6 ms·

>There are a myriad ways to make a company fail, but only two ways to make one succeed. One of those is to make a product that fills a heretofore unmet market

by trevyn 9y ago

>There are a myriad ways to make a company fail, but only two ways to make one succeed. One of those is to make a product that fills a heretofore unmet market need, and to do it better, faster, and cheaper than the competition. That is incredibly hard to do. (I'll leave figuring out the second one as an exercise.) Is he implying some sort of unethical behavior as the second way?

lisper 9y ago
Yes. [UPDATE: before you downvote this answer you should know that I am the OP.]
- trevyn 9y ago
  Something specific, or just unethical behavior in general?
  - gizmo 9y ago
    Most unethical behavior doesn't pay. Some unethical behavior is staggeringly profitable. I don't want to go into detail, because the less known these things are the better. I think there are two main cases: 1) business models based on the exploitation of others, and 2) low margin businesses where ethical players get crushed by those willing to take unethical/illegal shortcuts. Luckily you _can_ become successful even if you rigidly adhere to the highest ethical standards, you just have to choose your business model carefully.
  - lisper 9y ago
    Not "in general", but there is a long list of unethical behaviors that, sadly, can contribute to success. Selling snake oil. Abusing monopolies. Flat-out lying. However, it's not good to go to the other extreme. I've seen companies fail because the CEO bent over too far backwards to be ethical and as a result let people walk all over him. One of the qualities that seems to be required in a successful founder is a willingness to be an asshole when circumstances demand it (and being able to tell what those circumstances are!)
    - gizmo 9y ago
      It's not _required_ to be unethical, it's just really tempting when you see others get rewarded for their unethical behavior. "When circumstances demand it" is of course the excuse of all unethical people throughout history. Total weak sauce.
      - watwut 9y ago
        I agree, but there is also subtle difference between unethical and asshole. You can be ethical asshole.
        gizmo 9y ago
        "Asshole" was used in contrast to being "too ethical", so from the context it cannot mean anything except for "unethical". If the parent meant "asshole" in the conventional sense (e.g. parking in two spots) it would make no sense to bring up in this discussion. The parent is rationalizing unethical behavior by classifying it as merely assholish. If you read the post carefully you can see the point where the cognitive dissonance takes place. The parent even said "the other extreme" is being too ethical, so he's clearing arguing that acting too ethical is undesirable.
      - nickpsecurity 9y ago
        Try being the only one without a pile of patents on important tech in a patent war. Offensive use of patents + piles of money from market share and their own lock-in are among the reasons newer, big players are holding off older ones in the patent suits designed to eliminate competition with older ones. Originally, I thought I could just avoid what was patented until I learned how vague and ridiculous they are. Plus, there's said to be 200,000+ patents that could cover smartphones alone. Where would I start if doing legal, due diligence? Then, maybe I'd license them for a fair amount. I found NDA'd offers, high-balling, and even I.P. holders suing people w/ Oracle demanding $25 per Android phone for its tiny slice of smartphone patents, Java, or whatever. So much more honest licensing. So, status quo for tech companies is to not read on patents (avoid knowing infringement), grow as fast as they can no matter what patent laws they violate, accumulate their own patents where possible for use in self-defense, and build up lawyer money. One day, when the attacks come, the company will be ready for a solid defense where it claims it didn't know about the patents, they're void, or they're overpriced. This might also be leverage for a better deal during an acquisition. The operating environment is unethical in its very nature with certain things such as patents, trademarks, copyright, lock-in w/ formats/protocols (eg walled gardens) and so on. So, those that can use them will get a financial advantage. Those that don't might get so much less of the market they get squashed or denied a fortune they could be doing a lot of good with. Lots of grey areas to think through in these sorts of things.
- erikb 9y ago
  Oh, I have totally missed that part. Happy to see that you didn't lose the money without learning something. What decision have you made? Howling with the wolves or getting back to being a sheep? I'm still unclear in this part and actually hoped for some suggestions in one or the other direction.
  - lisper 9y ago
    Bah ah ah ah ah. ;-) Seriously though, I do have a strong preference for erring on the side of being ethical and respectful of others. (But that could be the reason none of my companies have succeeded.)
beambot 9y ago
My immediate thought was more along the lines of companies that were built for acquisition -- either for the team or a technology (without business model).
- gt_ 9y ago
  Good point. I've only spent a limited amount of time in startup space but it seems this intention is usually considered more as a possible path rather than an intention. It's a common accusation but seems outlandish and unnecessary to me. If anyone thinks this is wrong, please say so. I'm interested.
  - trevyn 9y ago
    This is reasonable -- I think companies that get a solid team together and then look for a quick acquisition is a way for top players to capture something closer to their market value. Or as a way to develop good tech that a big player is interested in, without having to deal with the specifics of profitably monetizing that tech. I don't understand why he'd be cagey about telling us that, though.
  - v12golfcart 9y ago
    My two cents, heavily influenced by Blank's book :) While any sentence-long description will be an oversimplification, I think fitting everything under the sun in a "1st way" is counterproductive. If all we're talking about is how they succeed with Ron's components in mind, then there are at least a few ways. I see the the need-being-met thing as a spectrum. The more unmet the need is, the less likely competition is a problem at that moment, so just solving it is sufficient (who knew having a car was actually a 'problem' versus purchasing transit from 'a' to 'b'?) I've also seen that sometimes a product that focuses on a niche and does it REALLY well is better (for that niche) and NOT cheaper, but they succeed too (e.g. Veeva). Sometimes a product that focuses on the lower end of the market is cheaper and not better (i.e. functionality) but ppl underestimate the long-tail of non-users. (maybe like Gusto vs. traditional payroll providers or RelateIQ vs. Salesforce) On acquisitions, I've heard that acquihires usually make little-to-no money for the investors. But as beambot also mentioned, the business could be acquired for hard tech that, even if no customers/bizmodel, some other business would find value in having (maybe like Facebook>Friendfeed or Linkedin>RunHop). But to reverse engineer that from day 1 I imagine would be even harder than building a product to an unmet need haha. You don't know if the bigger co is working on it internally or if they'd scoop up somebody else. Wonder if this was Meerkat's plan, gone awry <-- speculation. ¯\_(ツ)_/¯.
deleted 9y ago
[deleted]
gt_ 9y ago
My guess is the second consists of pretending to do the first, so 'dishonesty'.
nsx147 9y ago
timing?
CodeWriter23 9y ago
It's the "do something illegal that people really want, then force politicians to rewrite laws or face the ire of their constituents" business model. Not sure if that's unethical or bold. When it comes to taxi laws, I view the laws as unethical, and challenging them as bold. OTOH, I see hotel laws as providing a necessary constraint on the cost of housing. It worked as the foundation for several now big startups, but was the perhaps ethical breaking of said rules some kind of gateway drug to unethical behavior? Kinda looks that way in Uber and AirBNB's case. And then again breaking perceived rules, ideas like Big Oil will be here forever or you have to be a defense firm to get a rocket launch contract, is bold and lucrative (or apparently future-lucrative). There is a fine line between bold and foolish.
mindcrime 9y ago
One of those is to make a product that fills a heretofore unmet market need, and to do it better, faster, and cheaper than the competition That's note quite true. You might choose to compete on, say, price, but that certainly isn't required. Likewise, you don't necessarily have to have a better product, if you are so much more operationally efficient that you can sell you product cheaper than the competition. It would be better to say that you need to be better than your competition in some combination of "better, faster and/or cheaper". For more on this topic, I recommend The Discipline of Market Leaders by Fred Wiersema and Michael Treacy.

