Why You Should Build a Startup When Everything Has Already Been Invented
Clients and colleagues regularly ask me about this topic.
Brilliant ideas are few. There are fewer than 100 truly large markets in the world. And there is no point in developing a second Twitter or a second Snapchat.
So, every good idea has already been tried, right? And it either took off (and it's too late to repeat it), or it didn't take off (and it won't take off with you, you are no better than tens or hundreds of predecessors). There will be no more hugely successful startups anymore, correct?
Of course not.
The world is changing. What could've failed 10 years ago may have a chance to become super successful now. Future giants will try what was previously thought unnecessary or impossible. For example, the main technological change of the last 30 years — the reduction in the cost of communication — has made it economically feasible to do regular interaction between cities and continents. The result is Facebook, Amazon, Booking.com, Alibaba and others. For 10 years now, everyone has had a smartphone in their pocket — and this is where Uber, Instagram, and neobanks came in.
While using Nokia 3310 or even Samsung S55, the taxi call client application was completely pointless. Probably, quite a few people tried to start a business similar to Uber, but they had no chance. On June 29, 2007, the first iPhone appeared and the world changed forever. Uber was founded in March 2009 — one of the first of its kind, using the window of opportunity that was open for just a few years. Now the company is worth $85 billion.
The same show can be repeated with other actors. Before the massive expansion of the web, it was impossible to trade over the internet. Once it became popular, a niche for online shopping emerged. Jeff Bezos was not the very first in it, but he was one of the first and the most successful — and now Amazon is worth $1.7 trillion.
The world keeps changing
New windows are bound to appear. We just need to be among the first ones to strike.
What is there now or what will appear in the near future that was not here ten years ago? There are a lot of things. Someone will immediately tell you about new records of global warming and population growth (hello, Beyond Meat and Impossible Foods). Someone is very excited about CRISPR — unicorns will surely start appearing here too.
Someone will definitely mention cryptocurrencies and NFTs. This is where a lot of money is, and where a barrier to entry is still small. Want to see a new Google or Facebook? Look at crypto exchange FTX. Now, its founder Sam Bankman-Fried is valued at $26.5 billion at 29 years old.
But more globally in the IT-sphere, the leader seems to be obvious. In the past few years, artificial intelligence has finally become a reality. This change is massive. A computer now solves any mundane tasks better and cheaper than humans. It can recognize faces, find the best value per buck, hire people, drive cars and even predict customer emotions. This means that almost everyone can be replaced with artificial intelligence. In just a few decades, machine learning programs will handle a lot of work currently done by people. And these game-changing programs would need to be developed by very specific companies, some of which could be startups.
Related: When Should You Not Invest in AI?
There will be a lot of money
According to US labor market statistics, there are 3.5 million cashiers and 4.5 million drivers. If we take their average salary to be $30 thousand per year — that means that these are markets for $100-$135 billion each in the US alone. By comparison, Facebook's global revenue in 2020 was $84 billion.
Of course, we are not the only ones who can type "the most popular profession" on Google. Only the laziest big corporation does not participate in the race to self-driving cars now. Shops without sellers are also a popular topic, Amazon Go is a good example of how the giants are looking at it. So let's dig a little deeper.
The border of the "interesting" market here is easy to calculate. To build a unicorn, you need a profit of at least $50 million. The revenue, let's say, will be $100 million. To pay you $100 million, the clients would need to save at least half a billion from layoffs. That is about 17,000 people with a modest American salary. Each industry requires a specific startup, possibly a few of them. There is plenty of space for potentially hundreds of unicorn startups here.
For the last 15 years, we have become accustomed to the emergence of giant marketplaces. Soon, giant automation, AI and robotics will start to appear more and more frequently in the news. The time for change is quickly approaching. New startups must destroy every boring profession. And while the majority of us will watch this show unfold, the minority will shine.
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