This monday I posted ideas vs. opportunities in this space. The point was filtering all those ideas for the subset that are actually opportunities.
Overnight I got an email from Rick Holdren, chief evangelist for Medi-code, with this delightful additional story:
As a angel investor in over 25 startups I tell a different story: A few years ago Starbucks put suggestion boxes in all the Starbucks locations. They got 50,000 ideas. They implemented three of them.
I don’t know Rick, and I can’t validate his story. Anybody else know? Do you work at Starbucks and know the background story? Please comment.
And I’m not asking Rick, much less challenging him, because I’ve always said (and written, including on this blog) that stories have value whether they are literally true, or not. For example: Can stories be true when they’re false? Besides, I’m grateful for the story, why not use it for its illustrative value, instead of challenging it?
And this story, true or not, makes its point. Divide three executed ideas by the 50,000 and you get 1/150,000, which is 0.00000667. That’s .0007 percent. Seven hundredths of a hundredth of a percent. Sort of like a needle in a haystack. I hope you ideas to opportunities ratio is better than that, but you be the judge.
So you want to start a business, but don’t know what kind? Sure, you can get a list of franchises or ask the experts what are good businesses to start. That works for some people. Lists of businesses to start are easy to find. My advice, however, is don’t look for a list of good businesses. Don’t ask what the big opportunities are. Get a clue. Go look in the mirror. And as you look in that mirror, ask yourself these questions:
What do I like to do? How am I different? What is there about me that sets me apart? What excites me? What am I good at?
What do I like to do that other people (or companies) want to have done? What do I like to do that people will pay for? What do I like to do that I do better or differently from others who do it?
What value can I add? What’s missing? How can I do something better than what’s now available? What can I see about the future that others can’t see?
Where can I give value that isn’t there right now?
I’m down on lists because I don’t see the startup process as beginning with some idea that’s on a list, followed by research and putting together a team and developing a plan and starting a business. Instead, I see most good businesses starting with something that the founders believe in, something that they think ought to be done or ought to exist, something that excites them or intrigues them, all of that followed by planning and building a business to make it happen.
Here’s how it goes: you develop the original business plan to establish that your idea is an opportunity. Ideas are a dime a dozen, commonplace, and without any essential value. Opportunities are a subset of ideas. The planning process separates the opportunities from the ideas.
The heart of the business is that trio of identity, market, and focus. A lot of that is about you and what you want to do and what you can do better. And if building the business, I hope you fall in love with the business first. I hope you recognize the need and see how you can fill it. And, I hope you like the vision, know that you want to do it, and discover that you’re excited by it.
Do something you want to do and believe in. That restaurant you’ve always dreamed of, or skiing equipment, or a newsletter … success isn’t based on the idea, it is based on how hard you work at it, how much value you deliver. When somebody close to me wanted to start a graphic arts business, I didn’t say ‘no, don’t, there are a million of them.’ Instead, I said their success would depend on getting customers, providing value, and, in short, working hard.
In the Art of the Start, Guy Kawasaki offers a list of ways to generate new business ideas. If nothing else, read his first chapter. Just click, you can do that now; or later, if you want to keep reading me. Guy talks about getting going, about ideas being generated by impulses like “I want one” and “I can do this better” or “my employer wouldn’t (or couldn’t) do this.” There too, it doesn’t come out of the blue, it starts with you.
In Growing a Business, Paul Hawken shows how a business grows naturally out of the owners and founders doing something they want to do, filling a need they believe should be filled. I recommend it.
To be fair, there are exceptions. Franchise businesses, for example, when they work, are a business formula you pay for and implement, guided and taken by the hand every step of the way. Being a McDonald’s franchisee means you’re a millionaire, it doesn’t mean you like eating or preparing what McDonald’s restaurants serve. You buy a business to run. They tell you how to run it. If it isn’t a set formula and if they don’t give you all you need to know, then it’s a bad deal.
Thanks for asking.
(Note: I posted this on Up and Running several years ago. It’s as valid now as it ever was.)
