May 5 2011

Your idea is overrated

I’m not going to rehash the “why I don’t sign NDAs” stuff that I’ve written about in the past (here it is if you want to see it), but being asked a few times this week to sign NDAs has gotten me thinking about the value of ideas.

Actually, this is something I’ve recently been noodling on and my conclusion is that people 1) overvalue their idea on the front end of a project and 2) once something has become successful undervalue the day-to-day tactical execution that made the idea successful.

Ideas are great. But they’re not as valuable as most people make them out to be.

and by correlation,

Execution is almost universally underrated and in hindsight taken for granted as a given once a company has become successful (and rarely given the credit it deserves).

History shows that this is generally the case. The vast majority of companies that we consider to be the lions of the internet had plenty of competitors. In fact many weren’t the first or only ones to come up with the idea that made their company. What separated them from their competitors was their ability to out execute everyone else in a way that took a good idea and made it a great company. Often, in fact, another company was the early market leader only to have their leading position overtaken by an upstart who was hungrier, more nimble, and more focused on the basics of executing a great business.

The examples are legion. In our own portfolio everyone talks about how great Zynga is. And indeed it is. But so was Playdom. A few years ago it wasn’t at all clear who would end up emerging as the market leader. The idea of social gaming didn’t make Zynga. Outstanding execution around that idea did. In the online advertising “yield optimization” market Rubicon Project was the early leader. AdMeld – at least in my opinion – simply out executed them and moved past (as has PubMatic – that market continues to be very competitive). Famously, Overature’s performance based keyword buying market idea was perfected by Google. Back in the day, Microsoft wasn’t the first company to come up with an OS. Or business software. And, of course, Facebook moved past MySpace even after it seemed like MySpace had gained enough momentum to keep it’s market leading position (and before both was Friendster, Tribe, etc.).

My point isn’t that ideas aren’t important. It’s just that execution of those ideas is far more critical. And it’s worth thinking about that as you consider the operations of your own business.