Billion Dollar Startup Ideas [video]
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I wanted to touch upon the other thing Garry Tan mentioned when he said that reason people try the same ideas is because "desire is mimetic". We want what other people want. Same ideas especially ones which have already been successful. And he cites examples like Podcasts, Travel plans, and local events app.
Out of the three mentioned, local events app and travel plans apps have been tried multiple times but never been successful. Its something when you ask casual travelers what they would want in a travel app and travel planning help is their first pick and local events and guidance is their second pick. Most of these ideas fold because travel is very cold market for an investor and most dont want to invest.
Also, quite a few folks now pick ideas based on what is a hot market ergo what is being funded, and quite a few times its a variant or a rendition of what is already successful (or something a success in one vertical can be tried in another).
That being said, I do think that you need to have the experiences of the people you are building the product for. It may or may not be the same experience as others.
This isn't true. For example, AirBnB has plenty of funding.
Investors as the constraint currently happens for capital-intensive opportunities, like nuclear fusion. There's plenty of investors for software as a service.
There are lots of other reasons why there aren't more "apps for x." The main barrier for any app is that it has to improve on the alternative. In this case, tech services like AirBnB and TripAdvisor are competing with DIY search, or simply talking to a friend or travel consultant and having a human conversation.
Travel advice inherently doesn't scale -- you saw it with Frommers et al. pre-web.
High investment to develop content, constant need to update, and your success cannibalizes your own business. The sorts of people who want travel advice are typically not the sort who want 1,000 other jackass Americans (said as a travelling American) showing up at "that tiny gem of a restaurant."
I'd say Yelp is the most useful travel-related app, precisely because they targeted a different market: what you want now, here (not the best in the world).
And with Ruby on Rails that's nothing short of high magic.
The did revolutionis the touristic rental market, and as for any revolution, it was very very difficult at the begining to have followers ( finance, customers, accomodations).
More on the early history of the company: https://medium.com/@jasper_ribbers/the-airbnb-founder-story-...
Airbnb was an exception given they had good people backing them (PG et al) just based on team and they competed in a different segment and that they had enough funds to actually show repeats and retention (something many others lack). It did spawn a few clones all over which got funded, but folded very early. This indeed helped Airbnb in later rounds as they virtually had no competition.
> There's plenty of investors for software as a service.
True when the Gross Margins are 60-80% and not about 5-10% as in case of travel.
> tech services like AirBnB and TripAdvisor are competing with DIY search
Travel planning is an experience in itself, and hacking those prices/places gives a dopamine hit which no app can compensate for imo. People like to try out the app and use it once, but the retention for these apps are low. Users tend to forget about these apps next time they travel.
Amazon, Google, Uber, Facebook (despite some cherry picked article from the video about it never being able to hit profitability) were all hugely popular right off the bat, and indeed, many people saw them as being more worthy successors to what were already huge businesses (e.g. the pre-Google search engines, MySpace).
In a similar vein, you often here how pg and other top VCs thought AirBnB was a horrible idea early on. Well, that's just their own individual myopic vision IMO. Couchsurfing was already very popular, as were other vacation rental platforms like VRBO - it's not hard to see how AirBnB could grow into that space.
If anything, what I see as the common thread is that the most successful startups executed extraordinarily well at just exactly the right time (e.g. there were other video sites before YouTube, but you didn't really have enough broadband adoption until the late 00s the make it viable).
Edit: Per Wikipedia VRBO was launched in 1995.
And "the more slick execution" was key. VRBO was until quite recently basically just classified ads - all transactions were done off platform, which was a major PITA and left a huge vector for fraud. I remember back in the late 00s I rented a place in Europe, and the only form of payment the owner would take was cash, so I showed up and paid 1200 euros in cash like I was buying half a kilo of heroin.
AirBnB solved the transaction issue right from the get go, with all payments going through their system and the owner not getting paid until like a day or two after the guest checked in. In addition, AirBnB worked off a commission model, which makes much more sense from a business perspective and which VRBO finally switched to a couple years ago.
> paid 1200 euros in cash like I was buying half a kilo of heroin
and luckily, the UN has some nice historical data on this [1]. Looks like the EU averaged 50 euros per gram or so. You’d have only gotten 25 grams :).
[1] https://dataunodc.un.org/drugs/heroin_and_cocaine_prices_in_...
User experience and design matters a lot.
I equate startup advice to those "Teach you how to become a millionaire" books you find at grocery stores. If these people really were good at making soap, they wouldn't be around giving advice. That includes my own advice in this comment ;-).
Without these books, finance wouldn’t have enough money to play with. Schmucks are a key ingredient of the ecosystem.