by trevyn 9y ago

lisper 9y ago

Yes. [UPDATE: before you downvote this answer you should know that I am the OP.]

trevyn 9y ago
Something specific, or just unethical behavior in general?
- gizmo 9y ago
  Most unethical behavior doesn't pay. Some unethical behavior is staggeringly profitable. I don't want to go into detail, because the less known these things are the better. I think there are two main cases: 1) business models based on the exploitation of others, and 2) low margin businesses where ethical players get crushed by those willing to take unethical/illegal shortcuts. Luckily you _can_ become successful even if you rigidly adhere to the highest ethical standards, you just have to choose your business model carefully.
- lisper 9y ago
  Not "in general", but there is a long list of unethical behaviors that, sadly, can contribute to success. Selling snake oil. Abusing monopolies. Flat-out lying. However, it's not good to go to the other extreme. I've seen companies fail because the CEO bent over too far backwards to be ethical and as a result let people walk all over him. One of the qualities that seems to be required in a successful founder is a willingness to be an asshole when circumstances demand it (and being able to tell what those circumstances are!)
  - gizmo 9y ago
    It's not _required_ to be unethical, it's just really tempting when you see others get rewarded for their unethical behavior. "When circumstances demand it" is of course the excuse of all unethical people throughout history. Total weak sauce.
    - watwut 9y ago
      I agree, but there is also subtle difference between unethical and asshole. You can be ethical asshole.
      - gizmo 9y ago
        "Asshole" was used in contrast to being "too ethical", so from the context it cannot mean anything except for "unethical". If the parent meant "asshole" in the conventional sense (e.g. parking in two spots) it would make no sense to bring up in this discussion. The parent is rationalizing unethical behavior by classifying it as merely assholish. If you read the post carefully you can see the point where the cognitive dissonance takes place. The parent even said "the other extreme" is being too ethical, so he's clearing arguing that acting too ethical is undesirable.
    - nickpsecurity 9y ago
      Try being the only one without a pile of patents on important tech in a patent war. Offensive use of patents + piles of money from market share and their own lock-in are among the reasons newer, big players are holding off older ones in the patent suits designed to eliminate competition with older ones. Originally, I thought I could just avoid what was patented until I learned how vague and ridiculous they are. Plus, there's said to be 200,000+ patents that could cover smartphones alone. Where would I start if doing legal, due diligence? Then, maybe I'd license them for a fair amount. I found NDA'd offers, high-balling, and even I.P. holders suing people w/ Oracle demanding $25 per Android phone for its tiny slice of smartphone patents, Java, or whatever. So much more honest licensing. So, status quo for tech companies is to not read on patents (avoid knowing infringement), grow as fast as they can no matter what patent laws they violate, accumulate their own patents where possible for use in self-defense, and build up lawyer money. One day, when the attacks come, the company will be ready for a solid defense where it claims it didn't know about the patents, they're void, or they're overpriced. This might also be leverage for a better deal during an acquisition. The operating environment is unethical in its very nature with certain things such as patents, trademarks, copyright, lock-in w/ formats/protocols (eg walled gardens) and so on. So, those that can use them will get a financial advantage. Those that don't might get so much less of the market they get squashed or denied a fortune they could be doing a lot of good with. Lots of grey areas to think through in these sorts of things.
erikb 9y ago
Oh, I have totally missed that part. Happy to see that you didn't lose the money without learning something. What decision have you made? Howling with the wolves or getting back to being a sheep? I'm still unclear in this part and actually hoped for some suggestions in one or the other direction.
- lisper 9y ago
  Bah ah ah ah ah. ;-) Seriously though, I do have a strong preference for erring on the side of being ethical and respectful of others. (But that could be the reason none of my companies have succeeded.)

