The Worst Startup Idea

https://medium.com/on-startups/db355566d8b7

by joeemison • 13 years ago

48 57 13 years ago

Isn't this idea just uShip.com? They raised $18mm recently from Kleiner Perkins, although they are pivoting towards competing directly with UHAUL, from what I hear.

minimaxir• 13 years ago

uShip appears to use accredited transport brokers. The pitch mentioned in the article suggests that Alice and Bob drive goods to each other.

joeemison10• 13 years ago

Right. The People's Parcel was essentially ride-sharing for packages (but packages can't move themselves to locations for pickups or deal with transfers or travel the last mile after getting dropped off close-to-but-not-quite-at their final destination).

woah• 13 years ago

Is this actually a bad idea? We won't know until someone tries it, and deals with the issues. The author's attempts at prognostication cloud what is otherwise a well written and perceptive post.

joeemison10• 13 years ago

I would submit to you that there are bad ideas that we know are bad without having to throw money at them and watch them fail. (And, look--even if we do throw money at them and watch them fail, that's not a definitive disposition, since it could have been execution errors that caused the failure). I think I made a strong enough case as to why this particular idea was bad, even in lieu of having an actual case study of someone trying it and failing.

But I would be happy to be proven wrong, and I'd bet some cold hard cash on failure...

kevingibbon3• 13 years ago

This is not a bad idea. It's all about the execution.

Your first point is spot on. It is going to be hard and fuck to figure out the logistics issues with this idea. But not impossible. Does it look like the The People’s Parcel will be the people to do it? Probably not.

This idea already exists to a certain extent. Check out keychainlogistics.com.

coopdog• 13 years ago

I've always thought spreadsheets were a great indicator of B2B startup ideas. Just find a spreadsheet that's key to a process that now involves multiple people, hasn't changed in a while and is relatively important and you probably have a SAAS right there.

The only problem is having the business agree to store data on your servers, something that's getting harder and harder these days thanks to the greed of some agencies

robryan• 13 years ago

I haven't participated in a startup weekend but from following what has come out of our local one "AirBnB for x" does seem the be the most popular starting point.

I would agree with the author that the idea is unlikely to hit on something that will actually work, given the way it goes against economies of scale for what essentially be a commodity service.

At the same time though, I think it is good that people are exploring these ideas. Sure after a month or 2 (or even just the weekend) they might realise that the idea isn't going to fly. In doing that though they may have learned something and stumbled on an even better related opportunity.

joeemison10• 13 years ago

I tried to make it clear in the piece that I think Startup Weekends are a really good and useful event. I think that everyone who participates in one, no matter what experience they have had to date, will learn something from one. I definitely did.

My complaint is more that our "startup society" pushes us far more toward the Startup Weekends of the world, and away from "boring" jobs at large organizations--and that's really silly, since (as I argue) a great case can be made that the most viable, most fund-able startup ideas will come from working at large organizations (mo' money, mo' problems, mo' moving-the-needle-a-little-means-big-returns).

kevingibbon3• 13 years ago

"This is an awesome service…for transporting drugs" - There can be safeguards put in and doesn't seem like this service would even benefit drug dealers. I'm mr. drug dealer and for some reason I want to trust a chain of 3rd party delivery people with my illegal substances. Not gonna happen.

joeemison10• 13 years ago

If your customers pay you before you ship, and they trust the shipper, it's definitely going to happen. Happens every day now already.

kevingibbon3• 13 years ago

This same argument can be made for courier services and they seem to manage just fine.

alex_doom• 13 years ago

I have a joke with my weed dealer, "Hey, can I PayPal you?"

No dealer wants a bunch of transactions that can tracked by the Feds.

ironic_ali2• 13 years ago

It's a while ago now, but I said the million dollar website (the first of many) selling 10 pixels of advertising was a stupid idea and wouldn't go anywhere.

It'd sold about $600 when I said this. Unfortunately I said to my flat mate at the time I'd run round the block naked if it made a million bucks.

