"Great post -- this is what my partner Ben and I have always believed. Starting a company is just plain hard. It's not clear that starting an ambitious company is any harder than starting a less ambitious company. Your points on market size and being attractive to the ecosystem (particularly talented employees) are dead on.
The other thing we find is that less ambitious startups in Silicon Valley are often built to appeal to an acquirer as an exit strategy -- the cliche of "we will work for two years and then Google will buy us for $50 million". The big problem with that is what we call the "then what" problem -- if Google doesn't buy you, then what? Whereas ambitious companies built to stand on their own two feet and succeed in big markets are both highly attractive as acquisition targets and are viable independent companies. "
For most startups, if I understand correctly, the founders get rich on a liquidity event - either the company getting sold or IPO'ing.
So eventually you are going to flip, if things go well, right? Or go public in the rare but usually better outcome.
Anyway this is Andreessen's view. I work on a "smaller problem" right now. :)
Obviously if you've raised VC, then that won't work - though angels will probably be more understanding. So, the conclusion is, liquidity events are only necessary if you've raised VC money. So don't raise VC money if you don't have to.
Probably all the data pg has gathered by funding a lot of startups?
First, Matt Cutts said "Paul's #1 suggestion is reinventing search. I happily welcome competition in search because it keeps us on our toes, but his #2 suggestion resonated with me more: reinventing email."
They just today released (for the first time, and they even call it huge news) a video about what they do on a search, I'm sure watchers must have thought that search is so advanced and hard seeing that video that they might give up ;-)
I wonder what pushed them to post this video. It's not even very informative, it talks about searches of N-grams and spell corrections, it seems more like something to show how advanced the changes they make are. It must be so hard to catch up with them ;-)
Maybe GOOG is afraid of a plethora of startups reinventing search. One may succeed.
Sure it may not be harder to work on an ambitious idea than to start an Italian restaurant (or the startup equivalent - something that is ubiquitous and stands a good chance of succeeding if executed correctly).
But although I acknowledge that the possibility of hitting it big from opening the "restaurant" is small compared to an ambitious idea, the chance of the restaurant succeeding and being an ongoing concern is magnitudes greater than the ambitious idea.
The simple fact is non ambitious ideas don't pay off for investors and that's why investors are biased to not encourage those types of ideas.
I think it's easy to choose an ambitious startup once you have a success under your belt, and aren't worried about paying the bills (ie. have a small exit/cushion already).
On the other hand, if you still got to pay the bills, and have a family, it makes sense to pursue a smaller idea that doesn't require $10 million in venture capital, or a team of 20 people.
You say that you can start small, and go big.. but I'm not so sure many people here have the luxury on working on any project for 2+ years, and still not have any profit to show for it. It makes more sense once you have some cushion as OP does with his first success.
You're right. And all of this is nonsense anyway. The people who encourage all this risky behavior aren't going to be there to clean up the mess when you fail and can't pay your bills. And passed up your chance to go to Harvard to do YC.
It pays for them to encourage you to take big risks and encourage big ideas. And they will pick from those risks and if 2 in 10 are a home run then they win big. They are spreading the risk over many ideas (you're only doing one idea) and they are risking other peoples money in general. (Sure they have reputation and other worries but not the same as your loss.)
My guess is, and this is only a guess, that when they evaluate an idea they don't take into account at all what will happen to the founder of the big ambitious idea when it fails. It probably doesn't even enter into the decision to fund the idea or not.
It's like encouraging a friend to go to Hollywood and follow their dream to become a star. If they succeed you have a friend who's a Hollywood star. If not no loss on your part.
It also depends on how long you spent doing the startup and the opportunity cost of doing so. It's one thing if it takes a 6 month chunk out of your life and another thing if it takes a 5 year period. And prevented you from doing something else.
Each circumstance is different of course.
I have a big idea to take on the banking system, yes the banks.launched the MVP 2 weeks ago not wanting to be too ambitious at the beginning. Have two more features to add that will really challenge them. Plus we already know at this point that banks don't care about the disappearing middle class. http://www.cnbc.com/id/45899309/Why_Banks_Shun_30_Million_Am... http://www.businessweek.com/news/2012-02-29/jpmorgan-sees-cl....
For now, it is a fun way to save money with friends http://sou-sous.com . If you are not laughing by now and want to join this challenge or any advice, please let me know.
The risk of being too ambitious at first is being unable to ship your MVP because it appears too narrow vs. the ambition you have in your head. I know many entrepreneurs that failed because of that. Great entrepreneurs can ship a great MVP for an ambitious idea and thrive from there...
How many people here are working on ideas that may not seem ambitious on the surface, but with long-term goals that are very ambitious?
Think big. Plan in meticulous detail. Then shelve your plan and just do it. Come back to your plan a year later and see how you are doing. Business plans are great exercises for thinking through issues. However, don't let it stop you from picking up on important opportunities down the road. Prepare a new plan every year. Again, don't look at it during the year.
more on bloat: http://goldwaterinstitute.org/sites/default/files/Administra...
I've written some more about how oversold education is here:
Another strategy would be to attract the brightest away via some sort of YC/Theil education combo (we provide an education for a cut in your future income and we put you in touch with the brightest minds). You'd then have to overcome all the problems with licensing associated with the alliance between higher ed and local/state government (you can't train engineers, doctors, lawyers without approval from certification schemes, ...software engineers don't require certification yet). You would do this by demonstrating your students are smarter and more capable than the certified students.
Once you've taken down the licensing and certification scheme you open the road to disrupt higher education for everyone else.