Simon South

(Continued from part 1.)

About a year ago I was contacted by a couple of guys who were trying to get a startup off the ground. They’d had a fantastic idea for a new online business, they said, one that was going to revolutionize an industry. There was just one small problem: Neither of them knew how to build a web application. And that’s where I came in. Sign this NDA, they said, and we’ll let you in on our big idea. You build the software, we split the equity three ways, and everyone retires rich!

If you’re a developer, you too may find yourself presented with an offer like this someday. So, should you do it? How do you evaluate this? What’s a good business idea really worth?

Let me help you out. This fantastic business idea you’re being taunted with? It is worth exactly zero dollars. It is worthless. Ideas are worthless. If you’re just planning to launch a business, your idea doesn’t matter.

The first reason why this is so should be obvious. As soon as you start working with actual customers, you’re going to throw this idea away. Quickly, if things go well. So there’s no special value in knowing the first idea you’re going to try. (It would be valuable to know ahead of time the second idea you’ll try, the one you’ll transition to after the first one inevitably fails. Do your prospective business partners know what this is yet? Of course not.)

The other reason is that ideas are everywhere. Anyone can have one. Seriously! It’s a weirdly persistent myth that successful businesses happen because somebody had a good idea. More often, somebody launches a business based on a so-so idea—or even a downright lousy one—and works hard getting feedback from customers and adjusting their strategy until they find something people really want to buy. (See part one for a few examples.)

Which puts software developers in a special position, at least with regards to web startups. Nobody can really say they know anything about the direction their new business is going to go in until they’ve put something tangible in front of users. In other words, a working prototype has actual value. It is the start of an education. It is the start, hopefully, of a growing business. If someone is asking you to build real software for them, and all they’re offering in exchange is the privilege of using their idea, you are being asked to trade something for nothing.

So did I take the offer from those two guys? Yes, I did. Although there was talk of their having done some market research and even having found a prospective client, in the end they brought little more than their grandiose vision. One even took a month-long vacation while I was working. I finally backed out once I realized I could wind up actually building the whole business myself and giving away two thirds of the ownership.

To be fair to my erstwhile partners (partially because they might actually read this), I don’t think they were trying anything malicious. I think they just didn’t have the experience at that point to know better. Obviously, neither did I.

Now I do. Remember: An idea is nothing more than an idea. It is just words floating in the air. Running code is worth real money.

(Want to know how you can generate more ideas of your own? Check out this advice from James Altucher. Also, Rob Walling has some more concrete advice for developers on how to evaluate proposals like this.)

(Continued in part 3.)

I ran into him a birthday party last month: A programmer I worked with ten years ago. I hadn’t seen him in all that time. He’s living in Toronto now, too, and working at a local tech startup. Of course, I had to ask him when he was planning to quit and launch a startup of his own.

Someday, he said. I need a good idea first. If I ever have a good idea for a startup, maybe I’ll do one then.

This guy is undeniably bright. At the party he revealed to me that after months of hounding he had finally agreed to an interview with Google, mostly (I think) so they would stop calling him. But I know that about this one thing, he’s wrong. If he wants to launch a startup, he should just go do it now. Same goes for you: Pick an idea for your business and run with it. There’s no point waiting for a “good” idea to strike you because ultimately, your idea won’t matter.

Fred Brooks famously wrote, Build one to throw away. You will, anyhow. He was writing about software development but the same rule applies to startups: The idea you found your business on will almost definitely not be the idea you become successful with. That kind of continuity in a startup is rare. Whatever your idea is now, you’ll most likely have thrown it away—or at least altered it to the point of unrecognizability—by the time you’ve learned enough to achieve a sustainable business model.

Do some research into successful startups and you’ll see how often this happens. Flickr, the photo-sharing site, actually began life as an online game. Craigslist, as I’ve mentioned before, started as a mailing list for events in San Francisco—it didn’t have classified ads or even a website. Here’s my favourite: YouTube was launched as an online dating site, of all things. Even the startup I worked for years ago, Quack.com, began with an idea (a physical device to help with comparison shopping) completely different from the one it eventually made people wealthy with (a phone-based voice portal).

So if you want to begin working on a startup, there’s no reason to wait for a “good” idea. Until you have something built and in the hands of users you’re only guessing about what they’ll find valuable, anyway. From that perspective, you might as well start with any idea at all. It’s not like it’s going to matter.

(Continued in part 2.)