Top 10 Worst Business Ideas I Have Ever Come Across
Albert Einstein once said “If, at first, the idea is not absurd, then there is no hope for it.” Here is my list of the top ten most absurd and hopeless ideas I have heard about in my lifetime:
- Coffee shops? The world hardly needs more coffee shops. Plus, coffee shops don’t scale.
- A Maine-based line of natural products that are made with bees wax? Last time I checked, the “bee” supply chain wasn’t that scalable.
- Overpriced, finely made historically accurate dolls that will teach children about history? Seriously? I don’t even know where to go with that.
- An algorithm that will improve upon Yahoo’s web search technology? Fatal flaw: why couldn’t Yahoo just do that themselves?
- Packages overnight? The infrastructure required to make that happen is prohibitively expensive. Nice idea, but too much capital risk.
- Growing a technology business in Seattle? Cow town, and too far away at that: investors want to be able to drive no more than four hours from their home. Plus, there’s no entrepreneurial talent in Seattle.
- You want to trade collectibles and knick-knacks on the web? That’s maybe, like, a $1,000 market on a good day.
- Your children have an “orphan disease” for which you want to find a cure? OK, so what don’t you understand about the healthcare industry(?): orphan diseases are unfundable.
- Sell books on the Internet? People want the experience of touching books, opening the covers, being in a bookstore. Sorry, but the need just is not there.
- You don’t want to develop computers but you do want to (basically) assemble them? There’s nothing novel or even very protectable about that. If you had invented a new microprocessor or something, I might be interested. But just putting the boxes together isn’t going to generate sustainable gross margins.
These are unassailably awful ideas. Every one of them. Laughable almost. I wonder what the poorly thought-out, misguided, ill advised…OK, can we all just agree to call them patently absurd?…ideas of the next decade will be:
- Making cost competitive oil out of algae (been there, tried that; plus, the whole algae industry is too capital intensive, don’t you know)?
- Competing with Google (ok, can you say naïve)?
- Starting a great company in Cleveland (too cold; no talent — seriously: none, anywhere in the entire state in fact)?
I confess that I do not know. But, I have the time of my life working with entrepreneurs trying to figure it out.
(So, the terrible ideas listed above are examples so well known to most Americans — never mind you fair, brilliant readers steeped in innovation history and always seeking contrarian ideas — that they are almost trite. But, to my mind, they bear repeating because they remain stalwart, iconic reminders of how visions and dreams become great companies in spite of a slew of reasonable obstacles and well reasoned protests. In case you didn’t recognize one or two, here they are:
- Starbucks, founded in 1971 and a market cap of $17.2 billion today
- Burts Bees, acquired by Clorox for $913 million in 2007
- American Girl, founded in 1986 and acquired by Mattel Inc. for $700 million 1998
- Google, founded in 1998 and a market cap of $184 billion today
- FedEx, founded in 1971 and a market cap of $27 billion today
- Microsoft, founded in 1975 and worth $274 billion today
- eBay, founded in 1995 and a market cap of $29 billion today
- Novazyme, acquired by Genzyme for $225 million in 2001; see Extraordinary Measures, which came out last week
- Amazon, founded in 1994 and a market cap of $55 billion today
- Dell Computers, founded in 1984 and a market cap of $28 billion today
Also, it should be noted that angel and/or venture capital investors believed in and invested in almost all of these companies. Each entrepreneur in question was able to get someone, and in some cases numerous someones, to believe in and put money behind the entrepreneur’s harebrained, crackpot — and I mean that with all due respect — idea.)
Becca Braun is President of JumpStart Ventures. She founded and led a number of early-stage companies and organizations, as well as worked as a private equity investor and management consultant. She received her MBA from Harvard Business School and her BA in Linguistics from Harvard University. She is keenly interested in the intersection of wealth creation and broad-based regional economic growth.
January 28th, 2010 at 6:15 pm
Starting a great company in Cleveland (too cold; no talent — seriously: none, anywhere in the entire state in fact)?
That is the most hurtful statement I have ever read in my life. I live in Cleveland and I have been trying to get funding for two years with people stringing me along and simply ignoring my phone calls. How you you say that there is NO TALENT IN THE ENTIRE STATE, but then say that you support minorities and women of which I am both, Have two degrees, my own property management business, and a dream to start a Holistic Health day spa and medical practice. I hope that you are not in the business of being so cold-hearted that you just dash people’s dreams just because of their geographical location and then say that you support northeastern Ohio ideas. You don’t even know me and generalizations like that are greatly offensive.
