

Innovation, Or the Complete Lack Thereof, In the Start-up Community - bootload
http://kurt.karmalab.org/articles/2008/06/24/innovation-or-the-complete-lack-thereof-in-the-start-up-community

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mechanical_fish
Here's my hypothesis: The cost of starting a tiny startup is now so low, and
recovering from a failed startup is so easy, that people are founding "startup
companies" as a way of educating themselves.

I wish _I_ had time to build a slavish, mindless clone of Youtube. I would
learn a ton of useful things about the data-center requirements for streaming
video hosting, the state of the codec universe, Flash programming, how to sell
in a crowded marketplace, how to look at another video site and figure out if
they're competently designed... I could even practice presenting to crowds of
bored investors.

Who cares if the project is ultimately doomed? If you compare it to a college
senior-thesis project, instead of to a serious attempt to found a future
megacorporation, it all makes a lot more sense. It's _practical education_.
And it's probably cheaper than a master's degree (which can't teach you this
stuff, anyway).

After you graduate from the silly me-too project you can use your new-found
skills to either get a better job at someone else's company, or to help found
a second startup with a much greater shot at success.

------
tc7
It's natural to lean towards just copying the latest big hit. 1) Market
research is done for you, so you don't have to be as convincing to get
funding, 2) there's room in any niche for > 1 competitor (first, best,
cheapest, at least :)), 3) creativity is hard, new ideas are hard,
_innovation_ is hard.

And there's the major reason. We all* want easy money, so we groan and slap
our foreheads with poorly disguised jealousy whenever a 14-yr old girl makes a
million bucks with crappy myspace layouts. But the thing is, there's positive
feedback for taking the low-hanging fruit: You can make a ton of money. And if
you don't, at least you didn't have to invest much thought.

The 'problem' (if so you categorize it) is that there's no promise of greater
return for greater effort. You can spend your life trying to solve BigProblems
until you die, and get further than anyone else, but the guy in the next dorm
room retired at 25 after making a social-networking site for parakeets with
dyslexia. In two days, in ASP classic.

So if you're motivated by money, success, fame, there's not a lot of reason to
go for the hard problems. And those are pretty common (and powerful)
motivations.

*All including you, unless you don't, in which case it doesn't.

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cousin_it
Nature works like this: stumble upon a successful model, spawn a million tiny
variations and let them struggle for survival.

~~~
coglethorpe
And there's room for more than one winner, especially if they can find a sub-
niche. Flickr seems to specialize in "photographers" and Photobucket has
crappy myspace photos. They both "won" in their respective areas.

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pxlpshr
Based on my experience during 1.0, I've been speculating a fall-out relatively
soon as I've seen a lot of me-too popups from the critical areas (SF/NY).
Roughly 1 year after this influx in 1.0, the bottom fell out.

During 2.0 that pattern was contradicted as social bees tend to migrate and
have a lot less loyalty. Friendster > MySpace > Facebook is one example, and
there have been a quite a few other. However, is it really a great migration
or simply natural segregation at work? I'm beginning to think it's the latter
and that being said, maybe there is a play to be made for the me-too sites
this time around.

~~~
coglethorpe
While me-too ideas have their place (see my other comment), the game has been
to profit by getting VC money more than profit by having a valid business
model. People know they can get funding for a relatively "safe" idea possibly
easier than a "cazy-but-just-might-work" idea.

