Three Types of Bad Ideas
Assessing AI-Enabled Business Ventures
The landscape of AI entrepreneurship is brimming with possibilities. When exploring AI-enabled business ideas, it’s easy to get swept up in the excitement of innovation. Here’s a simple tool to assess your AI business ideas before you invest too much of your precious time and resources.
The Three Types
“Square”: Rationality at the Expense of Differentiation
“Square” ideas are often overly rational, painfully obvious, and destined to swim in the “Red oceans” of brutal competition. In these saturated markets, well-funded, high-prestige organizations with proprietary data and vast resources dominate, leaving little room for new entrants to make a significant impact. In other words, while an idea may be “smart” and “validated”, it may not be an opportunity for you. To avoid the “square” trap, seek ideas that explore niche markets (e.g., specialised use cases or unorthodox distribution/format) and defy conventional design.
“Wrapper”: Just an UI without Soul or Moat
“Wrapper” is essentially a thin UI layer designed running a publicly available LLM to complete some specific task (e.g., “Create a business plan”). If an AI chat tool can perform the core function just as effectively, given a trivial prompt, you might be selling snake oil. It means the customer doesn’t need it, and the concept is unlikely to hold its ground. Notice that the criterion is not technological sophistication, but whether your tool actually makes customers’ lives better. You have to bring some hard-earned insight to its design.
“Fluff”: Philosophically Intriguing, Practically Challenged
Finally, we encounter “Fluff”–concepts that captivate your imagination but raise serious questions about feasibility and scalability. These ideas often emerge from profound-ish insights or philosophical musings, but when it comes to execution, they falter. Aim to create a credible and actionable path to profitability and growth. Rigorous effort into learning about markets and building financial scenarios should help in judging whether you’re after a vision or a mere hallucination.
Final Thoughts
This is not presented as an exhaustive analytical framework. Instead, the three ‘archetypes’ offer perspectives to toy with while exploring alternative product concepts and business models. Save some time from pursuing ventures that are not worth it, and steelman the ones that are.
Seeing a lot of squares, wrappers, or fluff out there? Making these judgements well isn't easy. For example, it is easy to judge something as a wrapper while there might actually be a dedicated audience for that specific, albeit technologically simple, well-designed thing.