Amazing fact (to me at least): the first wheels on suitcases appeared in the 1970s. My wife and I, both baby boomers, have asked ourselves: how is it possible that we all dealt with suitcases without wheels all the way through the 50s and 60s? What was wrong with all of us?
And sliced bread first appeared in 1928. I’m not talking about cumulative technological advances here, like computers and cell phones and ATMs.
Still, isn’t that the way with a lot of the really great ideas? They seem obvious. But only after you see them.
Can you help me with this? Can you remind me of some other great-but-obvious ideas?
I recently read your article protect your ideas and I have an idea that I want to protect and want to pitch to a company. I don’t know if I can turn my idea into a business without the business I created it for. I have an idea for a new revenue model for Facebook that uses their current model but gets more advertising and more potential … But my model would only work on Facebook; I don’t think I could start up a social networking site and get the same results. So my questions is do I try to patent the idea then go to them or what? How do I approach a successful company and tell them “hey you could be making way more money and revolutionize social networking!
And my answer:
Find out about patents and whether or not your idea has a good chance of being patentable. I seriously doubt that your idea is patentable, but I don’t know what it is. Patents are for inventions, not ideas. There have been some business model patents issued, but to build a business around it you’d have to be able to not just have a patent but defend it. And you should worry that the patent system is no longer working, caught in a deluge of technology.
If there’s a reasonable chance of a good strong patent that would be defensible against Facebook, explore that option. Plan to spend tens of thousands of dollars, so be honest with yourself. Start by spending a thousand or so dollars with a patent attorney really good, and really honest, who can tell you what the odds are, and be prepared to end the project there.
If — my guess — the patent option isn’t realistic, then forget it. You’re wasting your time. Give it up. The following points are just so you understand why.
Jump into the shoes of Facebook for a few seconds. They live and breathe their business model. How likely is it that they’re going to invite you to tell them what they haven’t thought of? How likely is it that you’ve got something related to some direction they’re already studying? And how much to they want to deal with some stranger saying what they’re doing is an idea they copied.
To help you think of it this way, I’ll share that during the years I built Palo Alto Software I learned not to even respond to people who wanted to sell me an idea for my business. I learned it the hard way: every single time I listened, it was something we’d thought about, often something we tried, but didn’t work. In a couple of rare occasions it was something we were already working on, which led to “oh dear, now this guy’s going to think we did it because he suggested.”
And then, to make matters worse, there’s the problem of ownership: even if you did think up that great idea, originally, you don’t own it. You can’t legally own an idea. Patents protect inventions, not ideas (see points 1 and 2 above); copyright protects creative works; and trademark protects commercial communications. You can’t sell something you don’t own. Tell it to Facebook and they can run with it for free. They pay you only if they want to, out of the well-known goodness of their huge corporate heart.
Just to explain an apparent contradiction between points 4 and 6: legally the big company can take anybody’s idea and run with it, because nobody owns an idea; but big companies don’t want to deal with the accusation or even the bad karma of actually doing that. Who wants the negative press? It’s way better to just not ever respond to you.
So there you have it. Not what you wanted to hear, I’m sure, but if I save you a lot of wasted effort, then I’ve done you a favor.
Sometimes I’m intrigued by what I call critical mass problems, meaning businesses based on ideas that work only if masses of users adopt them. These make intriguing startups sometimes, because if they go big, they go really big.
The best example in my lifetime was the fax machine. I dealt with the precursor in the 1970s when I was still with United Press International (UPI) and we used an early fax-like technology to send pictures to New York from Mexico City. Fax machines were in every business 10 or 15 years later, and the spread of fax was a critical mass problem because a fax did nobody any good until lots of other people also had fax machines.
Pricing and volume are an integral part of critical mass problems. The UPI telephoto cost tens of thousands of dollars. Fax machines were expensive at first, but got cheaper quickly as they became a standard. Eventually the fax machine was replaced by fax boards, which, in turn, were replaced by fax technology in the personal computer operating system.
Companies rose and fell as technology changed.
The other day I thought of critical mass related to the parking meter problem. I hate having to have quarters all the time.
