Worthless, Impossible and Stupid? Why Contrarian Business Ideas Make It Big

If everybody looks at you like you're crazy when you tell them your business idea, congratulations. You might be on your way to becoming a bona fide entrepreneur.

Just being young, innovative and your own boss does not make you an entrepreneur, says Daniel Isenberg, an adjunct professor at Columbia Business School. And if everyone thinks your startup idea is wise and logical, then you are almost certainly not one, he says.

"In order to create and capture extraordinary value, you almost always have to be contrarian," says Isenberg. "You enter the market when everyone else is leaving."

Ideas of truly successful entrepreneurs are often at first considered ridiculous by the majority of the public, Isenberg says in his new book Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value (Harvard Business Review Press, 2013).

Often, self-employed people call themselves entrepreneurs because they are not working for a boss, says Isenberg. But business ownership is not sufficient to define an entrepreneur. "They may just be sort of plodding along," he says about the interviews he conducted with entrepreneurs from Alabama to Islamabad.

And while Isenberg sees nothing wrong with being a small-business owner, he says only 1 to 5 percent of small-business owners are truly entrepreneurial. The word "entrepreneur" is often used to describe intentions, he says. For example, an "entrepreneurial thinker" is someone who identifies opportunities or approaches a task creatively.

But to be a true entrepreneur, you must not only think about ideas; you must act on them, according to Isenberg. "It is about actually generating results that are more than the market expects," he says.

Ironically, a contrarian entrepreneur can't be identified until after his or her idea has been absorbed or rejected by society, says Isenberg. "In a sense, it is the entrepreneur's job to surprise us, to surprise the market," he says. "There is a certain aspect of entrepreneurship that is unpredictable." That unpredictability makes it difficult to develop public policies to support entrepreneurship, adds Isenberg.

For entrepreneurs, Isenberg says the key takeaway of the book is to have confidence and get used to being an outlier. It's important to learn to cope with the adversity, resistance and derision of the market, says Isenberg. "This is a normal part of the entrepreneurship experience."

There are no resume requirements for who will make a successful entrepreneur, but there are a few similar traits of true entrepreneurs, says Isenberg. Namely, they tend to display a willingness to think independently, work hard and persevere, and seek excitement. Most of them held jobs when they were young, so learned the value of hard work early on.

While the common characteristics of entrepreneurs are noteworthy, they don't define every entrepreneur, says Isenberg. Entrepreneurs are born all over the world, come from different socio-economic backgrounds and start up in a variety of industries. "It's not about Steve Jobs and Silicon Valley. It's about the kind of entrepreneurship you can see anywhere, whether it is Slovenia or Brazil or China or Iceland," he says.

First Story 

An Online Platform That Simplifies Investor Relations

Last year, Jeff Brenner and Peter Kieltyka were looking for a better way to manage their communication with investors and increase their visibility while trying to raise seed capital for their mobile-media startup, Pressly. So they turned to Gust, an online platform that simplifies investor relations during the early-stage financing process. Startups can get access to potential accredited investors on the Gust network and create a secure company profile, complete with pitch video and slide decks, which they can easily share. Investors, meanwhile, have a secure platform for managing their deals. "The beauty of this is both sides are using the same platform," says Gust founder and CEO David S. Rose.

Gust (originally called Angelsoft) launched in 2004 and is now used by 170,000 companies, 40,000 investors, 800 angel groups and 250 venture funds. The service is free for startups; investment groups and venture capitalists pay a fee. Also using the platform are incubators, accelerators, conferences and business-plan competitions; many of them curate "collections" of startups to watch. "Companies are 37 times more likely to have investors look at them if they're in a collection," Rose says. Although Gust does not bill itself as a matchmaking site, Rose says more than 5,500 startups have received a total of $1.8 billion in funding via Gust.

"Gust does a nice job of breaking down the elements investors want to see," Brenner says. We talked with him about using the platform to raise Pressly's profile.

Why did you start using Gust? 
Doing a raise is not a quick thing. Initially I didn't realize how much the pitch would change--the actual pitch deck and the financial modeling and all those assets that support you going out and getting in contact with investors. I had to constantly go back and update my documents and then resend them to people I had already e-mailed them to. It was getting to be a pain to manage it. So we started using Gust a couple of months into the actual fundraising process.

How did it improve the process?
Gust is the central repository for all my pitch docs: deck, business plan, financial model, video and high-level financials. It always has the most up-to-date information--it's almost like Dropbox for your investment raise. I just gave the links for our Pressly account to all the investors we were talking to, and I didn't have to go back and remember, Who did I send that to?

How many investors did you talk to?
Between the angels and VCs, there were a dozen investors during a six-month time period, and our conversations were all at different stages. We've raised $1.5 million as a seed round from two angel investors and two venture capital companies. The people we ended up doing a raise from were not through Gust, but we did have probably a half dozen or a dozen angels reach out to us on the Gust platform.

Did using Gust yield any other benefits?
We were selected to attend two different events we heard about through Gust. It was like, "We're running this campaign, submit your Gust profile, and we'll see whether you qualify to attend for free." We qualified for free attendance at Demo, which normally costs thousands.

We were fortunate that we were featured in a collection of startups on Gust. Driving some of that awareness obviously benefited us.