The True Value of Ideas
This is the Chapter 8 of my e-book Silicon Valley for Foreigners, that can be downloaded for free on www.siliconvalleybook.com or purchased for $2.99 on the iBookStore and Kindle. A new chapter will be posted on this blog every week.
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Many people outside Silicon Valley are fixated on the intrinsic value of ideas. Some believe that, in the tech world, a brilliant idea is enough to achieve tremendous success. How many of us have not heard from friends that “Google is an excellent idea” or “Steve Jobs is a genius because he had world changing ideas.”
Reality could not be more different from the general perception. Ideas are a great start, but their influence is overrated. They probably contribute less than 1 percent to the success of a tech startup.
The media compounds the problem by doing a poor job explaining how hard and complex it is to build a winning product. Many times, we stumble upon articles or reports romanticizing the power of an idea in detriment of all other factors.
Non-entrepreneurs, in most cases, are unable to imagine the amount of work behind the curtain to transform an idea into a viable product or company. Even the simplest ideas are super complex to implement in real life and success is 100 percent driven by flawless execution and sheer perseverance.
Uber is a great example. At first, it looks like its merits rely only on the brilliant idea to disrupt the transportation industry by using the smartphone and people’s private vehicles to replace taxi companies. In fact, Uber’s success relied on a multitude of factors related to execution:
1. Uber’s team built a great product, which was easy-to-use and with a repeatable and scalable business model;
2. It raised a lot more money ($15B+) than competitors;
3. Infused with new cash, the startup was able to expand to hundreds of cities around the world in a few years and subsidize fares to drive out rivals and undercut local taxi companies. Copycats abounded, but now just a few competitors are still alive;
4. It faced regulators and the wrath of lawmakers with a mix of bravery, arrogance, irresponsibility, persistence, and competence. If fines were imposed on drivers because they were operating illegally, Uber would pay and continue running the service.
5. It attracted lots of talented engineers to work on current and future products in complex fields such as artificial intelligence, robotics, and big data. As of May 2017, Uber employed more than 7,000 people.
6. Long-term vision in sacrifice of short-term losses in order to create a truly disruptive company that will be alive for decades to come. The same philosophy was embraced by Jeff Bezos as he built Amazon.com into a powerhouse.
The jury is still out on Uber’s fate, as the company is going through many growth pains and losing unthinkable amounts of money. Its destiny will be determined, however, not by how brilliant the original idea was, but by how good its overall execution is in the next years, including the transition from a transportation marketplace to an artificial intelligence and robotics company (due to the advent of autonomous cars).
Other software startups such as WhatsApp, Instagram, Snapchat or Airbnb have products that look even simpler than Uber and might be misperceived by the general population as just good ideas. The truth is that, behind all these companies, there are super smart founders who command an army of thousands of professionals solving complex problems every single day.
Thomas Edison, the most influential inventor in modern times, used to say that “genius is one percent inspiration and ninety-nine percent perspiration.” In tech, if you think your idea is worth something, you will never be able to build a meaningful company or product and, someone else will end up taking your place. Patents do not protect digital startups. Flawless execution is the only viable path to success.
