A while ago, I was in the same boat. Why try to recreate GitHub, or Uber, or Salesforce, or Facebook? And once I discovered any competitors in my idea's field, I would chalk it down to "not worth trying" and call it a day.
But then I realized, if my town can have 3-4 Chinese restaurants with the same exact menus (probably supplied by the same exact distributors), and they've all operated continuously for over a decade....who cares about uniqueness? Sure, none of these copycat places are raking in millions, but it's enough to support the livelihoods of the owner and all of his/her employees, so who cares? Your business doesn't need to be a unicorn to make you happy, as long as you're happy with that outcome.
Of course, tech does not operate the same way as Chinese restaurants, and for that I point you to Accumulative Advantage:
>Accumulative Advantage is when a small advantage at the beginning of something, such as kindergarten, becomes a little difference that leads to an opportunity that makes a bigger difference a bit bigger, and that edge in turns leads to another opportunity, which makes that initial small difference even bigger.
Put in context: You don't have to follow the same path your competitors did. Uber/Lyft poured billions into normalizing the concept of being driven by some stranger who uses the same app as you, so any new ride-sharing platform can spend that money in other areas. Giants like Microsoft have decades of technical debt they need to tackle; you can start building with 2019 libraries, 2019 paradigms (wouldn't the cloud have been great for startups ten years ago?) and 2019 performance.
In order for the underdog to win, there first has to be an underdog. If you're brave enough to start, you may just be brave enough to win.
Also worth noting the downside of scale: some opportunities are "too small" for a Microsoft or Google to pursue. Google revenue for 2018 was $136.8B. Extra effort to possibly address a small niche segment of a market, that would improve revenue by $1M per year, is too small to draw anyone's attention.
However, that same $1M/yr is enough to sustain a bootstrapped business and even possibly build the credibility to raise a larger round and try to win the space.
If a company is already solving a problem, a better question to ask is "why didn't I know they exist?" It may be that they aren't properly tailoring their marketing to the target audience, in which case you have a clear opening.
As a "personal anecdote", we (https://sheetjs.com/) offer a variety of solutions for problems involving structured data. Before we started, there were plenty of solutions but every solution had various compatibility issues or didn't work with our data. Even in 2019 companies turn to us because of compatibility issues with Google Sheets or Excel 2019. We went through the same analysis and concluded that neither company thinks there will be a meaningful improvement in revenue or marketshare
> $1M per year, is too small to draw anyone's attention.
I'll take this opportunity to tell a long-winded story about how that number can be two orders of magnitude larger, and still be too small.
I was with Slide when Google bought us in 2010. They bungled the acquisition (bought us to work on Google+, which had already made a bunch of disagreeable decisions by the time we were ready to rumble), so we were left to our own devices for a year, in which time about 12 of us made something called Photovine, a photo sharing app that would have competed with Instagram, and we were getting pretty universally positive press. I think TechCrunch called it the best mobile app google had ever produced, and all of our beta and early release engagement numbers were bananas.
(We also had loads of fun with it — the core sharing mechanic was organized around shared captions that we called vines, and we spent most of our play-testing time swapping visual puns.)
Anyway, if you project our trajectory generously, which didn't seem out of the question given our early traction, we would have wound up competing with Insta, doing business in the hundreds of millions. But Larry, in all his "more wood behind fewer arrows" wisdom, decided to axe the project, as he did many, many others, and re-assign all of us to YouTube, which, granted, was gearing up to compete with TV, and needed more staff.
I remember looking at photovine when it came out. I was only 11 but I thought it was a brilliant idea. And it was so much more colorful than any other Google apps I'd used at the time.
> However, that same $1M/yr is enough to sustain a bootstrapped business and even possibly build the credibility to raise a larger round and try to win the space.
And often, $1M/yr is not even needed. Many developers don't necessarily want to become managers and worry about funding rounds, hiring, etc. $1M/yr is already a pretty good lifestyle, no need to get further funding or scale the business if you're happy running the project on your own.
