As I prepare to pick up Steven Johnson’s Where Good Ideas Come From for a piece of holiday reading, I got a couple of emails talking about where some good ideas came from. The first was YouTube, which most of you have probably encountered at some point, which was originally conceived as a video version of Hot or Not?
YouTube’s original goal, its founders have said, was to build a video version of HOTorNOT.com — you know, the site where you look at a bunch of uggos and rate just how repulsive they actually are.
According to the Wikipedia page, the early incarnation of Facebook had similarly lofty ambitions.
It’s not clear what type of sharp conclusions to draw from those episodes, so moving on to our second example, today we have a 64% discount on a platinum detail package at Tender Car, courtesy of your friendly neighborhood Milwaukee GroupOn. For those of you not familiar with the GroupOn concept, here’s the gist:
Groupon negotiates huge discounts—usually 50-90% off—with popular businesses. We send the deals to thousands of subscribers in our free daily email, and we send the businesses a ton of new customers. That’s the Groupon magic.
So where did this idea come from? Well, according to this bit by David Lowery (of Camper Van Beethoven fame) the basic idea germinated with a couple of indie rock bands looking to limit their financial risks.
Cracker and Camper Van Beethoven have a festival, The Campout. It’s rather remote and since we produce the small festival ourselves we take considerable financial risk. While the previous years had been marginally successful we were worried about the rapidly deteriorating economy (I believe Bear Stearns had just gone bankrupt). So I started a campaign to get a “break even” amount of CVB and Cracker fans to commit to attend the festival. In this way our fan’s promises to attend would become a sort of promissory note. no pun intended. While you couldn’t exactly peg it’s value, these collective promises to attend at some point seemed to be worth enough to go ahead and book the flights, PA, lights, and port-o-potties.
Other successful “campaigns” on The Point also involved similar commitments for group purchasing. It wasn’t long before The Point became Groupon.
That’s right, the brainchild behind my bargain-basement car detailing deal germinated long ago with the same geniuses that brought us “Pictures of Matchstick Men” and “Take the Skinheads Bowling.” And the idea is simple enough, over some range, marginal costs are pretty low, but you still have to cover your average costs:
[I]it had not gone unnoticed that most concerts have a lot of empty seats. And Groupon works best when the “incremental” cost of adding clients/patrons is very low. Adding concertgoers to a half full arena is a perfect example of low incremental costs. So concerts were seen as a natural fit for Groupon.
My editing of that clip does a bit of violence to the spirit of the post, so I suggest you go check it out for yourself. The lesson here might be that those punk rockers might be a bit sharper than they look. Or, perhaps this fits into Johnson’s hypothesis about innovation environments.
More on this one later.