In the early days of the World Wide Web, renowned investor Jim Clark famously coined the term “the new new thing” (memorialized in Michael Lewis’ book of said title) to refer to his search for the idea that would represent the next prime investment opportunity. The Silicon Valley was swirling with new ideas about ways to make money off the Web, many of which would disappear with the bursting of the Internet bubble by the turn of the century.
Today’s startup environment suffers from the same problem – too many ideas, not enough good ones. How can entrepreneurs determine which idea truly represents the “new new thing”? My personal experience in creating OurPlan, an app that makes it easier to meet new people over shared interests, reveal several factors for successful ideas.
The Novel Twist. A good argument can be made that there are really no original ideas anymore. Every great idea is simply a twist on an old one. Take the social media industry. What is Facebook but merely a different iteration of MySpace? Of course, the Facebook pivot obliterated MySpace from the social media landscape. A twist on an existing idea might be just enough to become the next new thing. Of course, the devil lies in the details. Does your idea provide enough novelty? Most importantly, can you show potential investors how this twist represents enough of a departure from the old idea?
My experience shows that the novel twist can inspire investor confidence by detailing the innovations that build on a proven success. One of my first pitches involved presenting investors with a highly generalized idea for a social media platform. As expected, investors failed to recognize what that the idea actually represented. When I took some more time to nail down the exact details of my idea, investors took much greater interest. They were already familiar with the general concept behind it, and the innovations I presented sparked their interest even further.
The Value Proposition. Ideas must be more than novel to succeed. They must possess value. One of my mentors, a veteran of the heady days of the 1990s, recalls the problematic nature of determining the value proposition of an idea. One of his first ventures involved an online shopping retailer that did little more than replicate the brick-and-mortar model in this product category. Everybody was nevertheless thrilled with the concept. After all, consumers spent billions every year in this category. How could an online model not succeed? In their rush to beat rivals to the market, my mentor and his associates failed to calculate certain shipping costs and taxes for this category. These unforeseen costs, which couldn’t easily be passed onto the consumer, eliminated any price value that the online model provided. The venture suffered the same fate of many other first-generation Internet failures.
This example illustrates the need to work out the fine details about the value of an idea in the real-world environment. If you lack the financial expertise to conduct this level of analysis, find an investor or partner who can. The world is full of great ideas (jet packs anyone?) but not all of them can be monetized. Your ability to sell investors on your idea will be determined by how well you’ve worked out the details of the value proposition.
Personal Calibration. I’ve seen a lot of great ideas about ways to make a fortune off of quantum mechanics. Unfortunately, my personal skill set precludes me from pursuing on participating. If Einstein struggled conceptually with quantum mechanics, I doubt that I have what it takes to help monetize these ideas. Instead of pursuing pie in the sky ideas that could change the world, my successes have only been in areas where I am most familiar. Your best ideas will most likely calibrate with your personal experience, knowledge, and skills. Writers are encouraged to write about what they know. Similarly, your best ideas are likely to be personally calibrated.
Everything Changes. As Buddha wisely observed, everything changes. So should your idea. Fluctuations in customer preferences, the competitive landscape, and countless other factors present challenges that must be accommodated. The great idea you came up with a month ago might need to adapt to these changes. Your idea will also change as a result of feedback from the experts you have hopefully consulted. Consider your platform an organism that must constantly evolve or face extinction.
The history of failed startups is the history of static ideas that fail to respond to changing circumstances. One of my early investors prudently advised me not to become too wedded to the idea that I successfully pitched to him. “This might be your baby,” he told me, “but your baby is going to grow up. She might not end up anything like the girl you imagined she would be.” He was right. My original idea underwent dramatic changes as a result of fine tuning and feedback. I can see the resemblance to the child she once was, but she has fortunately matured into something different.
The literature on developing great startup ideas is replete with details about business plans, market research, and customer testing. These activities represent the foundation of developing and evaluating. My experience shows that a few conceptual approaches can also help you separate the wheat from the chaff when considering what to pursue. Some of the best concepts build upon what has come before, so consider ideas that are novel twists on proven successes. Not everything can be monetized, so make sure you hammer out the details of your value proposition. Even the brightest among us have limitations, so calibrate your efforts with your skill set. Everything changes, so make sure your idea is a fluid, evolving, and dynamic organism. With a little luck and a lot of work, your idea might become the new new thing.