What if your startup idea already exists?
Working for an incubator, I often come across start-up ideas that have already been implemented elsewhere. As anyone would, I Googled how aspiring entrepreneurs should deal with this. Surprisingly, most articles I came across encouraged them to continue, of course after some basic sanity tests such as “Whether users are still available?”. For example, Dropbox’s Drew Houston replied to an investor who questioned him about the numerous file sharing services already around — “Do you use any of them?” “No!”.
So while I was at it, I thought that I might as well create a list of questions to ask before taking a decision. Will update it as I come across more points.
- Is there a niche market that is not being covered by the existing product(s)? Geographic, Demographic, Professional, Size of Business, Share of pocket-wise. Age old trick of segmentation. Can you partner with an existing competitor to cater to a new segment?
- Can you make a product better than what already exists? How easy it is for someone else to add that killer feature you just thought of?
- Is it a market where network effects don’t play a big role? Is there space for several competitors?
- Pitch it to as many people, VCs, entrepreneurs, friends. Can you convince them on how you would build a better product?
- Are the existing companies in the market doing well? Check Crunchbase. How much funding have they received? See Google Playstore, how many times has the app been downloaded? Are they doing well? Why? Why not? Competition acts as an excellent validation for your idea.
- Would you be happy with something that gives you enough to live off? How ambitious are you with the project? Is this a hobby that you might take up full time later on? Where do you plan to get your investments from? What returns do they expect?
- Does your product category appear on Y-Combinator’s list on what startups they’re willing to fund? Almost all the categories are crowded, but they still invite innovative ideas. Can you be one of them?
- If not the product, can you differentiate in something else? Marketing, Customer service, Revenue model — Can you sell it at a lower price and make money somewhere else?), Delivery, Speed, User Experience. Anything. Does your target market care for it? Great!
- How dynamic is your team? Are you ready to get your hands dirty, see how the market responds and pivot if required? Is there something to go back to if you fail?
- How big is the market? Is it growing? What percentage of your overall target market has been eaten up? Will it still have space by the time you’re ready?
If you’ve answered in the affirmative to a few of the above questions, take a deep breath, validate your answers, build a business plan and there you go. If not, scrap it.
Ah, one last check. Does only Sony or Microsoft already do it? Excellent. Definitely go ahead.
PS: I also found this hilarious piece that clearly reflects what I’ve been through after each of my start-up ideas.