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How to pick startup ideas

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Re: How to pick startup ideas

#11

Post by davemel37 »

nostrademons wrote: post #9

I like this article. Much of the advice on startups is biased from an investor perspective, this is something that's very real from a founder's perspective. If I had to summarize and riff off of the ideas here, I'd phrase it as "Be very careful about where you're getting your information from." If you got your startup idea because you heard about something from a news article, you are way too late. If you got it from…

"Be very careful about where you're getting your information from."

I would encourage you to apply this nugget of gold to this post as well.

It is a mistake to dismiss an idea just because others are working on it. In fact, I would argue the opposite. It validates the idea and the market.

Re: How to pick startup ideas

#12

Post by vinceguidry »

inthewoods wrote: post #2

Interesting article - a lot of good stuff in it but I found it a bit to general to be really useful. As an example, the author states: "So you need to get to market with a viable product before anyone else does." That's the type of statement that I question - there are plenty of examples of companies creating products in saturated markets where they were not the first mover. In fact, sometime being a first mover can…

I found the article great in forcing me to reconsider my goals in that space. I'd always had this belief that it was possible, eventually, to find the right idea and break through and become the next Microsoft / Google / Apple. The more I actually understand about the broader economic environment, and the more I read about the people in question who started these companies, the more it just looks like right-place-right-time luck.

The article puts that neatly in proper perspective. And that changes the personal self-actualization path calculus for me considerably. Targeting "building a rocket ship" as a goal doesn't make you any more likely to actually build a rocket ship than just starting a company in wherever you find your passion. Where you find your passion is, just due to the way humans are, more likely to be rocket-ship-worthy than any idea borne out of any rational brainstorming process aimed at producing one.

Re: How to pick startup ideas

#13

Post by nostrademons »

davemel37 wrote: post #10

This article is built on top of many faulty assumptions... Most notably,"When you’re second to market with a viable product, your customers will compare you to the company and product that got to market first." This assumes that the entire market knows about a solution the moment a first mover comes to market. The reality is that building a brand to the point where every prospect you approach is comparing you to an i…

That's true, but you also need a story about how you're going to grow your reach & influence faster than your competitor does. It can work, for example, if your main competitor is a hobbyist who doesn't take his product seriously. Ditto a major corporation for whom this is a sideshow that can't get resources from execs whose attention is focused elsewhere.

But anybody can spend more money to tell more people about their product. This is not a competitive differentiator; if you do it, and the company who got to market first does it, they'll win simply through Gambler's Ruin, since they start from a bigger base.

Re: How to pick startup ideas

#14

Post by [deleted] »

davemel37 wrote: post #11
nostrademons wrote: post #9

I like this article. Much of the advice on startups is biased from an investor perspective, this is something that's very real from a founder's perspective. If I had to summarize and riff off of the ideas here, I'd phrase it as "Be very careful about where you're getting your information from." If you got your startup idea because you heard about something from a news article, you are way too late. If you got it from…

"Be very careful about where you're getting your information from." I would encourage you to apply this nugget of gold to this post as well. It is a mistake to dismiss an idea just because others are working on it. In fact, I would argue the opposite. It validates the idea and the market.

[deleted]

Re: How to pick startup ideas

#15

Post by coffeemug »

nostrademons wrote: post #13
davemel37 wrote: post #10

This article is built on top of many faulty assumptions... Most notably,"When you’re second to market with a viable product, your customers will compare you to the company and product that got to market first." This assumes that the entire market knows about a solution the moment a first mover comes to market. The reality is that building a brand to the point where every prospect you approach is comparing you to an i…

That's true, but you also need a story about how you're going to grow your reach & influence faster than your competitor does. It can work, for example, if your main competitor is a hobbyist who doesn't take his product seriously. Ditto a major corporation for whom this is a sideshow that can't get resources from execs whose attention is focused elsewhere. But anybody can spend more money to tell more people about th…

> This assumes that the entire market knows about a solution the moment a first mover comes to market.

