What were the most ridiculous startup ideas that eventually became successful?

The best startups seem obvious in retrospect – this is because by the time we found out about them as users they had already reached critical mass.

It is possible to create a good startup with a good idea, but great startups are often the result of ideas that would have seemed ridiculous if you had heard them prior to seeing them working.

This is true almost by definition – if they had been so obvious, someone would have done them already.

Ask yourself, if you were a venture capitalist pitched one of these ideas, what would your reaction have been?

• Facebook – the world needs yet another Myspace or Friendster except several years late. We’ll only open it up to a few thousand overworked, anti-social, Ivy Leaguers. Everyone else will then join since Harvard students are so cool.
• Dropbox – we are going to build a file sharing and syncing solution when the market has a dozen of them that no one uses, supported by big companies like Microsoft. It will only do one thing well, and you’ll have to move all of your content to use it.
• Amazon – we’ll sell books online, even though users are still scared to use credit cards on the web. Their shipping costs will eat up any money they save. They’ll do it for the convenience, even though they have to wait a week for the book.
• Virgin Atlantic – airlines are cool. Let’s start one. How hard could it be? We’ll differentiate with a funny safety video and by not being a**holes.
• Mint – give us all of your bank, brokerage, and credit card information. We’ll give it back to you with nice fonts. To make you feel richer, we’ll make them green.
• Palantir – we’ll build arcane analytics software, put the company in California, hire a bunch of new college grad engineers, many of them immigrants, hire no sales reps, and close giant deals with D.C.-based defense and intelligence agencies!
• Craigslist – it will be ugly. It will be free. Except for the hookers.
• iOS – a brand new operating system that doesn’t run a single one of the millions of applications that have been developed for Mac OS, Windows, or Linux. Only Apple can build apps for it. It won’t have cut and paste.
• Google – we are building the world’s 20th search engine at a time when most of the others have been abandoned as being commoditized money losers. We’ll strip out all of the ad-supported news and portal features so you won’t be distracted from using the free search stuff.
• Github – software engineers will pay monthly fees for the rest of their lives in order to create free software out of other free software!
• PayPal – people will use their insecure AOL and Yahoo email addresses to pay each other real money, backed by a non-bank with a cute name run by 20-somethings.
• Paperless Post – we are like Evite, except you pay us. All of your friends will know that you are an idiot.
• Instagram – filters! That’s right, we got filters!
• LinkedIn – how about a professional social network, aimed at busy 30- and 40-somethings. They will use it once every 5 years when they go job searching.
• Tesla – instead of just building batteries and selling them to Detroit, we are going to build our own cars from scratch plus own the distribution network. During a recession and a cleantech backlash.
• SpaceX – if NASA can do it, so can we! It ain’t rocket science.
• Firefox – we are going to build a better web browser, even though 90% of the world’s computers already have a free one built in. One guy will do most of the work.
• Twitter – it is like email, SMS, or RSS. Except it does a lot less. It will be used mostly by geeks at first, followed by Britney Spears and Charlie Sheen.

Link on Quora

How does a new business get its first clients?

When I first started a business, I was 21, bald, and had the social confidence of an asthmatic fieldmouse.

Fortunately I started my business with an ultra-confident Sales Director, who unfortunately turned out to be both hopeless and completely mental. He punched me in the face during our second board meeting.

At one of our first pitches to a prospective client he bragged how he “wasn’t much of a techie” and “didn’t know how to use email”. These were not inspiring words from a cutting edge web design company.

So in order to feed myself, I rapidly learnt how to sell. In our first year I secured government contracts and FORTUNE 500 clients, all with no money and an office the size of a refrigerator. Let me tell you how.

Credibility comes ahead of time

 

A new business has no reputation. So at the start, all credibility is on you, the founder.

For my part, I built websites as a student. One in particular – a social network for my university – had grown to thousands of active users, and was raising a lot of controversy on campus.

I made stuff like this simply because I wanted to, and the passion showed. When you can’t find paid work, create stuff for free. Free work is your way of bootstrapping credibility, and you don’t need anyone’s permission to earn it.

 

Enthusiasm + knowledge

 

I was not a conventional salesman, with slicked back hair and fancy suits. I was however, fiercely enthusiastic and highly knowledgeable. And it turns out that matters more.

People buy from people. You may resent this, but they’re far less moved by your brochure or your features. They evaluate you as a person, and that person had better be convincing. If you are sincerely bubbling over with excitement at all the wonderful things you could do for them, your enthusiasm will win many people over. Your credibility (above) should do the rest.