Don't forget that large companies and established players typically are extremely bad in listening to their customers or providing good support since it doesn't scale well for them to do so. Even if the product is the same, you can steal marketshare by being responsive to your customers and being able to iterate at a quicker pace than the larger competitors.
Competition isn't bad - that just means there's a market large enough for different companies to want to fight for a share of.
As a small businessperson, I find it's critical to be aware of the different strengths and weaknesses that come with being big or small, and to leverage them to your advantage.
My favorite one-liner about the difference is: small companies make it possible, big companies make it cheap.
Also personnel costs at FAANG are high - something like 200-250k per engineer. The upside has to be very high, accounting for the personnel costs, to make building a product worth it.
> It may be that they aren't properly tailoring their marketing to the target audience, in which case you have a clear opening.
Then you would start a marketing company. Or it will become a fight about who spends the most on marketing, and the only winner would be the marketing companies.
You restaurant analogy fails, because restaurants are at a fixed physical location and the seats are constrained. I find Ben Thompson's "Aggregation Theory" quite insightful on this topic: https://stratechery.com/2015/aggregation-theory/
That's not to say that you cannot be successfull running a small service, but it needs to be differentiated in some way and not just copy the existing ones (which works fine for a chinese restaurant if there isn't one in that part of the town).
That's fair but how about streets in any big city or town (certainly in the UK) where there is fried chicken shop after fried chicken shop after kebab shop after another kebab shop? The only thing that differentiates each of those places are usually the logos and the name of the shop (London Fried Chicken, Tasty Fried Chicken, Hackney Fried Chicken etc. - not a great deal of imagination there).
The food is almost identical, the prices too, they are of course at a fixed location (but not quite sure how that makes any difference) and there are no seat constraints. Yet these places seem to stay alive even though none of them really offer anything different to the chicken shop next door.
Multiple shops like this can survive because each has limited capacity, i.e. these two go up exponentially after a certain (quite early) point:
1. Time between walking in and paying.
2. Time between paying and receiving your food.
If one of those restaurants could maintain quality, and keep the above two metrics flat whilst a scaling to 4x, then the other 3 restaurants would lose business and eventually go out of business.
Online businesses don't usually have the same limits to scale.
Small shops multiply instead of swelling because their capacity limitations are either a high barrier to individual growth or an essential feature of their service ('coziness').
You're making a really good insight here. I just wanna give some examples to add to your point. Here in Indonesia there are 2 big Uber clone (at least initially): Gojek and Grab that are both unicorn. In the beginning, they both started off ride-hailing. But after about 4 years, Gojek morphed into a payment company like Chinese We-Pay. It seems they were thinking of ride-hailing as a good customer-acquisition strategy in order to build the initial user base. On the other hand, Grab still seems to be focused on being a transport company, but they expand to a lot more countries. Their main strategy seems to be South East Asia expansion.
I think these are very cool examples on how two seemingly the same thing end up diverging and finding up their own path.
Just do expand a bit further on Grab, they added food delivery and parcel courier services recently, as well as transport subscription services (for around $40 you get 35 car rides a month, for example).
Steve Yegge, high profile developer previously at Google and Amazon, now head of engineering for Data Insights at Grab, wrote a nice blog post about why he quit his job at Google to join Grab:
Google brought to market a unique and powerful approach to getting the most relevant content to the top of the search results: PageRank. It was a good solution to a big problem with search engines at that time, and the difference in quality of results was obvious.
This reminds of one of the more memorable question/advice from Peter Thiel's book, Zero to One. "What's the one thing you can do 10x better than your competitors?". IIRC, the chapter was titled "The last mover advantage".
In SaaS you need some differentiating factor, but that's pretty easy:
We're faster, simpler, privacy friendly, cheaper, etc.
Most leading SaaS businesses have proven there's a market, but they're vulnerable on one of those key differentiators.
Sure, you might not conquer the market, but it's probably a safer way to build a lifestyle business than trying to come up with and market a novel idea.
