The ‘Me-Too’ Business Checklist

Who remembers WebCrawler, Lycos, AltaVista, Ask Jeeves (now Ask.com), Hotbot, or Dogpile? For those of you early web users, the names will recall slowly loading pages and web 1.0 graphics. These companies make up a list of search engines that predated Google.  Not to mention Yahoo! which doesn’t require distant recollection. For WebCrawler (the world’s first text based search engine) and Lycos, we’re talking a solid four years of in-market activity before Google entered the scene. People generally scoff at the little companies that hop onto the bandwagon of whatever shiny new market opportunities arise, dismissing them as “me-too” companies. But Google is also a me-too company, and it has certainly proven that me-too companies may not always be a bad idea. Especially given its current 66% search market share and $190.2 billion valuation. So it got me thinking; when do you shelve your business idea in the face of strong market competitors or jump into the fray of a market opportunity as another ‘me-too’ company?

By my way of thinking, it really comes down to a handful of factors. I’ve made a checklist of considerations to mull over before taking the entrepreneurial plunge.

  1. Distinctive Offering – I’ve heard claims that the distinguishing factor to Google’s success was the simplicity of its interface; the stripped down, bare search bar. But looking at the early designs between Google and the other early search competitors, there’s not that much of a difference. The most distinctive component of Google’s offering was PageRank. PageRank along with an incredibly talented crew of engineers made Google’s search experience the best on the web. There’s a lot more to add here which contributed to Google’s success, but I’m going to leave it at that for now.
  2. Capital – If you’ve got more luchini than the next guy,  be prudent but use it to your advantage.
  3. Focus – Yahoo! was in the search business since March of ’95 but hadn’t focused on that aspect of their operation with the laser precision in the way Google did. Moreover, if you’re observing a lack of focus in a market, dive in and apply that laser edge.
  4. Cost – This one is pretty obvious but determine how much it costs the competition to acquire new customers/deliver their services/manufacture their products and figure out if you can do the same thing for less… sustainably.
  5. Timing – If you have an idea in which you’re going to create a micro-blogging platform in which users can shoot off quick bursts of text based information, you’re a little late to the game. You’re probably even late to the social photo-sharing app game already. On the other hand, you might want to hold off if you see competitors jumping in too early like B2B online marketplace Ariba did back in 2000.
  6. Blood In The Water – This is a sexier way of saying ‘if you see poor execution, counter, and attack with great execution.’ Friendster is an example that comes to mind here. Myspace sensed blood in the water as Friendster couldn’t deliver a service that loaded profile pages within forty seconds time which is shameful (and to say it was 2003 is no excuse). Needless to say, Myspace out-executed Friendster at the simple task of processing along with a list of another feature add-ons, etc. [For a good, detailed breakdown of events, this is a good read from the Times]. Then, of course we all know the story of how Myspace got Facebooked which hardly needs further analysis. Another example here would be Plurk aka the Twitter clone. Some of you may recall Twitter’s fail whale which represented essentially the same problem that Friendster experienced. Plurk launched right at the point in which many Twitter users were becoming increasingly frustrated with the amount of down time and were open to switching to a new medium. I personally recall experimenting with both. But this story plays out differently in the end (obviously) as Twitter was able to scale their processing requirements. Tech readers back me up here, but I believe they restructured their database architecture to a sharding design?
  7. Location – For non-web based companies, location will certainly play a roll in sizing up your market opportunity. But how about for web based businesses? I suppose if your zip code is 94301 you would likely have a better chance at success than starting your me-too company in the Yukon.  I’d love to hear further thoughts on this.