Confidence will come with time. But the best way to build confidence is to become good at something and get yourself in front of people who will appreciate it.

Get in front of everyone you know

 

My first sale – a £3,000 ($5,000) website – was to the residence where I had lived as a student.

These were people I knew. I blagged myself a meeting and sold them on what I could do. I already knew them and what they wanted; they were sold on the basis of my free social network and the fact that they knew me.

This is the key. People buy from who they know. You probably don’t want to hear that, but that doesn’t mean it’s not true. Just being vaguely known by that guy who knows that guy is enough to get you in the door of most places.

I sold to the school where I’d studied at university. I pitched to the companies where my friends were working. Every single person I knew, however low-level they might seem, was a potential inroad to another opportunity. This alone got me a sale to a FORTUNE 500 company (3M) in our first year.

Later I would learn about ‘networking events’, but I didn’t use any for the first 6 years of my business. The best lead is always from someone you already know, and the biggest mistake people make is assuming that they don’t know anyone.

Get in at the ground floor on big names

 

My first tiny sale to a department of a university suddenly gave me the ability to say “I did a website for this university”. Nevermind that it was a small project; it could have been free. The most powerful indicator of credibility is not your work, it’s the names you can associate with.

One great side effect of big names is they tend to have lots of staff, who move on to other organisations and recommend you. Someone from that university started working for a local council, and soon I had my first government client. Someone there moved on and I had another. Big names attract big names.

Another great thing about big names – you can grow within them. Over the next 5 years that small school website let us pitch for their parent department, and ultimately the whole university – over 20,000 webpages and a lot more money. We never lost that contract in 10 years.

Crucially: deliver on service. If you don’t make your clients happy, none of this will happen.

Write and sound the part

 

You want to look presentable, of course, but don’t invest your hopes into this. Your appearance won’t win many sales, but a bad appearance will certainly cost you some. Don’t be the smartarse kid who doesn’t realise he needs a haircut, shower or deodorant.

Master speaking and writing clearly. The quality of your communication is one of the strongest indicators people will use when judging you; it can make a smart kid sound stupid, or an idiot sound vaguely intelligent. If you don’t know how to use apostrophes or capital letters, you’d best believe people who do will not judge you kindly. And they will never tell you.

Don’t mistake professional communication for fancy words and long sentences. If you can say a lot with a little, you’ve a much better chance of being heard and respected.

Things that work (but not for you)

 

If your sales strategy involves SEO or ‘Social marketing’, get a new strategy. Ask people who use those things – they work in the long term, and mostly as embellishment for established businesses. You are not Coca-Cola. Plan accordingly.

Advertising is almost always a fiery pit where your money goes to die. Look for what other companies like yourself (early stage, same industry) are doing with their advertising, and whether they appear to be successful. If you do advertise, spend lightly.

Don’t waste money on premature status symbols. Dropping cash on a fancy watch / car / office has terrible ROI – it might make you feel good, but it barely touches your odds of selling.  I didn’t even have a car for my first 5 years of business and I was able to win contracts worth £100k ($160k) / year .

Summary

 

 

• If you have no reputation, work for free.
• People buy from people, so be enthusiastic and knowledgable.
• Reach out to everyone you know.
• One tiny sale to a big name is a tentpole you can build your reputation on.
• Big organisations spread word of mouth far faster.
• Look the part, but more importantly: write and sound the part.
• Don’t expect results from SEO, advertising or status symbols.

By the way, I bought my face-punching Sales Director out after a year. Lovely fellow – but let’s just say he sold his 49% share of the company for less than it’s worth 12 years later. Ho hum.

Link on Quora

What are the most important things 14 year old can learn if they want to become an entrepreneur?

Here’s what I wish someone had told me when I was 14.

1 – Start now. Right now. Just about every self-made billionaire actually started selling something while they were still in high school. I’m no billionaire yet, but I had 2 business when I was 17. Learning how to sell, how to communicate value, how to handle disgruntled customers is a skill that remains useful throughout life.

2 – Learn to code. Just about everything these days involves technology and computers to a certain extent. Now, at the age of 25, I’m having to go back and learn, and it’s painful. I really wish it done it at an earlier age.

3 – Don’t buy into the whole “entrepreneurs never give up” thing. Smart entrepreneurs test before they commit. My first business I spent $6K on stock before I’d even proven that people wanted my product – turned out to be a complete waste of money. Now my rule is to spend $1000 and 3 months MAX testing an idea – if no one wants to buy it, it’s time to move on.

