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How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

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Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#41

Post by sprsimplestuff »

anstosa wrote: post #23
crikli wrote: post #21

So...to me this article illustrates the dramatic differences in objective and mentality between bootstrappers and VCs. This VC looks at this idea, figures out that in order to own the market and make $fuckton, they'd have to spend > $fuckton. Decides to bail. As a bootstrapper of businesses, I look at this case study and go "well yeah of course it'll take $fuckton because you're haven't focused on a narrow enough nic…

Ansel from PSL here. Absolutely. Because we're venture-backed and are spinning out venture-backed companies, we are limited to billion dollar ideas. It's not uncommon for us to kill great ideas that could "only" make tens of millions of dollars. We're hoping through blog posts like this and other means to be able to share more of them because we want those companies to exist, we're just not set up to create them!

feel free to start sharing those "small market" ideas haha

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#43

Post by thorwasdfasdf »

I think this part is really key to their analysis:

"First off, there are a ton of enabled small businesses competing in this space and I'm not sure there needs to be a middle man. For example, I get 4 ads from businesses in Seattle offering lessons for guitar on Google. Thus, they know how to market and get customers, they are offering free first lessons, and have availability. So I am unsure/doubt there is any real consumer problem."

The realization that this is not a big enough problem consumers are having.

I would guess that the musicians who want to sell their time would gladdly sign up to this platform. But the customers looking for these services, would most likely be very costly to reach.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#44

Post by novok »

crikli wrote: post #21

So...to me this article illustrates the dramatic differences in objective and mentality between bootstrappers and VCs. This VC looks at this idea, figures out that in order to own the market and make $fuckton, they'd have to spend > $fuckton. Decides to bail. As a bootstrapper of businesses, I look at this case study and go "well yeah of course it'll take $fuckton because you're haven't focused on a narrow enough nic…

Often though, many successful VC startups start from a niche and expand from there. For ex: uber started with luxury black car service only in SF (a niche) and then expanded into normal cars, carpools, food and the rest of the world. I think the real requirement is a foreseeable future that you could potentially expand into a bigger $billion market.

Small niches that have proved themselves are often more attractive from an investment standpoint.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#45

Post by binklee »

I read one of the conclusion: "Lastly, I can't imagine that tech won't win here with non-human based teaching. It's affordable, convenient, and scalable to any genre, language, right from home on many platforms."

I strongly disagree with that one. The pie is big enough for different type of teaching, including real-life classes.

If what he predicts turn out true, and we all get plugged behind screens to learn new things... what a sad world it would be...

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#46

Post by novok »

edouard-harris wrote: post #31
lowdose wrote: post #3

So these guys have to read up on some articles about multisided marketplaces which what they were testing. Starting a matching platform between consumers and teachers is not a feasible plan because this is a longer term relationship and a platform is easily cut out. A platform like uber works because nobody has a regular cab driver. Supply and demand matching is also terrible for dog walking platforms. Don't spend ti…

Excellent point. This would have been reason enough to kill the idea irrespective of the CAC calculation. Speaking from extensive marketplace experience: A pattern of long term relationships will lead almost surely* to supply-side defection in your marketplace, which is when the supply leverages its relationship with the demand to set up a side deal that cuts out the platform. This can quickly take both supply-side a…

How does supply side defection work for airbnb except in very edge cases, such as a long term rental. Even then it turns into something like apartments.com

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#47

Post by nunez »

lowdose wrote: post #3

So these guys have to read up on some articles about multisided marketplaces which what they were testing. Starting a matching platform between consumers and teachers is not a feasible plan because this is a longer term relationship and a platform is easily cut out. A platform like uber works because nobody has a regular cab driver. Supply and demand matching is also terrible for dog walking platforms. Don't spend ti…

How do you explain Angie’s List then?

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#48

Post by awb »

anstosa wrote: post #23
crikli wrote: post #21

So...to me this article illustrates the dramatic differences in objective and mentality between bootstrappers and VCs. This VC looks at this idea, figures out that in order to own the market and make $fuckton, they'd have to spend > $fuckton. Decides to bail. As a bootstrapper of businesses, I look at this case study and go "well yeah of course it'll take $fuckton because you're haven't focused on a narrow enough nic…

Ansel from PSL here. Absolutely. Because we're venture-backed and are spinning out venture-backed companies, we are limited to billion dollar ideas. It's not uncommon for us to kill great ideas that could "only" make tens of millions of dollars. We're hoping through blog posts like this and other means to be able to share more of them because we want those companies to exist, we're just not set up to create them!

> we are limited to billion dollar ideas

How did matchmaking for music lessons get into the discussion as a billion dollar idea?

Referrals for tutoring in any subject (math, reading, music, etc.) would be a bigger market, but even then it might not be a $1B company.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#49

Post by Untit1ed »

emrehan wrote: post #10

I really liked their methodology. How can I learn more of it?

I wrote a blog post (https://blog.nichetester.com/the-assholes-guide-to-product-v...) and eventually made a web app (https://nichetester.com) to step people through a pretty similar process for new ideas.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#50

Post by edouard-harris »

teej wrote: post #37
edouard-harris wrote: post #31

Earlier quoted context omitted.

Excellent point. This would have been reason enough to kill the idea irrespective of the CAC calculation. Speaking from extensive marketplace experience: A pattern of long term relationships will lead almost surely* to supply-side defection in your marketplace, which is when the supply leverages its relationship with the demand to set up a side deal that cuts out the platform. This can quickly take both supply-side a…

I’ve seen some writing on what makes marketplaces resilient to “supply side defection” as you call it, but I’d love to hear your take. Specifically I’d love to hear more about structuring to leverage the relationship, or anything else you think is important. What specific structural things are important?

Generally speaking: your participants will use you when they need you and cut you out when they can do so cheaply. This isn't an indictment of them: it's completely rational for them to do this. But that means it's up to you to add value to the transaction, until the perceived cost of defection is higher than the platform margin.

Airbnb did this beautifully: they set up insurance for all their hosts, and so were able to frame "stay on our platform" as a safety directive.

You can also go the opposite way, but that usually leads to user-hostile antipatterns. E.g., Freelancer tries to detect all the ways folks might send each other phone numbers on their messaging service. This is both annoying and easy to circumvent.

If your rate of defection is high enough, no amount of tactical tricks will save you. Incentive and ingenuity together are too much.

When you're small and still have structural degrees of freedom, target the incentive by adding value to your offering if you can. If the problem only appears when you're big, you may have the resources to play whack-a-mole.

If you're small, have high defection rates, and also can't economically add value to your offering - it's time to move into another line of business.

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