5 ms·

It's not that good ideas are getting harder to find, it's that poorly-funded good ideas can't compete against well-funded bad ideas. Investors are more interes

It's not that good ideas are getting harder to find, it's that poorly-funded good ideas can't compete against well-funded bad ideas. Investors are more interested in funding terrible ideas from people they know than great ideas from people they don't know. The market is monopolized on every side and good ideas can't compete against sheer capital.

vishalzone2002 10y ago
Agree, great point.
devoply 10y ago
Not only that many good ideas don't yield the sort of returns investors are looking for... so they never have a chance to get funded other than through grants and those a relatively a small size of the market. Many things are not profitable but still good to have, and since they can't sustain themselves they die... to be replaced by other things that are profitable. That's the direction in which the market evolves. Governments in general think this is a good thing, and perhaps it is... but not for good things that don't exist because of the mechanics of the market.
mysterydip 10y ago
I agree but would expand it to humans in general rather than just investors. Look at the top charts in the mobile app stores for examples (with a few exceptions).
rmah 10y ago
It's not that exactly. It's that investors are more interested in making money than "ideas". And they feel that people who have a good track record of delivering results are more likely to make them money than unknown an team with a great idea. Part of being a good management team (which is what VC's are looking for after all) is being able to sell. Selling the concept to investors, selling the product to customers, selling benefits to partners. People's history, credentials, contacts, etc. are all part of how you sell. Just think about how hard it is to determine if someone can do a specific, relatively narrow, job when hiring. Then imagine how hard it is to determine if a team can work together, be persistent enough to see things through but flexible enough to roll with the punches as needed. To assess if the team can deliver a product, manage their finances, hire a good crew, craft a compelling marketing message, sell to customers, sound good to the media, etc, etc. This is not easy. Is it any wonder that VC's put great stock in past successes of any kind? Maybe this isn't fair. But it's how the world works. Sorry for rambling this morning :-)
- wslh 10y ago
  Also good ideas with a lot of value don't imply good businesses. As an example, just look at GitHub financial numbers. Another issue is the scale that makes your idea profitable, it is almost impossible to sustain growth like Facebook or Amazon did before you make a dime and they were excellent ideas with great business execution. In the past a music concert with 10k people will be enough to sustain artists, now you can have one million viewers in YouTube and receive a tiny amount in comparison.
  - aaron-lebo 10y ago
    Also good ideas with a lot of value don't imply good businesses. As an example, just look at GitHub financial numbers. A lot of that is of their own doing. Github is a great business; they just got greedy. Interesting if they should fail, their failure will be cited as evidence that you can't make money hosting code (you already are). If they didn't take on millions and keep hiring engineers like crazy, they'd be doing just fine. They wouldn't be losing $66 million hosting a code repository anyway....
    - wslh 10y ago
      > A lot of that is of their own doing. Github is a great business; they just got greedy. Amazon was/is greedier and look at where they are now. My central point is that great businesses are just a small set within great ideas with lot of value. One simple example is what happened with software tools in Windows. There are great tools that provide a lot of value for the users but people are use to free software and almost nobody is buying them.
- aaron-lebo 10y ago
  It's not that exactly. It's that investors are more interested in making money than "ideas". And they feel that people who have a good track record of delivering results are more likely to make them money than unknown an team with a great idea. This is post-hoc justification. Google, Facebook, Reddit, and Twitter have been worth billions (Reddit the exception) for more than a decade. They've collectively innovated how much since 2005? They have a bunch of small improvements that anyone could have anticipated and purchased many of the good ideas that have come along (Occulus). Some are floundering in spite of having massive reach (Twitter), some can't anticipate uses of their platform until after it happens (Facebook). Some are dead and their founders have joined the VC game (Digg). Did Kevin Rose not look like a pretty sure bet in 2006? Whatever happened to Milk? Yet according to the "they know how to deliver" logic, they should be knocking new ideas out of the park. Where are they? Of course they have some successes but you could have some successes too if you have billions of dollars to subsidize yourself and an existing social network to support yourself and advertise your success. You throw ideas at a wall and the ones that work are evidence of know how. It's a broken metric. Honestly, there is no evidence these companies are well run except for the fact that they won, but they effectively won a lottery at which point money starts flowing in. And that's the entire VC game - you'll have some moderate successes, mostly failures, and some unicorns. As long as you hit jackpot a few times you are ok. Meanwhile, part of the VC job is selling the idea that they know what they are doing, too. And with hundreds of thousands of the world's smartest kids being funneled through the top colleges each year, you've got a lot of lottery tickets. I think it's interesting that all of these authors are at Stanford or MIT. Seems similar to the backgrounds of a lot of tech talent: Gates (Harvard), Zuckerberg (Harvard), Brin and Page (Stanford), Reddit guys (Cambridge area) you could go on and on. Maybe there would be more diversity of ideas if the people behind them weren't all coming from similar backgrounds and self-selecting to certain locales...
vthallam 10y ago
But that's the job of the investors, they don't try to hit the returns with every idea. What they look is a capable team who can pivot if that's what it takes to make a compelling product used by millions.
rarec 10y ago
What defines a good idea? From an investor point of view, a good idea is one that returns on monetary investment. I'd argue that an idea can't be very good if it doesn't have at least a neutral ROI on execution.
deleted 10y ago
[deleted]
gatling1787 10y ago
> poorly-funded good ideas can't compete against well-funded bad ideas. Nonsense. In the U.S., if the idea is worth anything, then it's surely worth spending ~$1500 to file a Provisional Patent. That Provisional Patent gives you 1-year to determine whether the idea is feasible. Talk to investors, see if there's interest. Nothing proves interest better than an investor willing to invest real money. If no interest, take that as an indicator and move on. > Investors are more interested in funding terrible ideas from people they know than great ideas from people they don't know. Nonsense. Investors are looking to make money. Give them an feasible idea that is somewhat backed with a guarantee that the money they fork over for you to spend on developing the idea won't simply be copied - and the investor will take that over a terrible idea with someone they know. > The market is monopolized on every side and good ideas can't compete against sheer capital. Nonsense. Even if the biz ends up collapsing, the patents can still be sold or retained. Many here will not like that idea - but the reality is the patents provide the investor with some comfort especially if the idea is worth anything.
- beambot 10y ago
  > Nothing proves interest better than an investor willing to invest real money. If no interest, take that as an indicator and move on. Really... Nothing? You know, like customers willing to pay you money...?
  - gatling1787 10y ago
    I was replying to "poorly-funded good ideas" so the context was investors funding ideas. Generally, customers come after the idea and the funding.
    - beambot 10y ago
      Politely disagree. If you're raising funding before talking with potential customers, then you might be doing it wrong. (Depends slightly on the product, but generally true in my experience.) People who supply funding also want to know that customers want your product.
- 10y ago

