Paul Graham opens Why Smart People Have Bad Ideas by describing his plan to provide seed money to young (undergrad) entrepreneurs:
We expected to divide them into two categories, promising and unpromising. But we quickly saw that we needed a third: promising people with unpromising ideas.
Why do good hackers have bad business ideas? The Still Life Effect:
If you’re going to spend years working on something, you’d think it might be wise to spend at least a couple days considering different ideas, instead of going with the first that comes into your head. You’d think. But people don’t. In fact, this is a constant problem when you’re painting still lifes. You plonk down a bunch of stuff on a table, and maybe spend five or ten minutes rearranging it to look interesting. But you’re so impatient to get started painting that ten minutes of rearranging feels very long. So you start painting. Three days later, having spent twenty hours staring at it, you’re kicking yourself for having set up such an awkward and boring composition, but by then it’s too late.
How do we fix that? I don’t think we should discard plunging. Plunging into an idea is a good thing. The solution is at the other end: to realize that having invested time in something doesn’t make it good.
Another great point:
Why did so few applicants really think about what customers want? I think the problem with many, as with people in their early twenties generally, is that they’ve been trained their whole lives to jump through predefined hoops. They’ve spent 15-20 years solving problems other people have set for them. And how much time deciding what problems would be good to solve? Two or three course projects? They’re good at solving problems, but bad choosing them.
Anyone who can write an optimizing compiler can design a UI that doesn’t confuse users, once they choose to focus on that problem. And once you apply that kind of brain power to petty but profitable questions, you can create wealth very rapidly.
That’s the essence of a startup: having brilliant people do work that’s beneath them. Big companies try to hire the right person for the job. Startups win because they don’t — because they take people so smart that they would in a big company be doing “research,” and set them to work instead on problems of the most immediate and mundane sort. Think Einstein designing refrigerators.
A cute anecdote on how they came up with their company name:
I wrote a program to generate all the combinations of “Web” plus a three letter word. I learned from this that most three letter words are bad: Webpig, Webdog, Webfat, Webzit, Webfug. But one of them was Webvia; I swapped them to make Viaweb.