Building A Factory vs. Discovering A Goldmine

http://www.sebastianmarshall.com/building-a-factory-vs-discovering-a-goldmine

by joeyespo • 14 years ago

47 15 14 years ago

pcrh3• 14 years ago

Though I like the analogy used here, I think this whole "ideas" versus "execution" debate is rather silly.

Though obviously worthless unless executed, a truly great idea is worth a lot. The point is that there are not that many truly great ideas around.

A valuable patent is an example of something that is a great idea. The most valuable patent, for the anti-cholesterol drug Lipitor, generated $105 billion in revenues.

http://www.pellegrinoandassociates.com/most-valuable-patent-...

brudgers• 14 years ago

Lipitor wasn't an idea, it was the result of research followed by intensive development. Synthesis of an organic salt tends to be non-trivial. FDA approval is left as an exercise for the reader.

Atorvastatin was first synthesized in 1985 by Bruce Roth of Parke-Davis Warner-Lambert Company (now Pfizer). The best selling drug in pharmaceutical history, sales of Lipitor since it was approved in 1996

http://en.wikipedia.org/wiki/Lipitor

sp332• 14 years ago

Even after you've developed the method of synthesis, you still have to actually do it at scale, market it, and as you mentioned, get FDA approval. That all counts as execution.

codeflo• 14 years ago

But the patent covers the result of years of research, not the original idea, or does it? I don't know how drugs are actually developed, but I cannot imagine that someone goes, "Gee, I have this awesome idea: C33H35FN2O5! Now let's see what it's good for."

pcrh3• 14 years ago

The point I intended to make was that a patent describes an invention, and has clear requirements for novelty and non-obviousness.

Clearly the money made from Lipitor required FDA approval, etc, etc, which is the execution. However, without the initial inventive step, which was non-obvious there would have been no patent, and fewer profits to be made.

My other point is that truly good ideas are very rare indeed, an idea whose execution is too difficult does not count as a "good" idea.

jfno67• 14 years ago

The formula by Sivers he refers too seems to be the best approximation to value idea. I still like to put emphasis on execution instead of idea, since almost everybody I talk with that value idea is in fact doing some analysis paralysis and will start working when they get that "great idea".

brilee• 14 years ago

Lipitor was most likely discovered by screening a library of billions of compounds for ones with some bioactivity. Then, by putting these compounds through more refined screenings, they have a bunch of candidate compounds. Then, these candidate compounds go through many, very expensive rounds of clinical testing to establish safety and efficacy. In the process, the structure of the molecule undergoes many tweaks, again, which are often not 'rationally designed', but tried en masse and screened for activity/metabolism.

The Lipitor patent is, in fact, exactly the opposite of what you're trying to convey here. There is zero 'idea' behind Lipitor, just massive amounts of screening.

programminggeek• 14 years ago

Well there is a difference between discovering a goldmine and actually mining it. If you discover some gold dust in a stream panning for gold, that's a nice discovery, but if you actually can manage to dig and mine the gold out, that will make you money, but even goldmines aren't free to build. You need equipment, people, permits, land rights, etc.

Also, don't forget that many of the people who make money in a gold rush are the ones selling pickaxes, shovels, and other supplies. Think Parse vs devs building apps, who is getting rich?

PhoeniX-P• 14 years ago

The public markets also encourage the 'discovery' of gigantic assets. I know a number of companies in commodity-rich countries (Australia, Canada) that, after discovering a mine, immediately go public because of this unique asset on their balance sheet. From there, they get the $ to exploit it, create jobs, etc. It is certainly a booming market and the demand will never stop. I don't think it's the same game factory-building versus discovery. The question is more environmental, economical and personal ambitions from my point of view.

ThomPete• 14 years ago

It takes great execution to come up with a good idea.

stephengillie• 14 years ago

I prefer to discover goldmines while building factories. That is, I believe that taking an idea and executing on it will generate many more ideas. Take the good ideas and pivot them into your project, if it works. Use some of that gold in your factory.

Maybe the original idea was terrible - doesn't matter - you can just pivot out of it if it's going nowhere, and it found you other ideas that may go somewhere.

acgourley• 14 years ago

A lot of commentary on idea vs execution misses an important point - while some ideas have inherent value, people won't believe it until you prove it anyway!

There are so many "fools gold" mines being proposed and pitched, until you setup some equipment and bring out real, sparkling gold... statistically no one will try and compete and certainly no one rational will invest.

nikoc• 14 years ago

The goldmine analogy is palpable, BUT in the case of the mine/property, mineral-rights and land-rights are assigned to only one party. Having the legal and exclusive right to exploit physical properties (esp. when that property has value in the marketplace like gold would) is of course very, very valuable. No one can encroach on your territory for fear of legal repercussion. Aside from defensible patents, I'm not sure an "idea" can ever be treated as a goldmine. No one can be assigned the exclusive right to exploit an "idea". Perhaps film producers may have this right, but even in their case, they've essentially gambled on the bankability of someone's creative mind, and placed a bet, so they might be better thought of as the investor, and not the "idea-holder". I think a better goldmine analogy would be to think of a person's past performance (rather than a single idea), hunger, execution, determination, network, and get'er done attitude as the goldmine - one that will deliver gold more often than not with respect to the rest of the population at large.

Building A Factory vs. Discovering A Goldmine

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