Nathan Lustig

Are Big Ideas Really Rare?

Category : Entrepreneurship
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I just finished reading a May 12th article from the New Yorker by Malcolm Gladwell called In the Air: Who Says Big Ideas are Rare?

Gladwell profiled a couple of guys who started a company called Intellectual Ventures, a company devoted to the “belief that combining capitalism and invention will benefit the world with more and better innovations as well as create financial rewards for investors.”
They basically get the smartest people they know, send them reading materials a few weeks prior and just get them all in a room to talk about a topic.  When they first started these brainstorm sessions, they thought that they might get 6-8 good ideas per event.  They found that they were getting hundreds.
Since 2000, IV has developed 3,000+ ideas that they feel have the ability to change the world.  They found that they could create “geniuses” by bring all of the parts of a genius together in a room and that big ideas were really a dime a dozen.
Gladwell argues that their works also helps prove multiples:
“This phenomenon of simultaneous discovery—what science historians call “multiples”—turns out to be extremely common. One of the first comprehensive lists of multiples was put together by William Ogburn and Dorothy Thomas, in 1922, and they found a hundred and forty-eight major scientific discoveries that fit the multiple pattern. Newton and Leibniz both discovered calculus. Charles Darwin and Alfred Russel Wallace both discovered evolution. Three mathematicians “invented” decimal fractions. 
Oxygen was discovered by Joseph Priestley, in Wiltshire, in 1774, and by Carl Wilhelm Scheele, in Uppsala, a year earlier. Color photography was invented at the same time by Charles Cros and by Louis Ducos du Hauron, in France. Logarithms were invented by John Napier and Henry Briggs in Britain, and by Joost Bürgi in Switzerland.

“There were four independent discoveries of sunspots, all in 1611; namely, by Galileo in Italy, Scheiner in Germany, Fabricius in Holland and Harriott in England.”

If Gladwell is correct, and I think he is, it has big implications on how startups and even large companies should do business.  The previous method of bring ideas to market was someone thinking of an idea, pursuing it, then possibly getting it funded by a VC.
Should VCs or others simply fund smart people to come up with ideas instead of waiting to see if they pan out at all?  This would give VCs better valuations as they are able to get in on the ground floor, before more value is created.
What also interested me is that a fellow UW entrepreneur has used this approach to help large companies solve problems.  Anand Chhatpar, a UW alum, founded a company called Brainreactions.  Its purpose was to bring smart college students together to create “fresh, actionable, innovative ideas” for companies who needed solutions to problems.
I was one of the initial brainstormers at Wisconsin back in 2006 and had a great time at the two sessions I attended.  They would get 4-6 smart college kids together in a room and present them with a problem.  The brainstormers would then try to come up with any solution to the problem that they could think of.  Much like IV in Gladwell’s article, these sessions were wide ranging, as we touched on just about any subject we could think of.  The amount of ideas we generated in a two hour period was astounding.
Brainreactions has been pretty successful so far at generating some great ideas for companies.  It will be interesting to see if this method of idea generation catches on beyond IV and Brainreactions.
I, for one, am hoping it does.

Entrepreneur Deli

Category : Entrepreneurship
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A few weeks ago, Corey, one of my two partners from ExchangeHut, and I were asked to talk about our experiences with ExchangeHut for the Entrepreneurship Deli, an event put on by Wiscontrepreneur and the Office of Corporate Relations at UW. It was a “speed dating” format where young entrepreneurs from companies like Flying Cart, Powered Green, Sconnie and Brazen Careerist talked to people from the community about our experiences starting and running companies.

We were tasked with talking about boostrapping and the lessons we learned as college entrepreneurs. I created this list from our list of hundreds of lessons we learned during our three years of running ExchangeHut.

Here’s my list:

1. Don’t be afraid of the competition

2. Research, research, research

3. Don’t overestimate sales, market penetration or adoption rates: take your projections and cut them in half. Then cut them in half again.

