“Ideas are worthless”

In one of his many well written and thought provoking essays (Ideas for Startups), Paul Graham has this to say:

Actually, startup ideas are not million dollar ideas, and here’s an experiment you can try to prove it: just try to sell one. Nothing evolves faster than markets. The fact that there’s no market for startup ideas suggests there’s no demand. Which means, in the narrow sense of the word, that startup ideas are worthless.

While I agree with his main point that execution counts, his affermation bugs me a little bit because it clashes with my understanding of economics. To wit, that ideas are “Non-excludable goods“.

As the linked page says,

Non-excludable goods are defined in economics as goods or service whereby it is impossible to prevent an individual who does not pay for that thing from enjoying the benefits of it. Market allocation of such goods is not feasible.

How would a market for ideas work, in any case? How could you prevent someone from listening to a bunch of ideas and just walking away with the ones they like?

Perhaps with lots of lawyering and monitoring schemes, something could be kludged together, but at that point, since the ideas alone most likely aren’t worth that much compared to well executed ideas, putting together that market would probably be more trouble than it’s worth.

So Paul Graham is right, for practical purposes, but his economics don’t seem correct to me.

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