I read a lot of stories about startups and watch many videos from Y-Combinator and others and frankly I haven’t come across much that is new and different lately.
I was hoping to find a nugget in the article I camped out with a tech billionaire. The advice he gave me was priceless by Adam Naor on freeCodeCamp. Three out of four tips were the same old same old: embrace change (what choice do we have? fight it?); embrace lifelong learning (this has become a truism, valuable though it is); and invest in skills that the future will value (sure, if you can predict the future please give me a call!)
But one piece of advice, or values, as the author calls them, was an eye opener for me:
Value #2: Create new markets, not just new products
He observed that most people focus on just building new products, apps, or software. Instead they should be aiming to create new markets that have never existed before.
Imagine what markets might exist in the future, and ask why they don’t yet exist. Leverage existing technological trends to power futuristic ideas that can give birth to new industries.
He observed that “the most valuable companies and ideas spark entirely new industries.”
Frankly I’ve had my head down trying to help my mentees understand the difference between creating a product and building a company. But creating a new market? Wow – now that is thinking big and thinking big is what investors are looking for. Go big or stay home when it comes to VCs.
I wish the author had given some examples of this “value” – but it’s an excellent exercise for me and the reader to come up with some. Going way back to my start in the personal software industry Microsoft is a great example. Bill Gates and Paul Allen didn’t just port BASIC to the Altair – the first commercially available personal computer – they created an entire market for programming languages which generated the cash flow, and more importantly gave birth to the OEM bundling model that made Microsoft king of software even before they launched PC-DOS for the IBM PC.
Today the valuation of Tesla is based on Tesla creating not one, but at least three new markets: one for electric cars that outperform fossil fuel autos; two, solar energy, including replacing your roofing shingles with solar tiles; and and three, developing new batteries at monstrous scale – its so-called Giga-Factory. No wonder Tesla’s market cap has just exceeded Ford’s and GM’s.
One way to create a new market is to create a platform, as Jeff Bezos has done with AWS – he created a market for cloud services which has grown to rapidly and so profitably it has attracted Microsoft, Google, and others.
The key to creating a market and not just a product or even a company is to create an opportunity for others. Apple’s App Store has created a multi-billion dollar market for iOS app developers while putting 30% of those revenues in Apple’s pocket.
And while Google began life as a search engine in fact the company has lead the way in revolutionizing advertising and has become the world’s largest ad agency in the process, whilst enabling thousands of smaller businesses to benefit from Google’s core technology.
eBay, yet another very successful platform play, that while started as an online auction house, has in the process created a market for thousands of small companies to do business online.
Amazon has generated billions of revenue for itself by opening up it’s ecommerce platform for third party sellers.
So start thinking beyond your product, beyond a company, to creating a market. And one way to do that is to think about platforms and marketplaces and what’s in it for other players in the market you are creating. Building value for others will build value for your company.