Most people take “Build something people want” to mean “Pick a problem to solve and solve it well.” This is not sufficient to build a world changing company.
“Why now?” is the question entrepreneurs really need to answer. “Why now” encompasses two important and closely related concepts:
- Why have previous attempts at this idea failed?
- What enabling factors have emerged that enable you to succeed today?
The world is full of smart people who have the same idea
There are a lot of smart people out there. At least five of them have already tried to solve the problem you’re trying to solve. But you haven’t heard about any of these people.
Why would a similar product in an extremely similar world be vastly more successful? Most entrepreneurs essentially say: “There are other smart people who saw this opportunity. But none of them were smart enough to figure out the right product/marketing/sales strategy to succeed.”
Betting that other people are less capable than you is a bad idea. For you to be massively successful where multiple startups before you have failed, something in the world has to have changed. If the world has not changed in some fundamental way, you too will fail.
How do you do this looking forward?
You can’t answer “Why Now?” until you look back (years later). But you can look for patterns. Some common answers to “Why Now?” are:
- A new enabling technology has emerged (GPS)
- Consumer behavior has changed (Consumers understand the idea of “the cloud”)
- New distribution channels (The iTunes app store)
- Legislative changes (Environmental regulations drive cleantech)
I’m going to use my company, Spool, since I think about this every day. Spool lets you save any URL and cache it locally on all of your devices. It’s like a TiVo + personal web crawler for any media.
Why do we think now the right time for Spool? Why have previous startups in this space been unsuccessful?
- Content consumption has fragmented across multiple devices. We aren’t in a 1 browser, 1 PC world anymore. (Consumer behavior change)
- Content consumption now happens on wireless networks and infrastructure can’t keep up with demand. (Consumer behavior change)
- The Internet will be touch based. This introduces a number of user input issues. (Enabling technology)
- Cloud processing is shockingly cheap. Amazon Silk is a great indicator of this. (Enabling technology)
- Mobile stores have global reach and the stores keep evolving. (New distribution channel)
- Social networks are deeply integrated into mobile phones. (New distribution channel)
How many of these will enable to Spool get big? I have no idea. But there are a lot of trends here that expose new opportunities, and Spool sits right in the middle of all of them.
To succeed, you have to clearly articulate “Why now?” You need to have a thesis about why the world is different today and be able to back that up with some data. As a corollary, if you cannot clearly articulate why now is the right time for this business, and why 2, 3, 5, or 7 years ago were not the right times — then you are probably going to fail just like the other very intelligent entrepreneurs who previously tried to solve this problem.
Some Historical Examples
Here are a few examples of companies that weren’t novel ideas but succeeded after the world finally changed or caught up to the idea. In addition to enabling technology or consumer behavior changes, they executed on a new distribution channel.
Foursquare was an overnight success 10 years in the making. Dennis Crowley has been predicting the coming of location based services since feature phones. He built Dodgeball in 2003 and sold it to Google in 2005. He vested. Left. Started Foursquare. 7 years after he started Dodgeball, he finally got the idea to work. Why? Because the iPhone came along. GPS became standard in smartphones (thanks to a variety of influences including the US government requiring it in every cell phone). And consumers became comfortable with broadcasting information about themselves publicly on the Internet. He saw the world had finally caught up to his idea thanks to the iPhone and social networks.
Reid Hoffman has been playing around with social networks since the mid 1990s. He started SocialNet.com in 1997. Reid tried and didn’t succeed. He was way too early. So he tried again at the end of 2002 with LinkedIn. No one gave him money because consumer Internet was dead in the post-bubble Internet era. But the world had changed. There were finally enough companies and mainstream business professionals online to build a real social network. And enough businesses were looking for employees online that they would pay for it and enable a business. There was a critical mass of users online was and it was finally possible for this idea to scale virally. (If you’re interested in a great, short read check out this article from 2005 with a bunch of names you know and some you’ve forgotten about, including Mark Pincus’s Tribe.net, Friendster, and “Thefacebook” — http://www.nytimes.com/2005/05/09/technology/09network.html)
Social video sharing sites had been tried many times before. It was going to happen at some point and dozens of sites were funded to pursue the opportunity. But YouTube piggybacked on the back of a perfect storm of trends. Laptops started shipping in 2005 with built-in webcams, so no setup was required by the user and Flash could access these as a standard peripheral. By 2005, playing a video finally didn’t require any downloads. Broadband penetration finally got to a point where video was streamable. And MySpace enabled embedding of videos and YouTube doubled down on easy embedding as their distribution strategy. By the time MySpace realized YouTube was massive and tried to ban YouTube, it was too late. Meanwhile, Google launched Google Video. Google didn’t pursue embeds, focused on making sure copyright violations didn’t happen instead of relying on the DMCA, focused on non user generated videos at first, and required a download to do video uploads. They missed all of the “Why now?” insights that YouTube nailed.
Casual games have been a part of the Internet since the very beginning. But no one aggregated enough user attention to make a massive business out of it until Zynga came along. Zynga managed to piggyback on the Facebook API, the launch of the NewsFeed, and the lack of spam controls in the early days of the Facebook Platform. They spammed the hell out of the News Feed, acquired millions of users, funneled them around to a bunch of other games, and when Facebook shut off spam in the NewsFeed the window for anyone to build a meaningful Zynga competitor was closed. Along the way, they bought as many users as they could because they knew that the value was in having all of your friends playing games. Facebook (spam and ads) was the perfect distribution channel for games. Brilliant move.
A few clarifications
- Stating “If now is not the right time, then people didn’t want it” is a cop out. Almost everyone interprets “Build something people want” to mean “Pick a problem and solve it really well.” If you want to think this way, consider “Why now?” a better way to figure out what people want may want.
- This applies to startups where you need a small group of smart people executing well. Launching a smartphone requires manufacturing and capital at large scale. Large organizations can mis-execute, build bad products, and screw up because politics makes people do funny things. If only large companies have tried, you should ask if a startup can even build the right product, and if it can it’s fair to ask if the right product was actually ever built.
- This applies to startups that want to get to massive scale. This does not apply to businesses that make less than $5 million in revenue.
- This is not about timing a market. This is about a framework of thought to evaluate the opportunities that are presented to you as an entrepreneur. If you see an opening that clearly answers the “why now,” then you can capitalize on it.
- This is not about multiple startups competing against each other in a short window of time. This is about comparing a startup today against a similar startup from an earlier point in time. Determining which of Startup A or Startup B will do better today is a different question. However, you can still ask whether or not today is the right time for either of them to try.
- “Why now” does not say that successful entrepreneurs happen to be in the right place at the right time. Why Now?” reinforces how much execution really matters. Not only do you have to come up with a brilliant insight, build a product that people want, but you have to build your company with a deep understanding about how the world was, is, and will be. Doing all of this is HARD.
This framework came out of several discussions with friends. I don’t recall who distilled the framework into the brilliantly simple “Why Now?” but it was probably either David King or Ashvin Kumar. Thanks to Curtis Spencer, Christine Tieu, Aditya Koolwal, Chandra Patni, Yin Yin Wu, and Elad Gil for reading drafts of this and providing input.
33 thoughts on ““Build something people want” is not enough”
Good post! But let me challenge this a bit:
First, what’s the “grace period” here? If an idea became possible six months ago, then it’s good, right? What about 2 years? 5 years? Markets may be efficient, but not magically and instantly so. Take Mint as an example. It seemed “late” when it rose to prominence—but no one had done it yet and done it right, and it worked.
More importantly, what if you (the entrepreneur) have an idea that seems good and you *can’t* answer “why didn’t this work N years ago”? Do you drop it, on the assumption that there must be some reason why this idea is bad? That seems wrong. Maybe you should look harder for the flaw, or do some historical research to find it. But if you look harder and it still seems like a good idea, what then?
You’re right, markets aren’t immediately efficient. I think grace period is tough and probably varies wildly per industry and per type of solution. A mobile software opening is going to get filled far more quickly than some sort of network optimization infrastructure solution that requires integration with a telco.