beambot 9y ago

My immediate thought was more along the lines of companies that were built for acquisition -- either for the team or a technology (without business model).

gt_ 9y ago
Good point. I've only spent a limited amount of time in startup space but it seems this intention is usually considered more as a possible path rather than an intention. It's a common accusation but seems outlandish and unnecessary to me. If anyone thinks this is wrong, please say so. I'm interested.
- trevyn 9y ago
  This is reasonable -- I think companies that get a solid team together and then look for a quick acquisition is a way for top players to capture something closer to their market value. Or as a way to develop good tech that a big player is interested in, without having to deal with the specifics of profitably monetizing that tech. I don't understand why he'd be cagey about telling us that, though.
- v12golfcart 9y ago
  My two cents, heavily influenced by Blank's book :) While any sentence-long description will be an oversimplification, I think fitting everything under the sun in a "1st way" is counterproductive. If all we're talking about is how they succeed with Ron's components in mind, then there are at least a few ways. I see the the need-being-met thing as a spectrum. The more unmet the need is, the less likely competition is a problem at that moment, so just solving it is sufficient (who knew having a car was actually a 'problem' versus purchasing transit from 'a' to 'b'?) I've also seen that sometimes a product that focuses on a niche and does it REALLY well is better (for that niche) and NOT cheaper, but they succeed too (e.g. Veeva). Sometimes a product that focuses on the lower end of the market is cheaper and not better (i.e. functionality) but ppl underestimate the long-tail of non-users. (maybe like Gusto vs. traditional payroll providers or RelateIQ vs. Salesforce) On acquisitions, I've heard that acquihires usually make little-to-no money for the investors. But as beambot also mentioned, the business could be acquired for hard tech that, even if no customers/bizmodel, some other business would find value in having (maybe like Facebook>Friendfeed or Linkedin>RunHop). But to reverse engineer that from day 1 I imagine would be even harder than building a product to an unmet need haha. You don't know if the bigger co is working on it internally or if they'd scoop up somebody else. Wonder if this was Meerkat's plan, gone awry <-- speculation. ¯\_(ツ)_/¯.

deleted 9y ago

[deleted]

gt_ 9y ago

My guess is the second consists of pretending to do the first, so 'dishonesty'.

nsx147 9y ago

timing?

CodeWriter23 9y ago

It's the "do something illegal that people really want, then force politicians to rewrite laws or face the ire of their constituents" business model. Not sure if that's unethical or bold. When it comes to taxi laws, I view the laws as unethical, and challenging them as bold. OTOH, I see hotel laws as providing a necessary constraint on the cost of housing. It worked as the foundation for several now big startups, but was the perhaps ethical breaking of said rules some kind of gateway drug to unethical behavior? Kinda looks that way in Uber and AirBNB's case. And then again breaking perceived rules, ideas like Big Oil will be here forever or you have to be a defense firm to get a rocket launch contract, is bold and lucrative (or apparently future-lucrative). There is a fine line between bold and foolish.

mindcrime 9y ago

One of those is to make a product that fills a heretofore unmet market need, and to do it better, faster, and cheaper than the competition That's note quite true. You might choose to compete on, say, price, but that certainly isn't required. Likewise, you don't necessarily have to have a better product, if you are so much more operationally efficient that you can sell you product cheaper than the competition. It would be better to say that you need to be better than your competition in some combination of "better, faster and/or cheaper". For more on this topic, I recommend The Discipline of Market Leaders by Fred Wiersema and Michael Treacy.