Startup Ideas: a response(mattmaroon.com)
mattmaroon.com
Startup Ideas: a response
http://mattmaroon.com/2012/11/21/startup-ideas/
19 comments
> got the idea for Pay Per Click advertising from Overture and Adsense from Applied Semantics
Going on pedantic streak here, but Overture's and Google's implementations differ substantially with Google implementing the second auction model and ranking ad's CTR, while Overture did a simple price-based ranking. Google's innovation was generating more revenue on ads that paid less but were clicked more.
On Applied Semantics - deciding the desired path of development, and then either buying the product or building it in-house is part of "figuring stuff out". They didn't randomly buy Applied Semantics, and then discovered those guys had some AdSense-like technology, Applied Semantics was acquired precisely because of that.
Going on pedantic streak here, but Overture's and Google's implementations differ substantially with Google implementing the second auction model and ranking ad's CTR, while Overture did a simple price-based ranking. Google's innovation was generating more revenue on ads that paid less but were clicked more.
On Applied Semantics - deciding the desired path of development, and then either buying the product or building it in-house is part of "figuring stuff out". They didn't randomly buy Applied Semantics, and then discovered those guys had some AdSense-like technology, Applied Semantics was acquired precisely because of that.
I'm not sure how what the KPCB person said was wrong (here it is again: "they figured out how to sell those little ads better than anyone had ever sold them before")(not "they invented pay per click"). And if your accelerator was any other than YC, I, too, would probably suggest staying in school for the year.
Google didn't win because they monetized the best, they didn't. The got the biggest following that nobody could steal because they became and remained THE BEST search engine ever. They then took innovations from other companies to monetize their search engine as a pure search engine, something that the larger search engines, especially Yahoo!, hadn't been able to do because they weren't particularly good search engines.
While not every accelerator program is a good one, this one has proven to be extremely beneficial to its startups, with a near 100% full raise rate after the program and perhaps the best value added in terms of resources and mentors of any accelerator including YC.
I will submit that perhaps I didn't do a good job explaining those two things in my post, so I hope that clears it up. There is no argument that YC is the only accelerator worth doing that matches up with the numbers (although there are MANY not worth doing) and the argument that Google won because it sold ads better than its competitors, who's ideas on selling ads they either stole or bought is ludicrous when matched up to the facts.
While not every accelerator program is a good one, this one has proven to be extremely beneficial to its startups, with a near 100% full raise rate after the program and perhaps the best value added in terms of resources and mentors of any accelerator including YC.
I will submit that perhaps I didn't do a good job explaining those two things in my post, so I hope that clears it up. There is no argument that YC is the only accelerator worth doing that matches up with the numbers (although there are MANY not worth doing) and the argument that Google won because it sold ads better than its competitors, who's ideas on selling ads they either stole or bought is ludicrous when matched up to the facts.
Well, if nobody had used their search engine they wouldn't be able to sell those little ads—part of how they "figured it out" (which seems awfully hand-wavy of an explanation coming from a VC) was by having the best search engine. And also, as the post pointed out, other people had seen it. They just couldn't make it work as well as Google did.
About leaving school for a while to work: can't you go back if you have to? This isn't like sports, where going pro costs you your college sports eligibility. I took a couple of semesters off for a far less impressive reason, and there weren't any repercussions.
About leaving school for a while to work: can't you go back if you have to? This isn't like sports, where going pro costs you your college sports eligibility. I took a couple of semesters off for a far less impressive reason, and there weren't any repercussions.
Google won because they were able to provide much more meaningful results then its competitors, thanks to the PageRank algorithm[1].
When you have the most efficient SE, it is easy to 'monetize' without risking losing your users.
[1] http://en.wikipedia.org/wiki/PageRank
When you have the most efficient SE, it is easy to 'monetize' without risking losing your users.
