I've been listening to and reading about very weak startup ideas over the past week. Several first-timer founders expressed acknowledgment of their feeble beginnings. I know, I've been there, often.
So what do you do when in such a situation, when you have a weak idea?
I'll use an example to give you some practical suggestions that worked for some recent entrepreneurs. Study this article about successful startups known as "discount luxury e-tailers". They sell expensive, world-class brand gowns at very low prices, on-line. Then try to apply the related suggestions to your startup:
- Learn from startup winners. You need to understand what a startup gorilla looks like if you are trying to become a successful startup. Who is your hero startup? Why? (Example: Gilt Groupe, HauteLook, Rue La La, and Vente-privee.com)
- Sell pain medicine, not vitamins. Look for a pain being suffered by the end user and deliver what solves the pain. (Example: "designer goods online at discounted prices"). Quicker, better, cheaper is selling vitamins. Boring. Too competitive. No future. Easy copied.
- Add more value, more stickiness. Low prices are not the only allure of these discount etailers. They bring more to customers and thereby increase retention of buyers. (Example: Sites are open only to those who have received an e-mail inviting them to join from another member).
- Bring exclusivity to boost retention and buzz. Member-only access is compelling , people want to become a member. And it propels sending invitations to friends, thereby creating PR buzz at nil cost to your startup. (Example: this buzz also attracts designer brand marketers to the discount luxury etailer sites as suppliers and thereby strategic partners).
- Exploit sense of urgency. In our example, the etailers put designer goods on sale the same time every day for 24 hours a day. And no buyer knows how many items of each size and color are available. That makes such shopping an urgent and competitive daily activity for many members.
- Bring compelling value to suppliers. Designers can use the sites to get rid of stock quickly and discretely. This spares them the disgrace of seeing their heavily discounted products lingering on sale racks in full public view.
- Deliver solutions to pain of suppliers. These etailers shield themselves from search engines, so they do not pop up in response to online searches for brands they offer. That encourages grand firms like Cartier to sell their wares through them.
- Build special social responses.Ben Fischman, the boss of Rue La La, which started in 2008 and expects to have $130 million of revenues this year, thinks the "theatrical environment" of his site keeps customers hooked.
- Exploit technology, particularly the latest, hottest. Rue La La recently launched iPhone applications.
- Expand the product line. Being careful to not confuse the market (that confuses people, slows sales and dilutes your brand), look for related items to add for sale to your growing customer base. (Example: etailers have added wine, spa services, travel packages and even yachts and apartments). This is tricky to do right, beware.
The numbers are impressive in this example. Gilt already has 1.4 million members after launch in 2007 and expects revenue in 2010 around $400 million. The French startup, Vente-privee.com has 8 million, growing 42 percent a year. And so on it goes (and grows).
BOTTOM LINE: As you can see, the initial idea has been expanded far, far more in ways noted above. Users and suppliers are drawn into relationships with the etailers that become stickier and stickier. As the spider spins her web, the buzz of the early arrivals attracts more and more participants. Soon the web is sagging under the weight of the rapidly growing number of buyers and sellers. Looking at this situation from a distance, I'd say the founders of these startups understand how to begin with a feeble idea and convert it to an amazing business that is propelled by an unfair advantage. Now it's time for you to try.
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