There’s a lot of talk about Silicon Valley vs Silicon Alley. Let’s be honest: New York startups head west for the Silicon Valley investors. Silicon Valley companies open offices here for the access to the wealth of established industries that only New York offers. As for the rivalry: enough already, although one thing that the Valley does have that the Alley doesn’t is Stanford University. In a new spirit of collaboration, AlleyWatch is bringing Stanford East, with a series of videos from classes taught at the esteemed university.
In his presentation at the Startup School last year, Chris Dixon had a bit of unconventional wisdom to share. Good ideas which are clearly good ideas, he reasons, are gobbled up quickly by the big companies like Apple and Samsung. Then what does that leave for every would-be startup and entrepreneur looking to introduce the next big thing? Leftovers—or good ideas that look like bad ideas.
“Entrepreneurs are in the business of leftovers,” says Dixon.
One famous example he touched upon is the difficulty Google originally had in selling its technology to the major web portals. Way back then (what seems like eons ago when computers were only good for Kid Pix and DinoPark Tycoon), “stickiness,” or the ability to keep users browsing a single page, ruled the methodology and the thinking behind accessing the web. Since Google’s superior search technology connected users with their query quicker, it was actually seen as a bad idea. It was a loss leader, and no one could figure out how exactly to make money from it. Fast forward to now, and you can imagine that there are at least one or two execs who cringe every time Google is used in verb form.
This problem Google originally faced is pandemic in the entrepreneurial process. So, how then does one even go about developing a good idea that everyone else is saying is a bad idea? Unless you know something no one else knows, chances are that you’d think it’s a bad idea, too. As Dixon explains, that’s exactly the case: if you’re going to develop a winner, you’ll need to know a secret.
There are three ways, Dixon reckons, that you can uncover a “secret.”
1) Know the tools better than anyone else.
2) Know the problem better than anyone else.
3) Draw from your own experience and background.
Linking the three is a proprietary knowledge acquired through skill and technical prowess, or a deep rooted understanding of what users need, based on living in a world without the solution. By this token, attempting to develop an idea abstractly—either by analyzing reports or attempting to combine “x service for y platform”—will pale in comparison every time, when put up against direct user experience. It’s quite logical, if you think about it. If you can read about it or come to it from analyzing trends, there really isn’t a secret, is there?
Dixon then goes on to unveil four other characteristics of good ideas masquerading as bad ones.
1) Powerful people will dismiss them as toys.
2) They’ll unbundle functions done by others
3) They often start as hobbies.
4) They often challenge a societal norm.
Since technology often expands at a rate faster than the demand for it, good ideas are often misunderstood as niche entertainment, superfluous functions, unimportant side projects, or socially questionable. Really powerful ideas are often spawned from the work engineers choose to tackle in their spare time, since—once again—a real need is identified at the consumer level, rather than being analyzed from an abstract layer.
Of course, to Dixon, this presentation itself is a sort of “secret.” It’s a realization he came across in his experience after taking a look back into his own startups and the time he spent as a venture capitalist. With a need to predict the winners and losers, Dixon came up with the “secrets” system as a way of analyzing whether or not a startup was on to a good idea that only looked bad, or was indeed actually bad. If the founders show signs of being privy to any of the aforementioned “secrets,” Dixon reckons investors will have a better way to judge an ideas potential success.
In that case, VCs will be hoping that there’s plenty enough leftovers to go around.
You can watch the full presentation below: