Don’t Launch a Product, Start a Cult
I wanted to share my thoughts and research on a question asked in startup cohorts. The question was- My idea can be easily copied by the competitors. What should I do? Should I pursue new and different idea? Should I focus to get it patented?
At an early stage of learning product market fit, I sought a number of materials to find the answer to this issue-
1) Quote from Sam Altman’s (President, Y-Combinator) ‘Startup Playbook’
The best ideas sound bad but are in fact good. So you don’t need to be too secretive with your idea – if it’s actually a good idea, it likely won’t sound like it’s worth stealing. Even if it does sound like it’s worth stealing, there are at least a thousand times more people that have good ideas than people who are willing to do the kind of work it takes to turn a great idea into a great company. And if you tell people what you’re doing, they might help. Speaking of telling people your idea – while it’s important the idea really excites some people the first time they hear it, almost everyone is going to tell you that your idea sucks. Maybe they are right. Maybe they are not good at evaluating startups, or maybe they are just jealous.
2) Ben Silbermann (Co-founder, Pinterest) used to approach strangers in coffee shops in Palo Alto and ask them to try Pinterest to assess product-market fit.
3) Instagram received $7M in Series A funding. A competitor spun up named Color Labs Inc. and made a similar photo app. They raised Series A of $40M a month after. When Kevin (Co-founder, Instagram) was asked how did he feel when he heard this huge venture funding by Color Labs Inc. Kevin said that anyone can look through online forums and hack a photo filtering app. However, it’s difficult to build a community. The first hire of Instagram was not an engineer, but a Community Manager. They would arrange meetups for the users to be more involved with the community. Fast forward a year, Color was in turmoil as they did not have user traction. And Instagram sold that same year to Facebook for $1B. Pinterest also partnered with bloggers in the early days for community campaigns. One campaign they had was called ‘Pin It forward’.
4) Pete Adeney (founder of Mr Money Mustache) said in a Y-Combinator podcast “Don’t start a blog (product), start a cult”
5) Find your north star metrics to help you grow and make it super difficult to be copied by competitors as mentioned by Alex Schultz, VP of Growth, Facebook. E.g. For Facebook, it was monthly active users, In the early days of Whatsapp, they used the “Send” metric to gauge retention. Monthly active users is good, but if they’re not sending any messages, they’re not really using the messaging app. Airbnb’s north star metric is nights booked and customers re-book rate after first booking.
6) Every company can be copied, but not every community or cult. Even SpaceX has a major competitor Blue Origin (by Jeff Bezos). Communities are difficult (if not impossible) to copy as community values are an intangible component which you can’t just copy-paste.
7) Reed Hasting (Co-founder, Netflix) was asked how he would tackle Amazon Prime Videos. Netflix had a huge competitor back in 2005 called Blockbuster who was ten times bigger than Netflix. However Netflix ran Blockbuster out of business. How? Reed Hasting said they came up with four counter attacks to beat Blockbuster – i) banner ads, ii) Netflix friends (which was their own social network similar to Facebook), iii) used DVD sales, iv) purchasing Red Envelope Entertainment to get into content business. And Reed thought wasn’t our management so clever? None of the counter-attacks made any contribution to Netflix’s victory. All of the four features had to be closed down. The biggest lesson that Reed Hastings learned was when attacked, focus on doing the core (content streaming experience) better, and not to broaden the surface of attack.
Hope you guys enjoyed the read! Peace 🙂