[1] http://en.wikipedia.org/wiki/PageRank
And the same with Facebook. Myspace was just a cesspool of autoplaying music, animated backgrounds and illegible text. Not to mention it was horribly buggy and you weren't allowed to remove Tom from your friendlist (eventually you were able to remove him but still got his pointless updates in your newsfeed). Myspace was winning on user count only because Facebook was limited to college students. When the gates opened at Facebook is when I mark the demise of Myspace.
> it is easy to 'monetize' without risking loosing your users.
http://www.ericpinder.com/html/lose.html
http://www.ericpinder.com/html/lose.html
Thanks for correcting my grammar. I'm actually not a native english speaker, and I'm not writing from home where I have a grammar checker plugin in my browser... so that's my excuse ;)
> I'm not writing from home where I have a grammar checker plugin in my browser ...
I wish there really was a "grammar checker" as opposed to a spell checker. That would be great, but such a thing doesn't exist yet. It would be much more complicated than a spell checker -- there are so many rules and exceptions to rules. In fact, thinking about it, I suspect it's not even possible.
But I would like to write a small, substitute grammar checker with very limited abilities. It would do trivial things like catch misuses of "less" when "fewer" is meant:
Less apples -> fewer apples.
But even that would be complicated -- there are edge cases and exceptions.
Oh well. :)
I wish there really was a "grammar checker" as opposed to a spell checker. That would be great, but such a thing doesn't exist yet. It would be much more complicated than a spell checker -- there are so many rules and exceptions to rules. In fact, thinking about it, I suspect it's not even possible.
But I would like to write a small, substitute grammar checker with very limited abilities. It would do trivial things like catch misuses of "less" when "fewer" is meant:
Less apples -> fewer apples.
But even that would be complicated -- there are edge cases and exceptions.
Oh well. :)
MS Word has had grammar checking for a decade or more. I haven't used it in about five years, but I remember it being inconsistent and irritating.
English is not my native language so I cannot comment on the quality of it but Apple includes some basic grammar checking.
It looks like it is able to catch some basic things like "is" / "are" or "a" / "an". (This counts as grammar, right?)
Someone who knows the traps of the English language who can test / comment on this feature?
It looks like it is able to catch some basic things like "is" / "are" or "a" / "an". (This counts as grammar, right?)
Someone who knows the traps of the English language who can test / comment on this feature?
Please tell me you're joking.
http://en.wikipedia.org/wiki/Grammar_checker#History
Grammar checkers are far from perfect, but they've been around in various forms for around 40 years.
http://en.wikipedia.org/wiki/Grammar_checker#History
Grammar checkers are far from perfect, but they've been around in various forms for around 40 years.
I should have said "grammar checkers that actually work." My bad.
Word 2010 actually works, particularly with your example:
1. Type: "I want less apples."
2. Click Review > Spelling & Grammar
3. Grammar dialog appears:
Number Agreement: "I want *less* apples"
Suggestions: "fewer"
4. Click Explain
5. "Number Agreement
A noun and the words that modify that noun must agree in number. "Many"
and "few" modify plural nouns. "Much" and "less" modify nouns that cannot
be counted or divided such as "much oil," "less happiness." In addition,
the phrase "one of" must modify a plural noun."
They were wrong because they were ahistorical. It's like saying 2+2=1 because the equation equals "1, plus some other numbers."
Assuming it was YC, why not just give your cofounder's mom a copy of one of the magazines where YC was on the cover. (Inc., Vanity Fair, etc.)
It wasn't YC. It was the most commonly featured in the "YC or this new up and coming fund/accelerator" argument, if you can extrapolate from that. I don't feel comfortable saying the name because ultimately they convinced us to pivot, or to say it another way, rejected us and it feels weird and name-droppy to say "yeah, had three talks with this big accelerator" when you got rejected.
Assuming it's the one on the top floor of my office building in MV, I wouldn't call them "large" yet, despite the name -- which is independent of quality or value-add of course. They're also quite new. And KPCB has a huge partnership, a lot of whom are unrelated to tech (cleantech, green, energy, etc.) Anyone who retired a few years ago probably only knows Idealab!, maybe YC, maybe Tech Stars -- anyone from outside of tech probably only knows Idealab! and maybe YC.