4 – You don’t need to be good at maths to succeed. However, there is one equation you need to understand. Lifetime Customer Value (LCV) MUST BE GREATER THAN the Cost of Acquiring that customer (CAC). For example, say you sell a subscription service for $10 per month and the average user stays active for 6 months. If it costs you more than $60 to acquire a customer, there is no way your business will be viable.

5 – Get yourself a mentor. This is surprisingly easy. There are lots of smart, experienced people out there and if you send them a polite email telling them you’re a young entrepreneur, you admire what they’ve achieved, and you’d like to buy them a coffee and ask them some questions you’ll be surprised just how receptive people are. I’ve approached more than 100 people this way, although I really clicked with only 3 or 4 of them who I would consider close mentors. I’ve never had anyone say no. I’ve had a few “I’m busy – email me again in a few weeks” but never a flat out no.

6 – Understand strategic partnerships. Find another more established business that already has a list of customers/users that might also be interested in your product or service. Do a deal with that company – get them to send an email out to their customers or put your business card in with their products. That way their customers also become your customers. The key is to add value to what they are currently offering. This is the single fastest and cheapest way to acquire customers.

Link on Quora

What does Goldman Sachs do?

Goldman Sachs (and most Wall Street Investment Banks) does the following:

1. Mergers & Acquisitions Advice: When a big company buys another, they take the advice of an investment bank. For instance, when Skype received an offer from Microsoft for a buyout in 2011, they sought the help of Goldman Sachs andJP Morgan to help them get the right deal (paying $30 million fees for this). The investment bank helps value the companies and identifies the strength of each division/product. This data will help you negotiate the right price as the deals can be huge (even going over $100 billion). In return for the advice, the bank gets 0.5%-1% of the deal as a fee. Last year, Goldman made $1.7 billion in such fees. Goldman Tops M&A List as Berkshire-Heinz Signals Rebound 
   
2. IPO deals and bond offerings: When companies go into the Stock Market for the first time (called an “Initial Public Offering“), investment banks such as Goldman help put together the offering. They help set the price and market it actively to their wealthy clients. This nets them a commission on the money the company raises from sales of shares of company stock to buyers in the stock markets. The commission can be as high as 7% of the total money raised.Where banks really make money on IPOs
3. Proprietary Trading. In the heydays of pre-2008 crash, investment banks did a lot of trading on their own. This has come down a lot after the crash, but still continues to happen. They might trade oil, bonds, stocks, buildings or gold. They could buy $100 million worth of Facebook stock, taking confidence in its research that reaches very deep. Given that they almost exclusively hire from the ivy leagues – the connections of their employees go very wide. At its peak, Goldman got two-thirds of its profits from such kind of trading. Goldman Had More Trading-Loss Days Than Morgan Stanley, Lehman
4. Prime Brokerage. When big institutions and Hedge Funds trade in the market, they go through a prime brokerage. The regular online broker you use to trade $10,000 in Apple (AAPL) stocks would not be able to support a $100 million hedge fund trading in oil. This is where prime brokers such as Goldman come in.Goldman Tops Global Prime Broker Rankings
5. Private Wealth Management. If you are a billionaire, you might not manage your own money. You call up Goldman’s private wealth management division who might help you to buy a mine in Santiago or a skyscraper in Dubai. In return they take 1-1.5% of your wealth as their annual fees. Private pursuits
6. Distressed debt a.k.a. Vulture investing and Private Equity. If you have made a lot of loans that you cannot get repaid (i.e. your debtors are in default), you might be able to use Goldman’s help. Last year, they bought a $800 million loan portfolio from a Brisbane bank who couldn’t get back the loans. The bank might have sold the portfolio for less than half of its “book value” (what it’s worth if every debtor was paying on time). Goldman would then use its connections – political and commercial – to collect on the loans. They might also lump up whole businesses that are on the verge of bankruptcy and then turn it around.Distressed-Debt Investors Eye Asia
7. Market Making: The markets are often very choppy and volatile. A few extra sales or a few extra share share purchases can change the stock price a lot. In those instances, a market makes uses their inventory of stocks in that company to provide a smoother movement. Each major stock would have its designated market maker. Goldman is a designated market maker for many stocks and makes money in the trades.
8. Investment Research: Goldman would analyze companies, bonds, currencies, commodities and even real estate, to help its clients identify the best investment opportunities.
   

Although the media makes it all sound like voodoo, most of the daily tasks they do are mundane: playing around with financial models in Excel and connecting the dots. Essentially, they try to master the information flow and use the asymmetric information & connections to help businesses be more efficient with Capital ($$).

 

Link on Quora