------
olefoo
His point about copycat companies is well taken; one of the shortest paths to
failure is to slavishly imitate someone who is already successful.

~~~
mechanical_fish
I agree only with the strong form of your statement -- the one that requires
us to define _slavishly imitate_ as "with no distinguishing special feature,
and targeting the same market".

But I think the weak form of your statement is wrong. Here's Eric Sink, urging
you to start a company in a field where there are already competitors:

<http://www.ericsink.com/Choose_Your_Competition.html>

"The big problem with avoiding competition is that you are also avoiding
customers. The existence of a competitor indicates the existence of paying
customers. If you can't find anyone who is making money with your idea, you
really need to wonder if there is any money to be made there at all."

Let's consider the original article's example: cloning Flickr. There may be
lots of good reasons to clone Flickr. It's a really new idea, and we haven't
had much time to explore the space. For all we know, there might be all sorts
of niche markets for Flickr-like services: Flickr for amateur baseball, Flickr
for fashion designers, Flickr for medical illustrators, Flickr for architects.
Each of these apps might have slightly different features (perhaps Flickr-for-
architects would allow you to estimate the sizes of rooms by pointing at the
corners of various objects in the photo, or provide various easy-to-use UI
elements for matching photos with locations on a floor plan), and each would
certainly be sold to a different market (or else they would likely fail -- in
the Generic Photosharing market, they risk being crushed by Flickr itself).
But there's no reason why they should not all coexist, just as the existence
of Starbucks does not, in fact, doom all other coffeeshops everywhere to
extinction.

Now, if you clone Flickr but don't add a differentiator, that's probably a
mistake. And if you clone Flickr but don't have a revenue model that will keep
you afloat, that's a mistake. [1] But there's no reason to expect successful
businesses to be _novel_. Novelty is irrelevant. Only _making money_ is
relevant.

[1] This is the real reason why it's easy to laugh at many of the Flickr
clones: Many of them have also cloned Flickr's revenue model, which involves
being acquired by a company that has deep pockets and a large number of
servers. It seems unlikely that this plan will work out for everyone...

~~~
olefoo
I put the adjective in to restrict it to the strong sense, imitation isn't
necessarily bad, intelligent emulation of successful strategies is the basis
of progress; but it's a mistake to think that you can succeed as a follower.

The thing I see is that there are a lot of bright young things out there who
want to be entrepreneurs but who have not the disposition or the discipline to
be creative as entrepreneurs and who for whatever reason don't take a critical
look at their goals and methods. Leaping on to the business model of the week
becomes a substitute for self-assessment and critical reflection. And of
course there is the "ooh that's cool, I want to build one of those!" factor to
be considered.

------
babul
There is nothing wrong in being a "me too" clone.

In the early stages of a market (in any business), when someone stumbles upon
something new/novel/untapped, there is always a land-grab and (initially)
often plenty of users for everyone.

Ultimately success really comes down to the offering provided (e.g. you offer
same service but USP being simpler GUI that saves you time) and the ability to
iterate quickly and develop features that users want and find value (ideally
without adding unnecessary complexity to what you already offer).

Many a successful company started as a "me too" clone (or late entrant), later
becoming the dominant player.

It is only when the market is saturated do other issues such as "churn" etc.
(e.g. as seen in the established mobile-phone markets) start coming into play.
Now entering the market is actually not a good idea, unless you are offering
something radically different (ideally a disruptive technology), but then you
would not be a "me too" clone.

~~~
kschrader
Correct. The problem is that I am still running into people who are making
"Youtube with a twist". That boat has sailed.

------
edw519
We are constantly hearing advice like "Scratch your own itch," "Find problems
close to you," and "Code what you know," which is all good advice for finding
a startup idea.

What then, do you do if you're not exposed to much?

When I spent time talking to people in SV 2 months ago, I noticed something I
never expected: lots of people have very little exposure to "real world"
problems.

People come up with "me too" startups because that's all they know.

Sure it's easy and cheap to start a business, and if you're smart and can
hack, all the more reason. But what about the giant issue hardly anyone
mentions: real world experience.

I've been doing programming work in real businesses for years and _still_ get
excellent startup ideas from my customers almost every day. In the past week
alone, I have been challenged with problems I've never seen before that are
really affecting these people. Just a couple of quick recent examples:

\- One customer is preparing blanket purchase orders for '09 models, but since
the SKUs change every season, their ERP system is of little help.

\- Another is setting up a new warehouse, but their app won't allow bulk
updates so they have to hire clerks just to enter 10,000 new bin locations.

\- Another has a call center whose response time has doubled with an upgrade
to their app. Now they want the new release's functionality with the old
release's interface.

And this is just one week! People will pay big bucks for technical solutions
to these real world business problems.

My advice to a young hacker with lots of skill but not much experience
(outside of college apps): you may want to consider getting a job for a year
or two. I know, everyone wants to start the next <whatever>, and get rich now
and no one wants to sit in Megacorp's cube farm. And a startup, even a failed
one, may be a better education.

OTOH, you will acquire dozens of great startup ideas (and contacts) and avoid
the "me too" trap. Something to think about.

