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Too Many Gas Stations (A parable for startups)

10 points by MicahWedemeyer 18y ago

MicahWedemeyer 18y ago
Don’t forget that sometimes a startup can take a bite out of the existing market by taking the current status quo and twisting it. To continue the gas analogy, perhaps you believe that there’s a better, more convenient way to sell gas, and you’re willing to bet that others will agree with you and be willing to pay you for it.
sanjayparekh 18y ago
Micah - definitely agree which is why I said: Are you entering an already crowded field with the hopes of doing what everyone else is doing and then try to sell some lottery tickets and candy bars along with it? For gas stations, maybe it would be interesting to have paid memberships to a gas station franchise (would have made a killing in the last few weeks in Atlanta). But doing the same thing as everyone else plus selling candy bars isn’t the way to make a killing. At least I can’t think of an example where that was done to huge success.
- LogicHoleFlaw 18y ago
  CostCo does actually have paid memberships to their discount gas. They do an amazing volume of business.
  - sanjayparekh 18y ago
    I was actually thinking memberships only to a gas station. I'm a Costco member but they make their money (or at least more money) on the stuff inside, instead of at the pump. With our gas delivery problems in the last few weeks a gas station that catered only to members (and had gas) would have made a killing from membership signups. Come to think of it, Costco probably would have too if they weren't subject to the same issues as everyone else.
- MicahWedemeyer 18y ago
  Ah, sorry. Missed that part.
razzmataz 18y ago
Selling gas by itself isn't profitable (10 cents or less profit per gallon). Hence most gas stations are either glued to carwashes, or have convience stores as a side, with a few outliers that dabble in car repair.
- sanjayparekh 18y ago
  Absolutely correct. Part of the reason for the post was to show how obvious it is (during our current gas shortage situation) that there are more gas stations than consumers really need. If there weren't, there would be lines and shortages until all the gas stations opened back up (or perhaps we were at 90%). In fact, things went back to "normal" when there were about half of all stations back open. This is the same thing you see with Internet (and other) businesses. As entrepreneurs we should all try to be a little more intelligent about what arenas we're entering so that we don't waste our time and lose (admittedly lemming like) investor money.

Don’t forget that sometimes a startup can take a bite out of the existing market by taking the current status quo and twisting it. To continue the gas analogy, perhaps you believe that there’s a better, more convenient way to sell gas, and you’re willing to bet that others will agree with you and be willing to pay you for it.

sanjayparekh 18y ago

Micah - definitely agree which is why I said: Are you entering an already crowded field with the hopes of doing what everyone else is doing and then try to sell some lottery tickets and candy bars along with it? For gas stations, maybe it would be interesting to have paid memberships to a gas station franchise (would have made a killing in the last few weeks in Atlanta). But doing the same thing as everyone else plus selling candy bars isn’t the way to make a killing. At least I can’t think of an example where that was done to huge success.

LogicHoleFlaw 18y ago
CostCo does actually have paid memberships to their discount gas. They do an amazing volume of business.
- sanjayparekh 18y ago
  I was actually thinking memberships only to a gas station. I'm a Costco member but they make their money (or at least more money) on the stuff inside, instead of at the pump. With our gas delivery problems in the last few weeks a gas station that catered only to members (and had gas) would have made a killing from membership signups. Come to think of it, Costco probably would have too if they weren't subject to the same issues as everyone else.
MicahWedemeyer 18y ago
Ah, sorry. Missed that part.

razzmataz 18y ago

Selling gas by itself isn't profitable (10 cents or less profit per gallon). Hence most gas stations are either glued to carwashes, or have convience stores as a side, with a few outliers that dabble in car repair.

sanjayparekh 18y ago
Absolutely correct. Part of the reason for the post was to show how obvious it is (during our current gas shortage situation) that there are more gas stations than consumers really need. If there weren't, there would be lines and shortages until all the gas stations opened back up (or perhaps we were at 90%). In fact, things went back to "normal" when there were about half of all stations back open. This is the same thing you see with Internet (and other) businesses. As entrepreneurs we should all try to be a little more intelligent about what arenas we're entering so that we don't waste our time and lose (admittedly lemming like) investor money.