Startup Confusion

Many people, myself included, remain suspended in the search for the earth shattering idea that will change everything; the idea that meets at the very least the following criteria:

1) It’s solves a real problem
2) People will pay real money for it
3) Competitors can’t replicate it
4) Market is large and growing
5) Differentiation is substantial and sustainable

Now, nobody said running a business, or starting one was easy, but aren’t these standards too high. How many successful businesses do we know of that met these requirements when they were founded? With the exception of a few, highly specialized businesses, backed by a portfolio of patents and years of PhD research (e.g. Nanoink), I can’t think of anything that is not imitable.

If you build a widget (especially the web 2.0 category), by the time of your second sale you’ll have a competitor. Building software has just become too easy. If you think you can differentiate based on technology alone, then I think you’re deluding yourself. So the questions is: Are these tech entrepreneurs, and the investors who fund them infected by some denial-of-reality bug?

What was novel about Facebook, or inimitable about StumbleUpon, Delicious, Upcoming. What was so earth-shattering about Yelp? Each of these solved a real problem, BUT:

• People weren’t willing to pay any money for them
• There were incumbent competitors operating successfully
• There was no question of sustainable differentiation

The last I checked these businesses, and many others like them, are the poster kids of what it  means to be a tech startup and an entrepreneur. We aspire to build companies that don’t meet the text book criteria of a sustainable business. Somethings gotta give.