Over the blog Jumpstart, Becca Braun has a listing of the 10 worst business ideas:
So why is our national innovation strategy still fixated on "high-tech"?
# Coffee shops? The world hardly needs more coffee shops. Plus, coffee shops don't scale.Of course, these are all examples of highly successful companies:
# 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.
1. Starbucks, founded in 1971 and a market cap of $17.2 billion todayWhat strikes me, however, is how many of this successful "bad" ideas are business innovations -- not technological. Starbucks, FedEx, American Girl, Burts Bees are not what one would call "high-tech" companies. Even eBay and Amazon were built around a new business model using modifications of essentially existing technology. And while Dell makes a technology product, its innovation was the process -- not the product.
2. Burts Bees, acquired by Clorox for $913 million in 2007
3. American Girl, founded in 1986 and acquired by Mattel Inc. for $700 million 1998
4. Google, founded in 1998 and a market cap of $184 billion today
5. FedEx, founded in 1971 and a market cap of $27 billion today
6. Microsoft, founded in 1975 and worth $274 billion today
7. eBay, founded in 1995 and a market cap of $29 billion today
8. Novazyme, acquired by Genzyme for $225 million in 2001; see Extraordinary Measures, which came out last week
9. Amazon, founded in 1994 and a market cap of $55 billion today
10. Dell Computers, founded in 1984 and a market cap of $28 billion today
So why is our national innovation strategy still fixated on "high-tech"?
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.
I give my hats off to Google, amazing company, innovations which this comapny brings in market is indeed good... just take the example of gmail, in the competitive market of "emails" ... with new innovation like ajax etc, they have changed the world.. who uses yahoo n hotmail???
This is amazing, hats of G
RR
Couldn't be more true. We are in the new world
of information technology. We as business owners
especially online MUST provide value to our
current and future business partners.
We must find a unique niche for our businesses.
Bee's wax really is a completely saturated market just
as many of the business you mention above.
Very True and Very relevant.
~ Regina