4. Stay Focused: do one thing extremely well, rather than many things poorly

5. Legal work is essential: an hour of advice now will be worth weeks of hassles later

6. Know who you are dealing with: do your due diligence on all aspects of your business

7. Don’t do business with unethical companies or people: a quick buck now will bite you much harder later

8. Make a plan, then execute it

9. Mixing business with friendship seems great, but doesn’t always work

10. Give credit to employees when the going is good, take the blame when its not

Interesting Talk by Mark McGuire

Category : Entrepreneurship
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A few weeks ago, I attended a talk at the UW Business School by Mark McGuire of Jellyfish.com and Alice.com fame.  He talked about his experiences starting, running and selling Name Protect and Jellyfish during an hour talk and a generous question and answer period.  As a fellow UW Poli Sci major and entrepreneur, I really enjoyed the entire talk.  It was great to see another non-business major succeed as an entrepreneur.  For me, the most interesting parts of the talk were his “Big Three Advantages” to being a startup, taken from his blog.

Mark’s three advantages are:
Speed and Agility – Big companies can’t move as fast as you
No History – Statups have no baggage and nothing to protect
A Different Kind of Employee – Start up teams can accomplish amazing things
I think he really hit the nail on the nail on the head with all three of these points.  It led me to reflect on my experience with ExchangeHut to see if we had used all of these advantages to their fullest potential.
Speed and Agility

When we first started, we were able to move more quickly than any other site.  Even when other startups entered the ticket market, we were able to move more quickly to meet our customers’ needs.  When the UW athletic department introduced the Ticket Marketplace or Facebook created a classified system, we were able to keep pushing our streamlined, agile vision for ticket sales.  Speed and agility were definitely our most important advantages.
No History

When one piece of our website did not work as well as we had planned, we quickly moved onto a new plan.  We did not have to worry about upsetting revenue or a previous customer base, precisely because we did not have any history.  This advantage over Facebook allowed us to gain market share and become the dominant player in the student ticket market, while they slowly developed classifieds.
A Different Kind of Employee
We were lucky enough to find a programming team that bought into the start up ideology.  We were able to convince our team that we had “the power to change the market” and make a big difference in how students bought and sold tickets.
After looking back at our experiences, I’m confident that Mark is right about these advantages.  I’d also like to thank him for taking the time to come talk to a bunch of college students who are interested in entrepreneurship.  It’s always fun to hear big success stories about startups, especially Madison based ones!

What do you DO all day?

Category : Personal Thoughts
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What do you DO all day?
I’ve been asked this question by so many people in the last few weeks since ExchangeHut was acquired.   Its been asked with varying degrees of disdain what seems like hundreds of times in the last few months.  From professors to friends, to other entrepreneurs to people at the bars, not to mention my parents, I try to come up with something interesting and meaningful for each audience.
So, what does a college student who just sold his first business do all day?
Class
At the start of the fall semester, I was 11 credits from graduating with a degree in Poli Sci from Wisconsin.  I decided it would be worthwhile to take these 11 credits in two semesters for many reasons, which I will go into later.  As a result, I’m currently taking two classes, both on Tuesdays and Thursdays.
Consulting
I try to work 1-2 hours per day consulting for other startups by doing research, coming up with marketing ideas and helping with business plans.   Its usually some of the most interesting parts of my week.
Reading
I love to read.  I always have, ever since I was in grade school.  I read the Economist cover to cover each week, along with lots of random blogs and books that I find.  I try to spend 2 hours a day reading various books, blogs and magazines.
Research
I’ve also been trying to spend at least 2 hours per day researching new business ideas.  Many days, I spend closer to 4 hours and as many as 8, but on average, its probably closer to 2.  I’ll usually try to read just about anything relating to new ideas that I get to try to get a better feel for new markets.
Working Out
I try to either ride my bike every day, whether its outside or on my trainer.  Other days, I’ll play racket ball with one of my roommates or just mess around at the SERF.  Depending on the day, I’ll try to spend at least an hour a day doing something active.
Sports and Entertainment
Since I’m still a college student and am only taking two classes, I try to make sure I enjoy the college lifestyle while I still can.  I also have student season tickets to football, basketball and hockey and go to all of the games with my friends.