The importance of small ideas
Why we should build and invest in companies that aren't going to save the world
There's an incredible scene in the TV show Silicon Valley.
The characters are competing at TechCrunch Disrupt, one of the biggest tech conferences and pitch competitions in the world.
Before the main characters are up to pitch, you get to hear a snapshot of all of the pitches coming before them, and every one contains some variation of "We're going to revolutionize the world" and "make the world a better place."
It's a brilliant scene, and like many from the show it could have just as easily been real footage from half of the pitch competitions around the country. Startup founders are all obsessed with revolutionizing, disrupting, and (thankfully) making the world a better place.
Part of it is our nature. We're the wacky people who see something broken in the world and become obsessed with the idea of fixing it.
But a big part of it comes from the mechanics of Venture Capital. Venture Capitalists have long had the loudest voices in the startup world.
The most successful VCs invest in companies expecting the majority of them to fail. They get the returns not from a handful of 5-10x investments, but from one or two 1000x investments. Because of the nature of the business, they want to invest in big ideas. The biggest, boldest, craziest ideas are the ones most likely to go to zero or become unicorns.
The rest of the companies in their portfolios? According to Paul Graham, the founder of Ycombinator, those are "just a cost of doing business."
But it's important for founders to work on small, "boring" ideas. It's even important for investors to put their money behind them.
There are lots of reasons.
First, there are more important things than money or power or even changing the world. Whatever your religion, this is the only life you get on Earth. Spending all of it working or chasing a massive payday will cause you to miss out on some incredible moments. There are loads of stories of people on their deathbeds wishing they’d worked less. There are very few stories of someone saying with their last breath, “...if only… I’d put in more hours… maybe I could have doubled the price of our stock…”
You could also make a pretty compelling argument that massive tech monopolies aren’t net positive for the world. For every birthday fundraiser on Facebook, there’s a fake news scandal.
Assuming tech monopolies are net positive, those tech companies still need someone to sell to. There need to be businesses of all shapes and sizes for this wacky capitalism thing to work.
You can also make the world a better place with a small company! Small companies and small ideas can have an outsized impact. But even a small impact for the positive is a positive for the world. One more tree planted, one kid saved, one pair of hipster glasses given to someone in need is still a good thing!
But even ignoring all of that there’s another reason we need to build and invest in small ideas.
We need to build and invest in small ideas because small successes are stepping stones. Small wins often lead to much bigger, bolder companies that really can make a dent in the world.
Small successes are stepping stones.
Tyler Tringas, bootstrapper and founder of Earnest Capital, demonstrates this with perfection in his Twitter thread:
Need more examples?
- Before Facebook Mark Zuckerberg built Synapse Media Player and Facemash.
- Before YCombinator Paul Graham co-founded Viaweb. The $49.5 million exit would be a failure by his own standards.
A small success gives you two critical things:
- Social proof - even a small success will make it easier to convince investors, consumers, etc. to take a gamble on your next project
- Capital - big ambitious ideas take a lot of money. Elon Musk self-funded Tesla in the early days to get it off the ground.
When you're starting out social proof and capital are scarce.
Paul Graham talked about the cost of doing business. What if we looked at the time and money put into small ideas not as a waste, but as part of the startup cost for the biggest, boldest ideas?
What if investors looked at investing in small companies not as a waste of their time, but a bet on the future of the entrepreneur?
Nah, taking the long view doesn't normally work out. 😜
For any of you out there with big ambitions, remind yourself, Elon Musk didn’t start off building Tesla. It takes time. Build something you love and can be proud of. Learn. Take the long path.
If your ambitions are small, that’s okay too. It’s great in fact. We’re small and proud. Don’t forget that the world needs all of us.
And no matter who you are, remember to put your oxygen mask on first before helping others.