Over the last 12 month here in Miami we've seen a lot of tech start-ups action. New companies pop-up every week. New entrepreneurial programs and organizations are established. New incubators and accelerators come up.
However a lot of the ideas we are presented with are basically copycats of already successful companies. Things like "The Uber of XYZ service" or "A better, faster and more niche E-Bay" or "A more niche social media network" or "A more secure and we-don't-sell-your-e-mail-addresses-and-phone-numbers social media network" or a "Better Yelp combined with a MLM system" or "A safer Tinder" are crossing our desks every month.
However a lot of the ideas we are presented with are basically copycats of already successful companies. Things like "The Uber of XYZ service" or "A better, faster and more niche E-Bay" or "A more niche social media network" or "A more secure and we-don't-sell-your-e-mail-addresses-and-phone-numbers social media network" or a "Better Yelp combined with a MLM system" or "A safer Tinder" are crossing our desks every month.
While we admire the initiatives, the truth of a matter is these kinds of businesses will be difficult to grow. Here are some of the reasons for that:
It's is extremely difficult to divert current users of Facebook from Facebook just because you are telling them that you are not selling their data. People like Facebook and they got used with it. Despite security concerns, some defects and some pessimistic projections of naysayers Facebook's audience keeps growing and it will keep growing for a while.
Same thing with E-Bay and Amazon. Tough job to make people use an alternate platform just because it's cheaper or more niche. To convince them you need to throw in a tone of freebies, much more business value and- the most important thing- show credibility that you can scale, you won't crash at a certain threshold, you will do a better customer service job than them long term. If you do that, you will become an acquisition target anyways- which is not bad at all, if you can by all means you should sell.
Same thing with E-Bay and Amazon. Tough job to make people use an alternate platform just because it's cheaper or more niche. To convince them you need to throw in a tone of freebies, much more business value and- the most important thing- show credibility that you can scale, you won't crash at a certain threshold, you will do a better customer service job than them long term. If you do that, you will become an acquisition target anyways- which is not bad at all, if you can by all means you should sell.
And the idea of combining a Yelp type of service for fewer categories, operated by a new/unknown company that *combines* the subscription model with a MLM type of system is straight stupid.
2. They usually do not address the real pain or the actual need in the market place
See the real pain of Facebook's users is not that Facebook sells their data. I mean for some people that is important. But for most of them it's not because they don't look at their personal data as super valuable assets- which is why they keep signing up to Facebook despite all the privacy lawsuits and stuff.
Facebook's users would potentially benefit from more fun features, more engagement, an easier way to connect with more targets audiences, an easier way to to find lost friends (like me now, I am looking for an old friend I have not talked to in 17 years and I can't find him on Facebook, I wish Facebook had to way to find him for me by interfacing with other online services where he maybe a subscriber), more personalized stuff etc. So that's were would be a lot of added value for this type of business.
It is very important to identify the real issue / the real opportunity in the marketplace. Founders of copycats usually fail to do that.
Facebook's users would potentially benefit from more fun features, more engagement, an easier way to connect with more targets audiences, an easier way to to find lost friends (like me now, I am looking for an old friend I have not talked to in 17 years and I can't find him on Facebook, I wish Facebook had to way to find him for me by interfacing with other online services where he maybe a subscriber), more personalized stuff etc. So that's were would be a lot of added value for this type of business.
It is very important to identify the real issue / the real opportunity in the marketplace. Founders of copycats usually fail to do that.
3. They are generally not well executed as businesses
Execution is everything in business. Or almost everything. It's 99% of your business success. I'd say the idea and funds availability are under 1% in importance. How you run your business, how you sell, what you sell, to whom you sell, how well done your product is, how much word of mouth referrals you get and how much people like you and your company and perceive you as somebody who delivers a lot of value into their lives, all those are key elements.
The reality is that most of the founders do not execute well in business. They cut corners on product quality, they lack sales skills, they do not have the right relationships / re-sellers / distribution channels and are more likely prone not to be able to build critical mass.
The reality is that most of the founders do not execute well in business. They cut corners on product quality, they lack sales skills, they do not have the right relationships / re-sellers / distribution channels and are more likely prone not to be able to build critical mass.
4. They are hard to fund
Because some of these reasons (and potentially others) copycats are very hard to fund. Investors are very knowledgeable (many times they are entrepreneurs themselves) and they spot a copycat very quick. If you have a copycat and really believe in it, I'd say fund it 100% with your own money because it will be a hell of a job to raise them from investors.
5. They do not deliver true innovation
In the tech world innovation is key. Come up with something new and useful and you have a pretty strong play. But a copycat does not have the "meat" of the true innovation that was initially in place. Hence it will never trigger the respect and admiration of the initial true innovation.
And, of course, we are always presented with the counter example of ... Google. Google was founded at a time when five other major search engines existed and was still very successful. However people who say that tend to overlook that, back in the 1998-1999, Google was still a very early player in a relatively new and unexplored market (the market of search engines), that the Founders were data scientists who did a stellar job in categorizing "world's information"- a much better job than everybody else at the time and since then and that the company did introduced and very well implemented a multitude of innovative concepts such as the concept of page ranking.
Back to Google the company was founded in Silicon Valley in a very unique and favorable moment in tech history- a moment that we will less likely see in our lifetime. Business wise Google got a little lucky too (as lucky as you can get with a lot of hard work and a good strategy) when their paid ads / Google Ad Words took off big time despite concerns of spam, security and invasion of privacy. Almost two decades after its inception Google (who employs some of the best engineers in the world) is still trying hard to innovate and to bring new products / ideas to the market place, most of which still fail (I don't know how many people realize how many products and services from Google's current portfolio are actually profitable- while everybody knows the giant success of Ad Words).
So I would advise for caution when comparing a lot of these new start-ups with Google.
I would stay innovative, humble and continue to try hard. Make less buzz and do more work.
Have a great day ahead!
Adrian Corbuleanu
Miami Beach, FL
