“We have a great idea that so much better than [XYZ established market leader], why can’t we get money from venture investors?
That’s a frustration of first timers, a very irritating and difficult hurdle to overcome.
Let’s take a look at what tips we can get from serial entrepreneurs about what to do about it.
TIPS FOR YOU
- BETTER is a BAD WORD. Success comes from doing something very different, so different that it needs a name for the new thing it's all about. “Augmented reality” and “virtual reality” are examples of names given to new markets known as new categories.
- INVENT gets more attention than JOIN. Joining means competitors are already ahead of you and you’ll have to be superior to overtake the leader of the new category (that has by then been named). Venture investors will listen to such ideas, but with caution. They would rather hear you present an idea for a category lacking a name, so fresh that you have the opportunity to quickly take over the leadership position and be associated with the name (Google = search).
- GAME CHANGER gets attention, not GOOD IDEA. Uber is a game changer, ride sharing the category. Cheaper rides from non-professional drivers misses the point, does not get the money, and lags behind. Same with a service aimed at ride sharing for commuters and students crossing the country (how Lyft began).
- FLANKING wins, ATTACKING is death. Once a market leader is established in a category, it’s time to find another market segment, one that is not yet dominated by one or two competitors. Unfortunately most spectator sports strategies are focused on attacking a weakness in the competing team. That breeds people expecting to do the same with their startups. It results in blood all over the carpet, lots of startup body bags. Savvy serial entrepreneurs know instead they must flank into un-contested territory, a space open to them without encountering a giant in the way.
- HUGE is desired, BIG is not. Your idea should aim to play in a space so huge that many segments will be formed with enough room for giants to compete. That gets venture investors salivating. Words like big – or worse niche – are signals that your idea is too tiny to be worth the risk of investing in. Talented people will pass on your offer of employment. Bloggers will be bored and write about someone else.
BOTTOM LINE: Serial entrepreneurs can smell a new market category forming before it is formed. They eagerly follow the scent as they form a plan for a new enterprise in the new space. The exact name is not important, spotting the opportunity before giants emerge is. That’s your challenge. When you can do that, you’ll have gained a priceless skill. It’s central to building an unfair advantage. Others have done it, so can you.
I wish you The Best on your Adventure!