
The Worst Startup Idea - joeemison
https://medium.com/on-startups/db355566d8b7
======
saosebastiao
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.

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

~~~
saosebastiao
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.

~~~
jasonlotito
That its addressing a real problem doesn't make a difference. A modest
proposal addresses a real problem. Who delivers the solution doesn't make it
any better.

If Smith was delivering the solution, it would not be what was presented. And
it would not be that idea.

------
pg
"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
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?

~~~
pg
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.

------
ironic_ali
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.

~~~
joeemison
What were your reasons why it would fail?

~~~
ironic_ali
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
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.

~~~
joeemison
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
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)

------
ginkgotree
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.

~~~
joeemison
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.

------
tptacek
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.

------
coopdog
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
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.

~~~
joeemison
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).

------
colemorrison
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.

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

------
kripy
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](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](https://en.wikipedia.org/wiki/WASTE)).

------
woah
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.

~~~
joeemison
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...

~~~
kevingibbon
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.

~~~
joeemison
keychainlogistics looks like uShip--using existing professionals on the road.
I totally buy that business model. I don't buy Alice and Bob transporting
packages on their way to work.

As I said, though--definitely happy to be proven wrong. It would be pretty
amazing.

------
sharemywin
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...](http://www.forbes.com/sites/erikamorphy/2013/03/28/about-walmarts-
idea-to-crowdsource-its-same-day-delivery-service/)

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.

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

~~~
joeemison
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).

~~~
femto
They could if they were air lifted over the last mile by a drone. Maybe a
flying box that can transport itself the last/first mile?

Taking it further, what if the flying box could rendezvous with a moving
vehicle? Preregistered vehicles could then pick up / drop off parcels without
deviating in any way from their already planned journey.

That sort of tech could even be useful for existing courier companies, as it
would make pick up and drop off of small items very efficient. The truck would
just drive a predetermined route, that passes within 1 km of each point of a
city, without stopping.

It could make an interesting partnership with the local bus company. Each bus
would have a roof mounted drone docking station. The drone would fly from its
start point to rendezvous with the nearest bus, then hop from bus to bus until
it is near its destination, and fly the last mile.

~~~
jasonlotito
That wasn't what was pitched though, and what you are suggesting is not The
People's Parcel. It also has it's own problems. It's a completely different
idea.

------
projectileboy
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.

------
lostlogin
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.

------
kevingibbon
"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.

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

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

~~~
joeemison
There was a courier service that had an office next to mine about 15 years
back that took all sorts of precautions that they weren't shipping drugs.
Here's an article that shows that those guys (Asheville Courier) weren't an
isolated case:
[http://network.yardbarker.com/college_basketball/article_ext...](http://network.yardbarker.com/college_basketball/article_external/akron_zips_starter_suspended_after_arrest_for_drug_trafficking/13082467)

------
michaelochurch
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.

~~~
tptacek
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.

~~~
michaelochurch
_(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.

 _(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._

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.

~~~
tptacek
That's not the assumption he made; that's a third argument you may have
(accidentally?†) made up just to knock down. It's not the case that the only
way to find problems that BigCos will pay you to solve is to be smarter than
everyone at the BigCo. You will almost certainly have a different tolerance
for risk than any senior BigCo employee. It's likely you'll enjoy product
development more than they will. It's almost certain that you'll enjoy the
trappings of "brand new company" more than they will; Matasano's "brand new
company" trappings were "desk at a library", followed by "attic of a print
shop with no air conditioning accessible only by a freight elevator".

You also don't need to acquire the trust of BigCo decision makers to sell them
products. You can learn about problems BigCo's have just by having routine
conversations with the right people, and you can sell anybody a product if the
product solves a problem for them at the right price.

Scott Wensing solves the White House Situation Room's "tracking devastating
storms" problem. How much do you think Barack Obama trusts Scott Wensing? He
has an account in StormPulse.

† _I 'm a little pissy today_

~~~
patio11
_How much do you think Barack Obama trusts Scott Wensing?_

Barack Obama cited Matt Wensing by name as an American innovator solving
American problems in a public speech, but to your point, several years ago the
decision to use StormPulse in the White House was made by a GS-whatever with a
nondescript .gov email address, and it was certainly not made due to
StormPulse's superior access to the Valley in-crowd. (Disclaimer: I invested
in them.)

~~~
tptacek
Dammit. Matt. Not Scott. Sorry.