It was cold that night.

joeemison10• 13 years ago

What were your reasons why it would fail?

benologist2• 13 years ago

Viral [anything]'s almost exclusively fail.

ironic_ali2• 13 years ago

Obviously I'm not a marketing guru... because 'logic' said, very few are going to see it and even if it does get some airplay who's going to really look and soak up some propagandising goodness, i.e. will any sales be gained from it - mostly likely no, so 'what's the point?'.

So, yeah, I won't be making any grand announcements like that again, I'll leave it to the shiny people with impossibly white teeth and raging coke habits.

lancewiggs• 13 years ago

I've also been a Start-up weekend judge, and have seen this idea (P2P package transport) in various incarnations. I have three responses:

1: For me Startup Weekend is not about creating businesses, rather it is about helping groups of people understand and experience a compressed version of what it is like to start a company. The ideas are often very similar across events (it's rare to get anything truly new), but learning about connecting with customers, changing in response to feedback, building something (anything), working as a team and so on and on are valuable lessons. The group is invariably exhausted at the end, but in a good way, and many go on to build or help build something else.

2: As a judge I've made it a point for us to give positive feedback to every participant, not just the winners. It's an exhausting process being a judge, with back to back pitches and no time between to mull, but we owe it to the participants to understand as much as we can, ask hard questions and also to keep it fun and positive. In the sessions I've been a part of the panel has retired for 20-30 minutes or so, come back and given overall group feedback, positive feedback and key questions to answer for each team and then the winners in reverse order. Plenty for each judge to do in there.

3: I agree the idea is flawed as it stands. But then a lot of people thought the FedEx idea was flawed, and we all know countless other stories about crazy ideas that worked. In every crazy idea is often an element of a business, and as a judge or coach or advisor or founder our job is to help identify the bit of the idea that is doable and can be built into a valuable business.

joeemison10• 13 years ago

I agree with everything you've said here, and it's possible that one could pivot the idea of ride-sharing for packages to something viable.

I think I could have made it clearer in the article, but my point was not that The People's Parcel was "the worst startup idea", but that "the worst startup idea" is that doing Startup Weekends and Y Combinator are the best ways for you to create a company that will help you climb the entrepreneur ladder.

zacharycohn• 13 years ago

But remember, as the parent said, Startup Weekend's goal isn't to create companies over the weekend - it's to teach people about all these tools they can use.

(Disclosure: I used to work for Startup Weekend)

reeses• 13 years ago

As long as it's called Tristero, and the mail transfer boxes are cleverly labeled 'W.A.S.T.E.', I'm all for it.

ginkgotree• 13 years ago

I agree with the first conclusion, that this is a bad idea. Yes, AirBNB is able to compete because it is as convenient and provides a similar level of service to regular hotels. However, even as an outsider to the shipping industry, it's clear that UPS and FedEX have extremely complex systems to get a package across the country quickly, and reliably. And yes, it is very likely that crowd sourcing ride shares would never be as efficient. Additionally, my experience with receiving packages gives me very little exposure to how the system works. All I know is that I click buy on Amazon, and a box is at my door 3 days later.

However, I disagree with the second point, that one NEEDS to work in an industry to understand product/market fit. There are plenty of industries that can be studied from a distance. Perfect example being the AirBNB founders. (as far as I know) They did not work in the hotel industry - they merely participated as a customer, hated it, and spent enough time studying to understand it. In addition, staying at a hotel as a customer gives me much more exposure to the system than receiving a package. I check in, I see the maids, I see the food prepared, the room keys, the furniture, etc. Yes, working in an industry will give you an edge, and it may be nearly necessary in some industries (such as shipping, semi-conductors, most physical products), but plenty of founders have built/exited successful businesses without working in their market first.

joeemison10• 13 years ago

I actually never argued (or at least didn't mean to argue) that one needed to have worked in a particular industry--rather, I was arguing that one needs experience with the particular industry. Experience can certainly mean (a) customer of the industry and (b) having researched the industry extensively. As you point out, receiving packages in the mail gives you little insight into the industry.

saosebastiao3• 13 years ago

Some ideas are legitimately terrible. But most ideas that are deemed bad are usually ideas that have a bad track record of poor execution.

