Some things just cannot be done by a startup

I’ve read quite a few unfortunate stories of founders that have spent their hard earned money trying to tackle a “big problem” with a “huge market” but finding little traction. I was one of these unlucky folks, trying to tackle one such opportunity. Thank goodness I woke up and quit before I went broke.

There are some problems that just cannot be solved by startups even though the company that solves it stands to reap huge rewards. A key signature of such a problem is the need to work with huge incumbent partners. I’m no fan of Apple but Apple is a textbook case where they tackle problems that stymie a lot of startups but they succeed because of their clout. Take music downloads. iTunes wasn’t the first but unlike Apple, the early startups were just unable to get the record companies to buy into their solution and hence companies like floundered.

Yesterday, Apple launched ApplePay. Whoop de doo. NFC has been around for ages…. BUT Apple managed to get the majority of the payment stakeholders on board – something no-one not Google, AT&T, Verizon were able to do with their initiatives.

My point is not to glorify Apple, but to warn you that sometimes, some problems just cannot be addressed by a startup – unless of course you already have the necessary contacts and clout in the field – and even then it would be tough.

  • This is so true. My own startup is failing for this very reason. Seth Godin talks about this in “The Dip”–essentially when you start a venture (of any kind, not just a business), there is an inevitable dip. that dip is the competitive moat, but one question to ask at the outset is: “Do I have enough resources to sustain me through the dip?” And in the case of some industries, you are absolutely correct, there needs to be an epic fuck ton of cash to push through. I’m thinking about Elon Musk and Tesla and SpaceX as one example to add to yours.

    Also to the person above who thinks you get any clout inside a big company when they buy you, you are very, very naive. Most of the time you get bought to shut you down, especially by a big, fat, old, dumb company.

  • Everyone should go broke once in their life. It’s stupid to be scared of something you don’t know what it is.

    Being broke is not some point in life that happens and then you move on. It’s a shit hole which you are trying to get out from by scratching, biting, kicking etc. You have no idea how smart you’re gonna be once you get out of it.

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