10/06/2012 05:03 pm ET Updated Dec 06, 2012

Million Dollar Ideas Make Money and Create Jobs Too

My wife recently started an MBA program and at least half of her classmates are considering the entrepreneurship track over the mainstays of finance, accounting, and marketing. Excited by the Facebooks of the world, they all want to break free, be creative, solve problems, and work for themselves. One problem: they have no concrete ideas for a business. Most will likely eventually choose the lower-risk platforms over entrepreneurship specifically because they don't have a big, game changing idea. Tech blogs and venture capitalists dominate the entrepreneurship conversation and espouse advice like "only focus on $1 billion+ markets" and "ideas aren't worth pursuing if they aren't highly unique and revolutionary." While that advice makes sense when you're a venture capitalist trying to increase the $500 million you were given by three to five fold over five years, I believe such advice discourages many would-be entrepreneurs from starting a business at all.

The mindset of only encouraging aspiring entrepreneurs to go after massive problems is harmful to our economy because so many them, who could address problems and create jobs, are sidelined out of concern that their idea won't be a big enough opportunity. The reality is, though, that incremental business model improvements in big markets can result in highly successful ventures, create many jobs, and solve problems that customers were previously experiencing. Should potential entrepreneurs be chagrined if their idea only grows to a few million dollars a year in revenue? No. Building a multi-million dollar company is a big deal and shouldn't be discounted.

Many venture investors and tech bloggers, however, would lead you to believe that ideas on this "small" scale aren't worth pursuing. For the vast majority of my wife's MBA colleagues, a company with more than $1 million in revenue would certainly be considered a success and -- this is what they don't realize -- you don't need an industry-flipping idea to build a multi-million dollar business. Simply look at what others are already doing, do it better, and obtain market share. It really is all about execution. If you make enough incremental improvements to an existing business model, clients will vastly prefer your company. In many industries, offering a better product or service at a lower price can result in a flourishing new business.

To the would-be entrepreneurs who are fearful of starting a business because they don't have a highly disruptive idea, I would like to offer a simple piece of advice: find a problem you can solve for which people would be willing to pay. It doesn't need to be a billion dollar idea but it should be an improvement upon what already exists. In fact, if it's not a billion dollar idea it's probably going to require less upfront capital. Think about daily problems you have and what you would do differently. I keep a list of 10-15 problems I would like to solve that I think could be businesses. None of them is earth shattering but all of them could be small, highly profitable companies that create jobs while solving consumer's problems or enhancing their experience. What are various services or products you use that make you feel less than satisfied? Next time you find yourself frustrated with a company and saying to yourself "they really should do x, y, and z" write it down on a list. Many businesses were born out of consumer frustration of perceived inadequacy in the marketplace. Take OrigAudio, the business born out of frustration with having to lug around big speakers when traveling. So they made foldable speakers and achieved revenue of $2.5MM in 2011.

A second concern that I'm hearing from my wife's classmates is about access to capital. The massive venture rounds that many high profile startups like Square are obtaining is significantly raising the expectations as to how much capital is required to create a valuable, successful company. When I worked in venture capital, I'd advise many small startups seeking venture funding to postpone that conversation as long as possible until (1) they had their business model figured out and were ready to scale it and (2) they absolutely needed the money and knew they could get a great return on capital. If you take institutional funding too soon, you end up wasting money, disappointing investors, and losing control of the business you started. Raising capital is the means to an end, not a goal in and of itself. I'm a big fan of the "lean startup" movement and hope that it's the path our country's universities recommend for most entrepreneurs. Many companies aren't venture capital material and that's okay; it should be realized that there is a substantial cost associated with venture funding. If you bootstrap your company and focus all your resources on solving a problem or creating an improved product or service, you'll get the best return possible, maintain control, and improve your probability of success. Isn't that why you wanted to start your own company in the first place?