Part 2: The Big Idea Of Kodo Startups

Welcome to the second blog of Kodo Startups. I’m writing about the mindset of a startup founder that wants to learn about the ins and outs of the startup world that spans a horizon from big idea to launch. I’m passionate about startups. I’ve spent the past few years learning as much about it as possible. From reading books, to watching videos, to going to meet-ups, to driving down to San Francisco from Los Angeles to network with successful startup founders and respected investors. I’ve also traveled the UK, parts of Europe, and parts of Asia. It has cost me time, and has been received freely, so now I want to freely give back by sharing what I’ve learned with you. I noticed that when some people offer insights, they tend to present things as if it is the definitive last word on a topic. Whereas I offer my insights with the understanding that it is, at the time of this writing, up to date information. I have a more historical view of things, and by saying this I mean that things change with the passing of time, so your comments and insights are welcome, and we can grow in our understand of the nature of startups as we move along trying to hit a moving target. I’m a simple and direct person, and what you read and see is what you get. I want to add value to people’s lives by offering my insights in hopes that it will help people in their startup ventures.

In the first blog, I made the distinction between an idea verses a big idea. A small idea is not likely to attract much attention, whereas a big idea will not only potentially attract users, but also attract funding from investors who want to make money on a big idea with a large market and the possibility to scale up and return five, ten, or more return on their investment. An idea, big or small, is really a question that needs an answer. By this I mean that an idea should be written or typed out as a question, and an answer. The question should be put in terms of a problem. The answer should be put in terms of a solution. The question that is a problem should be a real pain that people experience. The solution that is an answer should be a real gain that will take away the pain that people experience.

It is important to put things in the proper perspective by taking your idea that is in front of you in the foreground, and understanding it within the context of a background. The backdrop is the web portion of the internet. Facebook and Google dominate this space. They are both closed systems. A closed system is a company that keeps its secret sauces to itself, and crushes the competition by dominating the market. This is in contrast to what people commonly call open source. Please understand that open source is not the same thing as free. When the web started taking off in the early 90s, the battle between for-profit companies trying to dominate the market, and the fight to give people freedom of choice in terms of options and healthy competition to bring down costs began. But competition is good for users not for the companies who keep cutting prices in a race to zero cost. The so-called browser wars between Microsoft and Netscape is a classic example. It’s a fact that the US government sued Microsoft for antitrust in the late 1990s, and Microsoft was found guilty of being a monopoly and willfully trying to crush competition. But then the decision was appealed and overturned. It is interesting to be found guilty of something, and then to be found not guilty of it. Let's just say it is muddy waters. Regardless, things took there toll on Bill Gates, and for whatever reason or reasons he stepped down as CEO. Then stock prices went down and hurt shareholder’s margins. Back then, there was AOL keywords, which is arguably the equivalent of Facebook’s fan pages, or at least something like it, and people’s focus has been on getting as many likes as humanly possible. But history shows that people don’t like closed systems, which is what AOL was, and what Facebook currently is, and probably will always be. In between the closed system and open source is the attempt to somehow mix them together, and open sourcing this or that, while guarding the money-making secret sauce. When you have a growing understanding of the background and history of companies and competition, it will give you a proper context of where your idea and its place may fit in scheme of things.

The idea you have is stamped with a date and time. You could have an idea whose time has passed. You could have an idea that is so forward thinking that it may result in going too early to a market. The best thing is to have a timely idea. This is an essential component to startup success that is not only very difficult to accomplish, but also often an overlooked component.

An idea that solves a real problem verses a made up synthetic one is the difference between a successful startup, and one that fails. You might be surprised to learn that more than half of startups imagine a problem into existence, and spend time and money into coming up with a product that has no market. The best thing to do to prevent this from happening is to solve your own problem, or scratching your own itch, figuratively speaking of course. This does two things. The first is that it almost instantly makes you an automatic domain expert because you are solving your own real problem. It is also something that you are likely to already know a lot about. The second is that it increases the likelihood that other people have the same problem, and that there may be a market for it.

Let’s not forget that you will be solving a problem using software apps. Software applications exist to make things easier for people to accomplish by using a computer. So, besides a web developer, or programmer, there is a graphic designer, a product development and management person, a project manager, and a social media person.

The market you are entering may be a crowded market. You have to have a differentiating idea for your startup venture. In other words, there is your idea, but it has to be wrapped around an overall idea that differentiates itself from your competition, so that you will stand out. In addition, as your idea grows by getting inside the minds of others, so too, your user base will grow. If you enter a crowded existing market, and compete with merely product features and price points, you will most likely fail. However, if you have a differentiating idea and starts out in a niche market, then you have a chance to succeed. Otherwise, based on product features alone, the established big fish will gobble you up in one way or another, which is to say, acquiring your startup, or if you refuse to sell, they will steal your idea in terms of your app and all its features. This is why there is the well-known saying from back in 1996 that came Steve Jobs; namely, “Good artists copy, great artists steal.” This quote actually comes from Pablo Picasso. Who actually came up with it from his own experience when he visited the cave of Lascaux back in 1940, where he saw the breathtaking art there, and some believe that he got his idea for cubism from that experience. Now getting back to what I was saying about startups and big ideas. You have to start out small and capture a niche market, or better yet a segmentation within a niche market. Then expand from a small circle of success, instead of contracting from a big circle of failure. You still think big and are ambitious, but act in small increments, a saying attributed to Vinod Khosla.

The blogs here on Kodo Startups are an open conversation that welcomes comments, insights, and feedback. Maybe you will have a flash of an insight, and a big idea that will change the world for the better. It is an exciting thing, and makes life worth living for those who love this type of stuff. Just remember that you have to execute well on your big idea by acting small and on the cheap in the beginning, while still thinking big. This is yet another saying that is well known in the start world and is attributed to the great Vinod Khosla from Khosla Ventures.