The
View from Initialized

Billion dollar startup ideas

What makes you new, different, and unique in the world will often be the exact thing that makes you succeed.

Startup ideas. Oh my God. Why is it so hard to come up with a good startup idea? Everyone’s making the same photo-sharing, podcasting, travel plans, local event apps. Probably because desire is mimetic. We want what other people want.

It’s the same ideas over and over again. When people look for ideas, they look around and find the things that have already succeeded. And this is really tricky because the most famous startups were not famous at the moment when they were started.

“The great disruptive startup ideas are hard to spot because when they start they’re toys.”

Chris Dixon

The personal computer was a crazy idea. Why would anyone want a computer on every desk and in every home? That didn’t make sense to most people. And then suddenly it made a lot of sense. So was Bitcoin. “Your magical internet beans are a joke”, they said. So was social networking. How could Facebook ever make money? Those are real things that people asked when Facebook was new. These days we wonder if anyone else will be able to make money.

And the danger now is there are not just hundreds, not just thousands, but probably hundreds of thousands of people who are all trying to do the same things. And as Peter Thiel says, “Infinite competition is for losers.” How do you break free? How do you avoid the crowd? How do you avoid mimesis? Just doing what everyone else is doing. Here’s what Steve jobs has to say about exactly this…

Have you ever thought about what it is to be intelligent? Probably some of you have. A lot of it’s memory, but a lot of it’s the ability to sort of zoom out like you’re in a city and you could look at the whole thing from about the 80th floor down at the city. And while other people are trying to figure out how to get from point A to point B, reading these stupid little maps you can just see it all out in front of you. You can see the whole thing and you can make connections that just seem obvious. But the key thing is that if you’re going to make connections which are innovative, to connect two experiences together, that you have to not have the same bag of experiences as everyone else does or else you’re going to make the same connections and then you won’t be innovative. What you got to do is get different experiences than the normal course of events.

Steve Jobs

You’ve got to zoom out, you’ve got to make connections, and you have to have different experiences. You can’t have the same experiences as everyone else. It’s okay to be weird. What makes you new, different and unique in the world will be the exact thing that makes you succeed. You’ve got to embrace differences and that’s why diversity matters a lot. If you do that and you find a problem that needs solving you’ll do something amazing here.

Let’s look at a few examples.

I was an early investor in Flexport and meeting Ryan Petersen was an amazing moment because when I met him I knew he had stumbled onto a huge market. My favorite pitch meetings are with founders who teach you something about the world you didn’t know before. Global logistics was one of those things and he knew it intimately. Here’s Ryan in a recent interview.

“You were selling through Amazon 10 years ago, 15 years ago? Yeah, 10, 15 years ago, Amazon introduced the third party seller. I remember I was one of the first people to sign up for it. And I thought it was amazing that for 40 bucks a month I could become an Amazon merchant and add products to their catalog. But I would just make up my own brand name and create it. I thought it was amazing. Like, oh wow, I’m on Amazon. This is live. This is legit. So our business was importing motorbikes from China. It was a tough business. I lived in China for a couple of years. Actually, it was a good business. It went along for a while. We never considered it a startup. We were never trying to like change the world. It was like a couple of guys trying to earn a living. I moved to China, live there for two years running supply chain for that business.”

Ryan Petersen

He was one of the first people to be an Amazon merchant. He imported motor bikes and electric scooters. And he learned a lot about the supply chain from his own personal experience. We invested in Flexport and I worked with Ryan both at Y Combinator and with my fund Initialized and Flexport is now worth more than $3.2 billion.

I met Jack Conte and Sam Yam pretty early, so early that they were just getting started with the idea of Patreon.

I Started Palmplamouse with my wife. We created our own YouTube channel and we bought pomplamoose.com and we started posting videos and music under the name Palmplamouse. And we did that, let’s see, that was 2008. So we did that for a few years. We were in the very early first wave of people that were using YouTube to reach other musicians and fans. And eight years ago, the, the monetization methods for creators were just totally broken. And I remember looking up from this feeling like there’s got to be a better way for creative people who are reaching millions of people online to make a living from that.

Jack Conte

Jack started a band with his wife and started posting YouTube videos, but they weren’t making money. And because they saw that problem very early they created a new platform that has funded a new generation of creators. It’s like an online Renaissance. Patreon is now worth more than $1.2 billion.

I don’t have all the answers here. These are just breadcrumbs. History doesn’t repeat, but it rhymes. We went through some great examples of billion dollar startups that started the right way, but don’t do what they did. You have to go into your experience and find things that are unique to you.

And here are a few other pitfalls that I want you to be careful of. First, you don’t have to be novel. The above examples certainly were relatively novel, but it’s certainly not the first time they were tried. Remember, if there’s competition, you have to be better, faster, cheaper in order to stand a chance. Competition is not your friend. It’s fierce and it will make your startup fail.

Second, it’s also okay if the first version of your startup is not quite perfect. In 2010, Chris Dixon pointed out that a lot of disruptive technology is dismissed as toys because the tech itself is still developing. They undershoot user needs.

“The first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn’t see how it could possibly be useful to businesses and railroads, their primary customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. And this was true of how mainframe computers viewed the PC and the microcomputer and how modern telecom companies viewed things like Skype.”

Chris Dixon

So where do we go from here? Well, I think you should read Paul Graham’s 2012 essay about startup ideas. There’s a breadcrumb there that he left for us that I want to highlight here. How do you find good startup ideas? Here’s what he said

“Work on hard problems, driven mainly by curiosity, but have a second self watching over your shoulder, taking notes of gaps and anomalies. Give yourself some time. You have a lot of control over the rate at which you turn yours into a prepared mind, but you have less control over the stimuli that spark ideas when they hit it. If Bill Gates and Paul Allen had constrained themselves to come up with a startup idea in one month, what if they’d chosen a month before the Altair even appeared?”

Paul Graham

The world needs more startups, good startups. The world doesn’t need more photo-sharing-travel-plans-local events startups, save yourself. Please, be mindful. Find something new, follow your interests. Take note of the gaps, anomalies and the things you genuinely believe the world needs. Keep working on your creator skills, on your builder skills. Be a great engineer, be a great product manager, become a better leader, become more consistent, more conscientious, and a better communicator. You will create something amazing.


Thanks for reading! To watch my full episodes that go into detail about these ideas — and more — head over to my YouTube channel.