are crash-tested in real life. See for yourself: Twitter for cats, self-stirring pots or Wikipedia for marshlands. Does it tickle my fancy? Yes, yes and maybe. The ultimate judge will be unequivocal insight, derived from objective data. Determining an idea’s worth with data could include insights about a customer’s willingness to pay, how often a customer returns and the increase in annual recurring revenue for the company. I wrote about success metrics in the past here and here and here.
More interesting than looking at how we arrive at good ideas is looking at how we arrive at bad ideas. We don’t just need a shared view of what good looks like. Interestingly, Michael Seibel, CEO of Y Combinator talks a lot about bad ideas and failed VC investments. Over time he and his team at Y Combinator have become “failure experts”.
Product-market-fit is something not only a founder of a satellite and space exploration startup should be thinking about. Product-market-fit-thinking on a much smaller scale is relevant for everything we do. How many chili flakes can I add to pasta sauce before my son starts complaining? Or, how will my satellite data on LNG tanker positions help gas traders take long or short positions in gas hedging? Important questions as you would agree.
Validating an idea follows the same process as identifying product market fit. Many products and ideas fail not because their hypotheses were wrong, but because either the timing was off, or nobody iterated the product quickly to fit the solution to the problem well enough. Looking at good ideas alone, based on their financial success doesn’t give us the full picture, but looking at bad ideas in parallel helps us better understand the process of identifying value.
YouTube is a great example. It sold to Google in 2006 for $1.65 billion. A success? Yes, but looking at its history, it’s fascinating to know that it started off as a dating platform where users could upload videos about themselves. The use case of videos emerged as the most valuable aspect of the platform, so the founders Steve, Chad and Jawed swiftly adapted the product and business model. Long forgotten are the original YouTube features of adding a bio, matching partners and picking someone for a night out.
Another great example is Observa. Remember Observa? Me neither. I found it in Failory, the database for failed startups. Observa went out of service in 2016 after only two years with about $1 million in funding due to missing product market fit. The original idea of Observa was to detect and alert on database exposure, like a burglary alarm for databases. Sounds like a good idea to me, but the data proves otherwise. Here’s what went wrong in the words of the founder Rob Picard:
“I wanted to be a successful entrepreneur, but I didn’t want to spend years searching for the right idea… I love building things, and really love building things people want, but without an idea for what to build, I ran out of enthusiasm” [and wound down the company].
Back in the brainstorming session, Amelia Armageddon starts taking pictures of the board filled with our sticky notes, grouped by themes. One of them on the floor and one stuck to Amelia's shoe heel. I start to understand that ideas only work in large quantities. Some of them will stick and some of them will end up in bizarre places. Only time can tell.
As biochemist Linus Pauling once famously said:
“The way to get good ideas is to get lots of ideas and throw the bad ones away.”