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Ideas in a flat world

By January 31, 2006No Comments2 min read

Umair posited that in a truly Friedmanesque world, the only thing of value is the idea, because executing it is cheap. This was part of his argument that the whole VC structure is broken, and even though I don’t want to piss any VCs off, he does seem to take the whole Friedman argument in its logical direction. If Friedman (The world is flat is the book we are referencing, for those of you unaware) argues that because the world is getting more connected, that costs are being reduced, then it would make logical sense for the cost of a startup to drop. In this day and age, that makes a lot of sense, as the cost of execution is going down.Execution is the area where VCs traditionally shine, that and having piles of cash at their disposal, and thats where they like to contribute. VCs bring to the table quite a bit of resources that the average entrepreneur would normally have little access to: Harvard MBAs by the dozen, millions of dollars, and more important than any of those things: connections. Umair figures that the most important thing is ideas in this day and age, but ideas alone are nothing. Ideas are a dime a dozen, people can come up with hundreds of decent ideas, its the great ideas that are worth something.When great ideas are paired up with great execution and great resources, then that is when we see something magnificent emerge. Now the fact that one can probably raise the money to build a business by getting a small business loan, finding cheap developers, and using viral marketing, does not mean that the VCs are not necessary. You can’t raise the money necessary to operate a server farm by just asking friends (granted you don’t need a server farm up front, but thats not the point).So you might be asking yourself, what the heck am I arguing then seeing as I’ve backed both sides of the equation. Well I am trying to argue that ideas ARE becoming more important with the lower barriers to entry, but for those really big projects, the VCs are going to be sticking around for a while. They are a smart group of people that aren’t likely to sit idely by and watch as the industry topples its inverted pyramid.