Are Ideas Linear in Finance?

Listening to Ben Horowitz speak at the Chicago Venture Summit, he made a point which he’s made before.  Venture capitalists invest in really bad ideas.  But, if those ideas work it would be pretty cool.  He used AirBnb as an example.  You are going to rent out a room in your home to someone using a blowup mattress.

That is a bad idea.

In finance, we are a lot more pragmatic.  We are solving actual problems when we invest in a startup.  Usually a person has experience with it.  They have felt the pain.  They build software to solve it.

Are there bad ideas in finance?

There certainly are.  I suspect as we start to see a lot more innovation on the back office/process side of the business where 67% of the costs are we will see a lot of bad ideas.  There will be some gems that if they really worked would be kind of cool.

Clearly, creating your own cryptocurrency is a bad idea.  However, we know that it’s been short term successful.

I can foresee really bad ideas when it comes to managing risk, managing cash flows, wealth management, insurance, recording things.

I am sure we will see some stupid ideas that will grow into gigantic game changing companies.