Let’s End the Myth that Ideas Are Worthless

Let's see:

To resolve the question of P versus NP, all it takes is a good idea.

Easy? By all means, I'll give you a week! Worthless? Clay Mathematics Institute will give you $1 million for a correct answer. There will likely also be some startup opportunities. Uh, there is a lot of history to suggest that don't hold your breath while looking for a solution and that shouldn't plan a lot of other activities for the week, month, year, decade, lifetime while you find the 'easy idea' for a solution.

Many people would like a single, cheap pill that will cure any cancer. All it takes is an idea. Why sequence DNA? To get a fundamental ('reductionist') understanding of how cells work and, then, how they go wrong in the case of cancer and how to intervene to cure the cancer. People have been working hard on DNA since about 1950. Progress? A LOT. One pill to cure all cancers? Not yet. But, again, all it takes is an idea.

The Silicon Valley, John Doerr, Guy Kawasaki claim that ideas are easy has in mind for an 'idea' just some 100,000 foot vague, one-line statement of a new business direction and missing any detail or significance. E.g., Facebook but just for dog owners. Or, matchmaking and social networking from GPS checkins. So, by an 'idea' they are not thinking about resolving P versus NP or finding a pill to cure cancer.

For such a vague one-line statement, sure, ideas are worthless.

But, more specifically, especially in technical fields, an 'idea' is something worth protecting as 'intellectual property' (IP) because it is the crucial, core 'secret sauce', difficult to duplicate or equal, that provides a powerful, valuable solution to a big problem. That an 'idea' could be valuable, and difficult to find, e.g., 'non-obvious', goes way back to the founding of the USPTO. So, here is strong evidence that good, new ideas are difficult to find and valuable.

So, with the description that a new business should provide a valuable solution to a big problem, the 'idea' is the 'secret sauce' and IP crucial for being able to provide the solution. In this case, typically the idea is difficult and valuable. For the "execution", that may be just putting the pills in the bottles. BELIEVE me, if you have a good idea for a one pill cure for cancer, then execution will be routine!

Instead:

Good ideas are difficult, rare, and valuable. Given a good idea, execution is routine.

So, to explain the Silicon Valley, Doerr, Kawasaki, etc. claim there are at least two answers:

First, they are playing a negotiating game of 'preemptively' stating that what the entrepreneur brings to the table, the 'idea', is worthless while their money is worth, well, money. Here, of course, the entrepreneur can say:

"Money is all green, there's lots of it, Bernanke is printing more by the tens of billions, interest rates are very low meaning that for the gains the LPs need the money needs to be put to work, and the last 10 years of venture capital show that good projects giving good returns are rare. Uh, we believe that we have a project that can give very good returns. Want cut out the nonsense and talk more seriously now?"

Second, and even worse, they have had essentially no exposure to ideas such as solving P versus NP, being the crucial key to providing a valuable solution to a big problem, having value as IP, or being worth a valuable patent.

Either way, an entrepreneur should not want such a person on their Board. Else, at some point the entrepreneur may conclude that the business needs another idea, needs a small project to make progress with the idea, has to explain the project to the Board, and now has to face people who believe that ideas are easy, plentiful, and worthless. Really BIG bummer.

But the secret is that, really, venture partners essentially just ignore ideas, of any kind, good, bad, or otherwise. Instead, for a Series A investment in, say, a Web 2.0 project, the partners will look at ComScore numbers. They may want to see at least 100,000 unique users a month and the number of unique users per month growing quickly.

For a Series B, they want to see revenue, earnings, and both growing quickly.

For the business being 'defensible', they want to count on 'engaged users' instead of difficult to duplicate or equal secret sauce.

Given such numbers, they regard the ideas as irrelevant or nearly so.

My suspicion is that these criteria are enforced by the LPs.

The idea is crucial for the entrepreneur, but entrepreneurs should not think that 'ideas' in any sense are relevant to the evaluations of the venture partners.

What makes ideas worth is to become reality, execution and testing. You have to test your ideas to see if they could become worth anything,or just if they are false creations of your mind, that takes time and effort.

It is also very difficult to say: This idea I had yesterday is very bad, and they are when your only data you had what presumptions not based on reality, it goes against your ego. People think their ideas are true: How many atheist believe in God?, How many Christians do not?

A lot of people spend their live thinking ideas without taking the effort to test them on reality, that is worth zero. That's it.

Nobody is going to pay you for "having the idea of a novel", but maybe they are for taking the effort and risk of spending one year writing it.

I have software that recognizes the voice, the idea is simple, the execution took a lot of years and is going to take more years to be the best of the world.

Only if your measure of "good" is what customers accept or want (at the moment you present the idea to them).

This is a common measure for business people, who value profit over all other concerns. But it's certainly not the only way of measuring value.

It's also important to note that what customers accept may have little to do with the idea itself but rather be a matter of sales and marketing.

Take a look at Java, who many on HN loathe with a passion, and yet it's achieved great market share, and many people accept and use it daily. Does that mean that Java is good?

I think a lot of confusion can be avoided by talking about "market success" (as measured by profitability, market penetration, etc). Even people who hate Java can probably agree that Java has been a market success. But that doesn't mean it's better by every measure.

Going back to ideas, it's clear that just because an idea may be "good" by some measure, doesn't mean it will inevitably become a market success. To do that requires many other factors such as implementation, sales, and marketing.

Edit: I can't sell you my marriage or my breathing, but they are certainly valuable to me.

The above single-sentence description of the Haber-Bosch process would have made it possible to manufacture ammonia artificially from air, starting a century earlier than it actually was possible --- if someone with the money to build and debug the equipment believed it, of course. That would have revolutionized both agriculture and warfare in much the same way that the Haber-Bosch process eventually did. That would have been very valuable.

"Scarcity in your favour" is just a way of controlling who the net use-value flows to. It doesn't contribute to creating the value in the first place. Often, in fact, it decreases it.

It's true that valuable ideas stop being valuable if nobody believes them, just as valuable machinery stops being valuable if nobody uses it, and disciplined execution stops being valuable if it's executing a stupid idea. That doesn't mean any of those things are valueless. It just means their value is contingent.

There's nothing intrinsic here which prevents a sale from happening. It's just vanishingly improbable that I could offer terms you'd accept.

> The above single-sentence description of the Haber-Bosch process would have made it possible to manufacture ammonia artificially from air, starting a century earlier than it actually was possible

...if it were known to be true. In this case, the idea's not valuable. If there's value anywhere here, it's determined by how much the problem you end up solving matters, not the process itself, much less the description of the process. The problem that matters isn't "how do I make ammonia?" It's "how do I make artificial fertilisers cheaply?" or "what do I do when I can't make enough gunpowder?"

> "Scarcity in your favour" is just a way of controlling who the net use-value flows to. It doesn't contribute to creating the value in the first place. Often, in fact, it decreases it.

No, setting up a situation where there is "scarcity in my favour" is arranging for there to be demand for something which I can supply such that the market value makes it worth my while to do so. "Value" itself doesn't exist without demand, which is why scarcity is important.