We are in the process of trying to figure out what we can do as a startup, and would love to share our thoughts along the way.
First, we don’t think we are super innovative or resourceful to build something like Airbnb or Facebook. Forget that. Keep in mind that we are a bunch of people who have can-do attitude but are not super techie, kind of risk averse, and not burden free.
Second, we don’t think we can do a startup centered on China. It’s well known that you have to be in China to crack China’s market. For us Chinese in US or Chinese Americans, it might be wise to think about how to crack US market first.
However it appears that US market is so competitive and crowded. In any given pond with water, there’re so many fishes, even sharks in it.
So what to do?
One way to do it is to identify a mature market with a dominant player, and then provide customers with a better product at cheaper price and better customer care. A small dent in that market could make a big winner.
Once upon a time, Bruce Ge showed a picture of snake “too full to move” while we were talking about big companies. In general, big companies are just like that: too big to move (ineffective management, inefficient operation, less driven employees, status quo mentality), and many of us have first-hand experience.
On the other hand, they do have an established product / market fit and a profit model, which a lot of startups die before figuring that out. If we as a startup could execute better by coming up with a better product at cheaper price and a better customer service, then the market is there for grab.
The caveat is the sunk cost of product implementation and marketing. If the founding team can get the product out quickly and cost-effectively, and partner with some market insiders, then it has a chance to make it, with some adjustments along the way. Once we put one foot in the door, we might find there are not as many resourceful players in the same market as it appears, and the competition not as fierce as well.
A few examples of starting small and having already tasted the big guy’s lunch:
1). In job & career industry, Indeed.com, founded by Paul Forster and Rony Kahan in 2003 with no outside funding initially, takes on Monster.com. Bruce Ge started Jobs2Carees.com as one-man shop until revenue growing to US$5 MM to take on Indeed.com. To some extent, ZipRecuriter.com, founded in 2010 by four outsiders, built the site in the kitchen to compete against Indeed.com in small-medium-sized enterprise (SME) market.
2). The dating site PlentyOfFish (pof.com), a one-man shop initially until tens of millions of dollars of revenue, competes with match.com.
3). Zenefits takes on ADP on payroll market
4). In search market, DuckDuckGo (search privacy) and Algolia (search as a service) takes on Google
We are not saying this is the blueprint for success. In fact, many more startups doing this have failed along the way. But their failure is less because of competing again established players than because of other factors like founder’s relative weakness or unrecoverable mistakes.
For us, this might just be one good way to start.