How to Have a BIG Idea
- Posted by James Altucher
A friend of mine needs $2 billion. He has a big idea. The idea came first. He wants to buy a well-known public company. He has an idea of how this public company can quickly become profitable, return money to the buyer, and then it’s a free ride with new management. He’s picked out the new management and already discussed the idea with them. They’re in.
He just needs two billion dollars to make his idea happen.
Another friend of mine has a smaller idea. She needs one million to make it happen. It’s an idea for a new business. She already has customers. She’s spoken to a few people who can put in $25-50k each. It’s very hard to raise one million. Sometimes it’s easier to raise two billion than one million.
With my friend’s two billion idea you have to ask the obvious: how come nobody else thought of it?
For one thing, people at public companies don’t really think very much. They have a lot of nobs and switches that they need to turn on and off every day. They don’t have time for many big new ideas. So they keep running things as “business as usual” even if it means running things into the ground. Often executive compensation is not aligned with owner-interests and that makes things even worse. Often the executives are not hungry enough. They are already rich and fine just turning the nobs and flipping the switches until all of the lights are out.
My friend’s idea would completely transform this company and it’s relatively easy to do. But it’s a risk for the people who are already there so it makes no sense for them to do it.
What impressed me is that he started off with the big idea. Now he needs the two billion. That’s how big ideas work. If you already had the two billion then there’s many dumb things you can do with it. But if you need two billion, it takes a very smart idea to get it.
So he told me the idea and I made some calls. Immediately I had people interested. The last time I tried to raise money for an idea I had trouble even raising a million and even then I returned all the money.
But with two billion, no problem. Everyone wants to listen.
That’s the nature of big ideas. They are like peacocks strutting down Park Avenue in Manhattan amidst the cabs, the people rushing to work, the skyscrapers containing all the little engineers that flip switches. Everyone gets up from their job and stares at the peacock. What’s it doing?
My friend’s idea had about four or five components. He didn’t know how to do any of the components by themselves. One component needs a banker, another component needs someone connected to big Internet companies, another component needs former managemnet of this public company, and another component needs two billion dollars . And finally another component needs knowledge of how to do tender offers, proxy fights, SEC rules, etc. My friend had none of these things. He just had the peacock. And yet everyone I call wants to listen.
So how did he come up with the idea. And, by the way, it’s almost certain there’s no way to pull this idea off. But he’s young and will come up with more ideas every week, or every day. So one of his ideas will work. Maybe even this one. Why not try?
He’s run companies (smaller).He’s been involved in various transactions. The company is an Internet company and he has experience being in the management or being an employee of several internet companies. He’s been through his share of failures and successes so he has a reasonable filter on what ideas might work.
His network includes the former management of the company involved so he was able to run the idea past them for some confirmation that it woudl work. His network incudes me. I was able to make some calls and now some people want to meet him who could potentially put some money to work. The idea might need up to $2 billion but realistically, $300 million might be enough to get the ball rolling with some creative financing after that. He didn’t know that at the beginning but now he knows it.
His network has also been working on their own ideas. These ideas can combine with his ideas to form the mega-idea. (See also, “The Nine Skills Needed to Become a Super Connector”). Ideas love to have mate with each other to generate new ideas. You can either have your own ideas mate with each other or your ideas can mate with the ideas in your network.
For instance, he might’ve had a smaller idea a few months ago. And then another smaller idea last month. And he probably wrote those ideas down and thought about them for some time but then they “mated” at some point in his head and came up with the bigger ideas. It’s important to always be thinking, always write down your ideas, review them, analyze them, and see what new ideas come from them.
- Learn from mistakes
My friend bought a subdivision of this company about a year ago. He did well with it but also made some mistakes with it. He also has been involved in fundraising for quite a few companies and realized an important fact: sometimes the bigger ideas are easier to execute than the smaller ideas. With the smaller ideas, there’s less “goodness” to hand around so you have to do everything yourself. With the big ideas, everyone can picture making money so right away you can get a lot of help. Small ideas are lucrative if you can pull it off – but it could be MORE hard work than the big ideas and probably less lucrative inthe long run.
Reading constantly keeps you abreast of other ideas in the industry. Sometimes these other ideas will be the ones to mate with your ideas to create the genius idea. Reading what’s going on in your industry (Note: this is not the same as generic readingof news) can catapult you to the forefront of the good ideas if you are constantly synthesizing what you are reading with not only your own ideas but others. Reading about what works in other industries help also. Too often people involved in the Internet industry (as an example) ONLY read about developments in the Internet industry. What if you also read about the latest developments in the medical industry? Who knows then how these ideas can mate with each other.
Knowing what’s possible, my friend could’ve just said, “ok, I will buy shares of XYZ.” but he didn’t do that. He thought about what’s REALLY POSSIBLE: “I can buy the entire XYZ” and make a lot more money. Again, take your idea and make it 100x bigger and picture the steps it would take to make that idea possible. If you just bought shares in XYZ you might make a littlebit of money – or you might not. Who’s to say the current management of XYZ will do the ideas to actually make XYZ work. Its highly unlikely (they are the switch flippers and nob turners). In order to make the idea really work you have to think as big as possible. And, most importantly, you have to have a next step. Else the idea goes from possible to impossible.
The trick is: how high can you take the idea before it goes from possible to impossible. Where’s the boundary.
This is really a drag. I put “Time” down in my notes just like I did in this Prior Post but I can’t, for the life of me, remember why.
When my friend bought the sub-division of this company he got a nice peek into the inner workings of XYZ. He saw what was missing. He saw where management was lacking. He saw the ways in which the pipes were clogged in their thinking so they would never be able to implement the bigger ideas he easily saw. In other words, he saw the beginnings of the opportunity.
- Have idea. Call ex-managemnet of company. Call James. Call ten other people who could help. Get feedback. Repeat. Clean idea. Call everyone again. Take the next step: meetings with management. Meetings with funds who have money, etc. Again, what’s the exact limit where the idea goes from possible to impossible. Chances are it’s a lot higher than you think. Push at that boundary as hard as you can.
- Many people have “the big idea” and then right away say, “I can’t do it. its too big.” How am I going to raise 2 billion, or 300mm, or even 1 million. I’m just an X, or Y, or a Z, and I don’thave an MBA or a law degree or a high school degree or whatever. And Zs get nowhere in life. Zs turn into Zzzzs. Asleep. Like all the other people in the pencil factory – asleep at the switch.
The people who I see succeed never think this way. It’s a daily challenge for me not to think this way. I’m used to being a big fat Z.
Will my friend’s idea work? I don’t know. I’ve already stolen it for myself when I’ve called around. Lot’s of people interested. But interest is one thing and action is another. Now my friend needs to inspire confidence in the people around him so that the team he puts together can each do their special mutant power and pull off the big idea. Like Professor X and the X-men. And he needs to follow-thru and keep pursuing the idea. This is hard. But it’s a good idea so he will get help. Small ideas don’t get help the way big ideas do.
And if this idea doesn’t work, his next one will. Or the one after that. If you come up with 10 ideas a day that’s 3650 a year. Many of those ideas will mate. Many generations of ideas will occur. And one day the Messiah of ideas will be born to save them all.blog comments powered by Disqus
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