Why do intelligent people pick dumb business ideas?

If I replace "intelligent" by "educated" in your sentence, the problem is that higher education teaches you how to handle the complex issues. Engineering schools can prepare you to be a researcher: you'll literally create new pieces of knowledge!

But this kind of intelligence only works in an environment that can make use of it. As a full-stack web developer, I am only useful in a society where people are willing to invest 10 to 100k into complex pieces of software to solve even more complex issues.

If I want to setup a B2C business, I'll be tempted to reuse this knowledge. I'll cringe at Wordpress performances, at the lack of open API in some SaaS tool I use etc., basically I'll have to fight myself every second to avoid premature optimization.

Intelligent people are tend to over think. You need to think straight way. And if you think simply (not easy) you can come up with the right way, easy for users. U see?

Interesting question! I don't know the answer, but I can speculate that it is four things and it is not limited only to intelligent people!

1. People can focus on building products they want vs. products they need. I want a segway because it would be fun to drive. But I don't need a segway specifically. I just need a way to get to work. A bicycle or skateboard completes this need.

2. People can think a problem exists when it really doesn't. There is a saying that when people buy a drill what they are actually buying is the hole that the drill makes. So a person could think that drills on the market currently aren't fast enough or strong enough or need to have lasers but actually as long as it can make a hole.

3. People who are confident in their abilities and intellect are probably less likely to validate their ideas. If I am a genius and I think XYZ should exist, then why would I ask people if they need XYZ? I know they do!

4. A lot of "dumb" ideas only look dumb in hindsight. None of the coca-cola executives that introduced "New Coke" thought it would be a flop. Though it was a huge failure, it was arguably a great learning experience for the company.

Hey, sometimes people need to try putting 140 characters on the public internet as a concept 😄

Intelligent people are just as susceptible to logical fallacies as anyone else. The difficult thing is that we (I'm assuming I'm intelligent lol) are able to lie to ourselves using logic and reasoning.

What I often see is false equivalences where smart people will take whatever they're doing and compare it with some other historic event, person, or company. i.e. "Everybody said so-and-so was going to be unsuccessful when he came out with X and then we all know what happened. Everybody is telling me my idea isn't going to work, but I'm going to show everyone they're wrong as well." The thing they miss is the fact that people have also called out a lot of unsuccessful things that eventually DID become unsuccessful.

Another common one is sunk-cost fallacy. "I spent 2 years working on this idea, so I'm going to make it work." That's despite a lot of proof that the idea doesn't have legs, or nobody is really interested in it, and so on.

Because nobody is infallible? Arrogance might also be an issue...

innovation is often a leap of faith. Businesses that are already known have lessons learned and are replicable.
I don't know if they actually choose dumb ideas, I think they focus more on replicable and in some ways boring ideas.