It doesn't. The first mover will start getting customers before you do, and as they do their ability to reach customers will grow exponentially. You might start reaching a segment of the market they aren't reaching, but they'll trivially be able to lock you out.

Re: How to pick startup ideas

#16

Post by davemel37 »

nostrademons wrote: post #13
davemel37 wrote: post #10

This article is built on top of many faulty assumptions... Most notably,"When you’re second to market with a viable product, your customers will compare you to the company and product that got to market first." This assumes that the entire market knows about a solution the moment a first mover comes to market. The reality is that building a brand to the point where every prospect you approach is comparing you to an i…

That's true, but you also need a story about how you're going to grow your reach & influence faster than your competitor does. It can work, for example, if your main competitor is a hobbyist who doesn't take his product seriously. Ditto a major corporation for whom this is a sideshow that can't get resources from execs whose attention is focused elsewhere. But anybody can spend more money to tell more people about th…

In my experience, PR and third party validation will build a brand, not advertising.

I do agree that the person who wins the perception of being first in peoples minds will win the branding battle...but I do not agree that the second place competitors won't build strong, viable companies.

In fact, there are many examples of big brands being overtaken by smart positioning.

Avis claimed, "we are number two so we try harder." to overtake hertz. Enterprise overtook avis by differentiating itself with a different distribution channel (central biz district instead of airports)

IF you aren't the first mover, you need to position yourself opposite the first mover and you will gain market share. This doesnt mean you shouldn't try. It means you should be smart about how people perceive your brand and your competitors.

Re: How to pick startup ideas

#18

Post by davemel37 »

coffeemug wrote: post #15
nostrademons wrote: post #13

Earlier quoted context omitted.

That's true, but you also need a story about how you're going to grow your reach & influence faster than your competitor does. It can work, for example, if your main competitor is a hobbyist who doesn't take his product seriously. Ditto a major corporation for whom this is a sideshow that can't get resources from execs whose attention is focused elsewhere. But anybody can spend more money to tell more people about th…

> This assumes that the entire market knows about a solution the moment a first mover comes to market. It doesn't. The first mover will start getting customers before you do, and as they do their ability to reach customers will grow exponentially. You might start reaching a segment of the market they aren't reaching, but they'll trivially be able to lock you out.

My argument is that it will take at least 2 years for any brand to lock you out. This post assumes that the moment the press knows about a market, it's too late. Plus, even if you are late to the game, you can position yourself opposite the market leader and overtake them.

Re: How to pick startup ideas

#19

Post by inthewoods »

coffeemug wrote: post #7
inthewoods wrote: post #2

Interesting article - a lot of good stuff in it but I found it a bit to general to be really useful. As an example, the author states: "So you need to get to market with a viable product before anyone else does." That's the type of statement that I question - there are plenty of examples of companies creating products in saturated markets where they were not the first mover. In fact, sometime being a first mover can…

> there are plenty of examples of companies creating products in saturated markets where they were not the first mover There is an "exceptions" section closer to the end of the post that discuss this, though it probably should have been longer. The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but…

"The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time."

I'd be curious to find data to back up that assertion - I've personally seen way more people/companies fail trying to skate to where the puck is going to be vs. just going after businesses where there are already existing solutions. But again, this is anecdotal data.

The best example I have of this is Google. Search was done and owned by a handful of players - they innovated and won. But to your point about definitions - did they win on that, or win on creating Adwords (which they were also not the first mover on)?

Perhaps it comes down to this: entering a market where there are low switching costs means that you can enter late with a significantly better product - but it has to be 4x better (that's my rule). Meaning the product has to be 4x better than the existing solution.

If, however, you're entering a market with high switching costs, then the benefit probably has to be great than 4x - maybe 8x. As an example - look at all the people trying to get people to switch off of Salesforce.com. I don't know anyone that likes this product - but no one can switch because the costs are too high across the board - organizationally, data-wise, software - while the resulting CRM might be marginally better. That means that startups going after that can get traction with people who don't have a CRM, but not with existing CRM customers - and thus bang their head against the wall/fail.

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