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> The best companies start out with ideas that don’t sound very good. They start out as projects, and in fact sometimes they sound so inconsequential the founde

> The best companies start out with ideas that don’t sound very good. They start out as projects, and in fact sometimes they sound so inconsequential the founders wouldn't let themselves work on them if they had to defend them as a company. Google and Yahoo started as grad students’ projects. Facebook was a project Zuckerberg built while he was a sophomore in college. Twitter was a side project that started with a single engineer inside a company doing something totally different. Airbnb was a side project to make some money to afford rent. They all became companies later. This is hardly a list of the best companies, and a few of them don't support the argument: 1. The search/portal market was already significant when Google launched. Companies like Yahoo, Excite, Lycos were already public traded at the time, and were some of the hottest issues in the tech space. So it's no wonder Andy Bechtolsheim cut Larry and Sergey a check for $100,000 before a corporate entity even existed. 2. When Facebook launched, Friendster already had millions of users and had received a $30 million acquisition offer from Google. MySpace, which was created by people who saw Friendster's popularity, was founded by people trying to capitalize on the social networking hype that was already present in 2003. 3. Even Airbnb is hardly a post child for Sam's argument. Homeaway, VRBO and Couchsurfing were all well established when Airbnb launched. For most entrepreneurs, "start out with an idea that doesn't sound very good" isn't likely to turn out very good.

malanj 11y ago
Starting a company when there are already established and strong competitors probably counts as "looks like a bad idea". I think the point is that the company (or project) seemed like a bad idea, not necessarily the market as a whole. Google and Facebook are both often used as examples exactly because they were "late" to the party. That seemed like a bad idea, but they both had a secret (as Peter Thiel likes to say), that made it not a bad idea.
- mtberatwork 11y ago
  When Google came about I don't recall anyone thinking that it (indexing the web, page rank, etc) was a bad idea. Everyone knew search was horrible at the time and many established players were simply directories with thin search layers. Yes, there were established competitors, but none of them were really strong aside from a tiny minority (altavista for example). I don't recall anyone considering Facebook a bad idea either, just that it was "yet another social media" site. Facebook mostly lucked out because of MySpace's user exodus.
  - danieltillett 11y ago
    I agree that when Google came out it was far better than its competitors. Facebook is a bit different in that the market they went after was the right one not that their product was that much better. Zuck may have been lucky at the start, but he soon realised that he was on the right path and stuck to it.
    - kedean 11y ago
      Facebook had a secret ingredient too, they were one of the only sites on the Internet to use exclusivity correctly. They built up hype and got users drooling by slowing becoming available to more groups, and once they became available to everyone they were already established and validated. Of course luck and a simple design factored in too, but I think the exclusivity was the biggest part.
- 7Figures2Commas 11y ago
  > Starting a company when there are already established and strong competitors probably counts as "looks like a bad idea". First-mover advantage is overrated, and in the tech industry, you'll notice that many if not most successful companies were not first-movers. Often, first-mover advantage is a disadvantage. In even the most established markets, you can find meaningful niches and adjacencies that the big players aren't tapping. Many times, the untapped adjacencies can expand the overall size of the market significantly (see Airbnb).
- JoeAltmaier 11y ago
  Existing competitors means two good things: customers exist, and the product is understood in the market. Building a better mousetrap is the ideal startup. There's nothing wrong with competition.
volaski 11y ago
Google was a bad idea because at that time Yahoo, Excite, Lycos and all those "portals" were making money by keeping the traffic on their site instead of sending them away. They didn't even invest much on "search" as we know it because it's better if users generate more pageviews while trying to find something they want. Now google adsense and adwords sound so obvious but nobody knew they would be so powerful. Google was no doubt a cool "project" but no one knew how it would sustain itself (nowadays it's taken for granted you would make money by advertising but back then that was not so obvious probably) Same goes for Facebook. One big distinction between a company and project is company makes money and project doesn't necessarily have to.

malanj 11y ago

Starting a company when there are already established and strong competitors probably counts as "looks like a bad idea". I think the point is that the company (or project) seemed like a bad idea, not necessarily the market as a whole. Google and Facebook are both often used as examples exactly because they were "late" to the party. That seemed like a bad idea, but they both had a secret (as Peter Thiel likes to say), that made it not a bad idea.

mtberatwork 11y ago
When Google came about I don't recall anyone thinking that it (indexing the web, page rank, etc) was a bad idea. Everyone knew search was horrible at the time and many established players were simply directories with thin search layers. Yes, there were established competitors, but none of them were really strong aside from a tiny minority (altavista for example). I don't recall anyone considering Facebook a bad idea either, just that it was "yet another social media" site. Facebook mostly lucked out because of MySpace's user exodus.
- danieltillett 11y ago
  I agree that when Google came out it was far better than its competitors. Facebook is a bit different in that the market they went after was the right one not that their product was that much better. Zuck may have been lucky at the start, but he soon realised that he was on the right path and stuck to it.
  - kedean 11y ago
    Facebook had a secret ingredient too, they were one of the only sites on the Internet to use exclusivity correctly. They built up hype and got users drooling by slowing becoming available to more groups, and once they became available to everyone they were already established and validated. Of course luck and a simple design factored in too, but I think the exclusivity was the biggest part.
7Figures2Commas 11y ago
> Starting a company when there are already established and strong competitors probably counts as "looks like a bad idea". First-mover advantage is overrated, and in the tech industry, you'll notice that many if not most successful companies were not first-movers. Often, first-mover advantage is a disadvantage. In even the most established markets, you can find meaningful niches and adjacencies that the big players aren't tapping. Many times, the untapped adjacencies can expand the overall size of the market significantly (see Airbnb).
JoeAltmaier 11y ago
Existing competitors means two good things: customers exist, and the product is understood in the market. Building a better mousetrap is the ideal startup. There's nothing wrong with competition.

volaski 11y ago

Google was a bad idea because at that time Yahoo, Excite, Lycos and all those "portals" were making money by keeping the traffic on their site instead of sending them away. They didn't even invest much on "search" as we know it because it's better if users generate more pageviews while trying to find something they want. Now google adsense and adwords sound so obvious but nobody knew they would be so powerful. Google was no doubt a cool "project" but no one knew how it would sustain itself (nowadays it's taken for granted you would make money by advertising but back then that was not so obvious probably) Same goes for Facebook. One big distinction between a company and project is company makes money and project doesn't necessarily have to.