Startup Competitive Advantages that Work • Hacker News Board

Re: Startup Competitive Advantages that Work

#11

Post by arturadib » Mon, Jul 19, 2010, 3:23 PM UTC

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches.

People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic).

Try doing this: Read "Founders at Work" or some other collection of startup stories, and try to identify any pattern in the initial ideas that were reasonable predictors of success.

I am sure you will scratch your head for a long time before realizing that it's all about the founders: how they adapted to the circumstances, how they dealt with the tough times, etc. (Ask the very author of the post above!).

My family is full of successful entrepreneurs in totally different market segments (ice cream shops, uninterruptible power supplies, ornamental rocks, etc), and frankly if I didn't know them I'd think they'd all flop: their markets were saturated at the time, they were non-experts, and there was no clear "competitive advantage".

I love the following quote from my cousin (the most recent and already very successful entrepreneur in the family), when talking about how he dealt with all sorts of difficulties with his company:

Sometimes I'm afraid of what I might want in the future. Because it seems like if I really want something, there doesn't seem to exist anything I can't have. (Loosely translated from Portuguese).

Re: Startup Competitive Advantages that Work

#12

Post by j_baker » Mon, Jul 19, 2010, 3:33 PM UTC

arturadib wrote: post #11

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches. People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic). Try doing this: Read "Founders at Work" or so…

This sounds to me like the Fundamental attribution error[1]: Attributing too much to the person and not enough to their situation. Smart, motivated people will eventually succeed. However, that doesn't mean that every given startup they found will succeed. A lot of people will go through a few startups before they get it right.

[1] http://en.wikipedia.org/wiki/Fundamental_attribution_error

Re: Startup Competitive Advantages that Work

#13

Post by Charuru » Mon, Jul 19, 2010, 3:46 PM UTC

arturadib wrote: post #11

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches. People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic). Try doing this: Read "Founders at Work" or so…

I'm not sure your standards for success are the same as the writer though. You need a home run idea to hit a home run.

Re: Startup Competitive Advantages that Work

#14

Post by arturadib » Mon, Jul 19, 2010, 4:06 PM UTC

j_baker wrote: post #12

arturadib wrote: post #11

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches. People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic). Try doing this: Read "Founders at Work" or so…

This sounds to me like the Fundamental attribution error[1]: Attributing too much to the person and not enough to their situation. Smart, motivated people will eventually succeed. However, that doesn't mean that every given startup they found will succeed. A lot of people will go through a few startups before they get it right. [1] http://en.wikipedia.org/wiki/Fundamental_attribution_error

Wait, did you also factor in everything I said after "smarts"? And did you interpret prediction variables as crystal balls with 100% accuracy?

All I'm saying is that, based on historical accounts, initial ideas/pitches do not seem to be good predictors of success.

The only patterns I have noticed have to do with the founders (not just smarts!).

But maybe you have noticed something else? Or perhaps no pattern at all??

Re: Startup Competitive Advantages that Work

#15

Post by cookiecaper » Mon, Jul 19, 2010, 4:19 PM UTC

atomical wrote: post #3

It's good to see someone admit that they didn't have an advantage in the market place and then built something great.

I think there's too much focus on initial advantages. There are a lot of people that make a lot of money by starting restaurants, dry cleaners, book stores, and other run-of-the-mill, every-day things in common and saturated markets. The idea that you have to have something earth-shaking to be a successful entrepreneur is far too pervasive, imo. The real thing is that you start, persist, and have some semblance of the skills that you need and a lot of dedication and perseverance.

Re: Startup Competitive Advantages that Work

#16

Post by arturadib » Mon, Jul 19, 2010, 4:20 PM UTC

Charuru wrote: post #13

arturadib wrote: post #11

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches. People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic). Try doing this: Read "Founders at Work" or so…

I'm not sure your standards for success are the same as the writer though. You need a home run idea to hit a home run.

Here's an article by the writer you should read:

"Your idea sucks, now go do it anyway"

http://blog.asmartbear.com/your-idea-sucks-now-go-do-it-anyw...

Re: Startup Competitive Advantages that Work

#17

Post by ntoshev » Mon, Jul 19, 2010, 4:23 PM UTC

The founders he admires (Gates&Allen, Jobs&Wozniak, Page&Brin) probably wouldn't be able to articulate competitive advantages that this guy considers "real". They didn't have insider info or authority. They were passionate about what they are doing, but who knows if they were more passionate than their competitors (also applying this point to Apple for design and Google for search is not correct; Apple sacrifices very little to make their products look beautiful (and this is a narrow understanding of design), Google founders cared more about collaborative filtering at first).

Re: Startup Competitive Advantages that Work

#18

Post by smartbear » Mon, Jul 19, 2010, 4:25 PM UTC

jargon wrote: post #8

None of these are competitive advantages that are the opposite of the suggestions from the previous post about things that are not competitive advantages. There are plenty of people who are passionate about their startups, working in a team of talented people, with customers, and insider information. If a company went to a VC and used these competitive advantages, they'd be shot down in a second. Imagine this scenari…

In your italicized text, it was good up until "No other company is going to compete with it."

The point isn't that you have no competition, but that you have enough raw material to be competitive yourself.

The point isn't that you're guaranteeing success, but that since most pitches (that I see) don't include ANY of the advantages you just listed, those that DO have those advantages look a lot better at the outset.

Of course anyone can succeed, and many should try. But that's not how investors think; they think in terms of reducing risk, and things like past success and traction are ways of reducing risk.

Re: Startup Competitive Advantages that Work

#19

Post by smartbear » Mon, Jul 19, 2010, 4:26 PM UTC

dgudkov wrote: post #7

Good article. Asking questions like "what would you do if someone will fully copy you" is a bit dirty trick. Abstract competitors are always better, so it's meaningless to talk about them. Real competitors, even very smart and mighty, can't cover everything - they must limit themselves to something (market niche, demography, geography, price range etc.), and this may become a chance to avoid competition.

I certainly agree with you in practice.

Think of this like an Einstein thought-experiment -- it's not how you should run your life every day, but it's maybe a nice foil for thinking about such things.

Re: Startup Competitive Advantages that Work

#20

Post by ippisl » Mon, Jul 19, 2010, 4:43 PM UTC

arturadib wrote: post #11

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches. People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic). Try doing this: Read "Founders at Work" or so…

Some research on business strategy, by rita mcgrath("discovery driven growth") found that many successful entrepreneurs have changed their initial idea while building their business.

This is specially true for very dynamic/chaotic business areas.

Her recommendation for dynamic/chaotic business areas:work with an adaptive strategy, using small experiments(in similar spirit to eric ries's "lean startup").