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Startup Competitive Advantages that Work

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Re: Startup Competitive Advantages that Work

#31

Post by btilly »

patio11 wrote: post #30
btilly wrote: post #25

What is sad is to see a company with a competitive advantage fail to see it and throw it away. I used to work at Rent.com. A key competitive advantage is that its revenue cycle is wrong. When it started its competitors all made money as soon as they referred someone. Rent.com only made money after the person was referred, leased, reported it to us, the apartment was contacted, and the apartment paid. Optimizing for t…

even at break-even [affiliates] are profitable because of positive SEO Not necessarily true in all cases, but broadly accurate. Also, you can work the backend. (Solicit upgrades, upsells, and repeat purchases from the customer, which would typically not result in you paying additional commissions to the affiliate.)

It was certainly accurate in Rent.com's case. Working the backend is another good idea, but not one that Rent.com used. (Typically once people have found a place to live, they aren't in immediate need of another.)

Re: Startup Competitive Advantages that Work

#32

Post by gamble »

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…

You're in a pretty sweet position if you can go to an investor and say:

1) I'm an expert in my target market.

2) I have a functional product deployed in a real environment.

3) I have five other customers lined up already.

You'd be sitting better than 95% of startups, even if The Donald isn't shilling for you.

Re: Startup Competitive Advantages that Work

#34

Post by mkuhn »

gojomo wrote: post #29
mkuhn wrote: post #22

Earlier quoted context omitted.

What you are describing is called Upper Echelon Theory or the Upper Echelon Perspective which is backed up by quite a solid base of research. It basically states that a company is a reflection of its officers (or founders) and that they therefore are largely responsible for a company's successes or failures. Upper echelon theory is one of the things used to justify the bonuses and salaries that Top Management Teams r…

What kinds of diversity did you look into? Did you find any factors in founding teams correlated with success?

I only looked at diversity and no other factors. I did a survey which I also published here on HN and in total got back 67 usable results. Quite a small sample but enough.

I checked for a total of 7 different kinds of diversity that can be split into two broad categories:

1. Ascribed Characteristics - Things that are "visible" and others ascribe to you. Here I checked for Gender, Age, Nationality, and Race. Hypothesis here was that diversity in Ascribed Characteristics has a negative effect because it fosters non-task related conflict.

2. Achieved Characteristics - Things that people have worked for. Here I checked for type of education, level of education, industry experience, functional experience. Hypothesis here was that diversity in achieved characteristics enlarges the overall knowledge available to the company and fosters task related conflict which leads to better decisions. Therefore diversity in achieved characteristics should have a positive effect.

As mentioned before while the results trended towards what I expected the results weren't significant enough to reject the Null-Hypothesis in all cases but Nationality diversity which had a small negative effect.

To summarize what I found: The effects of diversity in founder teams of internet startups are so small that they are outweighed by many other factors that are easier to achieve than to fine tune the composition of your founder team.

Re: Startup Competitive Advantages that Work

#35

Post by JesseAldridge »

rgr23 wrote: post #21
ntoshev wrote: post #17

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 ver…

Same goes for the founders of Facebook, Twitter, Amazon, Craigslist, Ebay, Yahoo, etc.

Those companies (except maybe Yahoo) had the advantage of being the first to get-it-right in markets that tend toward natural monopoly (due to network effects).

Re: Startup Competitive Advantages that Work

#36

Post by JesseAldridge »

yurylifshits wrote: post #33

I think number #1 competitive advantage is Distribution. Microsoft got to be an exclusive OS for IBM PC. Yahoo got a free button in Netscape. Kindle was pushed by Amazon (the default place for book buyers)

Distribution is definitely big. Look at how much the top iPhone apps make, look at Farmville. People generally will not seek stuff out. They will only consume stuff that's placed directly in front of them, like pigs at a trough.

Re: Startup Competitive Advantages that Work

#37

Post by ebiester »

btilly wrote: post #31
patio11 wrote: post #30

Earlier quoted context omitted.

even at break-even [affiliates] are profitable because of positive SEO Not necessarily true in all cases, but broadly accurate. Also, you can work the backend. (Solicit upgrades, upsells, and repeat purchases from the customer, which would typically not result in you paying additional commissions to the affiliate.)

It was certainly accurate in Rent.com's case. Working the backend is another good idea, but not one that Rent.com used. (Typically once people have found a place to live, they aren't in immediate need of another.)

Moving services? New furnishing for that bigger apartment?

Re: Startup Competitive Advantages that Work

#38

Post by btilly »

ebiester wrote: post #37
btilly wrote: post #31

Earlier quoted context omitted.

It was certainly accurate in Rent.com's case. Working the backend is another good idea, but not one that Rent.com used. (Typically once people have found a place to live, they aren't in immediate need of another.)

Moving services? New furnishing for that bigger apartment?

Rent tried those things, but they were never more than small sidelines compared to the main business.

Re: Startup Competitive Advantages that Work

#39

Post by SoftwareMaven »

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…

If I could go into my investors with 5 signed contracts and an endorsement from somebody like Donald (assuming it was actually relevant to the product), I can guarantee they would be standing on their seats cheering.

Your pitch has outlined very real successes that are far more important to the success of the business than 15 slides of how cool your idea is.

Re: Startup Competitive Advantages that Work

#40

Post by dennisgorelik »

btilly wrote: post #25

What is sad is to see a company with a competitive advantage fail to see it and throw it away. I used to work at Rent.com. A key competitive advantage is that its revenue cycle is wrong. When it started its competitors all made money as soon as they referred someone. Rent.com only made money after the person was referred, leased, reported it to us, the apartment was contacted, and the apartment paid. Optimizing for t…

It looks like Rent.com still ahead of mynewplace.com http://www.quantcast.com/profile/embed?img=http%3A//www.quan...
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