I think it’s usually pretty straight forward to identify why something didn’t work N years ago if you can get to the right people. They tend to have that knowledge. If you start there then you have a reasonable path forward to what needs to have changed to enable that business today and you can see if those factors have changed.
Mint is a great example. I think what Mint did was take a great product and pump it through a brand new distribution channel — TechCrunch. They won TC50 the first year it was put on and TC promoted the hell out of them to the early adopters in that first year. TC had an incentive to do this and was a distribution channel to all of the early adopters that hadn’t yet been exploited. This let Mint build up a great SEO and press strategy that drove a lot of organic users in. They did this by design — their SEO and press strategy was beautifully executed.
Jason, to address the last part of your statement. Sometime you can easily identify the flaw and address it. But most of the time, it takes a lot of time and money to make your company just lasts longer. So an important criteria is: How long can you survive being stealth mode?
Great post Avichal!
“But none of them were smart enough to figure out the right product/marketing/sales strategy to succeed” – you caution against this way of thinking — but it’s very true in the case of the “followers” that now dominate the internet. Google Search was still websearch, they just had a 100x better product than Yahoo, WebCrawler, etc, etc. Facebook was still a social network, they just had a better product (UI/UX, scaling, platform strategy)
Fantastic post – so many miss the idea of opportunity created by new/disruptive technology, legislation, cultural evolution etc. What coming waves of innovation and disruption are you watching?
Very interesting post. I like that you are challenging conventional wisdom and enjoyed your post. However, my issue is that it is really easy for an uber-excited idea machine to come up with 5 reasons why their idea will work now and why past ideas have failed. In other words, it’s just more opinions written on paper. That said, the process of researching the “why now” question will likely surface many insights. But there will never be a definitive answer from this question until you test your idea/product with customers, in my opinion.
Reminds me of “Nothing is as powerful as an idea whose time has come” – Victor Hugo.
Very insightful post Avichal! I am an entrepreneur in Chicago that recently created started called Code Academy (http://codeacademy.org). We have always been focused on solving problems, not necessarily focused about “what people want.” Maybe it’s just semantics from my end, but I haven’t always felt that want = people dynamic has been popular thought.
Turns out that we were offering was what a lot of people wanted (signed up 35 people when we initially though we could get 12).
Anyways, we are pretty small, bootstrapped startup, so maybe our story is a little different.
Wonderful post! To question “what has always been” to a different way of thinking that knows no bounds is always inspiring. Thank you!
Another way to look at this is to research competitors. If you can’t find competitors:
1) You probably didn’t look hard enough
2) Your idea has been tried before and didn’t work (so what’s different now)
3) You are brilliant and have come up with an idea ahead of everyone else (unlikely, are you sure you’re not deluding yourself?)
Great post and enjoyed reading!
Although, I agree almost completely “Why now?” is a very important point to consider for all startups, I feel “Pick a problem to solve and solve it well” will still remain a major factor in people’s decision to start a new venture.
Google and Facebook are two companies which actually picked a problem and solved it well and people are still cherishing and touting the reasons behind their success.
Before Google, there was Alta Vista, Excite, Yahoo and bunch of other search engine companies. Market was flooded with search engine companies and US was going through recession. It was not a great time to start a search engine company. But Google came from no where and built a search engine which provided best results with simple, clean UI. It was a surprise gift for people who were tired of portals and congested home pages.
Do you remember Google’s first public facing article which followed Alta Vista’s post? (click Next) http://web.archive.org/web/19991005055735/http://www3.zdnet.com/pcmag/special/web100/search1.html
“the site(google) has an uncanny knack for returning extremely relevant results”. Google picked the problem and solved it well.
I applaud you for the extremely relevant and thought provoking examples you provided which emphasized your point very well.
“The world is full of smart people who have the same idea”
Simple, yet brilliant! And so truthful!
Liked your post. I am in the process of working out how to start something up. My product is not technical, but I would like to use the internet as the major part of my distribution methodology.
great post Avichal…
thanks avichal, what a great post. love this. you are 100% correct