The Next Big Thing… at Ryan Says…

I guess most of us living here in Silicon Valley are constantly on the lookout for the ‘next big thing’ (NBT). That killer idea that will revolutionise the way we do things, and make some people a lot of money in the process :) Google is an obvious example, and is the darling child in the valley right now.

I can’t help but wonder how much luck plays a part in determining which cool idea will takeoff and become the NBT. I mean if you look at the ‘dot coms’ like Google and Yahoo!, the idea in itself, while cool, is nothing to make your jaw drop. It’s all about execution, and the coming together of various externalities that make the idea the ‘right thing at the right time’. As Jeff Bezos (CEO of Amazon) pointed out in a talk here at Stanford a year or so ago, great innovation typically builds on a lot of other technologies or infrastructure that have matured sufficiently, such that the ‘innovation’ is merely the capstone on a pyramid of technologies. While I use the term ‘technologies’, I really mean a broader class of things which could include a particular technological invention, a widespread adoption or roll-out of some type of infrastructure, or even a change in people’s attitudes - enough to reach a critical mass or some kind of threshold that causes the ‘world’ to change for good. For an innovative idea to be the NBT, it has to ride the wave of these changes, and truly be the right thing at the right time.

I think most entrepreneurs and VCs in the valley realise this, and consequently everyone is on the lookout for such a ‘coming together’ of technologies, and the emergence of a technological niche to satisfy some existing unmet demand. This, unfortunately, leads to a herd mentality, where everyone eagerly jumps on a particular idea if enough people believe it is the NBT. Be it nanotechnology, or social networks, or ad-hoc wireless networks, or a better mousetrap. We typically see a bunch of similar ideas funded by VCs in rapid succession, before the industry gets tired of the idea (or more precisely fails to see the dreamed about 10x plus returns) and looks towards another NBT.

What sparks the herd to converge on a particular NBT? How does a particular NBT reach a critical mass? I dont know if this has been studied, or even can be easily studied, but my guess is there are so many influencing factors that it would fall into the realm of chaos theory. And what that means for us, is that it’s essentially a random process.

So if it’s all about execution, timing, and ‘luck’, how to we go about making a lot of money as entrepreneurs or VCs?

Can we reduce all this to a simple procedure?

Find an NBT with sufficient interest, such that the herd is beginning to rush towards it
Come up with some new angle or new way of doing it (perhaps by recruiting a PhD student from your local top-5 university)
Put together your A-team
Write a killer business plan
Take a stroll down Sand Hill Rd and secure your funding
Make $$$s or rinse and repeat until we hit the right NBT

Can it really be this simple? If it is really this simple, why aren’t there more people out there doing it? Is it a case of analysis paralysis? Maybe Guy Kawasaki is right - there aren’t enough entrepreneurs who go out there and just start it, just get it done.

Are you an entrepreneur who is ready to ‘Just Do It’ (thanks Nike :)? If so, let me make it easy for you. Here’s a list of 11 ideas and the VCs willing to fund them (thanks to an article by Michael Copeland in the September issue of Business 2.0):

Credit card authorization via cell phones and PDAs (to reduce fraud) - John Occhipinti (jco@woodsidefund.com)
An ASP model for proprietary back-office software used by large banks (think salesforce.com) - Philippe Cases (pcases@partechvc.com)
Software that makes better recommendations to online sellers (more effective than the likes of Amazon) - Greg Martin (gmartin@redpoint.com)
Customised PCs for senior citizens, sold on a subscription basis (target the fastest growing demographic in the US!) - John Zagula (info@ignitionpartners.com)
Pack more functionality into smart phones (POS payments, opening doors, by using IR or RFID technology) - Ryan Floyd (ryan@stormventures.com)
Open source applications for back-office IT (charge for service and maintenance) - Matt Miller (matt@waldenvc.com)
News and classifieds web site customised for each neighbourhood (think Craigslist), maintained by local community members - Jim Lussier (jlussier@nvp.com)
Customer service solution using VOIP - Shanda Bahles (shanda@eldorado.com)
A software platform for wireless carriers allowing new services to be easily added (isn’t Danger already doing this?) - Eric Buatois (eric@sofinnova.com)
A wireless home-monitoring network for recuperating hospital patients - David Aslin & Paul Badawi (david_aslin@3i.com)
A platform allowing convergence of all net-connected devices in your home (let them all communicate with each other, share state etc) - Randy Haykin (randy@outlookventures.com)

Go for it!