Tuesday, October 7

re: Hank Williams' How Much Is an Idea Worth, and the Tech Market

Hank-

Replying to:

http://whydoeseverythingsuck.com/2008/10/what-is-idea-worth.html

and


http://whydoeseverythingsuck.com/2008/10/tech-market-failure-of-ideas-not.html

I believe what I said on-list was that success is "1% idea 90% team/connections 9% luck", and that 9% luck figure is important in putting context around my perspective.

A crappy CEO can take a crappy idea, and with a lot of luck hits 10%. 10% gets you prototyped, gets you seed funding, maybe gets you a Series A. It gets you users, it gets you news coverage, it gets you hype and buzz, but none of that constitutes success -- not in real world business terms.

Success is sustainable profitability. Success is a high-value exit. A brilliant CEO can take a crappy idea, mature it, and turn it into a hundreds of millions of dollars acquisition in under five years.

A crappy CEO can take a brilliant idea and get further than 10%, but a crappy CEO is going to result in a low-value exit, or is going to end up replaced, probably after a lot of pain and wasted investment.

The strongest indicator of success is the team, not the idea. Obviously, however, the right idea, a matured idea, a well thought through idea, carries more weight, vastly improves chances of success.

I think we're saying a lot of the same thing here, but I will insist that a subpar CEO can easily ruin the most brilliant, bound-for-success idea, whereas it's much more likely that a killer CEO can make a success out of a subpar idea, or one that needs massaging, maturation, etc. And yes, a slick CEO can BS their way to a limited degree of success -- but not sustainable success, which I think we're in agreement on. My definition of a killer CEO isn't the sales guy with the biggest shovel, but the one with the greatest ability to do the most with the least, make the right moves, and please stakeholders along the way.

"idea = 1%" isn't an exact figure, but it's highly demonstrative of proportionate value.

And yes, the market the past few years has made for some fat and lazy management teams and backers with a plethora of redundancy getting funded. That's inevitable, it happens with every peak. It's those who can stay lean and agile even in fat and happy times that will of course have the greatest chance of sustainable success over the long term.

--Andy Badera

Note: you can, and perhaps should, substitute "management team" or "founders" for "CEO" throughout this piece.

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