• Fri. Jun 24th, 2022

Why the Founder of a $17 Billion Company Says Good Ideas Are the Most Dangerous Ideas

ByLinda W. Smith

Jun 9, 2022

I built a terrace on the dune. It went well. Not perfect – when you do the job you still see the minor imperfections that no one else notices – but overall I was satisfied.

“Sounds great,” said a neighbor. “You could start a bridge building business.”

Hmm, I thought. I could:

  • Home renovation spending increased due to rising house prices; owners who could have upgraded chose to upgrade what they own instead.
  • Finding people to do this work is difficult; 90% of home builders report a shortage of carpenters.
  • There is definitely a market; a patio is a relatively inexpensive way to fulfill every homeowner’s stereotypical desire for “entertainment space” while on an HGTV show.
  • No capital is required; I already have all the tools I need.

Then yes. I could start a deck building business.

But that doesn’t mean I should.

When asked how he validates business ideas, here’s what HubSpot co-founder Dharmesh Shah had to say:

The most dangerous ideas are not the bad ones. The ones you can throw away easily. Dangerous ideas are those that are good, but not great. Yes he could work, and yes, I could do it – but that doesn’t mean I should.

It’s not about the failure rate – I actually agree with that. It’s that good ideas consume a lot of time/calories, leaving little time for great ideas.

Why would starting a deck building business be such a dangerous idea? At first glance, that would not be the case.

  • Product/market fit? Check.
  • Adaptation of skills/market? Check. Although I’m not a genius, I would be smart enough to shy away from projects beyond my skill level.
  • Reasonable profit potential? Check. Especially now; supply and demand curves would definitely be my friend.

But that still doesn’t mean I should. I enjoyed building my deck.

But I don’t want to build your deck. And I certainly don’t want to spend all day, every day building decks.

This is the other half of Shah’s could/should equation. Here is his simple framework for judging ideas:

  1. Potential: if it worked, how big could it be?
  2. Probability: What are the chances of it working?
  3. Proximity: how close is it to things that interest me, that I know or that I am passionate about?

The weighting of each category depends on your situation. From the start, Shah focused heavily on the likelihood of success; risk is not your friend when your main objective is to put food on the table.

“Today,” says Shah, with a $17 billion business under his belt, “I mainly solve numbers 1 and 3: what has great potential and excites me? (Even though I fail, I will have no regrets, because I cared enough).”

And this is where the deck building business falls apart for me. The probability of success is high. Growth potential? Sure, but scaling would require hiring, management, and infrastructure, and all the stuff I wanted to stop doing when I left a corporate job.

This only adds to the proximity problem; not only do I not want to manage dozens of people, but I don’t really want to build decks every day. I like to build decks for me and mine. I wouldn’t like to build decks for other people.

And I’m lucky to have other jobs that I appreciate more.

Trying to decide if starting a particular business makes sense for you? First, consider your situation. If you’re just starting out, the likelihood of making enough money to live on might be the most important factor; what you need to do matters more than what you love to do. What you could and should do is put food on the table.

If probability is less of a factor, then consider potential.

And how easily you can scale to reach that potential. Unlike, for example, SaaS, a bridge building business is not easily scalable. Regardless of the size of the potential market, you must be able to serve that market and be willing to create and manage the type of business necessary to serve that market.

Then ask yourself if you care about the business you are going to build. I could run a deck building business. I could run a successful deck building business.

The best way to define professional success? Doing a job you love. Work that leaves you feeling fulfilled, satisfied and happy. A job that allows you to better control your own destiny.

The beauty of starting a business is that you are free to choose what type of business.

Not the business you could start, but the business you should beginning.

Because we all have to make a living.

But we must also Direct.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

Source link