Innovation Hub: Forget Big Bets—Success Means Thinking Small
If you want to reap big rewards, you’ve got to take big risks.
Not according to Peter Sims, author of Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, who argues that companies from Google to Hewlett-Packard have cashed in by thinking small, floating trial balloons, and understanding that micro failures are inevitable.
I sat down to talk to Sims about his theory.
[This interview has been edited and condensed. For audio of the full conversation, visit innovationhub.org.]
Kara Miller: You say that some of the most successful people and businesses have started small.
Peter Sims: Yes. Whether it’s Google, which began with library search, or YouTube, which began as a dating site. Or PayPal, which began as a BlackBerry device transfer technology. They’re all different than what they started as. That is the reality if you study the history of these companies. Yet it’s very uncomfortable when you’re wanting to start something new to realize that you’re going to end up in a very different place than where you think you’re going.
KM: Wait, YouTube started as a dating site?
PS: Yeah, part of it was that the two founders had been working at PayPal, and they thought: let’s try videos in terms of dating. And they realized that they could solve a much larger problem by just providing a site that allowed for videos across a bunch of different types of content. So this is a little-known fact about YouTube.
KM: One of the little bets that you’ve looked at is the bet that Bill Hewlett and David Packard made. They basically said: we like each other, and we want to work together, but we don’t really have a business plan.
PS: The Hewlett and Packard story is amazing. And in the 1970s, they came up with the idea for the HP-35 calculator, the first scientific calculator. It was priced at a ridiculous price, something like $395, which would be several thousand dollars in today’s terms. Market research said nobody would buy it. But Bill Hewlett rode on a plane with some random person, and the guy said he’d buy one. So Hewlett said: let’s just try making 1,000 and see what happens. And that was what Hewlett called “small bets.”
KM: Do you find, given all the people you’ve talked to, that time and experience makes you smarter about making these bets? Or that time and experience works against you, because you get cautious as you get older?
PS: Great question, and I don’t think there’s one answer to that. But when you think about what makes a really good entrepreneur, like Howard Schultz of Starbucks, that person gets a gut feeling from all their expertise. On the other hand, people like the Wright brothers who don’t have that level of experience can be served by their ignorance. The Wright brothers worked in a bike shop before developing their airplane ideas, and they were extremely well served by navigating that whole process with small steps, operating under a veil of ignorance. It cuts both ways.