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8 stupid frat-boy business ideas

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First of all, let me say that I loved writing this.

See, when I was in college, I would walk by the Quad and see a poster for some new book-exchange service literally every week. “SCREW THE BOOKSTORE!!!” it would say. “TRADE YOUR USED BOOKS WITH THIS NEW SERVICE!” The idea is that bookstores charge too much, so why not give the power back to the students and let them trade books at the end of the quarter?

Perhaps one reason could be that this is one of the worst business ideas on Earth–yet it persists in thousands of colleges with many students pursuing the same dismal goal. Why?

Because it’s a stupid frat-boy business idea.

A stupid frat-boy business idea is an idea that sounds attractive on the surface, but ignores the graveyard of failures before it. It’s usually hatched when a few guys get together, drink a lot, and end up talking about stuff that “should” exist. Sometimes the discussion gets entrepreneurial and they talk about a few ideas, which one of the guys will pursue the next day (when everyone else forgets about it).

“No! Don’t do it!” I want to say. Do something else, but not that. It was a stupid frat-boy business idea. But I can’t, because this frat boy probably isn’t reading my blog (also, he is imaginary).

Now, a quick caveat: I totally admire people who take ideas and do something with them. It doesn’t matter if you make money or not for your first project; the biggest problem with doing anything entrepreneurial is getting started. I’ve written about this before (Chompz, On Greed and Speed). But frat-boy business ideas are expressly started to make money–they’re portrayed as “companies”–and they ignore the fact that these ideas hardly ever succeed. If you’re going to do something cool, why pick something that dooms yourself to failure?

Here are the worst stupid frat-boy business ideas:

  • Book exchanges. Without fail, college students love to complain about textbook prices. Also without fail, some joker on every campus in America will start a book-exchange service this week. Saving money and screwing the bookstore sounds nice, except for a few problems: Book exchanges are worthless unless there are a lot of people on it; this chicken-and-egg problem is really hard. Developing a website for this isn’t trivial. And although the creators love to proclaim this a “company” instead of just a project, they usually forget to create a way to make money. Finally, one minor point: NO BOOK EXCHANGE HAS EVER REALLY SUCCEEDED. I HATE TO CRUSH DREAMS BUT PLEASE FORGET ABOUT THIS.

  • T-shirt companies. We all love to think that our clever ideas will be so loved that thousands of people will buy t-shirts with them, but there are already millions of clever shirts out there. Seriously, search for funny t-shirts.

    Having started a t-shirt company myself (Bittershirts.com), I feel entitled to spend a little time on this. When I started mine, it was for one reason: To put some funny shirts out there and build my personal brand. 2 out of my 3 shirts were failures, but the 3rd one took off almost exclusively due to luck. THERE IS NO MONEY IN T-SHIRTS. It’s a hopeless business with no margins and horrible inventory problems. “But BustedTees does it!” you might say. Yeah, and I beat my friend Doug in H-O-R-S-E five years ago. That doesn’t mean I can be Michael Jordan.

    With all of that said, check out my famous dysentery shirt (I have girls’ designs/sizes too):

  • Coffee shops / restaurants. Although few college students actually open coffee shops, many of the people who do are suffering from the same stupid frat-boy business syndrome. It goes something like this: “Oh, a coffee shop! How cute! We can make a cute little place where people come and drink espresso every day!” I would be more than a little hesitant to invest in a business based on cutey feelings–especially one with high fixed costs, labor costs, and customers who (1) won’t switch from their regular place and (2) if they do, they’ll sit at a table the entire day. Also, see one man’s story of how opening a coffee shop ruined his life. Basically, this coffee example consists of any business idea that centers around a romantic idea (independent bookstore, bed and breakfast, etc).
  • Anything that is “the Netflix of ___,” “Flickr + ___,” or “MySpace + ___.” These companies had wild success, and now there are 50 million copycat companies. You are one of them. Also, maybe we’re just not ready for ideas like “the Netflix of furniture!” and “Flickr + Tic-tac-toe.” See this article for more: Startup Reality Distortion #4: Flickr, MySpace and Others Did It, So You Can Too.
  • Ideas that compete on price. I was worried about putting this one down until I heard a friend of a friend say he was going to start a service to compete with Wal-mart on price. WAL-MART, THE WORLD’S MOST TECHNICALLY ADVANCED COMPANY IN LOGISTICS AND PRICING. Anyway, listen up: It seems like competing on price would be a good thing, until you realize that when you lower the price, you usually make less money. People are completely willing to spend more for other things like design (Target), service (Ritz-Carlton), hot people (Hooters), etc. Don’t compete on price. Once you factor in things like time and gas costs, it’s very hard to compete against the scale of bigger stores. Also, you’ll get the worst clients–the ones you’ll have to pry money from–frustrating you with your low cash flow.
  • Discount cards. College students love to try connecting local merchants to their campus, negotiating deals, figuring out how to print a real laminated card, setting up a website, and more. They just forget one thing: customers. Hardly anybody buys these things, whether they save money or not. “But mine is the best because…” frat-boy creators say. Well, do they own a discount card?
  • Yet another social network. After Facebook took off, you could stand in line at any Silicon Valley McDonald’s and hear 15 people talking about starting their own social networks. “It’s different because…_____” they would say. AND YET, THEY’RE NO DIFFERENT! The chicken-and-egg problem is pronounced here, with fickle users who go from one site to another like roving vikings. (Remember, just a few years ago we all thought that everyone would be on Friendster forever.) Also, it’s not popular until it’s popular. In other words, early growth doesn’t mean much for later growth, and there’s a lot of luck involved. Will there ever be another social network? Of course. But the chances any individual one will take off are infinitesimally small. Just ask yourself: Would you use another social network?
  • Anything where you plan to make your money exclusively from ads. If your business consists of doing something and making money off ads, do some research and you’ll discover that for most situations, ads don’t pay very much. Really.

