We can’t all be Jeff Bezos, but maybe we could be Matin Movassate?
Jeff Bezos — like him or hate him — is a true visionary.
He identified the oncoming e-commerce tsunami and was able to surf it better than anyone. In doing so, Amazon changed the world.
Apple, Uber, SpaceX, Airbnb and Tesla are among others that changed the world.
They changed the world by betting big on radical ideas that offered high risk and high rewards.
But stories of wildly successful entrepreneurs can give us a distorted view of entrepreneurship. I’ve noticed this among many aspiring founders. They focus exclusively on finding revolutionary new ideas. While this is admirable, it tends to lead to one of two situations.
- They become overwhelmed and burdened by their own expectations of themselves.
- They try to execute on something big and fail to achieve their grand vision.
This reality causes many would-be entrepreneurs to give up their ambitions for the security of a comfortable corporate lifestyle.
But it doesn’t have to be this way.
Instead, ambitious entrepreneurs can reduce their risk by following the well-trodden path rather than being the first to wade through the thickest part of the unexplored jungle. By no means does it guarantee success, but it increases the likelihood.
Replicate and differentiate is the name of this game. And the goal is to build a business that can survive the startup odds and allow you to live without a lifelong feeling of regret.
Replicate
It’s always easier to start a company by improving an existing product.
This can be a hard pill to swallow. There is a deep part of every person’s soul that rebels; I am unique and special. What if I am capable of being a true change-maker, a maverick, a world-beater?
There are times when this rebellious voice should be listened to. When partnered with genuine insight, it is what propels truly great companies. Steve Jobs couldn’t have accomplished what he did without it.
There are also times where feelings of grandeur disrupt work ethic and distort what could be humble but excellent.
There are many companies that receive little media attention and put food on the table for hundreds of people. They have extremely happy customers and play their part in incrementally pushing the boundaries of what’s possible.
These companies weren’t founded because of a unique groundbreaking insight but instead by steadily improving existing technology.
There are also times when the copycat company surpasses its predecessor. Kickstarter was not the first crowdsourcing platform. Instead, they replicated the model of Indiegogo and put their own unique spin on it with tech-focused projects and better rewards for donors. Almost half a million products have launched on the platform since its founding in 2009.
Acquisition is also a very real possibility. In 1999, the Samwer Brothers developed Alando — a German copycat to American online auction site eBay. Within four months, eBay purchased Alando for $43 million.
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Differentiation
Once you’ve found the space you’re interested in, the second half of the formula is to differentiate. Your differentiation will become your core value proposition and the reason that customers should pay attention to what you’re doing.
Take Heap for example — a website and product analytics tool. From this description, you can probably name half a dozen other products just like it: Google Analytics, Mixpanel, Amplitude, etc.?
It can be hard to understand how this company has raised almost $100M and secured over 6,000 customers, many of which are global leaders in their field. Isn’t it just the same?
Heap replicated the basic value proposition of competing analytics platforms — track your users’ behavior and identify areas where you can improve — but Heap differentiated one very important step.
When Matin Movassate was working for Facebook he experienced just how difficult it was to use analytics. He described his experience with analytics tools as “a big pain in the ass”.
If you have very simple questions about your product, questions like: how many users use this feature? What are the common flows they take after using this feature? Those types of things require literally months of time. And if it takes months to go from question to answer, guess what? You’re not going to use data to answer questions as much anymore.
So, the realization that we had with that experience was, if it’s this difficult to make good use of data at a place like Facebook, then what hope does the rest of the world have to use data effectively and to achieve this glorious data-informed future that everybody heads up?
We decided to rethink analytics from the ground up.
Matin was then able to take this insight to build the first tool of its kind. Instead of manually choosing which events to track and installing code to track each, Heap would automatically identify and track events and with just one simple block of code.
That’s not to say that it was easy:
I remember early on, I was trying to get advice on how to approach this problem from somebody who had worked on the Google Analytics team. First, they told us, “You can’t do this. This is unsolvable. This won’t work. Give up now”.
How to replicate and differentiate
Although you are following a proven business model, the process of Replicate and Differentiate is no walk in the park. It requires a lot of research.
Replicate
The first step of replication is to research a company you can model yourself off of. The company needs to be solving a real problem with paying customers. This is the proof you need that there is a market need for the solution, reducing part of the risk associated with new startups ideas.
