6 ms·

> It's important to articulate why the company will eventually be in a strategically valuable position (i.e. a monopoly). Is it possible to ever answer this in

by kzhahou 11y ago

> It's important to articulate why the company will eventually be in a strategically valuable position (i.e. a monopoly). Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? Anyone have examples, or care to imagine what the answer would have looked like for those few companies that DID go on to dominate a market? I guess if your product has vendor lock-in or network/virual effects then you're in a better place to answer it well (?).

blizkreeg 11y ago
second this. At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? I mean, we're going to give it our best shot and try to wow our customers and stay ahead of competition. Examples would be great, if any of you have some.
- moonchrome 11y ago
  >At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? At that stage almost everything is story telling
rl3 11y ago
>Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? I'd imagine a good answer might try to elucidate what it is they intend to do, and at least approximate how world domination could be achieved. Explaining the market fit of the startup in detail, and how it meshes with present and future trends probably wouldn't hurt either.
patio11 11y ago
Imagine Slack's answer to this, which is "network effects within teams and, more subtly, between teams. Slack will be proposed by your engineering team because their OSS projects use Slavk, their conferences use Slack, their last client used Slack, etc. Then after your entire corporate brain uses Slack for its synapses we, not to put too fine a point on it, own your soul."
- kzhahou 11y ago
  Ok, but slack is just like campfire/hipchat/yammer/etc and none of those have come close to the outcome you're proposing. So what does "your" product, Slack, plan to do to actually achieve this, besides just being better than the rest?
  - elliotec 11y ago
    How is "just being better than the rest" not a good enough answer? Better marketing, better features, better marketing, better marketing(!!!). Better than the rest, but what more do you need to be better at than convincing more people to use it? That's what makes a monopoly.
    - kzhahou 11y ago
      Obviously if you can pull it off then you're golden. But we're discussing the early pitch here. It's not enough to say We'll do the same as product X but BETTER. That's totally generic and not a plan. So there has to be SOME insight at least on what might constitute "better," and then how to translate that into market dominance.
  - nostrademons 11y ago
    "We're going to take $340M in funding so that we build every conceivable integration and API into the product, blast the hell out of every marketing channel, and ensure that there's never a reason to use anything besides Slack. And if you do, you're stupid." More seriously - network effects exist when there are reasons to choose your product other than what you, as the company running it, have personally built. People shop on EBay not because it's a great site (it isn't), but because if you want to find someone selling a rare item, you are far more likely to find it there than anywhere else. People stay on Facebook (despite oftentimes hating them) because their friends are on Facebook; it has nothing to do with what Facebook does, and everything to do with the behavior of their friends. People use Whatsapp/Line/WeChat/Hangouts/iMessage based on what their friends are using, irrespective of the relative technical merits. People stay at AirBnB not because it's a great site (though IMHO, it is), but because they're far more likely to find a nice place at an out-of-the-way location than any other hotel search. The office messaging market - for whatever reason - has started to exhibit these dynamics. People setup Slack channels not because it's a good service, but because their employees encourage them to setup Slack channels. They write plugins for Slack not because they want to, but because that's where the audience is. They stay on Slack because that's where all the plugins are. Maybe these were intentional moves that Stewart Butterfield carefully planned out, or maybe they were just accidents of history. From an investor's POV, they don't care: the fact is that people do ask their employers to setup Slack channels, and they do get on Slack because other groups they're part of are using it, and that dynamic will lead to a monopoly that the investor wants to be a part of.
EGreg 11y ago
Why must everything be a monopoly? The biggest ecosystems of wealth has been created around open source software. Email. The Web. Linux. Webkit. Git. MySQL. NGinX. Wordpress. Wikimedia. You can build something for the world without capturing 100% of the value that results, and still have a billion dollar company. Or several, if they all have a first mover advantage. Once you have a huge audience on a platform you built, the subsequent investments can be seriously de-risked.
- phodo 11y ago
  I appreciate your point, but the difference is that in the "monopoly" scenario, the creator is the capturer of value. In the open source case, the creator does not necessarily capture the value. It is others (in the ecosystem, as you suggest) that capture the value. "Building on the shoulders of giants..." So ultimately it depends on your motivations. In the Peter Thiel book, I believe the whole premise was to have an entity that creates and captures.
- tim333 11y ago
  Everything doesn't need to be a monopoly but investors will want to cash in somehow. Github is perhaps a good example of cashing in on Git.
d0m 11y ago
>> Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? Yes, here are a few examples: 1. Some businesses require a massive amount of capital upfront and won't work in a iterative-lean-startup model. E.g. Tesla and SpaceX. I can't think of many people who can pull that off. 2. Most startups are started because the founders "live in the future", where the market isn't really a market yet but it's clear that there's going to be one. Basically, potential investors and competitors think you're wasting your time. I would say this is the most common thing at YC. When they "get it", you're already far ahead. Think of Paypal, Heroku, Reddit, optimizely or Stripe. (And hundred of others) 3. Owning the brand. I.e. You create some kind of horror app and you are Stephen King. Or, you're a big player in a space and expand in another one using your existing network. For instance, think about how fitbit keep adding new products, selling them to their existing customers, etc. 4. Expertise. You are one of the best in the world. I.e. Working on a new fusion reactor or some quantum computing. If you're thinking "Most startup don't have those kind of competitive advantages", you're right. And most startups fail. Executing better than the competition or doing your best isn't a competitive advantage, it's just a coin flip. To know if you have a real competitive advantage, you need to think that your competitors are going to raise more money, have a better team and execute better, but you should still beat them.
- millama 11y ago
  Tesla -- we'll see in 10 years, but looks good. SpaceX -- great business model... get massive government contracts, hire ex-government employees, and pretend that you're not dependent on the government. Paypal -- basically a luckbox. Heroku -- commodity, getting eaten alive. Reddit -- going strong. Optimizely -- commodity, trouble hitting numbers, getting crushed. Stripe -- commodity, failed to grow substantially beyond MMP, going to be eaten alive.