(I think that one is also even less well known outside the Bay Area within the US, although fairly well known in the specific foreign markets he goes after, like Mexico, Chile, and Asia. But I would hardly expect someone in Denver, NYC, Austin, etc. to have heard of them, but rather YC and the local Tech Stars franchise.)
(I think that one is also even less well known outside the Bay Area within the US, although fairly well known in the specific foreign markets he goes after, like Mexico, Chile, and Asia. But I would hardly expect someone in Denver, NYC, Austin, etc. to have heard of them, but rather YC and the local Tech Stars franchise.)
Yes, there are two reasons something might not seem worth doing: because someone else already owns the market, and because the market doesn't seem big enough. I addressed that here:
A startup can't hope to enter a market that's obviously
big and yet in which they have no competitors. So any
startup that succeeds is either going to be entering a
market with existing competitors, but armed with some
secret weapon that will get them all the users (like
Google), or entering a market that looks small but which
will turn out to be big (like Microsoft).yeah, you covered it, but you glanced over it very cursorily while matt maroon addresses the issue much more in depth and in a much clearer way.
Or "it feels trivial". My uncle spent most of Thanksgiving dinner bitching about how trivial Facebook is. I'm sure he'd find a lot of people who agree with him, but Zuck and the first 100 employees at Faceboook can just laugh at them behind stacks of money and rock solid analytics.
Although the examples used in PG's article can be framed in a lot of different ways, I thought the general advice was pretty useful and echos much of what's been said about product development in the last 5-10 years: don't sit around trying to come up with ideas--get out there and talk to people in other industries about their problems and solutions will naturally present themselves.
I also thought the concept of the "sitcom idea" was really clever and dead on--I hadn't heard that one before.
Re: next big markets--retail is an interesting one and it occurred to me that Walmart is going to have a RIM like crisis of its own over the next decade. E-commerce growth probably will continue as consumers grow increasingly comfortable with it, and the economics make so much more sense than building walmart's everywhere. I suppose they will start getting rid of their stores and moving to online, finding themselves looking like Amazon at the end of it, or out of business.
AIs--or approximations of them--are going to be a big thing. Self driving cars--google won't be the only company that makes that software. Big data--data is important for these types of applications, someone will find that it might make sense to standardize this data and simply sell it to the various AI/something-like-it makers rather than try to do all of it. Meanwhile, AI/something-like-it startups will not want to build a fleet of vans to drive around taking pictures of everything. This is going to be a really interesting industry over the next ten years and people won't remember what they were doing before.
I also thought the concept of the "sitcom idea" was really clever and dead on--I hadn't heard that one before.
Re: next big markets--retail is an interesting one and it occurred to me that Walmart is going to have a RIM like crisis of its own over the next decade. E-commerce growth probably will continue as consumers grow increasingly comfortable with it, and the economics make so much more sense than building walmart's everywhere. I suppose they will start getting rid of their stores and moving to online, finding themselves looking like Amazon at the end of it, or out of business.
AIs--or approximations of them--are going to be a big thing. Self driving cars--google won't be the only company that makes that software. Big data--data is important for these types of applications, someone will find that it might make sense to standardize this data and simply sell it to the various AI/something-like-it makers rather than try to do all of it. Meanwhile, AI/something-like-it startups will not want to build a fleet of vans to drive around taking pictures of everything. This is going to be a really interesting industry over the next ten years and people won't remember what they were doing before.
The key concept of pg's essay is the prepared mind.
It is a variant of the very old idea that we cannot see that we don't know. This is called blindness of ignorance.
The rest is a list of examples of what could be seen and have been seen by others and some hints to how to train your mind.
What could be seen does not matter. What matter is how to gain the ability to see, which means to overcome ignorance.
It is quite possible that pg himself saw it as a meta-model, or it was just an insight of the one, who already made his way to "enlightenment".)
btw, being familiar with Pirsig's book in ones twenties is a very telling factor.)
