July 17, 2006
Ideas are cheap

Fun, but fundamentally broken business idea: "Why don't we make an 'ideas for software' exchange where you can sell your idea without having to build the software!". You publish the idea and then let other people run with it and then they pay you back for that pivotal seed insight later on. Fun idea. But there's a reason Ben Hammersley isn't rolling in cash generated by Lazyweb which is simply that ideas are dirt cheap and people have them all the time. Their value is really, really close to zero. Unless you have real pyaing customers with money in hand waiting for your idea then you're just not adding any significant value by just having the idea. The problem in making money with ideas is in the words making and money not the word ideas.
The idea that you can test the idea before actually building is novel - but unless there's a creative process there - a brebuild phase that adds value and diminishes development cost later, itøs just a waste of valuable lead time.
As a more personal aside - I just don't believe markets build good software, not yet anyway - good software (if it is new in any interesting way) happens best with 3-4 guys in a room who know each other well and have the necessary skills. It's a refreshing idea to create an idea market for this kind of thing but the transaction costs in building software are just too high. They actually dwarf the price of the software itself. That's why you try to build teams small enough that you don't have transaction costs.

Ning is attacking the same kind of problem, which is of equally doubtful value, but at least they're changing the rules where it matters: The price/time to execute the idea.

Posted by Claus at July 17, 2006 07:00 PM | TrackBack (0)
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