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I saw a tweet this afternoon from Dharmesh Shah which offered -- "Entrepreneurs: You get a limited number of chances in life to do something really, really big. Take them." @dharmesh
Boy, is he right about that. I think that thought would resonate with most entrepreneurs. The problem becomes how does one recognize when something is "really, really big"? Many things can appear promising and worth pursuing but aren't really after more is known.
One of the related terms of art in venture capital, that something is a "big idea", refers to this phenomena. The "big idea" term is often confusing to entrepreneurs. What makes an idea a big one? Does that also mean it is a good one? Or, how do you know a big idea when you meet one? And, most importantly, if it is a big idea -- is now the right time for this big idea? (Given that for any big idea, being early is the same as being wrong)
For entrepreneurs and their backers, the only idea worth pursuing is a big one because only big ideas provide outsized returns for the invested capital effort and associated risk. So recognizing the big idea is a critical skill for entrepreneur and investor alike. As Dharmesh Shah points out, you will likely only see so many big ideas in your life, so recognizing them is critical.
And just as critical as recognizing them, one needs to execute/realize the big ideas that are spotted from time to time. In fact, whether a big idea is a good one lies not in the eyes of the beholder but in the hands. A big idea is only good in the hands of a person or team capable of pulling it off. I've seen plenty of presentations about big ideas pursued by teams incapable (in my opinion) of realizing the idea's true potential.
So the essential focus has to be developing an eye for the big idea and skills to determine if identified big ideas are good.
I think the 4 key characteristics of big ideas worth pursuing are the following:
1. Innovative or novel
The big idea is always new. It fills white space. It is by definition not a "me too" idea. There isn't anyone else doing it or those they are doing it, don't do it in similar way. Big ideas will inhabit space that is currently unoccupied by definition. It is an universal improvement upon what is currently done by all the possible solutions. If you can't see the innovation in an idea, it isn't likely to be big.
2. Broadly applicable
One of the surest validations of a big idea is the number and variety of potential applications. In fact, the greater difficulty one has in deciding on the particular industry application, the bigger the idea. If something could be used to improve the economics or operations of most industries, it is, by definition, a big idea. Big ideas have the potential to be ubiquitous, which is part of why they're big ideas. But they are also prompt difficulty in choosing the right path. That difficulty is confirmative in my view. If an idea can change the world, it can change any or many industries. Struggling with where to apply an idea is indicative of it being a big idea.
3. Visible money flow
The idea is close to the existing flow of money or customers or a flow that one can easily imagine existing soon. Big ideas are often simple and dont' require 7 step purchasing processes or complex adoption efforts. Open source software was a big idea. Software that was free until you were sure you wanted it was the essence of easy adoption. You could foresee people paying eventually for software or support of software that provided them with real value even if it was initially free to use. The current payment technologies like Square epitomize a clearly visible flow of money associated with the technology's adoption.
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4. Industry Formation
A big idea that is well timed leverages the formation a new industry. A clear indicator of the potential of a big idea is that exists in an industry that is showing signs of formation from the moves of "smart money" and strong companies. Yes, this isn't always true and one can find big ideas where no industry is present, but for my money and time, I would always advise to arrive early in newly emergin industries.
Let's use the example of augmented reality. Both Google (Link )with eyeglasses and Microsoft (Link) with contact lenses are working on products to support the adoption and usage of augmented reality. So if you have a big idea in augmented reality that meets the first three characteristics, I would argue that your timing is good based upon the demonstrated agreement of these 2 strong companies. Big ideas drive new industries but the formation of an industry involves many different participants. If you look, you can often see those participants lining up and preparing to join into an emerging industry. The presence of those participants and their implicit agreement about the potential industry is a positive indicator of timing. Google and Microsoft are signaling they think augmented reality is going to happen and happen reasonably soon. Which is a great sign for augmented reality.
Big ideas are transformative to everyone surrounding them. And, for entrepreneurs, few things are as fun to find or do. And remember, if you find one, be sure to come see us here at Grotech. We love big ideas too.