Much easier to find forums of people complaining about product X not doing Y and fill that gap.
There is a net demand for Chinese food in the area, and there will definitely be such a thing as 'too much or little' supply (though obviously each offer i.e. supply is a little different)
A single restaurant will only be able to meet so much demand, so if there's a niche in terms of region or menu, maybe there's a real opportunity.
GitHub, Uber, FB - they all have network externalizations to some extent, there definitely have economies of scale, and they are playing in a global marketplace (or at least, say 'the Western world').
So, no, it's probably not a good idea to compete directly with them.
In fact, incumbents almost always win - the idea is to do something different enough, solve a problem in a different way.
Slack did not build 'better email' they went up one level and built 'better communication'. And a whole bunch of other things of course. But 'slack e-mail' probably would not have yielded them the same result.
It depends on your ambitions. If you want to be a stinking rich billionaire, ok fine. Good luck!!
If instead you want to have some fun and maybe get more money back than you put in, that's a different world.
I'm increasingly persuaded that unless you go to dinner parties with say Sequoia capital people, it's better to start small, get the principles working right and then build on it.
'better UI' might be debatable... It is a bloated inefficient sack of kack that demands ~1GB RAM per channel! In fact, didn't the original developer label it thus and abandon the whole thing?
This is kind of amusing given that most new modern things in the hacker news ecosystem use either electron or some other variation of nodejs. Which is usually the exact opposite of 'performant'.
Ha! I still use Delphi (amongst other things)! It's great for producing Native Windows apps and is extremely performant (and still works with Win 10). I stuck with Delphi 7 (and thus avoided all the subsequent politics).
I agree with you on many points.
The restaurants analogy is especially true when the provided service or product is very simple. Additionally if the size of the user base does not influence the experience of the individual user there is no need to catch up in this area.
Competitors can be seen as a proof of concept and are not a real obstacle if there is no network effect involved.
I also agree that not starting a project if it doesn't have unicorn potential is ridiculous, but I don't feel like there is anything to explain there.
You can franchise, but the expansion is very different to what software can do.
That said, there are so many things that can be done better than the standard software, or where different varieties can work better for specific cases.
There's a big difference between apps and restaurants. One chinese restaurant can only serve so many customers, but one well made website can serve the entire market, making other solutions of lesser quality almost worthless.
That being said, I agree with the point of your comment in general, and we shouldn't stop ourselves from creating something we value just because it exists already. Working on something we care about gives meaning to our life, and who knows, maybe your solution will turn out to be the best one out there.
But then I realized, if my town can have 3-4 Chinese restaurants with the same exact menus (probably supplied by the same exact distributors), and they've all operated continuously for over a decade....who cares about uniqueness? Sure, none of these copycat places are raking in millions, but it's enough to support the livelihoods of the owner and all of his/her employees, so who cares? Your business doesn't need to be a unicorn to make you happy, as long as you're happy with that outcome.
Of course, tech does not operate the same way as Chinese restaurants, and for that I point you to Accumulative Advantage:
>Accumulative Advantage is when a small advantage at the beginning of something, such as kindergarten, becomes a little difference that leads to an opportunity that makes a bigger difference a bit bigger, and that edge in turns leads to another opportunity, which makes that initial small difference even bigger.
Put in context: You don't have to follow the same path your competitors did. Uber/Lyft poured billions into normalizing the concept of being driven by some stranger who uses the same app as you, so any new ride-sharing platform can spend that money in other areas. Giants like Microsoft have decades of technical debt they need to tackle; you can start building with 2019 libraries, 2019 paradigms (wouldn't the cloud have been great for startups ten years ago?) and 2019 performance.
In order for the underdog to win, there first has to be an underdog. If you're brave enough to start, you may just be brave enough to win.
[1] https://educationinnovation.typepad.com/my_weblog/2008/12/is... (yeah, weird source, but I'm just trying to define the phrase)