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Interesting article - a lot of good stuff in it but I found it a bit to general to be really useful. As an example, the author states: "So you need to get to ma

Interesting article - a lot of good stuff in it but I found it a bit to general to be really useful. As an example, the author states: "So you need to get to market with a viable product before anyone else does." That's the type of statement that I question - there are plenty of examples of companies creating products in saturated markets where they were not the first mover. In fact, sometime being a first mover can be a disadvantage as you must, as a startup, spend huge amounts of time and money educating the market. Now, the author's approach of "look at the trend, get in front of it" is great - but it's pretty rare that someone can do that. In startups, I've usually seen that luck plays a bigger role in it than anyone wants to admit - that is, you start a company, and you happen onto the right market wave at the right time. Definitely bookmarking it!

coffeemug 12y ago
> there are plenty of examples of companies creating products in saturated markets where they were not the first mover There is an "exceptions" section closer to the end of the post that discuss this, though it probably should have been longer. The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time. You can jump into a saturated market, but you need a hypothesis as to why you're going to win (a distribution edge that existing competitors don't have, a new trend that existing competitors can't capitalize on, etc.) Especially in the latter case, one could make an argument that you will have discovered a new trend/market, though at that point it's a matter of definitions.
- inthewoods 12y ago
  "The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time." I'd be curious to find data to back up that assertion - I've personally seen way more people/companies fail trying to skate to where the puck is going to be vs. just going after businesses where there are already existing solutions. But again, this is anecdotal data. The best example I have of this is Google. Search was done and owned by a handful of players - they innovated and won. But to your point about definitions - did they win on that, or win on creating Adwords (which they were also not the first mover on)? Perhaps it comes down to this: entering a market where there are low switching costs means that you can enter late with a significantly better product - but it has to be 4x better (that's my rule). Meaning the product has to be 4x better than the existing solution. If, however, you're entering a market with high switching costs, then the benefit probably has to be great than 4x - maybe 8x. As an example - look at all the people trying to get people to switch off of Salesforce.com. I don't know anyone that likes this product - but no one can switch because the costs are too high across the board - organizationally, data-wise, software - while the resulting CRM might be marginally better. That means that startups going after that can get traction with people who don't have a CRM, but not with existing CRM customers - and thus bang their head against the wall/fail.
vinceguidry 12y ago
I found the article great in forcing me to reconsider my goals in that space. I'd always had this belief that it was possible, eventually, to find the right idea and break through and become the next Microsoft / Google / Apple. The more I actually understand about the broader economic environment, and the more I read about the people in question who started these companies, the more it just looks like right-place-right-time luck. The article puts that neatly in proper perspective. And that changes the personal self-actualization path calculus for me considerably. Targeting "building a rocket ship" as a goal doesn't make you any more likely to actually build a rocket ship than just starting a company in wherever you find your passion. Where you find your passion is, just due to the way humans are, more likely to be rocket-ship-worthy than any idea borne out of any rational brainstorming process aimed at producing one.
- frandroid 12y ago
  > the more it just looks like right-place-right-time luck That's confirmation bias. There are tons more people than you know of in the right-place-right-time, but couldn't/wouldn't act on it. You still have to build the start up and be persistent at it, have the right vision, do the right adjustments when competition comes around. These are also features shared by the Microsoft / Google / Apples out there.
  - tjradcliffe 12y ago
    It's not an either/or: almost every successful company requires both hard work and luck. In very rare cases one or the other might be sufficient, but in the vast majority of cases both are necessary. The amount of luck required can be reduced by hard work, but it can't be taken to zero. In the usual case, picking a product that turns out to have high demand is the biggest area where luck matters. There are two kinds of high-demand products: the things that everyone wants but no one knows how to do, and things that no one knows they want but everyone knows how to do. Fractal image compression is a good example of the former. Almost everything else is a good example of the latter: smart phones, Facebook, Twitter. There are some things that are both: the Model T ("If I'd asked my customers what I wanted they would have said a faster horse") and so on. If you choose one of the former, the odds are you'll fail because if no one else can do it, you probably won't either. If you choose one of the latter, the odds are you'll fail because if no one knows they want it, it's probably a stupid idea--which is often a smart idea whose time has not yet come. This is not to say you shouldn't go for it! "The odds are you'll fail" is a simple statement of fact with regard to starting a business, but only for certain values of "fail". You'll learn a huge amount, grow in ways you never knew were possible, and have the adventure of a lifetime. Just be really, really careful about not getting wedged financially, and especially make sure you don't let friends or family members over-invest.
eldavido 12y ago
Differentiation is much broader than just the product. It could be in targeting a particular geographic niche, offering different financing, more convenient packaging, etc. In marketing, they have a concept of the "four Ps" - product price place (distribution) promotion; all of these can be fertile ground to set yourself apart from the competition.
sparaker 12y ago
A nice read. I am going to adopt alot of practices from this article. And yes i think alot of times you just get lucky in a few things that can make or break your product. Good affiliations early on can give your product good PR.
deleted 12y ago
[deleted]

