Internet Economics: Making Stupid Ideas Cheaper To Bring To Market

from the make-it-up-in-volume dept

One of the great things about the web is the speed with which it allows new products and services to be brought to market. Another is that it can allow for them to be brought to market very cheaply -- and while that can reduce the risk involved in launching new ventures, it still helps to have a good idea if you want to be successful. In this vein, The Wall Street Journal's Lee Gomes takes a look at Guy Kawasaki's newly launched site, Truemors, which is supposed to be a repository for people to share "true rumors" they hear. It was quickly overrun with spam, but it looks like things are under control on that front now. The problem, as Gomes notes, is that the site seems rather pointless -- but he says that Kawasaki admits that. He adds that he's spent "only" $12,000 on the site (which some might say seems like an awful lot for a Wordpress install), a paltry sum to risk for a chance to earn millions should Truemors take off. Gomes sums things up by calling Truemors a $12K lottery ticket, and noting that even if it fails, it will give Kawasaki fodder for his career as a paid speaker. It's interesting to contrast that tale with that of Gabe Rivera, the creator of TechMeme and some other sites. Rivera has done all the work on TechMeme and his other sites himself, with no staff and no funding, and is seeing a lot of success. The key difference between his efforts and Truemors is that something like TechMeme actually serves a useful purpose, and could be referred to as "a good idea". Kawasaki may brag that the economics of the internet have reduced the cost of bringing a "stupid idea" (as he puts it) to life from $5 million to $12,000 -- but that's of little concern if it's still a stupid idea. It's the reduction in cost of bringing the good ideas to market that's important.

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  1. identicon
    Dosquatch, 18 May 2007 @ 1:51pm

    Cost of entry

    The world is full of ideas, good and bad. Techdirt knows this.

    Even at a high cost of entry, stupid ideas make it to market. Sometimes truly exceptionally brilliant ideas wither and die. The market is fickle. Techdirt knows this.

    The purpose of the market is to make a suitable return on one's investment. The better the idea, the more likely that return is by design rather than dumb luck. Techdirt, as I've said, knows this.

    Cost of entry to the market acts as a filter. A higher cost of entry makes ideas coming to market tend towards the better end of the scale, as one can afford to bring fewer out. Lowering the cost of entry makes it more attractive to bring lots of ideas to market, and not as likely to be good ideas, and just hope one of them catches. I would assume Techdirt knows this, too.

    So, yes, lower cost of entry means less cost to bring good ideas to market. Why are you surprised that the same thing would be true for bad ideas?


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