“Penny for your thoughts” my dear ol’ mum used to say when she caught me staring into the middle distance. A penny ? Is that all my thoughts were worth. We live in a world where people are paid vast sums of money for their thoughts but what if all along they should just have been given pennies? I grabbed a piece of paper and have done a rough and ready calculation for you. Here it is:
First let’s assume that some bloke is trying to sell you his idea for a pound (we are talking pennies so let’s stick to British currency). He is in fact going to exchange some carefully formulated words and nothing else for hard-earned cash. Now, let’s try to put a value on these words.
If Alexander Graham Bell and Elisha Grey both independently came up with the idea for a device to transmit speech electronically, at a time when there was nobody at the other end of the line to call, it follows that our man’s idea is unlikely to be unique. He may be the smart kid in the dumb class but that doesn’t mean that there aren’t a lot of other smart kids around, some of whom may be way smarter than him. To me that fact alone loses the idea 80% of its value. That anyone could have had the same thought is not the great devaluer, it is that many other people have had exactly the same thought and our man is trying to sell something he doesn’t uniquely ‘own’. Ideas are as common as arse****s, everyone’s got one.
In today’s money the idea is now worth 20 pence, which is still twenty times more than my mother would pay for it. To understand the loss of the rest of its value we should go back to the preceding paragraph and the words “smarter than him”. Yes, while an idea remains unproven as fact, the possibility exists that it is not very good and that better ideas can be freely had. One can picture Mrs Bell looking at her husband’s device and thinking “all very well but who can I call?” It took a long while for the telephone to reach the level of utility that it has today and I’m not sure that many people would pay premium price for an acorn in the hope that one day it will become a mighty oak. Nope, for me the idea has now lost half its remaining value.
Ten pence for a thought missus? Mother shakes her head and holds out her shiny penny. It is all she will give because she knows there is more. In a world full of ideas, many of those ideas cannot be achieved. Let us be generous and assume that just over half of ideas have practical merit; and because my maths is very poor let’s round that up to 60%. This means that our man’s idea is now worth 6 pence.
If I were him I’d sell now if there were any buyers because the real kicker is beginning to occur to me. If we take some studies seriously, 80% of new businesses fail in the first 3 years. Now nobody starts a business thinking “that’s a really bad idea, I’ll do it anyway“. This means that 80% of ideas are positively bad for you. Our man’s idea is probably seriously detrimental to your wealth! So now we should only give him 20% of the 6 pence for it. That’s 1.2 pence or I’m a dunce. There’s no such thing in currency as 1.2 pence; we all like a bargain, and if we extrapolate out to 5 years the failure rate is 90%, so let’s call it a penny and be done with it.
It turns out Mother wasn’t being harsh, she was being ruthlessly accurate. Well that’s what I think anyway, but now of course you know what my thoughts are worth…