FedEx, up until the point that they succeeded, was a phenomenally bad idea...one that received heaps of ridicule from academics to VCs. Now their hairbrained competitors are the ones that receive the ridicule.

Logistics is hard (I work in it), but it has a track record of crazy innovations that sweep the entire world in a matter of years. Think about it: Canals, Railroads, Containerization, The Automobile, Air Parcel Delivery. While I don't think an AirBnB for Packages would go anywhere, the idea has at least a semblance of merit: It is a new approach to sortation (probably the biggest problem facing logistics today). A completely distributed sortation system. If this company came packed with a few OpsResearch professionals and a few good lawyers, I would hold off on my ridicule.

jasonlotito3• 13 years ago

Nothing you are saying really changes anything from the article. Indeed, you're only confirming the article and it's conclusions.

saosebastiao3• 13 years ago

Only slightly. I interpreted the article as "gain some experience so you can come up with good ideas". He very plainly ridiculed the idea. All I was saying was the idea isn't stupid and that it addresses a real problem facing logistics today. I agree that execution and experience matter, but nothing the author wrote gave me the impression that he would ever think it was a good idea, even if Fredrick Smith himself was pitching it.

jonmrodriguez• 13 years ago

Why lawyers?

saosebastiao3• 13 years ago

Every political jurisdiction you cross is a new legal and regulatory reality...whether it is a city, state, or national boundary. And laws usually lag innovation.

lifeformed2• 13 years ago

It sounds like it could be handy for international shipments? Normally it costs an arm and a leg to ship a heavy package overseas, but if a traveler has an extra check-in slot available, they could carry an extra 50 lb package for like $25. It normally costs like $300 to ship something that big overseas.

The liability and insurance issues would be pretty annoying to deal with, though.

michaelochurch2• 13 years ago

Don't get me wrong, I always love VC-istan bashing, but I think the OP has some critical misses in it and, ultimately, comes out with some bad advice.

If you want to come up with awesome, fundable ideas, go work for large companies with deep pockets that have old and archaic processes and few highly-technical and dynamic problem solvers. Identify the inefficiencies, make friends with decision makers, and then leave, build your solution, and sell it back to them.

That doesn't work. The theory is that these deep-pocketed dinosaurs are just waiting to get some top-1% talent to tackle their hardest problems. It's like they're sitting on their hands just waiting for smart, energetic people to solve their problems.

There are a few issues there. First, the captains of those behemoths think they already have top talent, because they can't recognize it, and therefore end up giving their ears to salesmen. Saying, "you should listen to me instead of that idiot, even though I'm 23, because I am an actual 3-sigma talent" doesn't just work that way. Trust me. I've tried it. In an ideal world it would work, but that's not where we live.

You know how people hate "politicians" in the abstract (recognizing the incompetence of the class) but tend to be favorable toward their local representatives, on account of interpersonal charm? That's why investors and owners get robbed blind by idiots and scumbags. We think they just can't find people like us; in fact, those owners and investors think they already have people like us (even if they share our skepticism of management/executives in the abstract).

"Make friends with decision makers"? As if it were that easy. Smart people love to think that the people in power are just waiting for top talent to come and help them; in reality, the people in power think (usually incorrectly, but good luck convincing them of that) that they have more enough access to top talent as it is.

Genuine smart people have a hard enough time getting along in the Googles of world, which are still more tolerant of true top talent's idiosyncrasies than a typical MegaCorp. Just being smarter than the competition doesn't mean you automatically get put on some magical protege track and "make friends with the decision makers" and will be able to "better yet, get the company to invest in your new startup". Ha! If only it were that easy.

