10 of the dumbest business ideas
From side-ejecting ejection seats to talking tennis shoes, venture capitalists dish on some of the worst ideas they've heard.
By Jessica Seid, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Many people toiling away at corporate jobs dream of someday launching a business that will bring them riches and the freedom to work when and how they please. But sometimes, a million-dollar idea should remain a dream.

CNNMoney.com asked a dozen venture capitalists - who get hundreds, even thousands, of requests for funding a year from would-be moguls - to tell us the worst business ideas they'd heard. Most were reluctant to dish, but a few couldn't help but share a laugh about ideas that could never get off the ground.

Best Business IdeaslaunchPhotos

Bad ideas can range from the just plain weird to the improbable, such as side-ejecting ejection seats; a so-called Google of graveyard registries; and an in-flight magazine detailing all the noises heard during air travel, with explanations for each buzz, rattle and click.

One of venture capitalist Paul Kedrosky's favorite examples of a terrible business idea was one he received for a site for used pet toys. "This is eBay crossed with Pets.com," the pitch said. Not only does that conjure unpleasant visuals of old chew toys for sale but, in case you've forgotten, Pets.com went bankrupt in 2000 - not exactly a business model to follow. That was an easy pitch to reject.

Here are a few other ideas that garnered a "no thanks."

People love robots

"The most amazing ridiculous idea I ever saw was for an electronic thoroughbred horse," said Todd Dagres, general partner at Spark Capital in Boston. It would work like a mechanical bull, Dagres explained, to teach people to ride race horses. The mechanical horse would be aimed at the mass market but could also be used by jockeys in training, according to the business plan.

"The assumption that people would want to train on a mechanical horse is the wrong one," Dagres said. "We sent back a polite letter telling him that it didn't fit our investment parameters."

There was also the lifelike robot doll that would talk and interact with others. "They claimed it was going to be the best robot toy on the planet," Dagres said.

It was not a totally ridiculous idea, Dagres explained, but the chances of it being successful in the highly competitive toy market were infinitely low. "It's like going out in the desert and sinking an oil well and hoping to hit oil."

Films? Forget it

Having a strong self-promotional streak often helps business founders succeed. Sometimes, though, it leads them in the wrong direction.

"I want to make a movie about this book, which happens to be about myself," declared one would-be entrepreneur in his business proposal seeking $10 million in funding.

Even if this guy had a very interesting life, Dagres said, that's a lot of money to spend on a self-proclaimed character.

Another proposal asked for $30 million to make an original animated film. But unless you are Pixar or DreamWorks (Charts), "that has disaster written all over it," said Dagres, whose company receives a multitude of movie pitches because it specializes in media, entertainment and technology ideas. He called the film idea an easy way to lose $30 million.

"What they failed to point out is that these movies are made by Hollywood professionals and they generally cost about $80 million to $100 million a piece," he said. "The chances of him making the next 'Incredibles' or 'Shrek' is a ridiculous idea."

Big bucks, little chance of success

Like movies, ventures that cost a lot to produce and have little chance of success are easy targets for the worst-ideas list.

Kedrosky cited talking sneakers. One company claimed in a pitch "all we need is 1 percent of the world shoe market for our talking sneakers to be a billion-dollar business!" That proposal received a polite decline.

And then, of course, there was the all-time highest-capital, lowest-return business: "An airline with WiFi on every plane!" Kedrosky said.

Generally, venture capitalists consider businesses that are based on one consumer product too risky because it is nearly impossible to determine whether that one product will be a hit.

Instead, they typically look for companies that are more multi-dimensional to diversify the risk. A solid team with several strong business ideas stands a much better chance of catching VCs' attention - and not getting laughed at when they're standing by the water cooler.

"We would rather invest in a hit machine than one product," Dagres said.

So how do you make the cut? Venture capitalists judge a pitch on the strength of the business plan, the executives behind it and the chance of success. In the end, few ideas actually get funded, many get denied and others are just so laughable that they merit their own story.

Inspired? See the $100 Million Giveaway: Top investors' best startup ideas Top of page

Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?