It is a variant of the very old idea that we cannot see that we don't know. This is called blindness of ignorance.
The rest is a list of examples of what could be seen and have been seen by others and some hints to how to train your mind.
What could be seen does not matter. What matter is how to gain the ability to see, which means to overcome ignorance.
It is quite possible that pg himself saw it as a meta-model, or it was just an insight of the one, who already made his way to "enlightenment".)
btw, being familiar with Pirsig's book in ones twenties is a very telling factor.)
First off thank you for writing the article. It doesn't seem to me that Facebook or Google saw a huge market inflection and decided to create a company in the hopes if hitting it at the write time. To me it seems they were doing something PG mentioned which is building something they themselves wanted regardless of the market potential. It just so happens that by doing this they built something that a lot of other people also wanted and were able to execute it in such a way. Sometimes I feel "looking for an idea" is the wrong approach but instead viewing the world from behind a critical lens we will see problems that need to be solved. By solving them we feel our lives will be better and maybe that is enough to begin with and by solving these types of problems, once in a while we may just discover that others feel the same way.
Online- and Software-centric startups are way overhyped right now. I believe that the commoditization of personal computing, smartphones and websites and the emergence of giants like Google, Apple, Facebook has made these much less interesting than people might think so the best long-term startup opportunities lie elsewhere (robotics/AI, biotechnology, sustainable living ... ). But internet startups are still good for a quick buck due to crazy valuations and low entry barriers, so VC will still pour down on them (sadly...).
At the end of the day, there's still things we need (food, medicine, health, production of goods) and things we don't (yet another website or SaaS/PaaS startup or electronic gadgetry).
Then again, right here, we're all biased ...
At the end of the day, there's still things we need (food, medicine, health, production of goods) and things we don't (yet another website or SaaS/PaaS startup or electronic gadgetry).
Then again, right here, we're all biased ...
Maybe I'm wrong but I think PG's article was focussed towards startup founders. And this article is more towards investors.
From a founder perspective, it is not just enough to know which market has the biggest potential in near future but also in which market can I execute my idea successfully. Just getting into a good market is not enough but you should be able to have the arsenal to execute an idea. And this is where organic ideas are way better than thought-up ideas. When you have actually faced a problem, then your path is a lot easier and you know where do you want to take your product/service.
From a founder perspective, it is not just enough to know which market has the biggest potential in near future but also in which market can I execute my idea successfully. Just getting into a good market is not enough but you should be able to have the arsenal to execute an idea. And this is where organic ideas are way better than thought-up ideas. When you have actually faced a problem, then your path is a lot easier and you know where do you want to take your product/service.
No other social network successfully kept a lid on who could join like FB did in the beginning.
Anyone who started a social network at the time wanted as many people to sign up as possible but could care less who they were or where they were from. This resulted in lots of random people signing up but few connections that existed in the real world translating to the social network. Consider Myspace (or many others) where your "friends" were often people you did not know. Sometimes you didn't even know their names!
Facebook did the exact opposite. They wanted to transfer the real world connections to the web. By getting almost everyone at Harvard on the service they were able make this happen. They repeated the success at many other schools. It was a long time before just anyone could join FB and at that point so many real world connections were already in place that when a person joined there were already people they knew on the site.
Anyone who started a social network at the time wanted as many people to sign up as possible but could care less who they were or where they were from. This resulted in lots of random people signing up but few connections that existed in the real world translating to the social network. Consider Myspace (or many others) where your "friends" were often people you did not know. Sometimes you didn't even know their names!
Facebook did the exact opposite. They wanted to transfer the real world connections to the web. By getting almost everyone at Harvard on the service they were able make this happen. They repeated the success at many other schools. It was a long time before just anyone could join FB and at that point so many real world connections were already in place that when a person joined there were already people they knew on the site.
You're forgetting aSmallWorld
The inherent flaw in both arguments: citing exceptions.
Facebook, Google, Amazon et al succeeded _despite_ being bad/unknown quantities on paper. They specifically should _not_ be used as examples of "how to do it right."