Same for startups. You need a substrate of failed founders and employees to create the raw materials that feed the successful juggernauts.
Those are 5 completely separate businesses ranging from 500k/yr to 5m/yr. Only the first is a "new" product.
Soap dispenser business is in own right quite interesting. If you made a substantially better soap dispenser, it won't be in the newspapers. It has a shorter lever, but a good business nevertheless.
I'm doing YouTube mainly to directly get the things I think work for founders out to people, just to help. So, I'm with you— but you have to understand my intention for the videos is to be something very different than those millionaire books.
Or, just make a mediocre product and make sure you have a big enough moat that competitors don't stand a chance.
So no, FB did not take over overnight. And even a few years into FB, no one (yes, no one) knew that FB will go past MySpace and there will simply be no comparison between the two 10 or 15 years down the road.
When FB took over MySpace a full FOUR years in [0], investors knew FB had momentum, but no one (yes, no one) had any idea why.
Not only that, many investors had no second thoughts about MySpace, and it felt like a competition space, instead of a winner take all. There was still an opinion that MySpace will retake the top spot again 'any minute now.'
So why FB took over MySpace? We don't know. Yes, we don't know in 2020, 16 years later.
(I'm not dismissing hard work, marketing, execution, commitment. But it was there for both FB and MySpace. It's a pre-requisite. You think MySpace folks slacked off and that's why FB got ahead? think again).
Stop monday morning quarter backing.
[0] https://www.google.com/search?q=when+did+facebook+overtake+m...
The point I was making was the idea that it was believed early on that social media was a "toy" or that it would never be profitable or that people poo poo-ed the idea of Facebook in its early days is not accurate, at all. Indeed, the example of MySpace shows that it was already well known that there would be a scramble for dominance in the social media realm.
> So why FB took over MySpace? We don't know. Yes, we don't know in 2020, 16 years later.
Uhh, I think we have a pretty good idea. First and foremost, Facebook was always focused on your real, offline identity, which was rather new at the time. MySpace and the early social networks were primarily based on different online personas (e.g. online usernames, no real name policy, etc.) MySpace tried to get people to add their real names and identities later, but it was basically too late by then. This isn't hypothetical, either, one of the founders of MySpace told me as much in a conversation about a decade ago.
I'm sorry "Stop Monday Morning Quarterbacking (MMQ)" isn't directed at you per se, but the general direction of whoever is reading my comment.
MMQ is, unfortunately, practiced widely in many prediction/retrospection circles like startups, finance, economics, politics.
I'm speaking from a the point of view of scientific rigor, or at least quantitative data analysis. No one does that when it comes to opining about the cause-and-effect of an event in the past. If you're "the winner", anything you say about why you won, would be taken as gospel. "Winner is always right". Rigorous analysis is very hard, and costly, and to what end? Just so you could say "my reasoning is based on analysis"? That's a very boring thing to say. Unless rigorous-analysis finds utility in applications like decision-making for future startups, and is shown to work over and over again (maybe we'll need AI for that), no one is going to bother with it.
Also YouTube was founded by Jim Clark’s son in law.
Maybe I'm wrong, but I have a hard time coming up with a super successful company based on a bad idea.
Just to be clear, I'm not discounting execution at all, it's obviously incredibly important. All I'm saying is that it bugs me when people always discount ideas as unimportant.
I guess a good idea now also contains a good idea on how to execute it as well.
The initial idea and its nth iteration are downstream from the real problem. What matters, therefore, is the iterative execution of those solutions. So instead of basing our judgment on the quality of the idea, we should rely on the execution ability because that is fairly constant in the development loop.
If you end up on the far-side of an idea-driven development process, you'll have solutions looking for a problem.
1. Customer/market risk
2. Invention risk
When invention risk >> customer risk (you can be certain there are customers, they have a need, you can satisfy the need), then a good idea will play a bigger role relative to execution (which still remains crucial).
However, we tend to grossly under-estimate customer risk, hence the "ideas are cheap" warning.
In my opinion, all of those are ideas that aren't really new. But they were executed in a new way and that made all the difference.
HomeAway was already well-known and successful at the time when AirBnb was founded. But the latter reached more potential landlords, due to their specific execution.
I remember using AltaVista for years before I ever heard about Google. So their business idea and business model wasn't new. Their initial execution was incredible, though.
And before I heard of Facebook, I was using MySpace, which was kind of the same basic idea, but pretty badly executed. Until 2 years after the iPhone came out, MySpace was actually larger than Facebook. So my guess would be that it was Facebook's superior execution of their mobile experience that crowned them.
The important ideas here is in the realm of "how". And that realm is both ideas and execution. Ideas of how to execute?
