Billion dollar startups are better faster cheaper— Lessons from Amazon, Instacart, Uber & Shopify | Summary and Q&A

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October 19, 2020
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Garry Tan
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Billion dollar startups are better faster cheaper— Lessons from Amazon, Instacart, Uber & Shopify

TL;DR

Being first isn't always necessary for startup success. What matters is being better, faster, and cheaper than existing alternatives.

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Key Insights

  • ❓ Being the first in an industry is not necessary for startup success. Being different and offering a better solution is more important.
  • 🎯 Better can be achieved through technical excellence, targeting underserved customers, or focusing on a niche market.
  • 💨 Faster startups often leverage software, increase supply liquidity, or prioritize website performance.
  • 😘 Cheaper startups can take advantage of shifts in technology cost curves or offer lower prices to attract customers.

Transcript

  • So, should you work on a startup idea that already exists? Well, Snapchat wasn't the first messaging app, Facebook wasn't the first social network and Discord wasn't the first chat app. You don't have to be first, but you do need to be different. Being better, faster and cheaper matters. In fact, it matters a lot. It matters so much that if you d... Read More

Questions & Answers

Q: Do startups have to be the first in their industry to succeed?

No, being first is not necessary for startup success. Many successful startups, like Airbnb and Dropbox, were late entrants in their respective industries but offered a unique and better solution.

Q: How can startups be better than existing alternatives?

Startups can be better by focusing on technical excellence, targeting underserved customers or situations, or catering to niche markets. For example, Google offered better search results through their PageRank algorithm, and Coinbase provided a better experience for buying Bitcoin compared to Mt. Gox.

Q: How can startups be faster than competitors?

Startups can be faster by leveraging software to replace traditional methods, increasing supply liquidity to reduce response times, or maintaining fast website performance. Uber's focus on matching supply and demand led to significantly faster ride-hailing services compared to traditional taxis.

Q: Why is it important for startups to be cheaper than existing alternatives?

Cost matters to customers, and startups that can provide the same or better product or service for a lower price can attract a larger customer base. Examples include Shopify, which offered a cheaper e-commerce platform compared to running a Magento server, and Lyft, which provided cheaper ride-sharing using a community-based model.

Q: Do startups have to be the first in their industry to succeed?

No, being first is not necessary for startup success. Many successful startups, like Airbnb and Dropbox, were late entrants in their respective industries but offered a unique and better solution.

More Insights

  • Being the first in an industry is not necessary for startup success. Being different and offering a better solution is more important.

  • Better can be achieved through technical excellence, targeting underserved customers, or focusing on a niche market.

  • Faster startups often leverage software, increase supply liquidity, or prioritize website performance.

  • Cheaper startups can take advantage of shifts in technology cost curves or offer lower prices to attract customers.

  • Startups should aim to be better, faster, or cheaper than existing alternatives, regardless of their age or novelty in the market.

Summary

In this video, the speaker discusses the importance of being different rather than being the first in the market. Examples of successful startups are given, such as Posterous, Google, Dropbox, Discord, Airbnb, and Coinbase, to illustrate how being better, faster, or cheaper than the alternatives can lead to success. The video also highlights the biases of investors towards novel approaches and the potential advantages of entering a market with competitors. The speaker emphasizes that startups need to clearly solve a need, whether it's a new need or a replacement for an outdated industry.

Questions & Answers

Q: Is it necessary to be the first in the market to succeed with a startup idea?

No, being the first is not a requirement for success. Examples like Snapchat, Facebook, and Discord show that success can be achieved without being the first in the market. The key is to be different and offer something better, faster, or cheaper than the alternatives.

Q: What made Posterous successful despite not being the first blog or social network?

Posterous succeeded because it offered a specific feature that made it better than its competitors. The ability to post by email was seamless and easy to use, making it accessible to anyone who knew how to send an email. This unique feature differentiated Posterous and attracted users.

Q: Do investors prefer startups with novel approaches?

Yes, investors tend to have a bias towards novel approaches. They are often attracted to ideas that are new and different. While this bias may not always be fair, it is important for entrepreneurs to be aware of it and consider how it may influence investors' decisions.

Q: Why do people still look for new things despite being a disadvantage at times?

New business models arise due to various factors, such as new technologies, changes in online behaviors, society's demographics, and new regulations. Investors are often interested in these new approaches, which is why people continue to seek out and invest in novel ideas.

Q: What should startups consider if they enter a market with many competitors?

Startups entering a market with many competitors must consider whether they are better, faster, or cheaper than the alternatives. These three factors can give them a competitive edge even in a crowded market. It is important to assess how the startup differentiates itself in these aspects.

Q: How did Google become successful in the search engine market?

Google became successful because it was clearly better than its competitors like AltaVista. It utilized PageRank, an innovative algorithm that provided more relevant search results. Google's focus on technical excellence and better engineering talent allowed them to create a superior product and user experience.

Q: What made Dropbox stand out in the market?

Dropbox differentiated itself from traditional USB drives by providing a breakthrough experience in file storage and sharing. Its technical excellence and seamless functionality made it a better alternative. Dropbox's focus on being better led to its success.

Q: How did Discord gain its initial users and become successful?

Discord targeted gamers and addressed their specific needs. By ensuring low CPU requirements, Discord allowed gamers to play high frame rate games without experiencing lag. This unique feature attracted early users and helped Discord establish itself in the chat app market.

Q: What made Airbnb successful when there were no alternatives?

Airbnb initially focused on conference goers who had no other options for accommodation. This lack of alternatives made Airbnb's offering clearly better than attending a conference without a place to stay. By addressing a specific underserved audience, Airbnb gained traction and grew its customer base.

Q: What made Coinbase better than its competitors like Mt. Gox?

Coinbase was better than Mt. Gox because it provided a more reliable and accessible platform for buying Bitcoin. Unlike Mt. Gox, which required wiring money to an overseas bank, Coinbase offered a much smoother and trustworthy user experience. Its focus on customer needs and technical excellence allowed Coinbase to outperform its competitors.

Q: How did Flexport become faster in air freight shipping?

Flexport enhanced air freight shipping by leveraging software to reduce processing time and claims resolution. Their streamlined processes and automation made their freight insurance up to six times faster to resolve claims, offering a significant time advantage over traditional methods.

Takeaways

Being the first in the market is not essential for a startup's success. What matters more is being different and offering something better, faster, or cheaper than the alternatives. Investors often favor novel approaches, but startups entering markets with competitors can still succeed by considering if they are better, faster, or cheaper. Startups should clearly solve a need, whether it's a new need or a replacement for an outdated industry. By focusing on these principles, startups increase their chances of success.

Summary & Key Takeaways

  • Startups don't need to be the first in their industry. Being different and offering a better, faster, and cheaper solution can lead to success.

  • Examples of successful startups include Posterous (better in supporting posts by email), Google (better search results through PageRank), Uber (faster ride-hailing), and Shopify (cheaper e-commerce platform).

  • Being better can be achieved through technical excellence, targeting underserved customers, or focusing on a niche market. Being faster can be accomplished by leveraging software, increasing supply liquidity, or maintaining fast website performance. Being cheaper can be achieved by offering lower prices or leveraging major shifts in technology cost curves.

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