Why Smart People Have Bad Ideas

[Why Smart People Have Bad Ideas]

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| Want to start a startup? Get funded by
Y Combinator. |

April 2005

This summer, as an
experiment, some
friends and I are giving [seed
funding](http://ycombinator.com) to a bunch of new startups. It's an experiment because
we're prepared to fund younger founders than most investors would.
That's why we're doing it during the summer—so even college
students can participate.

We know from Google and Yahoo that grad students can start successful
startups. And we know from experience that some undergrads are as
capable as most grad students. The accepted age for startup founders
has been creeping downward. We're trying to find the lower bound.

That's not how we plan to operate. Having done it once, we have
no desire to experience again the 24/7 timesuck of running even one
startup, let alone eight or ten. We'll give these guys as much
help as we can with their ideas, but it will be up to them to sink
or swim.
-->
The deadline has now passed, and we're sifting through 227 applications.

We expected to divide them into two categories, promising
and unpromising. But we soon saw we needed a third: promising
people with unpromising ideas.
[1]

The Artix Phase

We should have expected this. It's very common for a group of
founders to go through one lame idea before realizing that a startup
has to make something people will pay for. In fact, we ourselves
did.

Viaweb wasn't the first startup Robert Morris and I started. In
January 1995, we and a couple friends started a company called
Artix. The plan was to put art galleries on the Web. In retrospect,
I wonder how we could have wasted our time on anything so stupid.
Galleries are not especially excited about being on
the Web even now, ten years later. They don't want to have their
stock visible to any random visitor, like an antique store.
[2]

Besides which, art dealers are the most technophobic people on
earth. They didn't become art dealers after a difficult choice
between that and a career in the hard sciences. Most of them had
never seen the Web before we came to tell them why they should be
on it. Some didn't even have computers. It doesn't do justice to
the situation to describe it as a hard sell; we soon sank
to building sites for free, and it was hard to convince galleries
even to do that.

Gradually it dawned on us that
instead of trying to make Web sites for
people who didn't want them, we could make sites for
people who did. In fact, software that would let people who wanted
sites make their own. So we ditched Artix and
started a new company, Viaweb, to make software for building online stores.
That one succeeded.

We're in good company here. Microsoft was not the first company
Paul Allen and Bill Gates started either. The first was called
Traf-o-data. It does not seem to have done as well as Micro-soft.

In Robert's defense, he was skeptical about Artix. I dragged him
into it.
[3]
But there were moments when he was optimistic. And
if we, who were 29 and 30 at the time, could get excited about such
a thoroughly boneheaded idea, we should not be surprised that hackers
aged 21 or 22 are pitching us ideas with little hope of making money.

The Still Life Effect

Why does this happen? Why do good hackers have bad business ideas?

Let's look at our case. One reason we had such a lame idea was
that it was the first thing we thought of. I was in New York trying
to be a starving artist at the time (the starving part is actually
quite easy), so I was haunting galleries anyway. When I learned
about the Web, it seemed natural to mix the two. Make Web sites
for galleries—that's the ticket!

If you're going to spend years working on something, you'd think
it might be wise to spend at least a couple days considering different
ideas, instead of going with the first that comes into your head.
You'd think. But people don't. In fact, this is a constant problem
when you're painting still lifes. You plonk down a bunch of stuff
on a table, and maybe spend five or ten minutes rearranging it to
look interesting. But you're so impatient to get started painting
that ten minutes of rearranging feels very long. So you start
painting. Three days later, having spent twenty hours staring at
it, you're kicking yourself for having set up such an awkward and
boring composition, but by then it's too late.

Part of the problem is that big projects tend to grow out of small
ones. You set up a still life to make a quick sketch when you have
a spare hour, and days later you're still working on it. I once
spent a month painting three versions of a still life I set up in
about four minutes. At each point (a day, a week, a month) I thought
I'd already put in so much time that it was too late to change.

So the biggest cause of bad ideas is the still life effect: you
come up with a random idea, plunge into it, and then at each point
(a day, a week, a month) feel you've put so much time into it that
this must be the idea.

How do we fix that? I don't think we should discard plunging.
Plunging into an idea is a good thing. The solution is at the other
end: to realize that having invested time in something doesn't make
it good.

This is clearest in the case of names. Viaweb was originally
called Webgen, but we discovered someone else had a product called
that. We were so attached to our name that we offered him *5%
of the company* if he'd let us have it. But he wouldn't, so
we had to think of another.
[4]
The best we could do was Viaweb,
which we disliked at first. It was like having a new mother. But
within three days we loved it, and Webgen sounded lame and
old-fashioned.

If it's hard to change something so simple as a name, imagine
how hard it is to garbage-collect an idea. A name only has one
point of attachment into your head. An idea for a company gets
woven into your thoughts. So you must consciously discount for
that. Plunge in, by all means, but remember later to look at your
idea in the harsh light of morning and ask: is this something people
will pay for? Is this, of all the things we could make, the thing
people will pay most for?

Muck

The second mistake we made with Artix is also very common. Putting
galleries on the Web seemed cool.

One of the most valuable things my father taught me is an old
Yorkshire saying: where there's muck, there's brass. Meaning that
unpleasant work pays. And more to the point here, vice versa. Work
people like doesn't pay well, for reasons of supply and demand.
The most extreme case is developing programming languages, which
doesn't pay at all, because people like it so much they do it for
free.

When we started Artix, I was still ambivalent about business. I
wanted to keep one foot in the art world. Big, big, mistake. Going
into business is like a hang-glider launch: you'd better do it
wholeheartedly, or not at all. The purpose of a company, and a
startup especially, is to make money. You can't have divided
loyalties.

Which is not to say that you have to do the most disgusting sort
of work, like spamming, or starting a company whose only purpose
is patent litigation. What I mean is, if you're starting a company
that will do something cool, the aim had better be to make money
and maybe be cool, not to be cool and maybe make money.

It's hard enough to make money that you can't do it by accident.
Unless it's your first priority, it's unlikely to happen at all.

Hyenas

When I probe our motives with Artix, I see a third mistake: timidity.
If you'd proposed at the time that we go into the e-commerce business,
we'd have found the idea terrifying. Surely a field like that would
be dominated by fearsome startups with five million dollars of VC
money each. Whereas we felt pretty sure that we could hold our own
in the slightly less competitive business of generating Web sites
for art galleries.

[...]

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