vishalzone2002 10y ago

Agree, great point.

devoply 10y ago

Not only that many good ideas don't yield the sort of returns investors are looking for... so they never have a chance to get funded other than through grants and those a relatively a small size of the market. Many things are not profitable but still good to have, and since they can't sustain themselves they die... to be replaced by other things that are profitable. That's the direction in which the market evolves. Governments in general think this is a good thing, and perhaps it is... but not for good things that don't exist because of the mechanics of the market.

mysterydip 10y ago

I agree but would expand it to humans in general rather than just investors. Look at the top charts in the mobile app stores for examples (with a few exceptions).

rmah 10y ago

It's not that exactly. It's that investors are more interested in making money than "ideas". And they feel that people who have a good track record of delivering results are more likely to make them money than unknown an team with a great idea. Part of being a good management team (which is what VC's are looking for after all) is being able to sell. Selling the concept to investors, selling the product to customers, selling benefits to partners. People's history, credentials, contacts, etc. are all part of how you sell. Just think about how hard it is to determine if someone can do a specific, relatively narrow, job when hiring. Then imagine how hard it is to determine if a team can work together, be persistent enough to see things through but flexible enough to roll with the punches as needed. To assess if the team can deliver a product, manage their finances, hire a good crew, craft a compelling marketing message, sell to customers, sound good to the media, etc, etc. This is not easy. Is it any wonder that VC's put great stock in past successes of any kind? Maybe this isn't fair. But it's how the world works. Sorry for rambling this morning :-)