What built Silicon Valley back when it was great was a tolerance of people (true top talent, with the career-disrupting idiosyncrasy that implies) whom the current crop of VCs wouldn't give the time of day. Silicon Valley was built by people too talented and creative to survive a single year in the corporate culture that now dominates.

Okay... so that's the critical miss of the OP.

Now, onto why shitty ideas get funding, it comes down to this...

The clear good ideas (such as nutrition planning for bodybuilders) have two issues. First, they aren't that good. They're things that obviously add value; that doesn't mean they're worthwhile businesses. They might not add value in a way that can make sufficient money to cover the costs. Many great ideas don't; that's why philanthropy and non-profits exist. Second and more importantly, they require some domain expertise (the "golden child" protege of some chicken-hawking VC can't run it; you actually need to know something to run the business-- one of the appeals of social media is that, because any idiot can run it, VC funding as a personal favor works in that space, whereas it wouldn't in biotech). This also means that those businesses have a well-defined domain, which VCs would denigrate as a "sandbox". In other words, lifestyle businesses. It will never be a billion-dollar concern, so why fund it? VCs aren't really trying to maximize their portfolio returns but their career returns which are tied to visible tokens of social access. Those career-making extreme black swans come once in a decade. It's not making a return for investors. It's about getting "in on" those once-in-ten-years deals. That's why the disgusting culture of co-funding and (almost certainly illegal, and clearly unethical) collusive note-sharing exists.

Consequently, VC-istan ends up funding the "who knows?" projects-- not the obvious good ideas (whose maximum yields are usually below beeelll-i-ons) and not the obvious bad ones-- but those that are so vague as to have no obvious maximum. This means they end up funding based on personality cults and "track record" (read: how well someone as peddled influence and credibility in the past) because no one under the sun is capable of assessing these red-ocean gambits.

It's not that VCs are drawn to terrible startup ideas. It's that they're drawn for variance for variance's sake because the only thing that actually matters to a VC's career (i.e. making Partner, then lateral hops all the way to Sequoia) is getting in on those extreme black swans (as I call them, black albatrosses). Funding a good idea that will reliably 5x is useless from a VC's career perspective.

joeemison10• 13 years ago

Of note, the company I most recently founded absolutely fits into the "finding a problem that large companies have, build a solution, and sell it to them". I can also name a bunch of highly-profitable B2B companies in the insurance and lending spaces that fit into those same categories (Global DMS, Guidewire, and Eagleview, to name three).

So it's definitely not true that those opportunities don't exist.

pseut• 13 years ago

OP: If you want to come up with awesome, fundable ideas, go work for large companies with deep pockets that have old and archaic processes and few highly-technical and dynamic problem solvers. Identify the inefficiencies, make friends with decision makers, and then leave, build your solution, and sell it back to them.

Parent: "That doesn't work. The theory is that these deep-pocketed dinosaurs are just waiting to get some top-1% talent to tackle their hardest problems. It's like they're sitting on their hands just waiting for smart, energetic people to solve their problems."

From what I've heard, this happens in (e.g.) pharma all the time. But, as you clarify in the rest of your comment, probably not at the "billion-dollar concern" level and not (from what I've heard) with massive VC funding/interest.

I think that part of the OP's point might be that every would-be founder shouldn't set his or her goals as "the next AirBnB" or "the next Facebook," because the path to "the next GNC" might look a lot different.

tptacek4• 13 years ago

It's easy to refute someone's post by inventing arguments that the post didn't make and then knocking them down. I think there's even a name for that technique.

Two arguments that this post didn't make:

(a) That the correct path for starting any company is to convince venture capitalists to fund it. In fact, this post seems downright derisive of that idea.

(b) That the way to take advantage of on-the-job experience at BigCo's is to convince them to do things differently while you're on staff there. No, that's not why you make friends with decision makers; you make friends with decision makers to learn what it is they need. Then you leave, and go build a product.

dylangs10302• 13 years ago

I'm almost positive that was dry humor, but in case it wasn't, and for other peoples' benefit (namely the parent), it's called building a strawman argument[1].

