Is the "wisdom of crowds" really wise?

No! Not for founders of breakthrough startups

If a group of people are asked to guess a person’s weight, they are likely to be more accurate than most individuals. If a group of managers are asked to estimate how much a market will grow next year, they are likely to be more accurate than most of the individuals. The approach for navigating these questions is called the “wisdom of crowds” – asking many people for their opinions and suggestions, and then combining them to form the best overall decision. Evidence suggests that the combination of multiple, independent judgments is often more accurate than even an expert’s individual judgment.

The “wisdom of crowds” refers to the result of a very specific process, where independent judgments are statistically combined (i.e., using the mean or the median) to achieve a final judgment with the greatest accuracy.

But if you are conceiving of a breakthrough venture, the wisdom of crowds is not wise at all. If you ask many people, even experts, whether your venture concept will succeed, most will be wrong. Breakthrough ventures are breakthroughs because they go beyond the conventional wisdom of the time. They make what seems to be unlikely or impossible possible. Genius comes from individuals, not crowds.

Uber requires you to believe that ordinary citizens can become paid drivers with their own cars and that strangers would agree to use them. AirBnB requires you to believe that people would share their homes with strangers. Tesla requires you to believe that people will buy an all-electric, high-performance vehicle from an entirely new company, while beating back all existing car companies. SpaceX requires you to believe that commercial entities can compete with government and semi-government entities. Waymo requires you to believe that autonomous vehicles are the future of driving.

Who would have believed these ideas? Maybe some of you, but not most of you. The wisdom of crowds would have failed. Great venture ideas come from breakthrough thinking, not from wisdom of crowds.

Great venture ideas come from breakthrough thinking, not wisdom of crowds.

Back in 2007, when I was leading Stanford Research Institute’s venture division, and we began conceiving of a venture that would become known as Siri. The greatest force against us wasn’t a competitor or lack of funds. Rather, it was the opposing force of the wisdom of crowds, causing us to question ourselves and our opportunity. Here’s a brief part of the story.

The vision that led to Siri can be traced to 2003 when we recognized that the smartphone was going to create a market and technological revolution and that SRI was well suited to take leadership of this revolution as it had in every past computing revolution. We believed that the smartphone’s computing and communications capabilities would effectively be supercomputers in your pocket, and be far more ubiquitous and capable of communication.

We formed a team to develop market concepts and value propositions to help seize this opportunity. We named the team Vanguard, to remind us of our goal to be on the vanguard of this revolution. The team was led by myself and Bill Mark, president of the information and computing sciences division. Other members included Adam Cheyer, Pat Lincoln, Doug Bercow, and Jim Arnold, who all served as directors.

Many of the core ideas of Siri that the Vanguard team developed were articulated in a 2004 article that I wrote for the Red Herring Newsletter titled “The Quiet Boom,” in which I described the need for intelligence in the mobile phone:

"An experience as simple as buying a ticket to a ballgame and making a restaurant reservation can take dozens of keystrokes and many minutes. Instead, users must be able to easily ask for what they want, just as they might ask a real person. We’re now seeing software agents—lightweight programs designed to perform tasks autonomously and securely—reach the level of commercialization. They can now act as “intelligent assistants” for many requests. The user can specify a request and agents will break down the tasks and reliably perform them."

We knew that technology alone is never the basis of a venture (a subject worthy of another post entirely) and we worked hard to build a venture concept that would create an entirely new market and product with a breakthrough software agent technology. This venture concept was the origin of Siri. Below is a part of the Siri elevator pitch I wrote and used to present Siri to VCs. Remember this was 2007! As a reminder, the first iPhone had just been launched.

Siri- The SRI "Mobile Assistant" Venture

Access to web services through the mobile device is a multi-billion dollar opportunity that has been gated by the pain of the user experience. Hunt and peck browsing and keyword search are difficult, time consuming, and ineffective in gaining information and completing transactions. Siri will provide a fundamental breakthrough to this experience.