coffeemug 12y ago

> there are plenty of examples of companies creating products in saturated markets where they were not the first mover There is an "exceptions" section closer to the end of the post that discuss this, though it probably should have been longer. The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time. You can jump into a saturated market, but you need a hypothesis as to why you're going to win (a distribution edge that existing competitors don't have, a new trend that existing competitors can't capitalize on, etc.) Especially in the latter case, one could make an argument that you will have discovered a new trend/market, though at that point it's a matter of definitions.

inthewoods 12y ago
"The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time." I'd be curious to find data to back up that assertion - I've personally seen way more people/companies fail trying to skate to where the puck is going to be vs. just going after businesses where there are already existing solutions. But again, this is anecdotal data. The best example I have of this is Google. Search was done and owned by a handful of players - they innovated and won. But to your point about definitions - did they win on that, or win on creating Adwords (which they were also not the first mover on)? Perhaps it comes down to this: entering a market where there are low switching costs means that you can enter late with a significantly better product - but it has to be 4x better (that's my rule). Meaning the product has to be 4x better than the existing solution. If, however, you're entering a market with high switching costs, then the benefit probably has to be great than 4x - maybe 8x. As an example - look at all the people trying to get people to switch off of Salesforce.com. I don't know anyone that likes this product - but no one can switch because the costs are too high across the board - organizationally, data-wise, software - while the resulting CRM might be marginally better. That means that startups going after that can get traction with people who don't have a CRM, but not with existing CRM customers - and thus bang their head against the wall/fail.

vinceguidry 12y ago

I found the article great in forcing me to reconsider my goals in that space. I'd always had this belief that it was possible, eventually, to find the right idea and break through and become the next Microsoft / Google / Apple. The more I actually understand about the broader economic environment, and the more I read about the people in question who started these companies, the more it just looks like right-place-right-time luck. The article puts that neatly in proper perspective. And that changes the personal self-actualization path calculus for me considerably. Targeting "building a rocket ship" as a goal doesn't make you any more likely to actually build a rocket ship than just starting a company in wherever you find your passion. Where you find your passion is, just due to the way humans are, more likely to be rocket-ship-worthy than any idea borne out of any rational brainstorming process aimed at producing one.

frandroid 12y ago
> the more it just looks like right-place-right-time luck That's confirmation bias. There are tons more people than you know of in the right-place-right-time, but couldn't/wouldn't act on it. You still have to build the start up and be persistent at it, have the right vision, do the right adjustments when competition comes around. These are also features shared by the Microsoft / Google / Apples out there.
- tjradcliffe 12y ago
  It's not an either/or: almost every successful company requires both hard work and luck. In very rare cases one or the other might be sufficient, but in the vast majority of cases both are necessary. The amount of luck required can be reduced by hard work, but it can't be taken to zero. In the usual case, picking a product that turns out to have high demand is the biggest area where luck matters. There are two kinds of high-demand products: the things that everyone wants but no one knows how to do, and things that no one knows they want but everyone knows how to do. Fractal image compression is a good example of the former. Almost everything else is a good example of the latter: smart phones, Facebook, Twitter. There are some things that are both: the Model T ("If I'd asked my customers what I wanted they would have said a faster horse") and so on. If you choose one of the former, the odds are you'll fail because if no one else can do it, you probably won't either. If you choose one of the latter, the odds are you'll fail because if no one knows they want it, it's probably a stupid idea--which is often a smart idea whose time has not yet come. This is not to say you shouldn't go for it! "The odds are you'll fail" is a simple statement of fact with regard to starting a business, but only for certain values of "fail". You'll learn a huge amount, grow in ways you never knew were possible, and have the adventure of a lifetime. Just be really, really careful about not getting wedged financially, and especially make sure you don't let friends or family members over-invest.

eldavido 12y ago

Differentiation is much broader than just the product. It could be in targeting a particular geographic niche, offering different financing, more convenient packaging, etc. In marketing, they have a concept of the "four Ps" - product price place (distribution) promotion; all of these can be fertile ground to set yourself apart from the competition.

sparaker 12y ago

A nice read. I am going to adopt alot of practices from this article. And yes i think alot of times you just get lucky in a few things that can make or break your product. Good affiliations early on can give your product good PR.

deleted 12y ago

[deleted]