Pet owners often care about buying the same food every time, but few people are buying hundreds of copies of the same book.
No
> a super successful company based on a bad idea.
Magic Leap
Super successful companies based on nothing ideas are a dime a dozen. Almost all sites.
- Amazon, it sells things. It's execution was cutting edge.
- Rocket-internet is a great example - https://www.businessinsider.com.au/rocket-internet-companies...
Even the great mathematical ideas were execution. Working out how to create protocols is execution.
Lots of drunk discussions about internet currencies in the 2000's but no one implemented the mathematics -
Satoshi Nakamoto also released bitcoin software on Sourceforge.
Bram Cohen created torrent protocol and also release the software and filled it with porn.
Could you point me to a super successful public company with a proven track record, high revenues, rising stock price, etc. that is focused around a bad idea?
But you could just say the idea is playing to medical regulation and a dumb public.
So the answer is any company that pivots. ie. Youtube - https://www.entrepreneur.com/article/308975
OT:
Scott Adams tried to sell an idea - https://www.scottadamssays.com/2012/10/01/selling-an-idea/
Read it and follow it up how he went. It might interest you.
Here’s the difference:
“I think people would buy a screwdriver with a built-in hammer”
“I just spoke to company XYZ and they would buy 1,000 screwdrivers with integrated hammers if we made them”
The difference is obvious to anyone. You can execute like a star on the idea and make it if you get lucky and a market exists. The opportunity only requires “minimum viable execution” to capture it.
One is a push, the other a pull.
I still think what the advanced world needs most is an easily accessible way to form strong human connections. Organizations throughout history, such as religions, armies, fraternities, and secret societies, have figured out that formula. But, obviously those groups aren’t a good option for everyone. Great relationships are the most valuable things we have, and, judging by how many lonely people are out there, they are in short supply.
Yahoo was hugely popular when Google launched. Orkut and MySpace were very popular when Facebook launched. There were many popular messaging services when Whatsapp launched.
In fact I think just digging out something from the Google graveyard would be a good idea. 4-5 million users might be a pittance for Google but most of us would be more than happy to have even half of that customer base.
On a larger note: There's is so much contradicting startup advise out there it almost feels useless. Dunno, maybe those people who have the real insight are just to busy to share
He also said:
"Every moment in business happens only once. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them."
Regarding note-taking apps, I think few of those will turn into billion dollar companies, which is what the video is about.
That's kind of the case for all this kind of big-picture advice. There's some truth but some missing variables that may be just as important. "Bread crumbs" was a good way to describe it, I think.
sometimes building something that makes 1-2mn a year is the right move.
Small business is fragile endeavor, comparing to both regular employment and scaling small business to larger one with higher resistance to risks.
My suspicion is that a person who is constantly chasing a billion dollar business is going to have to make a lot more hops than someone chasing a more modest goal.
This is not a recommendation to avoid those billion dollar goals, just an observation on relative probabilities, and what is an appropriate target if your goal is stability.
I spent the last 2 years working on a research heavy startup that I felt would change game development forever, it was hard from an engineering, research, marketing and sales standpoint.
Late into the second year I started to feel burnt out and decided instead to write a robotics textbook which got way more attention to both myself and my project in about 2 months worth of work than 2 years did. This then got me to take Twitter a bit more seriously in terms of making friends, peers that I can easily see turn into collaborators or customers in the future. Sort of an audience first approach as opposed to product first approach. Tools like Twitter, Medium and Substack make this approach a lot more feasible today.
I even remember having a sort of disdain for freelancing because I thought it didn't scale whereas if I did pursue it more seriously I'd imagine I'd have had more direct solo enterprise sales experience, met more clients, figured out what their problems were and solving them instead of imagining an ideal where game developers would solve their problems like I wanted them to. Seeing my savings decrease every month took a mental toll on me, I figured there would be a light at the end of the tunnel and I essentially feel like I miscalibrated my goals. Instead of trying to build a billion dollar startup, I should have spent more time figuring out how to never need a job ever again.
The benefits of the multiple small bets approach is that when you're wrong it doesn't cost you 2 years of your life, you're less fragile to sudden decreases in income from one small bet, you don't have a boss, pandemics don't affect you, you choose your peers and hours etc.. Making your first few dollars online (not from a paycheck) changes you, makes a you a lot better at pursuing opportunities when they happen.
After COVID hit I started looking for a job again and my interviewing experience was very interesting to say the least. I described very honestly my failures and startups loved my story and appreciated my openness - bigger companies on the other hand essentially told me that well your startup didn't work out so you must be lazy and dumb. The outcome is what determines if I'm a good founder or not but it was really painful being lectured by people who had never taken a risk in their lives.
