“Build something people want” is not enough

Most people take “Build something people want” to mean “Pick a problem to solve and solve it well.” This is not sufficient to build a world changing company.

“Why now?” is the question entrepreneurs really need to answer. “Why now” encompasses two important and closely related concepts:

  • Why have previous attempts at this idea failed?
  • What enabling factors have emerged that enable you to succeed today?

The world is full of smart people who have the same idea

There are a lot of smart people out there. At least five of them have already tried to solve the problem you’re trying to solve. But you haven’t heard about any of these people.

Why would a similar product in an extremely similar world be vastly more successful? Most entrepreneurs essentially say: “There are other smart people who saw this opportunity. But none of them were smart enough to figure out the right product/marketing/sales strategy to succeed.”

Betting that other people are less capable than you is a bad idea. For you to be massively successful where multiple startups before you have failed, something in the world has to have changed. If the world has not changed in some fundamental way, you too will fail.

How do you do this looking forward?

You can’t answer “Why Now?” until you look back (years later). But you can look for patterns. Some common answers to “Why Now?” are:

  • A new enabling technology has emerged (GPS)
  • Consumer behavior has changed (Consumers understand the idea of “the cloud”)
  • New distribution channels (The iTunes app store)
  • Legislative changes (Environmental regulations drive cleantech)

An Example

I’m going to use my company, Spool, since I think about this every day. Spool lets you save any URL and cache it locally on all of your devices. It’s like a TiVo + personal web crawler for any media.

Why do we think now the right time for Spool? Why have previous startups in this space been unsuccessful?

  • Content consumption has fragmented across multiple devices. We aren’t in a 1 browser, 1 PC world anymore. (Consumer behavior change)
  • Content consumption now happens on wireless networks and infrastructure can’t keep up with demand. (Consumer behavior change)
  • The Internet will be touch based. This introduces a number of user input issues. (Enabling technology)
  • Cloud processing is shockingly cheap. Amazon Silk is a great indicator of this. (Enabling technology)
  • Mobile stores have global reach and the stores keep evolving. (New distribution channel)
  • Social networks are deeply integrated into mobile phones. (New distribution channel)

How many of these will enable to Spool get big? I have no idea. But there are a lot of trends here that expose new opportunities, and Spool sits right in the middle of all of them.

Summary

To succeed, you have to clearly articulate “Why now?” You need to have a thesis about why the world is different today and be able to back that up with some data. As a corollary, if  you cannot clearly articulate why now is the right time for this business, and why 2, 3, 5, or 7 years ago were not the right times — then you are probably going to fail just like the other very intelligent entrepreneurs who previously tried to solve this problem.

Some Historical Examples

Here are a few examples of companies that weren’t novel ideas but succeeded after the world finally changed or caught up to the idea. In addition to enabling technology or consumer behavior changes, they executed on a new distribution channel.

Foursquare

Foursquare was an overnight success 10 years in the making. Dennis Crowley has been predicting the coming of location based services since feature phones. He built Dodgeball in 2003 and sold it to Google in 2005. He vested. Left. Started Foursquare. 7 years after he started Dodgeball, he finally got the idea to work. Why? Because the iPhone came along. GPS became standard in smartphones (thanks to a variety of influences including the US government requiring it in every cell phone). And consumers became comfortable with broadcasting information about themselves publicly on the Internet. He saw the world had finally caught up to his idea thanks to the iPhone and social networks.

LinkedIn

Reid Hoffman has been playing around with social networks since the mid 1990s. He started SocialNet.com in 1997. Reid tried and didn’t succeed. He was way too early. So he tried again at the end of 2002 with LinkedIn. No one gave him money because consumer Internet was dead in the post-bubble Internet era. But the world had changed. There were finally enough companies and mainstream business professionals online to build a real social network. And enough businesses were looking for employees online that they would pay for it and enable a business. There was a critical mass of users online was and it was finally possible for this idea to scale virally. (If you’re interested in a great, short read check out this article from 2005 with a bunch of names you know and some you’ve forgotten about, including Mark Pincus’s Tribe.net, Friendster, and “Thefacebook” — http://www.nytimes.com/2005/05/09/technology/09network.html)

YouTube

Social video sharing sites had been tried many times before. It was going to happen at some point and dozens of sites were funded to pursue the opportunity. But YouTube piggybacked on the back of a perfect storm of trends. Laptops started shipping in 2005 with built-in webcams, so no setup was required by the user and Flash could access these as a standard peripheral. By 2005, playing a video finally didn’t require any downloads. Broadband penetration finally got to a point where video was streamable. And MySpace enabled embedding of videos and YouTube doubled down on easy embedding as their distribution strategy. By the time MySpace realized YouTube was massive and tried to ban YouTube, it was too late. Meanwhile, Google launched Google Video. Google didn’t pursue embeds, focused on making sure copyright violations didn’t happen instead of relying on the DMCA, focused on non user generated videos at first, and required a download to do video uploads. They missed all of the “Why now?” insights that YouTube nailed.

Zynga

Casual games have been a part of the Internet since the very beginning. But no one aggregated enough user attention to make a massive business out of it until Zynga came along. Zynga managed to piggyback on the Facebook API, the launch of the NewsFeed, and the lack of spam controls in the early days of the Facebook Platform. They spammed the hell out of the News Feed, acquired millions of users, funneled them around to a bunch of other games, and when Facebook shut off spam in the NewsFeed the window for anyone to build a meaningful Zynga competitor was closed. Along the way, they bought as many users as they could because they knew that the value was in having all of your friends playing games. Facebook (spam and ads) was the perfect distribution channel for games. Brilliant move.

A few clarifications

  • Stating “If now is not the right time, then people didn’t want it” is a cop out. Almost everyone interprets “Build something people want” to mean “Pick a problem and solve it really well.” If you want to think this way, consider “Why now?” a better way to figure out what people want may want.
  • This applies to startups where you need a small group of smart people executing well. Launching a smartphone requires manufacturing and capital at large scale. Large organizations can mis-execute, build bad products, and screw up  because politics makes people do funny things. If only large companies have tried, you should ask if a startup can even build the right product, and if it can it’s fair to ask if the right product was actually ever built.
  • This applies to startups that want to get to massive scale. This does not apply to businesses that make less than $5 million in revenue.
  • This is not about timing a market. This is about a framework of thought to evaluate the opportunities that are presented to you as an entrepreneur. If you see an opening that clearly answers the “why now,” then you can capitalize on it.
  • This is not about multiple startups competing against each other in a short window of time. This is about comparing a startup today against a similar startup from an earlier point in time. Determining which of Startup A or Startup B will do better today is a different question. However, you can still ask whether or not today is the right time for either of them to try.
  • “Why now” does not say that successful entrepreneurs happen to be in the right place at the right time. Why Now?” reinforces how much execution really matters. Not only do you have to come up with a brilliant insight, build a product that people want, but you have to build your company with a deep understanding about how the world was, is, and will be. Doing all of this is HARD.

Credits

This framework came out of several discussions with friends. I don’t recall who distilled the framework into the brilliantly simple “Why Now?” but it was probably either David King or Ashvin Kumar. Thanks to Curtis SpencerChristine TieuAditya Koolwal, Chandra PatniYin Yin Wu, and Elad Gil for reading drafts of this and providing input.