How To Score Big Profits from "Bad Ideas"

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How To Score Big Profits from "Bad Ideas"


Last month, a widely ridiculed startup went public.

For years, people called it a “bad idea.” Initially, even the founder himself seemed skeptical: when he was looking for teammates to join him, he called his efforts a “hail mary.”

But despite all these red flags, its earliest private investors ended up making a killing. Some are sitting on gains of about 30,000x their money. That’s enough to turn $500 into $15 million.

I bet you wouldn’t mind finding a few “bad ideas” like that for yourself.

So today, I’ll show you how.

It’ll Never Work

The “bad idea” of a startup I’m referring to is called Coinbase.

Today, it’s one of the leading exchanges for digital currencies like bitcoin.

Its stock ticker is “COIN,” and it’s currently worth about $60 billion — far more than any traditional exchange like the Nasdaq or NYSE.

But when it was just getting started, its future looked grim. In fact, its founder Brian Armstrong faced scorn, skepticism, and mockery.

Let me show you what I mean…

“Bad Idea”

In March 2012, Armstrong posted about his startup on a tech forum called Hacker News:

“I’m throwing a hail mary here – because desperate times call for desperate measures,” Armstrong wrote. As he added, “This is going to be super [redacted] hard, but the payoff is that we have a non-zero chance of really changing the world…”

Armstrong came under attack immediately.

“I’m gonna call it right now,” one user wrote. “Bad idea.”

Another user offered this sarcastic nugget: “Because Bitcoin worked out so well. Have fun with that, dude.”

A different reader offered a more pragmatic perspective: “I don’t think you’ve properly thought this through.”

What did these readers get so wrong? And what did Armstrong — and his investors — get so right?

Let’s take a look.

“Laughable” Startup Ideas

When a startup is just getting off the ground, it doesn’t look like much.

It often has no revenues, no product, and only a vague outline for its future.

Furthermore, when it’s facing what seem like nearly unsurmountable challenges, it will almost certainly look like a “bad idea.”

For example:

  • Consider a hospitality startup that helps you rent rooms in your house to strangers. Can you imagine the ridicule it faced when it was getting started? “Are you kidding me? Roll out the red carpet for potential murderers? Not in my home!” (That startup was Airbnb. It’s now worth about $100 billion.)
  • Or how about a taxi startup where random people pick you up in their own cars? “I’d never invest in that! And not just because I’d be getting into a stranger’s car! I mean, just think about trying to get approval, city by city, state by state — it’ll be like pulling teeth!” (That startup was Uber. It’s now worth about $100 billion.)
  • Or how about a social media startup like Friendster or MySpace. “What a dumb idea! What are people going to post about? What they had for breakfast? And there’s no business model!” (That startup was Facebook. It’s now worth almost $1 trillion.)

And yet, the early investors in these startups became insanely rich.

How did they do it?

In other words, how did they look past what certainly seemed like strange ideas — maybe even bad ideas — and have the courage to invest?

Simple. They had a system…

Early Indicators

A system is a set of indicators that can quickly help you screen out all the opportunities that have the highest probability of failing…

So you can focus on the ones with the highest chances of succeeding.

Examples of indicators include the quality of the team, the size of the potential market, and who else has already invested.

And once you have a system, then you need to follow the odds — in other words, instead of “betting it all on black,” you need to build a portfolio of these startups over time.

That’s how you give yourself a chance to invest in a Coinbase, an Airbnb, an Uber, or a Facebook — and that’s how you become wealthier than you could ever imagine.

Wayne and I use a battle-tested system to make all of our startup investments. And this is the system we teach readers in our course, The Early-Stage Playbook. (If you’re interested in learning more or signing up, give our team a call at 844-311-3191.)

A Few Startups Raising Capital Today

And now, to wrap up this essay with a bang, I’d like to leave you with a few startups that are currently raising capital:

Innovega Inc: “Smart” contact lenses that deliver Augmented Reality (AR) and Virtual Reality (VR) experiences.

Phoenix PharmaLabs: Biotech company creating a potent, non-addictive painkiller.

SimpleShowing: A new type of real estate company where you can buy a house — and then put a piece of the sales commission into your own pocket.

Are here are a bunch more on our free Deals page »

Many of these startups will seem strange, controversial, too hard to pull off.

But as long as you have a system to help you invest in the ones with the highest potential, they could potentially make you very rich!

Happy Investing

Please note: Crowdability has no relationship with any of the startups we write about. We’re an independent provider of education and research on startups and alternative investments.



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