This New Years embrace customers, talk to them, and build something really great that customers will crave.
As a startup lifer who lost more than a few million bucks one spring 2000 afternoon, I’m always on the lookout for the next “pop” of the startup bubble that’s been inflating for more than five years now.
Ouch, I think that “popping” is real close, and for lots of reasons, beginning with “sameness, lameness, and tameness” that causes at least 90% of all startups to run out of money, sputter and die. (Here’s hoping you don’t work at one of’em.)
Truly great companies that endure for the long term are built on meaningful, disruptive innovation solutions to significant, serious, high-frequency problems needs confronted by zillions of people. Far too few startups identify those serious business opportunities and solve them with a one-two punch of disruptive innovation and relentless execution.
And the farther you get from risk-tolerant Silicon Valley, the fewer disruptors are growing.
Sadly, far too many startups fit the pattern I see repeatedly in my one-on-one conversations with more than 500 startups a year:
AppAnnie.com currently tracks 5.8 million smartphone apps. And the 1.3million apps available in July 2014 on iTunes, included 237,389 game apps, 131,581 for kids, and more than 8,000 apps to help create or save recipes.
How many games does a single planet need?? iTunes alone adds about 100,000 apps a month, by the way, including 450 more recipe apps alone!
How “hot” can that next food, taxi, gaming or e-commerce app can really be, whether measured by uniqueness or revenue potential. Our bestselling Startup Owner’s Manual defines “hot” quite clearly: solving a serious, frequent problem faced by many, or filling a frequent urgent need that zillions of people will have again and again, for a long time.
Uniqueness is defined by customers, not entrepreneurs. How can anyone get excited about the next personal finance, web marketing or taxi dispatching tool with three or four cute new features.
Scores of niche versions of Linkedin, for example, have died painful deaths, trying to “do just what Linkedin does” for some subset of the business world served so well by the ubiquitous business networking tool. And too darn many startups offer little more than a tweak or a niche in an effort to distinguish themselves.
One top VC says we perhaps see a dozen great companies emerge from the roughly 650,000 started annually in America alone. And too often, they’re doing boring, un-techy things like preventing or curing diseases or solving complex “big data” challenges that just aren’t as sexy or well-publicized as the next “hot or not” dating app.
In my somewhat jaundiced view, the startup world it’s far too cluttered with “wanrapreneurs” who fail to, or just don’t, recognize that startup success demands a tenacity, resiliency and energy unlike any traditional job short of combat infantryman.
Lots of enthusiastic founders “get out of the building” in startup training and acceleration programs, only to disappear quickly quietly from the scene as customers yawn about their big, big idea. They aspire to be the next Mark Zuckerberg, and upon learning such a goal is as ephemeral as winning the Lotto, entrepreneurial zeal wanes quickly.
As the job market recovers, hopefully more of those wannabes turn instead to good old-fashioned W2 jobs, with predictability, stability and health insurance. It’s a place where 99+% of working folk belong, and in my view, these lesser entrepreneurs should go out and find regular jobs, clearing the clutter for those with the ideas, drive, and overwhelming ambition to build great companies.
I always thought billion-dollar valuations were driven by unstoppable meteoric growth in huge markets.
Think the early days of Facebook or Google, Priceline and eBay for sure, particularly in their earlier days, and perhaps add a few others carefully to the list. Massive valuations were once the reward for massive month-over-month growth, usually in the range of 5 to ten percent per month, whether measured in dollars or users.
Sadly very few startups sustain that kind of growth for anywhere near as long as they sustain their sky-high valuations.
How quickly did Myspace come and go, or the near-identical Globe.com years earlier? Where went the rapid user growth of Twitter and Groupon and Living Social, among many others? While it may aspire to do so, Amazon likely recognizes that it can’t ever be the world’s only retailers.
It’s remedy: new delivery systems, Amazon Web services, content production and more to assure its ambitions and revenue growth are never labeled “tame.” And while Google sees a leveling-off of its massive search ad revenues, the 84 other businesses they’re investing in heavily will likely drive its growth engine for many years to come.
The first crack in the rocket ship that was Groupon came in Boston, one of its first markets, where both retailers and Groupon users were soon fleeing in droves. A June 2013 Yipit study showed that less than 45% of Groupon merchants would ever return.
Groupon stock won’t likely return, either, from a peak of $30+ to a recent close under $8.
Speaking of tameness, most business people remember good ol’ messenger services, gritty small businesses that sent sketchy folk around town on bicycles for $10 a ride or less. Is local package delivery, reportedly Uber’s next great conquest, a bold, innovation or merely a pr activity?
One of the world’s most highly-valued startups du jour, Uber’s York City value proposition for its low-end UberX is at least tame if not sadly unimaginative: “cheaper than a New York City taxicab!” Hardly the mantra of a great, disruptive company.
The solutions are clear, but by no means easy. If you’re not a passionate, tenacious, driven entrepreneur willing to work 90+ hours a week while confronting a high failure rate, update your resume and get a job!
If you’re serious and your startup is guilty of sameness, lameness or tameness, blow it up!
Do something dramatic to differentiate your company in customers’ eyes and offer them lasting value. Recognize that virtually every good startup idea is “out of the building,” between the ears of your customers—the only people whose opinions truly matter.
Embrace those customers, talk to them, and build something really great that customers will crave by the millions, not thousands, for years not months. Build products they’ll tell friends about eagerly and use themselves again and again.
It’s the only way to build a great company, and the best way to keep the startup bubble inflated.