wslh 10y ago
Also good ideas with a lot of value don't imply good businesses. As an example, just look at GitHub financial numbers. Another issue is the scale that makes your idea profitable, it is almost impossible to sustain growth like Facebook or Amazon did before you make a dime and they were excellent ideas with great business execution. In the past a music concert with 10k people will be enough to sustain artists, now you can have one million viewers in YouTube and receive a tiny amount in comparison.
- aaron-lebo 10y ago
  Also good ideas with a lot of value don't imply good businesses. As an example, just look at GitHub financial numbers. A lot of that is of their own doing. Github is a great business; they just got greedy. Interesting if they should fail, their failure will be cited as evidence that you can't make money hosting code (you already are). If they didn't take on millions and keep hiring engineers like crazy, they'd be doing just fine. They wouldn't be losing $66 million hosting a code repository anyway....
  - wslh 10y ago
    > A lot of that is of their own doing. Github is a great business; they just got greedy. Amazon was/is greedier and look at where they are now. My central point is that great businesses are just a small set within great ideas with lot of value. One simple example is what happened with software tools in Windows. There are great tools that provide a lot of value for the users but people are use to free software and almost nobody is buying them.
aaron-lebo 10y ago
It's not that exactly. It's that investors are more interested in making money than "ideas". And they feel that people who have a good track record of delivering results are more likely to make them money than unknown an team with a great idea. This is post-hoc justification. Google, Facebook, Reddit, and Twitter have been worth billions (Reddit the exception) for more than a decade. They've collectively innovated how much since 2005? They have a bunch of small improvements that anyone could have anticipated and purchased many of the good ideas that have come along (Occulus). Some are floundering in spite of having massive reach (Twitter), some can't anticipate uses of their platform until after it happens (Facebook). Some are dead and their founders have joined the VC game (Digg). Did Kevin Rose not look like a pretty sure bet in 2006? Whatever happened to Milk? Yet according to the "they know how to deliver" logic, they should be knocking new ideas out of the park. Where are they? Of course they have some successes but you could have some successes too if you have billions of dollars to subsidize yourself and an existing social network to support yourself and advertise your success. You throw ideas at a wall and the ones that work are evidence of know how. It's a broken metric. Honestly, there is no evidence these companies are well run except for the fact that they won, but they effectively won a lottery at which point money starts flowing in. And that's the entire VC game - you'll have some moderate successes, mostly failures, and some unicorns. As long as you hit jackpot a few times you are ok. Meanwhile, part of the VC job is selling the idea that they know what they are doing, too. And with hundreds of thousands of the world's smartest kids being funneled through the top colleges each year, you've got a lot of lottery tickets. I think it's interesting that all of these authors are at Stanford or MIT. Seems similar to the backgrounds of a lot of tech talent: Gates (Harvard), Zuckerberg (Harvard), Brin and Page (Stanford), Reddit guys (Cambridge area) you could go on and on. Maybe there would be more diversity of ideas if the people behind them weren't all coming from similar backgrounds and self-selecting to certain locales...

vthallam 10y ago

But that's the job of the investors, they don't try to hit the returns with every idea. What they look is a capable team who can pivot if that's what it takes to make a compelling product used by millions.

rarec 10y ago

What defines a good idea? From an investor point of view, a good idea is one that returns on monetary investment. I'd argue that an idea can't be very good if it doesn't have at least a neutral ROI on execution.

deleted 10y ago

[deleted]

gatling1787 10y ago

> poorly-funded good ideas can't compete against well-funded bad ideas. Nonsense. In the U.S., if the idea is worth anything, then it's surely worth spending ~$1500 to file a Provisional Patent. That Provisional Patent gives you 1-year to determine whether the idea is feasible. Talk to investors, see if there's interest. Nothing proves interest better than an investor willing to invest real money. If no interest, take that as an indicator and move on. > Investors are more interested in funding terrible ideas from people they know than great ideas from people they don't know. Nonsense. Investors are looking to make money. Give them an feasible idea that is somewhat backed with a guarantee that the money they fork over for you to spend on developing the idea won't simply be copied - and the investor will take that over a terrible idea with someone they know. > The market is monopolized on every side and good ideas can't compete against sheer capital. Nonsense. Even if the biz ends up collapsing, the patents can still be sold or retained. Many here will not like that idea - but the reality is the patents provide the investor with some comfort especially if the idea is worth anything.

beambot 10y ago
> Nothing proves interest better than an investor willing to invest real money. If no interest, take that as an indicator and move on. Really... Nothing? You know, like customers willing to pay you money...?
- gatling1787 10y ago
  I was replying to "poorly-funded good ideas" so the context was investors funding ideas. Generally, customers come after the idea and the funding.
  - beambot 10y ago
    Politely disagree. If you're raising funding before talking with potential customers, then you might be doing it wrong. (Depends slightly on the product, but generally true in my experience.) People who supply funding also want to know that customers want your product.
10y ago