[1] http://en.wikipedia.org/wiki/Strawman

michaelochurch2• 13 years ago

(a) That the correct path for starting any company is to convince venture capitalists to fund it. In fact, this post seems downright derisive of that idea.

Sure. My notes on the problems with VC (specifically, the career incentives on VC-istan that make it suck) were to explain why bad ideas get funded. I didn't think he was arguing that, since he was clearly going out against the VC-istan mentality.

He's still carrying the assumption that the dynamic, highly intelligent people who often end up in VC-istan (by default, because traditional corporate environments can't accommodate them) will be so far above the competition in these stodgy dinosaur companies that they get magically put on a protege track and get to "make friends with decision makers" and acquire the trust (in that company, or later on, as you alluded) to solve their problems. I argue that it's not that simple.

sliverstorm• 13 years ago

... because I am an actual 3-sigma talent

3-sigma in what direction, though? ;)

tptacek4• 13 years ago

If you squint at it just right, this is exactly the advice Patrick McKenzie has been giving people looking for business ideas on HN for the last several years.

kripy• 13 years ago

Reminds me of the underground mail-delivery system, W.A.S.T.E., in Thomas Pynchon's "The Crying of Lot 49" (https://en.wikipedia.org/wiki/The_Crying_of_Lot_49), which was also the name of a peer-to-peer app developed by Justin Frankel (the original developer of Winamp) while he was at AOL (https://en.wikipedia.org/wiki/WASTE).

colemorrison• 13 years ago

I'm not really sure what's more prevalent now days... posts that are overtly idealistic and herald a "follow your dreams" mentality or posts that are ridiculously pessimistic and taut the "your idea sucks so give up" dogma.

I would never tell a graduate to just go "get a job." The cultural mindset to build something independently (interdependently might be better wording) is extremely important. The payment and reward of starting a start up transcends that of funding and exit - the god damned fucking journey, experience, relationships, and lessons are rewarding.

benologist2• 13 years ago

He's advocating getting experience from a job first, not getting a job instead.

pg3• 13 years ago

"we skip entirely over the value of working for large, established companies before you create your own."

When I first started writing about startups, I believed this. I suggested that would-be founders work for a couple years for existing companies before trying to start their own. But the empirical evidence changed my opinion. You can learn things from working at an existing company, certainly, but you learn more from trying to start a startup.

wilfra• 13 years ago

Selection bias?

People who can get into YC at 20 are probably better off starting a company than getting a job. However what about the other 99.999% of 20-year olds?

pg3• 13 years ago

There are two ways in which one might be better off starting a startup than going to work for an existing company: you might learn more, and you might have higher expected value. What I'm claiming (since this benefit of working for an existing company is what the OP is talking about) is that the former is almost always true. The latter, frankly, is never going to be true for more than a small percentage of people, regardless of age.

lifeformed2• 13 years ago

It seems beneficial to have at least some experience with working at an existing company. Knowing how things are traditionally done, knowing where the bottlenecks and communication problems lie, can be a big help in figuring out where you can take advantage of your own situation. It also helps you not take for granted many of the more subtle benefits a startup provides.

pg3• 13 years ago

It's certainly beneficial. Just not as beneficial as other things you could do with that time.

lostlogin• 13 years ago

I've never seen any other forum (and very few publications) where members are so up front about potential conflicts of interest or biases. I see it daily, and I like it.

sharemywin• 13 years ago

It's funny because Walmart just started offering a service where customers can drop off packages to online customers on the way home.

http://www.forbes.com/sites/erikamorphy/2013/03/28/about-wal...

So some form of it may not be as bad as it sounds. As with every solution it's usually about figuring out where it fits in.

projectileboy• 13 years ago

First, I have to echo PG's sentiment - the value gained from the experience starting a company will almost always trump the experience gained working for [insert company name here]. Second, it's not such an obviously hare-brained scheme, in my opinion - it's a packet-switched network, an idea which has had some success in the past.

The Worst Startup Idea

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