From the Don’t-Say-I-Didn’t-Warn-You Dept.
An open listicle to startup founders
Here are some ideas to avoid
Published in
4 min readAug 11, 2016
- I’m going to build an alternative to Facebook. Facebook isn’t popular because of its profiles, social news stream or graph API. It’s popular because everyone is already there. To create a fully functional alternative Facebook, you would need to pre-populate it with the majority of the world’s online population. That’s not to say that you can’t create something new that will eventually supplant it — but you can’t do it by using a similar model. A new social network isn’t innovative. Make something new.
- I’m going to build a food delivery service — but better. Just stahhhp already. The sustainable competitive advantage in food delivery isn’t in actually delivering the food: it’s in creating better logistics and deployment software. It’s in creating a network that can help vendors reach their customers, and be reached by their suppliers, more efficiently. These days, that might be through drones, or autonomous vehicles, or a network of volunteers, or … but the real point is, creating better high-quality gourmet food and selling it at cost, or whatever, won’t disrupt anything or create any new opportunities worth pursuing. You’ll burn your money.
- I’m going to build an open source, distributed x. This might shock you, but most of the world doesn’t care about an open source, distributed x. Try building an awesome y instead, and then, if you like, making it open source and distributed (but only if that is beneficial to your overall business strategy).
- I’m going to build an ephemeral messaging app. Yeah, Snapchat is big now. Last I read, they were valued at around $20 billion, which is the same as a quarter of Starbucks or half a Charles Schwab. That doesn’t mean you can create anything that blinks out of existence after you’ve seen it and rake in the dollars. The core magic of Snapchat wasn’t that it self destructs, Mission Impossible style. It was that this was a network for kids, that everybody wasn’t on. Remember how I said you need to make something new? Snapchat was completely fresh. (And occasionally incredibly racist, but that’s another story.)
- I’m going to build a service for sharing anonymously. There is a market for encrypted chat and other communications, particularly for high-value enterprise customers (and security-conscious individuals, including teens). This is not that. Secret was the big app du jour a couple of years ago, but it ultimately failed. Yik Yak, an anonymous discussion app for college campuses, has been a hotbed of cyberbullying. Candid is particularly popular with Trump supporters. These things are cesspools. Nobody wants to be associated with them.
- I’m going to share the proceeds from my advertising-powered site with my users. A lot of new services say they’ll share the revenue with their users. The more you use it, the more you earn! Unfortunately the dollar amount associated with a user on a social network is pretty low. The value per user per year for Facebook is often quoted to be $98, which is wrong: it’s based on its market valuation. Facebook’s revenue in 2015 was $17.93 billion; spread across around 2 billion users, that averages out at around $9 per user per year. Facebook has an enormous ad network at its disposal, while these other sites don’t. The bottom line: either social networking sites share almost no revenue with their users in reality, or they’re Ponzi schemes.
- I’m going to make money from news. No, you’re not. Journalism, maybe. But you’d better have a way to hit scale, and you’d better have one hell of a sustainable competitive advantage. This has almost never been profitable — usually news and journalism are loss leaders, propped up by another business model. Figuring that out is key. The big movers here so far: Buzzfeed.
- I’m going to found a niche blogging platform. 2008 called, and it wants to remind you that a niche blogging platform also wasn’t a viable business in 2008. Blogging for amateur chefs? Blogging for photographers? Blogging for superfans? Blogging for world travelers? There isn’t anywhere near a big enough market here, either of audience members to make up advertising numbers, or of actual bloggers who would be willing to pay to use the service.
- A fully autonomous chatbot. Can you say ELIZA? Better to put your conversational app on rails, à la Quartz or Purple. Don’t frustrate people by trying to understand everything they say; you’ll inevitably fail. Instead, give them strong cues — and have value to add beyond the novelty of the bot, because the market is saturating very quickly, without any real proof that anyone wants them.
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