by kzhahou 11y ago

blizkreeg 11y ago

second this. At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? I mean, we're going to give it our best shot and try to wow our customers and stay ahead of competition. Examples would be great, if any of you have some.

moonchrome 11y ago
>At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? At that stage almost everything is story telling

rl3 11y ago

>Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? I'd imagine a good answer might try to elucidate what it is they intend to do, and at least approximate how world domination could be achieved. Explaining the market fit of the startup in detail, and how it meshes with present and future trends probably wouldn't hurt either.

patio11 11y ago

Imagine Slack's answer to this, which is "network effects within teams and, more subtly, between teams. Slack will be proposed by your engineering team because their OSS projects use Slavk, their conferences use Slack, their last client used Slack, etc. Then after your entire corporate brain uses Slack for its synapses we, not to put too fine a point on it, own your soul."

kzhahou 11y ago
Ok, but slack is just like campfire/hipchat/yammer/etc and none of those have come close to the outcome you're proposing. So what does "your" product, Slack, plan to do to actually achieve this, besides just being better than the rest?
- elliotec 11y ago
  How is "just being better than the rest" not a good enough answer? Better marketing, better features, better marketing, better marketing(!!!). Better than the rest, but what more do you need to be better at than convincing more people to use it? That's what makes a monopoly.
  - kzhahou 11y ago
    Obviously if you can pull it off then you're golden. But we're discussing the early pitch here. It's not enough to say We'll do the same as product X but BETTER. That's totally generic and not a plan. So there has to be SOME insight at least on what might constitute "better," and then how to translate that into market dominance.
- nostrademons 11y ago
  "We're going to take $340M in funding so that we build every conceivable integration and API into the product, blast the hell out of every marketing channel, and ensure that there's never a reason to use anything besides Slack. And if you do, you're stupid." More seriously - network effects exist when there are reasons to choose your product other than what you, as the company running it, have personally built. People shop on EBay not because it's a great site (it isn't), but because if you want to find someone selling a rare item, you are far more likely to find it there than anywhere else. People stay on Facebook (despite oftentimes hating them) because their friends are on Facebook; it has nothing to do with what Facebook does, and everything to do with the behavior of their friends. People use Whatsapp/Line/WeChat/Hangouts/iMessage based on what their friends are using, irrespective of the relative technical merits. People stay at AirBnB not because it's a great site (though IMHO, it is), but because they're far more likely to find a nice place at an out-of-the-way location than any other hotel search. The office messaging market - for whatever reason - has started to exhibit these dynamics. People setup Slack channels not because it's a good service, but because their employees encourage them to setup Slack channels. They write plugins for Slack not because they want to, but because that's where the audience is. They stay on Slack because that's where all the plugins are. Maybe these were intentional moves that Stewart Butterfield carefully planned out, or maybe they were just accidents of history. From an investor's POV, they don't care: the fact is that people do ask their employers to setup Slack channels, and they do get on Slack because other groups they're part of are using it, and that dynamic will lead to a monopoly that the investor wants to be a part of.

EGreg 11y ago

Why must everything be a monopoly? The biggest ecosystems of wealth has been created around open source software. Email. The Web. Linux. Webkit. Git. MySQL. NGinX. Wordpress. Wikimedia. You can build something for the world without capturing 100% of the value that results, and still have a billion dollar company. Or several, if they all have a first mover advantage. Once you have a huge audience on a platform you built, the subsequent investments can be seriously de-risked.

phodo 11y ago
I appreciate your point, but the difference is that in the "monopoly" scenario, the creator is the capturer of value. In the open source case, the creator does not necessarily capture the value. It is others (in the ecosystem, as you suggest) that capture the value. "Building on the shoulders of giants..." So ultimately it depends on your motivations. In the Peter Thiel book, I believe the whole premise was to have an entity that creates and captures.
tim333 11y ago
Everything doesn't need to be a monopoly but investors will want to cash in somehow. Github is perhaps a good example of cashing in on Git.

d0m 11y ago

>> Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? Yes, here are a few examples: 1. Some businesses require a massive amount of capital upfront and won't work in a iterative-lean-startup model. E.g. Tesla and SpaceX. I can't think of many people who can pull that off. 2. Most startups are started because the founders "live in the future", where the market isn't really a market yet but it's clear that there's going to be one. Basically, potential investors and competitors think you're wasting your time. I would say this is the most common thing at YC. When they "get it", you're already far ahead. Think of Paypal, Heroku, Reddit, optimizely or Stripe. (And hundred of others) 3. Owning the brand. I.e. You create some kind of horror app and you are Stephen King. Or, you're a big player in a space and expand in another one using your existing network. For instance, think about how fitbit keep adding new products, selling them to their existing customers, etc. 4. Expertise. You are one of the best in the world. I.e. Working on a new fusion reactor or some quantum computing. If you're thinking "Most startup don't have those kind of competitive advantages", you're right. And most startups fail. Executing better than the competition or doing your best isn't a competitive advantage, it's just a coin flip. To know if you have a real competitive advantage, you need to think that your competitors are going to raise more money, have a better team and execute better, but you should still beat them.

millama 11y ago
Tesla -- we'll see in 10 years, but looks good. SpaceX -- great business model... get massive government contracts, hire ex-government employees, and pretend that you're not dependent on the government. Paypal -- basically a luckbox. Heroku -- commodity, getting eaten alive. Reddit -- going strong. Optimizely -- commodity, trouble hitting numbers, getting crushed. Stripe -- commodity, failed to grow substantially beyond MMP, going to be eaten alive.