A friend of mine recently described a concept he has for a LBS app which was the real catalyst for this post. I thought it was a really interesting idea, and a unique spin on what already exists in the market. Given LBS is one of the newer (but getting old in internet years) ‘shiny market opportunities,’ the major events have yet to play out. Foursquare, Gowalla, SCVNGR, and now Facebook are all active players in the space making for stiff competition. I should know better than to pose questions to my readership base of three visitors, but I’ll pose the question anyway to see if I can drum up some dialogue here. The question is two fold:

  1. Is there anything you would add/remove/refine in the me-too checklist?
  2. Based on this checklist, how would you size up the LBS market opportunity right now?
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  • BK

    First, let me compliment your outstanding incorporation of “luchini” into this post. Both subtle and stunning in the same breath.nnSecondly, I remember the faithful day in 1999 when I switched and became a Google user rather than a Yahoo user. I was drawn to the simplicity and elegance of Google in comparison to the other options available in 1999. Mostly though I liked being a person who turned people on to the “new new ish”. Don’t ever underestimate the esteem that goes along with being in front of the trend. That often implodes upon itself but when harnessed properly “trendy” is bad a bad mofo.nnThirdly (you ever wonder why people make lists that force them to use akward words like thirdly?), I would argue one of the backbone ideals of America is bandwagon jumping and that #6 on your list is simply the greatest place for anyone who is not a bona fide savant to start their journey.nnTaking something existing, seeing a flaw and improving upon it is just beautiful when done correctly. I once heard someone in a meeting say “don’t bring me a problem/complaint without a solution for how to make it better”, now that is a way of life I can get behind. Some of the best things we have are simply practical improvements in the way people have done things “forever”.nnOn Thanksgiving I can’t help but look at the pilgrims and think, now here is a group of men and women who were like “ok, this country you have is great and all but we’d be much better served jumping on this boat, risking our lives, and doing things a totally new and different way. I mean we’ll keep some of these ideals and structures but we’re really going to dynamically build upon an already tried and true methodology (read European culture) and do better by putting our own spin on things”. Of course this way of thinking also gave us the USFL and then subsequently the XFL which pretty much both sucked so you can see the risk in change for change sake.nnLastly, I think there are two kinds of invention:nn1) The kind that provide pleasure for people.nnornn2) The kind that removes pain for people.nnIf you can create something that creates pleasure you need the right messaging and marketing to move the meter. If you can get rid of pain, you can be very successful, very fast.n

    • joconnor

      BK, thanks for the thoughts and compliments on the use of the word luchini. Also, the USFL and XFL indeed were bad moves. Was Marc Cuban an investor in one of those or did he invest in yet another new fledgling football league?

      Your point about pain & pleasure being the core drivers behind innovation is right on. I think for the LBS example, it’s more a pleasure niche because I don’t believe there is an existing pain for NOT being able to digitally check in at my local grocery store. The direction the market is moving seems to be headed toward customer loyalty rewards which = happy customers = pleasure.

      Which category would you classify your former startup MiracleWorkers as?

    • http://www.jamestheiii.com James O’Connor

      BK, thanks for the thoughts and compliments on the use of the word luchini. Also, the USFL and XFL indeed were bad moves. Was Marc Cuban an investor in one of those or did he invest in yet another new fledgling football league?nnYour point about pain & pleasure being the core drivers behind innovation is right on. I think for the LBS example, it’s more a pleasure niche because I don’t believe there is an existing pain for NOT being able to digitally check in at my local grocery store. The direction the market is moving seems to be headed toward customer loyalty rewards which = happy customers = pleasure.nnWhich category would you classify your former startup MiracleWorkers as?

  • Patty Linnon

    I like the LBS opportunity in secondary or tertiary markets. While competition is overabundent in primary markets, the others are dramatically underserved.

    • http://www.jamestheiii.com James O’Connor

      Since we have different last names, not too many people would put 2 and 2 together to realize you’re my mom. But I can now officially say that my mom has officially commented on my blog. Wa-hoo! Thanks for the thoughts mom ;-)

  • Patty Linnon

    Overabundent is a typo, not total ignorance of the English language. Overabundant!

  • Rick Walsh

    I would suggest as your “non-techy” audience that you explain what terms like “LBS” mean when you use them… It’s fine now though. I searched for it using my favorite search engine, Lycos, and 45 minutes later I had the answer!