Yes, I know there are partial solutions already. Near me, Portland OR has a pay-to-park system that takes a credit card and spits out a receipt. And in Eugene, OR, they’ve installed some newer meters that let me swipe a credit card and buy minutes. And I love the way the San Francisco airport has integrated its pay parking with the fast track system, making it automatic. I assume those of you who live on the Eastern side of the country have that option because you have all those crazy toll roads.
Give me a national account with ties to my mobile phone. Give me a device I can put in my car or my rental car. Come on, the technology is obvious.
It’s a great example of the critical mass problem: to really solve it, somebody has to establish a standard that everybody follows.
Still, people: inventors, parking lots, cities: make something cheap and efficient that reads credit cards or talks to mobile phones. Let’s make it like the credit card swipers we have at retail almost everywhere now, so it’s not about quarters.
Call it coincidence, serendipity, synchronicity, or just random, but last week I was accidentally exposed to two seemingly unrelated ideas that ended up seeming very related to me. And they gave me a fascinating whack on the side of the head. I thought artificial intelligence had run its course, but computers that learn could be much more important.
First, the book Blondie24, by David Fogel, describing how he and his team used evolutionary computing to develop computer programming that taught itself to play checkers. It’s well written, logical, easy to follow, and fascinating. Here’s a snippet (direct quote from the book):
Suppose we could harness the fundamental processes of natural evolution inside a computer. We could generate many thousands, or maybe millions, of solutions to problems, test these solutions, keep the ones that are better, and use them as parents of future improved solutions. We could write a computer program that uses an evolutionary algorithm to breed solutions to problems and perfect them over time.
There is so much more there that I have trouble summarizing, but what it means is something way better than what we used to call artificial intelligence, which was rules-based computing in which humans summarized knowledge and experience into rules (sorry, that’s my definition, so I apologize to all the AI people out there). This, in stark contrast, is computers that learn, using a process that mimics evolution: It’s survival of the fittest, in compressed time.
Having suffered through some serious attempts to create a rules-based system for financial forecasting, back in the 1980s, I am instantly intrigued by the change of perspective: let the algorithms learn by themselves. Don’t try to codify, just manage evolution. I’m sure that sounds very far fetched, but in the book takes the reader through actual cases with practical implications. Blondie24, as it turns out, is a program that taught itself to play checkers. It ends up sounding much more believable, in the book, than any summary that does it justice.
The day after reading that book I spent all morning with Dun and Bradstreet Credibility Corp, whose founder, Jeff Stibel, is the author of Wired for Thought, which has some striking parallels. Consider this paragraph (another direct quote) and compare it to the one above:
Think of it this way: evolution took hundreds of thousands of years to evolve the human brain to its current level of complexity and sophistication. The Internet will approximate that in a few generations. We will have experienced in cyberspace a replication of biological growth itself, as though it were the brain of a living thing. But more to the point, we will replicate not only the brain itself but also its by-product: thought.
Again, in this quote like the one above it, I ask you to trust me that this book too, like Blondie24, is very well written, easy to follow, and exciting. They are both talking about some high-flying ideas, but they guide the reader through them very considerately.
Which brings me to another coincidence, parallel thought. Although they don’t know each other (I don’t think) and they are approaching this from different directions, they both ended up with the same example of what’s going on.
First, from Blondie24, David Fogel is making the point that the goal is not elaborating human thought into computers in sets of rules and conclusions, but generating an independent evolutionary process:
For example, suppose we wanted to design a flying machine. We might look to nature for inspiration and see a vast array of feathered birds flapping their wings. But in emulating those specific manifestations of flight, we’d be led astray. Neither feathers nor flapping wings is a cause, but rather an effect. It’s no surprise that we’ve failed to build a practical man-carrying ornithopter.
