An awesome note on Ideas and Assets

via Xianhang Zhang

There’s the romantic notion of two complete nobodies, coming up with the next great idea and forging off to change the world. While that does happen, I believe that it’s not the optimal path towards controllable business success.

There’s a ton of brilliant 22 year old kids these days all churning through the same bucket of rather trivial ideas for web startups. Games! Group Messaging! Coupons! The reason why is that when you’re 22 and just out of school, there’s only a limited scope of ideas that it’s actually practical for you to execute on. What I’ve found though, is that the most exciting startup ideas are mostly not in this pool but are, instead, backed by a hidden asset.

When I talk about assets, cash is the least interesting of all of these. Instead, I’m talking about more intangible assets like skills, reputation, relationships, attention & fame. I’m of the strong opinion that the most reliable path towards startup success is to focus relentlessly on acquiring interesting assets and then execute on the startups that naturally fall out of them.

Stack Overflow is the perfect example of this. The software that runs Stack Overflow is actually relatively trivial and really could have been built by anyone at anytime. What made Stack Overflow possible were two hidden assets:

  1. Without an initial community of high quality users, Stack Overflow would have died. Joel Spolsky & Jeff Atwood ran, at the time, two of the most popular programming blogs in the world and were able to generate sufficient interest and attention to get SO over the initial cold start hump
  2. Without great software design SO would not have been able to retain users at the rate they did. Joel Spolsky & Jeff Atwood had both been thinking very deeply about the structure and organization of social software for a very long time and avoided a number of obvious mistakes in the fundamental foundations of the software. Here’s a blog post from Joel in 2003, thinking about these issues:… and the Stack Overflow podcasts are a secret mine of excellent social experience design insight:…

Neither Joel or Jeff had any grand, overarching vision of starting Stack Overflow when they started blogging for the first time. Instead, they just diligently worked to each build this amazing asset. But by building this asset, they opened up a thousand new, good startup ideas that were unavailable to most other people in the world and all they needed to do was to pick the one most appealing to them and execute on it.

I talk to a lot of different early stage startups these days and, inevitably, the ones I’m most excited about are those with a hidden asset backing them. Joe Edelman who built one of the most sophisticated reputation systems in the world at Couchsurfing is now deploying that asset towards Groundcrew. Gabe Smedresman who ran real world social games at Yale is now deploying that asset towards Gatsby. Yishan Wong who is one of the one of the world experts at startup engineering management is now deploying that asset towards Sunfire Offices. Sutha Kamal who is one of the most relentless business development minds I’ve seen at work is now deploying that asset towards Massive Health.

Inevitably, the story was that these entrepreneurs focused on acquiring assets and they reached a point where they couldn’t not do a startup with them. It became like walking through a field of low hanging fruit and wondering which ones they should pick.

I think the conventional startup narrative is mistaken in that it casts the world into those who are temperamentally suited towards only doing startups and everyone else in the world who can be regarded as a brighter species of sheep. Instead, practically every one of the entrepreneurs in that list has spent significant time being an employee, quietly building up assets that would later become valuable. Many of them were even reluctant to become entrepreneurs.

What I take away from this is that I would like for a new startup narrative to emerge. One that focuses on the less sexy aspects of building a startup which is the 10 years before you write the first piece of code. I’d like for people to start thinking of startups as less something you decide to do and more an opportunity that gets handed to you after years of diligent, hard work. I’d like for people to focus first on making real contributions to the world before feeling like the world owes them a startup success. It’s things like this that are the key towards shifting the ecosystem into a more mature startup culture and most optimally deploy the scarce human capital that we have.

Disregard ideas, acquire assets

via Tristan Harries

Malcolm Gladwell’s Outliers would agree w/ this post πŸ™‚

Coincidentally when talking to Adam from Quora, he mentioned that he didn’t think the technology behind Quora made the product a 2011-only idea… that it really could have been created and built at any time, even if you didn’t have a social graph already or accustomed social behavior. But I actually think there were several hidden assets at work.

Their background from Facebook gave them unique and powerful objective data into human behavior which most entrepreneurs don’t have. The relationships and reputation they built through their careers at Facebook also played a huge role in inviting influential players to become early members, in the same way that Reid Hoffman seeded LinkedIn with his personal network of influential Silicon Valley elites.

Additionally, while Adam didn’t think Quora was an idea that had been baking in his mind for a while, he mentioned to me that one of his friends from high school told him that Quora felt like a natural progression of some of the ideas he was talking about back in school. Interestingly, Adam didn’t see it that way, but found it interesting that his friend could identify that.

So I think one of the reasons the “hidden assets” narrative you’re describing isn’t so commonplace, is because people are in fact not very good at seeing how their pasts lead them to where they are. I think many of us are far better at revising history to match narratives to which we aspire – we choose the story of the present that matches who we aspire to be, and then revise our memory of history to match the present.


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