On bad ideas, rotating to new ideas, market of ideas

Why immature ideas with friends from college matter. By Abhishek Sethi.

During college, right before a night of an exam, I shared an idea with my friends; “What if we can click a picture of food and it tells you calories of it?”

Everyone just “reacted” by saying that “it’s not feasible” or “they have seen another app like this” and other responses like that. Friends are awesome. They have the right intent, but let’s uncover what happens here.

These responses reflect an underlying dissonance: How can such a simple idea that a college can think of have a massive business opportunity? They are right. 15,000 entrepreneurs want to build tech companies each year in India. Someone must have tried this, right? And if it was a good idea then it should have been successful? And we spend some energy on rationalising why it won’t work.

It’s a feeling that makes you think that big things happen in big ways. Small projects turning into big things is hard to visualise for a college student.

People think most hard problems are solved. Science is at the moment of truth. Supply chain is set. And products are marketed well. There’s general faith (when young) in the system that if something is problematic then there are serious institutions to fix it.

Hence, it must be these big things that happen in the most planned way. They are all set. 

But most of the time, big ideas come from just a bunch of people deciding to do something. Homebrew Computer Club is one of my favourite examples. It was a casual group of people talking about computers in the 80s. And it produced Steve Jobs, Wozniak and Bill Gates. Anyone who walked in the room became a member. It attracted mostly “hobbyists” (antithetical to serious business). Look at one of their newsletters.

We recently did a podcast with Samay Kohli from Greyorange - and they started in college by running after competitions and setting up a “cult” robotics club in college. And then now it’s a $900M+ value warehouse robotics company. The informalness in college is remarkable.

And hence, people have a hard time understanding that big ideas can start small. In a college mess or people getting bored after their jobs. And just a bunch of people starting something imperfect can be a starting point for large structured organisations.  

Let me define ‘institutional idolism': where people feel whatever “major” institution is doing is rational, efficient, and worse: taking care of our interests through markets or democracy.

The response when infected by institutional idolism is: “They must have done this for a reason. There’s a reason why security takes a long time at the airport. There’s a reason why we are taught this in college. There’s a reason our degree is a 4 year one. This is the government's job to fix it.” 

Okay, enough making case for informal and foolish ideas. Now some random ideas on ideas.

Rotation of ideas

Twitter is full of “ideas are useless, execution is important” - while true, it breaks people into a pure motion mindset while not really evaluating the ideas they are in.

If your work is a vector then direction = idea and magnitude = effort. The longer the effort becomes the harder it becomes to rotate the vector, and harder it is to change your ideas. Ideas with no effort are easiest to rotate. If I just blurt out ideas without making an app or a landing page or a hardware or even doing research - the rotational energy required is much lesser. 

Low-effort quality ideas come from being smarter and reflective. And the quality of low-effort ideas makes it easy for me to rotate good ideas.

On competitive ideas 

Ideas compete with each other. When they have energy they become big companies they fight like how Zomato / Swiggy do. The bigger they become, ideas also lose their impact on business competitiveness. If Zomato comes with a better competitive idea it wouldn't necessarily mean they’ll make more money unless they can allocate capital, hire the right people, do the right experiments and the market adopts them.

But when the vector is 0, the ideas get competitive. It’s important because we fund at that level. Co-founders join at that level. Team + capital starts picking up from the competitiveness of ideas.

Sharing one simple framework to judge competitiveness of ideas.

Demand-supply of ideas

You went on a date to a highly rated restaurant. But it sucked. You paid 5000 INR for 2 meals. You are angry. But you also want to start up. So you say “Restaurants around suck and I need to fix this. I will build a discovery platform that helps people discover through customer ratings”

Probably 2000 people try this idea every year. Please don’t if you are one of them.

The supply of these ideas is going to be too high. Almost all urban people go into restaurants. All tech people go to them. And many would have noticed it. The solution is a low-cost well exploited framework. So the supply of such ideas is going to be highest. 

But someone says, “why are there bad restaurants in the first place?” and then builds a financing solution for restaurant entrepreneurs to increase supply for more options. These kinds of ideas will have lesser supply, because for the same problem the person is going deeper. 

Here are last 3 ideas we rejected at gradCapital, and there have been hundreds like them in our application system:

  1. Marketplace for mentorship. Mentors get paid and students get access to some seniors (jobs, education etc)
  2. Platform to meet buyers and sellers of real estate
  3. Dietician, restaurant and doctors on one platform for someone to discover food + advice + health

Ritesh Agarwal from OYO says that he had a bad experience in hotels. And hence went to build a quality but well priced solution. Bhavish from Ola says that he couldn’t find cabs on a vacation. Nearly all consumer ideas in 2010-2020 were about “I faced problem in using X so let’s build a platform to discover better X”

20,000 people startup in India now. At that point maybe 3,000. Entrepreneurs were less, and hence simple ideas could take off. Now it’s harder than ever. So if you think of a startup idea like “I face problem X and hence let’s build a platform for X” - you are going to have a hard time. 

PhonePe, Dream11, Practo, Zomato, Paytm etc have crossed 100M+ audience in India. That’s a slot. That’s beyond the monetising limit. Consumers are flooded with options in payments, entertainment, renting a house, getting food etc. We feel it’s the end of consumer software that’s based on discovery or logistic fulfilment. 

When someone wants to build a science based startup. We get on. Simply because, how many people can really just think of building that or have capability to build that?

Science is going to take over. It will take time, but it will start now. New ways of making energy, cancer fighting cells, better use of abundant metals, and quantum sensors to learn better about earth.

Science is exciting. It can do things until laws of physics don’t break. Drones can fly to deliver blood (Airbound) and lung health can be measured with new data (Pebbl). These are some companies we have backed.

Another set of good ideas are betting on a culture trend. When people shifted from Shaadi.com to Tinder - a cultural shift was happening. And a new consumer was coming along. If you bet on the next set of customers, then those ideas have less supply - because they are “small” problems but will become big. Ripen is building adulting school. OnHerWay is built for women travellers, and Klutchh built for esports gamers.

This is where the idea person says that they are observing a new culture shaping up - and that requires new products. 

There’s another set of ideas that are not “sexy”. In a way they are not doing discovery for food, or building an online community to upskill, or a cafe in himalayas. These are buildings for industries that are invisible on social media or day-to-day observation. Blood delivery, marketplace for metals, or an electric motor.

Enterprise ideas are something that I haven’t understood properly. But it seems to excite many investors.

10 February, 2023