Look at smaller sustainable startups that are flying under the radar to unearth proven, repeatable best practices. You can't establish patterns in methodology by citing exceptions.
For a $10mm company to become a $1bn company, know what you need? Luck.
EDIT: To those below, you're both validating my point. Luck isn't the sole driver of success, but it's the difference between a modestly successful company and an insanely successful company. The other skills the founders have to exploit opportunities are already there. The x-factor is luck. Nobody says "okay, all we need is 500 million users and we're successful!"
Facebook, Google, Amazon et al succeeded _despite_ being bad/unknown quantities on paper. They specifically should _not_ be used as examples of "how to do it right."
Look at smaller sustainable startups that are flying under the radar to unearth proven, repeatable best practices. You can't establish patterns in methodology by citing exceptions.
For a $10mm company to become a $1bn company, know what you need? Luck.
EDIT: To those below, you're both validating my point. Luck isn't the sole driver of success, but it's the difference between a modestly successful company and an insanely successful company. The other skills the founders have to exploit opportunities are already there. The x-factor is luck. Nobody says "okay, all we need is 500 million users and we're successful!"
I also would like to hear some investigations about serial startups. For example the Samwer brothers are doing it successfully again and again. The recipe: copy successful US-only startups/companies in europe. Another example: Richard Branson aka Virgin Group. I cannot get his recipe nailed down, but his biographical book is called "Screw It, Let's do It".
> For a $10mm company to become a $1bn company, know what you need? Luck.
Luck is necessary but not sufficient. You also need to be in a position to disproportionately benefit from luck. I think PG's latest essay outlines what a venture in such a position looks like.
There are qualitative differences between startups that are going for $10m and those going after $1bn. The biggest is variance, which luck is a multiplier for.
Luck is necessary but not sufficient. You also need to be in a position to disproportionately benefit from luck. I think PG's latest essay outlines what a venture in such a position looks like.
There are qualitative differences between startups that are going for $10m and those going after $1bn. The biggest is variance, which luck is a multiplier for.
Nobody says "okay, all we need is 500 million users and we're successful!"
You must not have been around 15 years ago.
You must not have been around 15 years ago.
"Luck".
That's just wrong. Even if luck is involved or even significantly responsible, successful people and companies create their own luck, put themselves in a position to be lucky and relentlessly pursue luck.
I'll grant you that limiting your comparisons to Google, Facebook and Amazon is not extremely helpful, but expanding the list might still get you similar learnings (PayPal, Ebay, Yahoo, Square, Dropbox, Airbnb, Fab, Etsy, Eventbrite, Box, Yammer, etc).
That's just wrong. Even if luck is involved or even significantly responsible, successful people and companies create their own luck, put themselves in a position to be lucky and relentlessly pursue luck.
I'll grant you that limiting your comparisons to Google, Facebook and Amazon is not extremely helpful, but expanding the list might still get you similar learnings (PayPal, Ebay, Yahoo, Square, Dropbox, Airbnb, Fab, Etsy, Eventbrite, Box, Yammer, etc).
Interesting write up. However, I don't see the point of picking apart a small paragraph, which, IMHO, was meant to provide mere guidance and perspective.
All the other points made in this 'response' are all fairly obvious and again, IMHO, already being worked on.
I think PG was spot on with his guiding essay; many things stand out and serve as a guide for people formulating ideas for a start up. If I am going to seriously undertake the task of building a start up, and dedicating an important part of their life to building something, I'd take all the sound guidance I can get.
Especially liked how this was put together:
Especially liked how this was put together:
Live in the future, then build what's missing.I think sometimes there's too much emphasis on finding the problem, but that's not why companies like Google or Microsoft were successful.
The reason Google won at search was that they had the best results. They probably still would have won if they started a couple of years earlier or later. Maybe eventually it would have been harder to enter the market against bigger players, but the hard part if figuring out the best solution, not figuring out the problem.
The reason Google won at search was that they had the best results. They probably still would have won if they started a couple of years earlier or later. Maybe eventually it would have been harder to enter the market against bigger players, but the hard part if figuring out the best solution, not figuring out the problem.