Alternatively, we can adopt a high-level and more abstract perspective that exploits the common ground found across all learning systems. This ‘top-down’ approach seeks out repeated patterns in systems and does not lead us astray. Considering my example of aerodynamics, the top-down approach focuses on the countering forces of lift and gravity, thrust and drag, and air flowing over an airfoil…
The pattern repeated in all natural learnings systems is an evolutionary process of adaptation by variations and selection. Evolution, then, provides a simple yet complete prescription for programming a learning machine, a computer that can adapt its behavior to meet goals in a range of environments and to generate solutions tio problems that we don’t yet know how to solve.
Interesting? Yes. And Dr. Fogel plays that out in actual cases involving some classic logic problems, playing checkers, and even some practical results in reading images to diagnose cancers.
And then I picked up Jeff’s book, where he uses strikingly similar metaphor about solving the problem of flight. He’s talking about the development of the Internet as similar to nodes in a human brain, and the hope of developing something akin to learning and thought, from the Internet:
This development is not unlike the evolution of flight. When the Wright Brothers first flew … their intent was not to create a bird. To be sure, some innovators thought that building a ‘bird’ was the road to flight, but it was not. The Wright brothers harnessed the laws of flight, and not the body of a duck or a bluejay.
So here I was thinking that artificial intelligence had lost traction because it was impossible to mimic human knowledge and experience in a rules-based system, or maybe just not worth the effort. And then I discover that there’s some fascinating work going on, not in what we used to call artificial intelligence, but, rather, computers that learn, and the Internet as brain.
Final thought: are we the same species we were 500 years ago, and that we have been for a few thousand years? Or are we now a new species that has new powers of communication, storing and retrieving information, instant interaction over large distances?
I know a bright, ambitious guy who didn’t have the patience to stay in school and ended up stocking retail store shelves for a major consumer products company. He stuck with that company, moved up from shelf stocking to sales, and the up again from there to sales management, and eventually, up to country manager for a subsidiary in another country.
And when he started his own business, what was it? Restocking retail shelves for consumer manufacturers. Right where he started. Only in his case, he was the owner, not the employee. He made a service of doing well what needed to be done. In just five years of it he had several thousand employees, and several very important major consumer manufacturers as clients. Before he was 10 years into, he sold the company for $10 million. He now lives happily in Switzerland.
That’s kind of my own story with business planning software. I was doing business planning for clients, and that led to developing templates for clients, which became a software product. That’s essentially the same thing: building a business based on doing what you’re already doing, but on your terms.
So that’s a thought for today: do your own business, not by doing something completely different, but by doing what you’re already doing, just better.
People ask me often what kind of business to start. Usually I say something like “look in the mirror,” continuing with how the best business for you has to reflect who you are and how you’re different. But here’s a new thought for you: choose the market you’re going to disrupt.
This isn’t for the sandwich shop, graphic arts business, dry cleaner, or new restaurant. It’s for the rarified air of the big bang startup. What market doesn’t work? What market can you radically change?
If your new business blows up an old market, then you really matter. Think of Netflix, amazon.com, Google, Hulu.com, and other big winners. ZipCar. Expedia. Twitter. Facebook.
In every one of those cases, somebody applied a new way of thinking to an annoying old way of doing something.
I heard it yesterday from one of the smartest and most successful people I know, my son Paul, CTO of Huffington Media Group:
“I’ve seen the way smart investors work. If it’s a team they believe in, and they focus on a market to disrupt, it’s going to work. They’re going to get going, change it often, and make it work.”
There was a nice short video on TechCrunch the other day, quoting Mark Zuckerberg, John Doerr, and two other industry leaders on how much the iPad has changed “everything.” I picked it up because of what John Doerr says near the end.
The video snippet I’ve embedded here skips directly to my favorite part, at 2:45, very near the end, as John Doerr talks about Steve Jobs saying what market research has done for the iPad. Jobs says:
It’s not the consumers’ job to figure out what they want.
I like that. As we turn increasingly to polling and research for answers, the problem is that people don’t often say what they really think, and quite often don’t even know what they really want. One kind of leadership, to me, is leading people instead of asking people. You take a guess. When you guess right, you win big. Guess wrong, you lose. Is it possible that this is also called entrepreneurship? What do you think?