Small Ideas, Small Companies and the DotCom Boom
Eric.Weblog() had ad posting a few days ago aboutSmall Ideas. These are the things that are interesting, but not worthy of full product development, or writing a full-blown post/article/book on. In large part, the content of this site *is* the body of my small ideas. Lots of this stuff is smaller than I would have bothered to share just a few months ago. However, I'm starting to see how big ideas can be built from these smaller building blocks.
However, I think that just plain getting that there are different levels of ideas and different levels of companies would have avoided much of the dotcom boom. To me, it's not that all of the dotcom companies had "bad" ideas. Many of them were actually good ideas. However, there's a world of difference between a good idea that targets a market with a potential for $1 million a year and one that can make $20 million a year. Unfortunately, if you take on debt and obligation (like taking huge sums of venture capital) aiming for the $20 million market with a $1 million idea, you'll be a failure. If, instead, you developed your $1 million idea with $500,000 of investment and $400,000 in annual costs going forward, your company will be a success and you will retire a millionaire within a few years.
The difference between them is that the exact same good idea can result in either embarassing failure or retiring wealthy. It all comes down to recognizing the actual potential of an idea and scaling the execution accordingly. As we enter what some are calling Tech Boom 2.0, it's worth thinking about. If an application/service could be built with 3 people and 3 months of full-time work, taking on $20 million in capital is a HUGE mistake.
Financial reporting from the likes of the Wall Street Journal has led lots of people to think in terms of "#2 is failure". If #2 in an industry is netting 500 million per year and is a failure, I'll be the first in line to fail. I know what I need for financial security and it can be obtained by getting a very, very tiny slice of a VERY big pie. All that I want is to build a modest company and build a secure future for my family. If you're chasing after the venture capital dollars, ask yourself what exactly you're after?
