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> the market is probably big enough to fit multiple nearly identical products at the same time and still have them all profitable. Agreed, but VCs don't need y
by a13n 7y ago
> the market is probably big enough to fit multiple nearly identical products at the same time and still have them all profitable.
Agreed, but VCs don't need you to build a profitable company, they need you to build a billion dollar company, in order to return their fund.
This "How are you going to win your market?" is driven by venture capitalism. Most startups in the Bay Area are VC-backed.
- dheera 7y agoChevron, Shell, UPS, and FedEx are all billion dollar companies. They succeeded not because of differentiating product, but because the market is so big that it's hard for a single company to dominate it.
- a13n 7y agoSo you think if you pick a big enough market, then building a billion dollar company with no product differentiation will be trivial?
- dheera 7y agoNot trivial, but very possible with a lot of hard work. Let's say you want to start a new grocery store chain and compete with Safeway. Differentiating your product (e.g. Trader Joe's) is one way, but another way is to just build new grocery stores where people want them and they don't already exist.
- a13n 7y agoAll of these companies were started between 50 and 150 years ago, when there was much less competition. These days you need a better story for how you're going to win a market and keep it.
- dheera 7y agoWhile that's true that there were fewer people starting businesses, there were also proportionally fewer consumers in the world. I'm not sure things were any easier 50-150 years ago in that respect. IMO only VCs want a bullsh!t "story". The rest of the world just wants X for $C and doesn't have access to it yet because the competitors aren't big enough. Brand loyalty, network effects, and cost of switching applies to some certain markets, but also doesn't apply to a lot of markets. Nobody reads the story behind the founding of Taco Bell or Del Taco. They just get hungry, see the sign, and eat. Billion dollar business right there.
- a13n 7y agoI think VCs want a good story because they've been burned too many times by companies that sound like they could be big, but then fail because: – not enough product differentiation – not a large enough market – not defensible enough Again, Taco Bell / Del Taco were both started 50+ years ago, and have nothing to do with starting a company in today's internet age.