The point isn’t to mock these ideas. Well, yeah it is. If you’re going to do something entrepreneurial, DO IT!! Don’t let some guy’s blog post stop you. But don’t waste your own time. Learn from ideas that have failed and will continue to fail. Of course there will be exceptions, but you should try to get every edge to succeed you can. And if that means taking a few minutes to research your idea before you start, good. And don’t ever, ever start a book-exchange company.

Thanks to Chris Yeh and Noah Kagan for their thoughts on this article. Check out their blogs.

What now?
Read my section on personal entrepreneurship to learn about starting something cool.

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126 Comments

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  1. we were taught a similar thing in a software engineering class. “Don’t reinvent the wheel.”

    student project team: “We’re going to develop (website).”

    Prof: “Okay. How is that different from My Yahoo!”

    student project team: “blah blah blah.”

    prof:”How is that different from My Yahoo!”

    etc etc.

    The website, if it would be a success, would look at what people don’t like about My Yahoo! and provide what the users want instead. These people were really just trying to get out of doing something hard, but doing something they could still put on their resume.

  2. Just another _blank Link to this comment

    One more for the record of dumb ideas: online classifieds.

    Do you know how many of these exist? Well, 3 years ago we had the brilliant idea of competing against eBay and Craigslist – a free classified site (with photos!) that would draw people with its ease of use and good looks.

    Long story short, after a LONG development process and a lot of money out the window, we finally launched. Got some press, started strong and even raked in a few dollars. Then the novalty wore off and we realized that we had a money draining albatross on our hands.

    No one thinks of the costs to make that super-successful website with all the cool features users want. Or the costs to maintain it and add new features. Or how fickle and cheap people really are online.

    And of course you don’t think of how easy it is for the big boys to duplicate you – after all, they have money and you don’t.

  3. YES! I can’t believe I forgot that one!

  4. This post and these ideas are relevant now and absolutely true…but it wasn’t…and they weren’t until a decent number of talented individuals (or frat boys) got a lot of VC’s to dump $xxx million into them over the last X years, to prove the point. Some of those fratboys are at home today, blogging and watching Entourage after their subsequent acquisition and exit strategies played out.

  5. You made that famous dysentery shirt? I’ve seen one with a blue background and white text, my friend Jason linked to it on his t-shirt blog Preshrunk.

    If you came up with that first, kudos. Your blog is one of my favorites out of the 67 feeds I read.

  6. While I agree with most of your points

    • Anything that is “the Netflix of ___,” “Flickr + ___,” or “MySpace + ___.”
    • Yet another social network.

    These two do ot seem right.
    Infact even before Facebook there were a gazillion me too social networkng websites.
    Similarly there will be room for the next Netflixs and Flickrs of whatever.
    As you had written in an earlier post the execution is more important than the idea

  7. Totally true. But a 100 such failures later, the “frat boys” will figure it out (the hard way – but probably the only real way). But at least they are doing something. Its the “all speak” guys who give me the creeps.

    After all, like Paul Graham says, isn’t failing faster the secret? More mistakes and bad ideas please…

  8. Astericks on the ads idea

    * Anything involving GoogleAds

  9. First and foremost, I agree that a lot of people have these “unrealistic” ideas that have “been there – done that”. Some times though, you can take a concept and apply it to other areas. Obviously, communities are huge. You could make another MYSPACE or FACEBOOK, but why? Now, saying that, I dont think you could also NOT have other community pages that have profiles, but serve other purposes.

    I have an idea for a site that would be much different than facebook – but has varied streams of revenue. It would be a community. My friend, who is also a partner in the idea just threw this site in my face saying it would never work. I disagree.

    The reason most “frat sites” fail in my mind is that the most important element is never considered — Marketing. The mentality is that if you build it, they will come. That’s not true. First, you have to create something useful. Second, you must find the people that would think the site is useful, and then you have to market to those that think it would be useful! Finally, keep the people who use the site happy!

    Most of the “frat boy” spin off sites never have any push behind them. You have to create a buzz… and you have to have some reoccuring value, or its, as you stated, a failure.

  10. But what happens when a frat boy doesn’t follow through with one of these ideas but someone with intelligence and a plan does?

    One of the smarter kids in my class created a book exchange that was so slick that the bookstore asked the school administration to force its closure. But it’s still going strong and thousands use it each semester. Check it out here: https://bookexchange.byu.edu/

*