I built a payment processor and failed. Regulations aren’t the issue. The issue is customer psychology: once a customer has solved their problem, they never switch. The biggest misconception I had is that it’s a viable business model to start a business to “compete” with an existing one (cheaper, better tech, better UI, etc). That never works.
You have to either 1. Solve the problem for a new customer who hasn’t solved this problem. 2. Solve a totally different problem than your competition. or 3. Invent a completely different paradigm for approaching solving that problem.
A good case study is search. Nobody could compete with Google, until ChatGPT. Note that ChatGPT is not just “Google but better”, but instead does (3): it’s a different paradigm for answering your questions. Even though it’s much better at solving this problem, people still don’t switch from Google. Most of ChatGPT growth comes from (1): new customers, because ChatGPT usage is highest among young people who haven’t already solved their problem and aren’t sticky with Google.
You underestimate how sticky customers are out of habit. Cable news is now an inferior product for information retrieval, but it’s sticky because it’s already there, solving the problem, for that generation.