I think a fundamental point missed is that Google, Facebook and the iPhone were better than Altavista, MySpace and the smartphones of the time. The untapped market was unimportant, that's an AOL play. I recall a general frustration that things should be better and a pleasant feeling of confirmation when each of the winners launched.
Not unlike AAPL, renewables and 3D printing right now.
Not unlike AAPL, renewables and 3D printing right now.
The poker analogy is an interesting one - I believe that it's been said that advertising is the only differentiation among products (or services) of equal value. Paradise Poker had a better interface and a wider variety of poker variations, but Party Poker (along with Ultimate Bet and Poker Stars soon thereafter) became the household names due to advertising.
I still think the PG post is way ahead. I remember why I started using google, it was just massively better than yahoo. It just worked. The same happened with facebook, I almost didn't use my myspace account because it was so limited the way to use it. Also it scared lots of my friends because if you wanted something cool you had to pimp your account. Facebook just was come in and use it, share stuff and locate people easily.
The market was found acter the use, they developed an amazing product and then discovered how to monetize. It doesn't have to be that way, good ideas don't need to be
. But there are lots of broken things around and if you feel amazed(living in the future) that nobody is doing the right stuff then it is probably a good idea waiting to be developed. Of course a good development is a huge part of the equation (and good luck too).
He is right that there are too much picture apps though.
True that about the growing market. And true that few of these products/companies are really anything novel. But you have to do things better than the rest (I've discussed that more extensively here http://web.bozho.net/?p=125)
I like some of the points made in that article and I would like to add that pg and the y-combinator startups he works with are a small part of what is out there and what is possible. The only thing I disagree with is the need (I think even many VCs feel) is to need apps that connect to hardware for it to feel more real. We don't even have decent social networks yet that solve basic problems for us. Facebook, twitter etc, in perspective, are just the first few truly global networks but... are they really the best we can make?
"Here, off the top of my head, are three things that sound like a formula for success, and here's three companies you like that I'm going to say had all three of these ingredients and you will believe me because it is convenient."
> ... few others realize are worth doing.
Pursuing. I'm pretty sure Paul meant "pursuing."
Pursuing. I'm pretty sure Paul meant "pursuing."
exactly... few others realize are worth "doing", because (a) market isn't worth it OR (b) competition is too big..
Everybody knew search is a big market, but few people realized that you can become a big player besides Altavista ad Yahoo! in 1998
so the statement remains correct....
Everybody knew search is a big market, but few people realized that you can become a big player besides Altavista ad Yahoo! in 1998
so the statement remains correct....
This summer my startup, located in Virginia, was in final talks to join a large seed fund/accelerator in SV and both sides were trying to decide if it made sense. Our only issue was our lead software engineer was still in college and needed to convince his mother that taking time off (or dropping out if things went well) to do this program was a good idea.
His mother was, shall we say, less than receptive to the idea. She decided to have her brother, an executive in the valley, reach out to his VC friends to see if this accelerator, an extremely well thought of and prominent accelerator, was worth doing.
He reached out to a former partner at KPCB who said he'd never heard of the accelerator, which is in itself insane, but also that our startup wasn't doing something "differentiated" enough to even justify continuing to do.
I reached out to him to clarify, and he said "you've got to find something that truly stands out, that nobody else sees. For instance Google didn't win because they built the best search engine, but because they figured out how to sell those little ads better than anyone had ever sold them before".
I stared at my screen reading that sentence over and over again. I couldn't believe it. There was a former PARTNER from KPCB that led a round of investment at Google that did not know that Google actually got the idea for Pay Per Click advertising from Overture and Adsense from Applied Semantics. This person thought that what made Google great was they had an idea so different from what everyone else was doing, NOT that they just out executed everyone by a country mile.
I was so dumbfounded by that, it barely even registered with me that a partner at a huge VC firm had never heard of the largest seed accelerator in the world. I never responded to that email, I get too sad every time I try.