Bad idea: laughing at business models instead of investing


By Chris Dixon, contributor

Us old timers remember 2001-2004 when anything related to the internet was ridiculed as a Ponzi scheme. The conventional wisdom was no Internet company would ever make money and all the ideas of the dotcom boom were stupid. Turns out that 2001-2004 was one of the best times to invest in Internet companies.

An artifact of that era is a board game called Burn Rate:

Fittingly, this game came out at the trough of the web downturn, 2002:

Central to the game are “bad ideas” that players try to get rid of.

One bad idea is name your price auctions:

Today the leading name your price auction is Priceline, which has a $20 billion market cap and made $750 million in profit in 2009.

The next bad idea is an online computer store “eggbrain computers.”

The leading online computer store is NewEgg, which is profitable and had $2 billion in sales in 2009.

Internet money sounds a lot like Paypal, which was sold to eBay for $1.5 billion and has since been eBay’s fastest growing profit center.

The leading online ad server was DoubleClick, bought by Google in 2007 for $3.1 billion.

Finally, we have the perennial punching bag “group discount auctions,” – basically Groupon, which reportedly is getting offers now for more than $3 billion and is generating over $50 million a month in revenues.

Lesson: When the mocking gets the loudest, double down on your investments.

Chris Dixon is a serial entrepreneur and angel investor based in New York City. He currently serves as CEO of Hunch, and co-founder of Founder Collective. He regularly blogs at

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

CryptocurrencyInvestingBanksReal Estate