With the application Siri, the user can, in plain english on a mobile device or desktop, find, execute and deliver the best information and services directly. (via speech or text). Siri doesn't just provide links - it satisfies the user's needs and completes the transactions. For example, the user can ask in one sentence "find me the status of United 77 and get me a hotel room tonight" and watch it immediately happen. Just ask... Siri, your internet assistant will take care of it.

Siri is a new venture in the mobile and consumer internet space that takes the manual part of using the internet out of the equation.The patented technologies required for Siri provides a seamless integration of user request (through keyword, text, natural language) to an AI driven "active ontology" that executes the request and mediates the transaction.

A first prototype has already been developed, and a fully commercializable product will be delivered in less than 12 months. Beyond this, again using AI technologies, Siri will be able to learn from the user, dynamically creating user profiles, increasing its accuracy over time.

The surprise came when we (the founding team) visited several of the VCs who we thought would be excited by the concept. These were not just any VCs – they were highly successful and their respective reputations preceded them. To our pitch, they replied:

• Microsoft tried this with “Clippy.” It was a terrible failure and this will never work.

• Nobody will ever talk to a computer or phone as if it were a human being.

• It’s impossible. Nothing can ever understand the meaning of sentences you speak, let alone provide a reasoned and accurate answer.

• People have tried to do this for decades, and it will be decades more—if ever—before it’s possible.

• It’s already been done.

• You’ll never make money doing this.

• No one needs this.

• And on and on…

This was hard to hear. The “wisdom of crowds” was telling us that Siri would fail. Opposing this wisdom is one of the most difficult things a human being can do. Our DNA has evolved over millennia to make us a social animal. Fighting against the tide of the wisdom of crowds as well as “conventional wisdom” can cause us to doubt both of ourselves and our ideas, to oppose people that are often far smarter than we are, and to expose ourselves to ridicule.

The “wisdom of crowds” was telling us that Siri would fail.

Companies like Siri, Uber, AirBnB, Tesla, SpaceX, Waymo, and others have all challenged the conventional wisdom of the world.

In the face of immense conventional wisdom, two remarkable VCs recognized the opportunity, the strength of the team, and the impact it would have: Gary Morgenthaler of Morgenthaler Ventures, and Shawn Carolan of Menlo Ventures. They funded our Series A round and continued to double down every round thereafter.

These VCs were not just investors. They were coaches, teachers, and more. They deeply understood the market and its potential products, grasped the promise of artificial intelligence, and maintained a strong relationship with SRI. They knew our team members well and were aware of their world-class capabilities. They understood the work that had been done in DARPA-funded government programs, which is known for picking only the most advanced technologies.

Most importantly, they believed in the vision of Siri. They knew that the team was composed of new first-time entrepreneurs, and they were willing to do the “heavy lifting” to help the team in every aspect. Last, but certainly not least, they were willing to invest in a company that went against conventional wisdom. They risked failure and attained great success.

So, in the face of opposition to the wisdom of crowds, how do you find the courage to continue your work? There are four steps:

So, in the face of opposition to the wisdom of crowds, how do you find the courage to continue your work?

1. Know that people-even well-known and successful people-will disagree with you. Know that you are opposing the wisdom of crowds. Accept that this is part of normal life.

2. Recognize the value of critique. Internalize it, dive into it, and make sure you understand how you will both overcome and use it.

3. Have confidence in your ability to discern what is possible by constantly analyzing and refining your hypotheses, gaining more and more confidence in your beliefs. When people tell you that you are wrong, use that information to refine your beliefs and better your venture.

4. Find a co-founder, coach, or partner at your venture’s outset. Siri, for example, was conceived and built by the SRI Ventures team. We served as a co-founder, helping build the value proposition, recruiting the CEO and other team members, finding the best VCs to invest, building the technology demo, and taking a board seat to help direct the company. Without SRI, there wouldn’t have been Siri.

I look forward to hearing about your breakthrough ventures!

This post is a modification of a previous post with Platform Venture Studio.

Your Venture Coach,

Norman