You can use the following sites to search for companies:
Another great way to find opportunities is to look abroad and see what businesses are successful but haven’t yet arrived in your country. This is what the Samwer Brothers did with Alando. When interning in Silicon Valley, they saw the opportunity to generate significant profit by providing a similar site to eBay but in Germany.
Questions you should be asking yourself when searching for companies include:
- Is there high-profit margin?
- Are there many other competitors?
- How difficult is it to build the technology?
- Does my founding team have the skillset to run this business?
- What does the future hold for this industry?
Differentiate
The next step is to differentiate yourself through a unique value proposition.
The best way to differentiate yourself is to find a problem that your competing company is overlooking or underperforming on. In the case of Heap founder Matin Movassate, the problem was that the analytics tools he was using were painfully difficult to setup and took a long time until event tracking yielded results.
Melanie Perkins, the co-founder of the graphic design platform Canva, has a similar story. She discovered when teaching design to students that tools like InDesign and Photoshop weren’t very accessible. This led her to build tools to compete with the design tools she knew so well by offering an easier-to-use alternative.
So how do you find a unique problem or underserved niche?
Ideally, you experience a problem firsthand and are determined to fix it. But you can also discover problems within any area that you are interested in using simple research methods. You just need to find a bunch of similar people who use the product that you are replicating (or similar products) and then ask them to rank problems they experience in order of importance.
This way you can see exactly which problems are ranking highest for the largest segment of people. This is a major clue about which problems — if solved — will allow you to differentiate in a way that customers will appreciate.
The process of asking people to rank problems is called Customer Problem Stack Ranking. Luckily, you no longer have to do this manually as we built OpinionX to do it without the hassle.
With OpinionX, you can see what each of your stack ranking participants voted on or submitted. Once you’ve picked a high ranking problem to focus on, you can follow up with individual participants for in-depth interviews to dig even further into the root of the issue.
By this point, it will be clear to you where your competitors are falling short and what problems they aren’t addressing well enough. Their inaction is your opportunity.
Follow The Startup Bowtie
Instead of jumping into building a product too soon, you should methodically follow a proven process to find Product-Market Fit. The Startup Bowtie is a step-by-step checklist to help you focus on the most important decisions first. The left hand side of the bowtie leads founders to “the pull point” — the first important milestone in finding Product/Market Fit — which is when you get your first signal that you’ve got a product that an identified group of people really need.
Let’s use Heap and Canva as examples to walk through the four steps leading to the pull point:
Persona
The more specific you can be when choosing your target persona, the better. Each different group of people experience the same problem in slightly different ways and need their own personalized solution. If you try to solve that problem for everyone, you’ll end up adding no value for anyone.
Heap initially targeted directors of analytics at scaling tech companies.
Canva focused on non-designer professionals like marketers at SMBs.
You can begin expanding your target persona once you have nailed your initial segment. Until then, you need to focus on just one.
Problem
You will either have identified the problem you are going to solve through personal experience or by using a stack ranking tool like OpinionX.
Heap’s founder knew from personal experience that manually setting up analytics events was time-consuming and complex.
Melanie at Canva saw first hand how much time and effort it took to teach people how to use design tools.
Push yourself to articulate your problem statement in one quick sentence.
Proposition
For the Replicate & Differentiate approach, your value proposition is where you communicate your differentiation. A good proposition is generally the inverse of the problem you are solving.
For Heap, “Manually tracking analytics events is time-consuming and difficult” becomes “Automatically track events without the need for code”
And “design tools are inaccessible” becomes “Use drag-and-drop features to create beautiful designs.”
Since your target audience has already told you that this is one of their big problems, you should stick this value prop right at the top of your website to grab their attention.
Product
It’s only at this final stage of the process that you consider building a minimal viable product (MVP).
Building an MVP is easier today than ever before. With no-code apps like Bubble, you often don’t even need to be able to code in order to build a functional product.
If no-code doesn’t cut it, then try and get some mock-ups in front of customers first using tools like Figma, MarvelApp or InVision.
Don’t spend too much time making it perfect. Instead, build something that is functional and get it in front of users as soon as possible. Then iterate over and over until you have a product they love.
Peace ✌️