I see so many founders dreaming of huge companies going towards IPO when I can see solo founder companies being a lot happier if they pursued multiple small bets instead. You can't hedge your life over multiple billion dollar startups with a 1% chance of working out but you can certainly hedge it over multiple small bets each with a 10-30% chance of success. What's good for the aggregate or society isn't necessarily what is best for you.
This is obviously going do the B2B domain, and a lot of the problems and products will be deemed "boring", but hey, there's good money to be made.
Could anyone recommend some exercises to practice that kind of voice?
The second big misconception is that in order to make a billion or even a million dollar product, you need to focus on a personal problem you are trying to solve. Essentially your product should solve your problem. And this lures people into an entirely different rabbit hole - convincing themselves that "X" is their problem and that many other people have that problem. Often no one has that problem or it's so insignificant that no one will even bother giving it a thought.
The next big rabbit hole are apps. Don't get me wrong, apps are great and I rely on my phone heavily. However the Pareto rule is in full effect here. People will have 60 apps installed, and will use around 20% of those. And they will use heavily 20% of that subset. Say the average human being spends, say, an hour and a half on his or her phone a day. 80% of which will be messaging/social media, where you can't compete. So you are left competing with 10 other apps for the user's attention for a portion of the remaining 36 minutes. Sure, you could get a few thousand users out of several billion people. But again, Pareto's rule: most of your revenue will come from a small subset of those. Which often defeats the purpose. It's really hard to compete as a startup or an indie developer, when thousands of companies have thousands of astonishing developers at their disposal + the finances to back up any new project.
In addition, an idea in itself is worth nothing. It's what you do with it and how you market it that counts.
Which leads me to my final point. Billion dollar ideas are really hard to execute because the bar has been set very high. It's not something a single person or a small team can pull off. Those who do are the black swans. On a semi-related note, when the pandemic started, I was pretty convinced that many people will step up their game and come up with relevant products which will help the world adapt to the new normal. Which didn't happen to my big surprise. And I'm kind of disappointed that I didn't take on the challenge either(too much on my plate already + it's hard to work alone on a project). There were so many opportunities that were entirely missed... Shame but oh well... Next time maybe...
Been looking for one for a while, i actually considered making one.
As a Y Combinator partner for five years, it never failed that some hundreds of applications every single time were for local events startups.
The differentiator is execution and the ability to network properly. Maybe try your ideas when you don't have five college-aged kids and debt.
I had the idea for "Slack" 4 years before it came out. Seriously, _exactly_ the idea of Slack. I even semi-pitched it to Microsoft and they blew me off. I saw Napster/(internet downloaded music) four years before 1999, but I suspect I wasn't the only one. I started a knowledge base of company resumes at my consulting firm in 1995 and now that's a billion dollar industry (we never finished it because coworkers hated the idea of their resume in a database).
I may be smart, but so far I have been unable to execute any of my billion dollar ideas. Being smart only really gets you so far. I did try to build a tech-ed company ten years ago (Textfyre) that would thrive in the Covid learning world, but we could never get funded.
Still swinging though. May be the one I'm working on now will connect. We shall see.
My advice to anyone with an idea? Learn how to execute. Join startups, read books, network with entrepreneurs, go to startupweekend (when Covid is over), learn how to build a solid pitch deck, a business plan, and a financial worksheet. These fundamentals are the difference in getting an idea to market. And finally, make sure you focus on customers. Not on your logo, business cards, a PR website, or even paid employees. Get customers. Get revenue.
https://startupnames.medium.com/startup-names-under-199-usd-...
Some of the vaccines are a fragile messenger RNA molecule with nothing to protect it. That's good, because it's the minimal molecule that will do the job, reducing the risk of side effects. But it has to be kept frozen at dry ice temperatures before use. The "user friendly" version needs to follow.
See [1][2] for other vaccines for which this has been done.
Merck is working on a pill version.
[1] https://stm.sciencemag.org/content/12/567/eabf2642.full
[2] https://www.sciencedirect.com/science/article/abs/pii/S00928...
i guess he never heard of ebay.
patreon is just paypal donation button but they take a bigger cut and have developed a habit of terminating creators from the service for vague TOS violations
When he says that a company is worth 1 billon or 3 billon etc. , this is based on the last funding round in a very illiquid market. The collapse of wework shows that these purportedly large numbers are less impressive than they seem
HN readers tend to have a single linear viewpoint, and if you dissent from that angle, then you get downvoted to oblivion, or worse, flagged, even if you may have a valid viewpoint.
Edit: And I just got downvoted. So this proves my point.