Internet Economics: Making Stupid Ideas Cheaper To Bring To Market
from the make-it-up-in-volume dept
One of the great things about the web is the speed with which it allows new products and services to be brought to market. Another is that it can allow for them to be brought to market very cheaply — and while that can reduce the risk involved in launching new ventures, it still helps to have a good idea if you want to be successful. In this vein, The Wall Street Journal’s Lee Gomes takes a look at Guy Kawasaki’s newly launched site, Truemors, which is supposed to be a repository for people to share “true rumors” they hear. It was quickly overrun with spam, but it looks like things are under control on that front now. The problem, as Gomes notes, is that the site seems rather pointless — but he says that Kawasaki admits that. He adds that he’s spent “only” $12,000 on the site (which some might say seems like an awful lot for a WordPress install), a paltry sum to risk for a chance to earn millions should Truemors take off. Gomes sums things up by calling Truemors a $12K lottery ticket, and noting that even if it fails, it will give Kawasaki fodder for his career as a paid speaker. It’s interesting to contrast that tale with that of Gabe Rivera, the creator of TechMeme and some other sites. Rivera has done all the work on TechMeme and his other sites himself, with no staff and no funding, and is seeing a lot of success. The key difference between his efforts and Truemors is that something like TechMeme actually serves a useful purpose, and could be referred to as “a good idea”. Kawasaki may brag that the economics of the internet have reduced the cost of bringing a “stupid idea” (as he puts it) to life from $5 million to $12,000 — but that’s of little concern if it’s still a stupid idea. It’s the reduction in cost of bringing the good ideas to market that’s important.
Comments on “Internet Economics: Making Stupid Ideas Cheaper To Bring To Market”
It's his name, not his idea
The only reason that Trumers is getting any coverage is because of the Kawasaki brand behind it. 12,000 dollars is a lot of money to build a crap site. As an example, I recently put together a social network for golfers for 20 different regions in the US and Ireland – The only thing I spent was some time (using WordPress and Ning to develop the sites).
See: http://golfnetwork.wordpress.com
Perhaps even more important to note is that I developed these social network communities with zero programming aptitude. It doesn’t take 12,000 USD to build a business today. It doesn’t even take much technical knowledge. You can actually get it started for nothing but time.
Sure, if something designed in this matter actually did take off, it would probably require some real money and tech skills to scale it effectively, but it’s easier to invest time and money in something when there is some initial evidence that it will actually gain traction.
Of course, my site will not get the necessary coverage to make it an instant success and will probably require some clever marketing efforts to build the communities – because, well, I’m not Guy Kawasaki.
All the best
Tom
Actually the low cost allows both
“but that’s of little concern if it’s still a stupid idea. It’s the reduction in cost of bringing the good ideas to market that’s important.”
There are a lot of stupid ideas that have become very popular, but that never would have been implemented in the first place if the internet didn’t make it cheap. Many of those ideas have become quite profitable without being really all that useful. I am thinking of sites like MySpace and Twitter that really serve no real useful purpose but are quite popular right now. While the popularity lasts they can make a lot of money. But since they serve no true purpose beyond enterntainment, when they lose their popularity they will simply die out.
Even stupid or purposeless ideas can be fun for a while. The internet allows a lot of those stupid ideas to come to market.
Telling the Good from the Bad.
What may seems like an obvious bad idea to some may seem like a good idea to others. The distinction isn’t as cut-and-dried as the above would seem to make it. Of course there are the obviously stupid ideas, and the obviously brilliant ones, but there’s a large grey area in between as well.
The wonderful thing about the cheapness of the internet is that all of these so-so ideas can be tried out, and the attention market will quickly sort the good from the bad.
Re: Telling the Good from the Bad.
So true. The PC and the Internet themselves were considered silly ideas when they were first conceived.
All the best
Tom
Odd little site Truemors is. Don’t mistake it for tumors.
I think I’ll keep coming to Techdirt for the latest…
cost of site
12k sounds like a lot, but if you even spend your own time on it, considering a decent software person can bill almost 1k per day, that only allows for 12 days of one person’s time to put something together… nada mucho.
of course he probably didnt spend 12k physical dollars… or at least i hope not 😉
How many people have read Guy Kawasaki’s books?
One of these, “Rules For Revolutionaries” was practically required reading at my company.
And it was pathetic. Much of it was just a hash of rehashed old ideas, little of it was terribly coherent, and all of it looked like some ghostwriter had spent a few days on Google to pad out items from a thin outline that had been hastily scribbled on a napkin.
If you’re looking for useful advice, avoid idiots like Guy Kawasaki.
This is exactly how Nature / evolution works
Evolution consists of trying a huge number of ideas and seeing which ones survive. No one, not even Mother Nature, is smart enough to know which idea is “smart” and which one isn’t. Are you sure the evolution of humans was a smart idea? Only time will tell if it was. (And if it wasn’t, a better idea will eventually take its place.)
Cost of entry
The world is full of ideas, good and bad. Techdirt knows this.
Even at a high cost of entry, stupid ideas make it to market. Sometimes truly exceptionally brilliant ideas wither and die. The market is fickle. Techdirt knows this.
The purpose of the market is to make a suitable return on one’s investment. The better the idea, the more likely that return is by design rather than dumb luck. Techdirt, as I’ve said, knows this.
Cost of entry to the market acts as a filter. A higher cost of entry makes ideas coming to market tend towards the better end of the scale, as one can afford to bring fewer out. Lowering the cost of entry makes it more attractive to bring lots of ideas to market, and not as likely to be good ideas, and just hope one of them catches. I would assume Techdirt knows this, too.
So, yes, lower cost of entry means less cost to bring good ideas to market. Why are you surprised that the same thing would be true for bad ideas?
TechMeme is a good idea?
How exactly is TechMeme a good idea? I agree, Truemors is stupid, but TechMeme is totally useless AND unoriginal. At least Truemors is original!
Costs
I don’t think the cost of $12,000 is all that significant, as I’m willing to bet that Guy paid someone to bring up his site. A developer may be willing and able to spend three months bringing up a TechMeme, but to my mind that’s the exception, rather than the rule. Developers may also have the skills needed to bring up a site, but lack the idea itself.
If Guy can make $40K a month speaking and/or consulting, then spending the equivalent three months could cost hime $120K, at which point spending $12K for someone else to do it is a no-brainer.
He may also believe in letting professionals do their jobs, or have better things to do than learn HTML, PHP, and SQL. Or there could be time-to-market considerations.
And as others have said, you may think it’s a dumb idea, but only the market knows for sure.