~~~
mechanical_fish
I agree with all of this and would add just one observation: All of these
valuable, profitable ideas will probably seem _really boring_ to (e.g.) the
audience at the typical Web 2.0 conference. SKU's, yawn. Call centers, yawn.
Warehouses, yawn.

~~~
edw519
"Boring" is in the eye of the beholder.

Once I really understood relational data base theory, those things (SKUs, call
centers, warehouses) became exciting to me. A chance to practice what we
preach. My customers are laboratories, much more so than Carr Hall 203 was in
college.

OTOH, most people I know think _everything_ we do is boring. They'd rather
watch TV and talk about each other. Fortunately, we know better.

~~~
timr
Dude...I understand relational database theory, and those things _are_ boring.
I'd rather gouge out my eye with a rusty spoon than normalize schemas for SKU
databases at BigCo (I wanted to gouge out my eyes when we used them as case
studies while _learning_ relational database theory!)

That's not to say that there aren't interesting engineering problems buried in
there (e.g. how does one build a high-performance, distributed database
architecture that can support tens of thousands of concurrent users, blah blah
blah), but for the most part, the _interesting_ portion of that kind of work
is done by the (small) company that developed the scalable database technology
in the first place. When you're hired as the guy who puts it all together as
BigCo's real-time widget tracking system, you're mainly splicing together
chunks of other people's previously interesting work.

Most paying work is boring -- that's why it pays. But if you can eliminate a
_class_ of boring work with a good piece of software, then you've got a
business.

~~~
edw519
Dude...there are 2 kinds of things we can work on: things for ourselves
(internal) and things for others (external).

"Building a high-performance, distributed database architecture that can
support tens of thousands of concurrent users, blah blah blah" is an internal
project. One we do for ourselves. So that we (as users) have what we need to
do our jobs for others.

Personally, I prefer external projects. Both of my mentors were engineers.
Everywhere we went, they had something to say about what they observed:

"I wonder what would happen if they put a Coke machine right there..."

"The plane landed 17 minutes ago, and so far 0 bags have been removed..."

"If we move the inspection table to the center of the department, we will save
an average of 116 steps per person per inspection..."

That's how I think now. I have real world customers and prospects with
problems like these all the time. I love it. I'm always on the lookout for
problems to solve with my apps.

I simply don't care about working on any internal projects unless I have to.
There is probably a solution somewhere that one of you guys already did. So
I'll use it to help me do my job.

Sorry you find what turns me on as boring. I guess that's what makes horse
races.

If we ever meet, remind me to hide all the rusty spoons.

~~~
timr
I'm puzzled by this whole "external" vs. "internal" dichotomy that you've
built. Perhaps noticing that your plane isn't being unloaded quickly is
"external", but the likely solution to the problem (building some sort of
high-performance, distributed database-backed scheduling architecture that
track thousands of bags, flights and people in real time) seems to become
"internal" very rapidly. Where's the line?

Moreover, what you describe as "external projects" sounds suspiciously like
"walk around and fix individual problems in the world". That's great, but it's
not scalable -- it's consultancy. Somebody hires you, and you tell them to
move their Coke machine to save 116 steps per inspection. To me, the
difference between that and an interesting _software_ problem is the
difference between noticing that a Coke machine needs to be moved, and writing
a pedestrian traffic simulator that can be used to optimize the positions of
Coke machines in any context...but maybe we're saying the same thing?

In any case, it's never a good idea to let your spoons rust.

~~~
edw519
Those were just examples of what others did to influence me. That's all.

I used to have to write the tools I needed first just to be able to do my job.
No longer. Almost all of my tools are available.

What you call "walk around and fix individual problems in the world", I call
"find problems anywhere, then build scalable solutions". Sorry if I didn't
make that clear.

It's the antidote to OP's original complaint of "me too" solutions.

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menloparkbum
Without specific examples, this article is as useless as the vague me-too
startups the author can't be bothered to write about. Thumbs down.

~~~
kschrader
I'm not going to burn bridges with people when it really wouldn't add
anything. The point is valid with or without specific examples.

------
raganwald
The author has apparently discovered that Sturgeon's Revelation applies as
well to start-ups as as it does to science fiction.

------
LPTS
The truth is that computer programming skills are a commodity and that the
silicon valley culture is no longer relevant to big problems. The world has
moved on, the same way it has moved on from industrial and agrarian economies.
These silicon valley folks are as desperate and clueless about solving todays
big problems as the corporate people were about solving the big problems
silicon valley sprang up to solve.

Getting them to understand is like yelling at water not to flow downhill.