January 30th, 2010 at 1:28 pm
Hi Katherine - I cannot tell you how much I sympathize with your thoughts! The entire post was a bit of fun sarcasm which I tried to make super clear from tone and all the examples I gave (Seattle has no talent; these companies whose ideas are “bad” are the best companies in the world etc). So, I was being way sarcastic in my comments.
Like you, I worked to raise money for my own company here in Northeast Ohio and know very well how many phone calls get unreturned when one is asking others for money (what a beautifully humbling experience…). Remembering this rejection is part of why I work at JumpStart - I believe in the mission. ~35% of our portfolio companies are minority or woman owned companies, which is significantly above the tech/investing industry as a whole. We celebrate entrepreneurial talent. We love Northeast Ohio with unequivocal passion.
Your company sounds interesting, your dream exciting, and while it’s true I do not know you, I do love that it seems you have fire in the belly to grow a company - that’s entrepreneurial DNA and thanks for sharing it openly and honestly, even if it was to be mad at me for my sarcasm!
-Becca
February 1st, 2010 at 1:18 pm
Ken Jarboe made a great point on this post: http://www.athenaalliance.org/weblog/archives/2010/01/bad_business_ideas_not.html
I commented back:
Ken - You’re right: innovation is different from invention and our national policies should recognize this more explicitly. Basically, technology = important, but innovation = more important.
Truly innovative business models are just as interesting as new technological inventions and investors can, should, and do invest in both.
Btw, there is a v. good book about economic developmet strategies for both innovation and invention - The Venturesome Economy by Amar Bhide.
February 2nd, 2010 at 3:57 pm
Good stuff, Becca, thanks. When combined with that marvelous introductory Einstein quote, your list resonates with anyone who has followed their entrepreneurial gut rather than the conventional wisdom.
February 2nd, 2010 at 4:09 pm
Great Post Becca -
I am reminded of a close friend, who was asked to get involved in an idea to send 20 people to an island and vote one off every day/week. He laughed and said it was the stupidest idea he had ever heard.
Many years later, the friend that presented him with the idea, Mark Burnette has done ok with it. Turns our the show Survivor has become the basis for an entirely new genre of reality tv.
February 2nd, 2010 at 4:53 pm
very bad article, becca braun. i dont know who you are since i stumbeld this page, but most of the stuff you say sounds pretty (captain) obvious, doesn’t it ?
you’ve probably “made it”, but thats no reason to make fun of bad ideas.
in fact, most of em are not bad ideas at all and maybe can create great revenues over a longer time-period, if you are creative and put your heart into it.
why not challenge the big companys already established in the market ? yeah, naive.
February 2nd, 2010 at 5:30 pm
Which of these companies actually provides a service the average American needs?
My grandparents weren’t wealthy or well educated like Jumpstart advisors, but they knew well enough not to pay $4 for a cup of coffee or promote companies that have that for the basis of their business.
Which of these companies actually provides good paying jobs and helps the American economy?
But wait a minute, even though Jumpstart receives significant funds to help grow the economy in Northeastern Ohio is that a requirement for any of the investments they make?
1 Starbucks, no, not necessary
2 Burts Bees, no, not necessary
3 American Girl, no, not necessary
4 Google, no,
5 FedEx, used by small businesses
6 Microsoft, used by small busineses
7 eBay, no,
8 Novazyme, yes! saves lives
9 Amazon, no,
10 Dell Computers, no, possibly used by small businesses
I am not aware of any of these companies providing livelihood and being foundation for communities like a Ford Motor, Sherwin-Williams, o
February 3rd, 2010 at 11:50 am
Hi Becca, I loved your post. It fits perfectly with what we’ve been talking about at Dise & Company. Check out Chapter 6 of Sonic Boom: Globalization at Mach Speed by Gregg Easterbrook.
February 3rd, 2010 at 5:06 pm
It seems as though some of the readers misunderstood the sarcasm intended in this post. I’m fan of Becca’s blog posts - and love that she continues to think about her world of entrepreneurship creatively like this. Keep the great posts coming, Becca.
February 12th, 2010 at 11:17 pm
Becca,
Although it’s early in the year, I’m hereby nominating this post as the best business post this year.
Great job. I’ll bet you hate being right.
The Franchise King®
Cleveland