The popular wisdom in the startup world is that ideas aren’t worth much. They’re regularly denigrated as being cheap, worthless, easy, and paradoxically, overvalued. Steve Jobs even described relying on a “really great idea” as a “disease.” As with so many popular pieces of advice, there’s a valid insight at its core, which is valuable so long as it isn’t oversimplified.
It’s true that a successful startup needs more than a world-beating idea. As demonstrated by Microsoft’s dominance over Apple in the 90s – and Apple’s dominance over everyone in the past decade – smart execution counts for a lot. A company which executes well can succeed even with an unoriginal or mediocre idea, but a great idea rarely overcomes a bad execution.
The point that Jobs and others are making when they talk down the value of ideas is that having an idea doesn’t mean you’re halfway to success. An idea is just half a step along a very long road.
The problem is that the “ideas are cheap” mantra has become the standard response to a new entrepreneur who says they’re worried about sharing their idea with potential mentors or investors. Their concerns are brushed aside with a casual, “oh, don’t worry, your idea isn’t worth anything. No one would want to steal it.” This doesn’t just happen in Brisbane – it happens in Berlin and London as well. But the response misses the point.
For me, the answer to these concerns is more practical: you won’t get anywhere in the early stages of your startup by jealously guarding your idea. It’s just not possible to carry around a stack of nondisclosure agreements to protect yourself in case someone asks, “what do you do?” You have to share your idea, even with people you don’t know well, not because the idea is cheap, but because at the beginning, it’s the best currency you have.
Paul Graham of Y Combinator makes the distinction nicely:
Nothing evolves faster than markets. The fact that there’s no market for startup ideas suggests there’s no demand. Which means, in the narrow sense of the word, that startup ideas are worthless.
Notice that he’s talking about the market value of an idea. You can’t sell your idea, so it is financially worthless. Just be sure never to confuse ‘financially worthless’ with ‘unimportant’.
The idea behind your startup may not be worth any money as such, but it is – and should be – worth a lot to you and your company. The initial idea sets out the problem you’re trying to solve and provides the reason for starting your business. It has to matter to you because the desire to solve that problem will be your best source of motivation throughout the process of building your startup. It sounds clichéd, but you need a sense of purpose in order to keep going. Love of money or notoriety just isn’t going to cut it.
It may sound as if I’m making too much of the initial idea. After all, most startups pivot and dramatically change their strategy, product, or market at some point. A startup almost never ends up doing exactly what its founders first planned. From that perspective, it might appear simpler just to start the company and try different things until you find an idea which seems workable.
Don’t fall into the trap of starting a company without an idea behind it. The initial idea is critical, not because it’s perfect, but because it frames the aim of your startup. Products and approaches may change completely, but it’s rare for a good startup to abandon its entire reason for being.
Another reason not to do things backwards is that trying to come up with a startup idea is a sure-fire way to generate bad, but plausible-sounding business concepts. The idea has to come first.
Finally, although a VC won’t pay you in exchange for an idea, they will see value in the intellectual property your startup owns. Ideas and IP are very different beasts. The widespread belief in the cheapness of ideas has led to an attitude that securing patents is a waste of a startup’s time and money. There’s a feeling that startups should just be running as fast as they can.
An IP investigation is a slow process and it does cost money. However, the value of owning and protecting new IP you create can make it well worth doing. If you’re intending to court investors, having (or knowing whether you’re eligible for) a patent on what you’ve built is an excellent way to underscore its value.
With the comparative dearth of seasoned tech startup investors in Australia right now, protected IP can speak louder than a business plan in some meetings. As I’ve said before, innovative patents are a significant source of value to the companies which hold them.
A great startup idea is a purpose and a driving obsession. It’s valuable, but its importance and effect can’t easily be passed on to someone else. Ideas are not cheap. They’re worthless and priceless at the same time.
Kit Kriewaldt is an entrepreneur and strategic communications specialist. He loves to talk James Bond, cocktails, and psychology – focusing particularly on decision making and consumer behaviour. He is also Chief Marketing Officer of digital communications platform Liquid State. Photo: Startup Stock Photos