
Too Many Gas Stations (A parable for startups) - MicahWedemeyer
http://www.sanjayparekh.com/too-many-gas-stations/
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razzmataz
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.

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sanjayparekh
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.

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MicahWedemeyer
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.

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sanjayparekh
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.

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LogicHoleFlaw
CostCo does actually have paid memberships to their discount gas. They do an
amazing volume of business.

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sanjayparekh
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.

