Some business ideas are truly revolutionary – radical departures from anything done previously. But most are evolutionary, building on concepts that have already been attempted. There are many advantages to using a “we’re the this of that” argument – meaning, we’re taking a proven model, and applying it to our specific situation. Here are a few fictional examples:
- The Toms Shoes of water. Toms sells shoes in one market, and uses the profits to give away another pair of shoes to needy people elsewhere. The Toms of water would sell a bottle of water in the US, and give away a bottle of water in a drought-ravaged country.
- The Gilt for vacations. Gilt.com runs limited-time sales of luxury goods, creating the type of buying frenzy found at fashion sample sales. The Gilt of vacations would offer discounted getaways on a first-come, first-served basis for short windows of time.
As you look at your startup idea from the point of view of an investor, learn everything you can from relevant predecessors.
- What companies can serve as “analogs” – models that you want to follow since they’ve found the keys to success, or avoid because of the reasons they failed?
- Who can help you understand the real story of what worked and what didn’t work with those models – and why or why not? Can you network your way to their investors? Founders? Employees? Ex-employees? Competitors or suppliers?
- Venture capitalists that specialize in the market you are pursuing tend to be particularly knowledgeable about models. Even if you are not planning to raise venture capital funding in the near term, you can often benefit from getting their perspective, and speaking to their contacts.