Why (Most) Internet Startups Suck?

Inspired by WhyDoesEverythingSuck.com and learning from Kroomsa.com, following is why I think most internet startups suck:

• They Give Away Things for Free
  When the business model depends on free, only a very few lucky companies can survive. Advertising, at best, should be a secondary source of income for a startup. How would startups keep on innovating their services when they are giving away stuff for free. Where is the motivation, dude? On the other hand, when you charge for what you are offering, there is a direct incentive to improve your services in order to attract higher prices or more customers, which directly translates into better earnings. Thus, charging for something you offer kick-starts a positive feedback loop which reinforces itself. And, that is good for a startup.
• They are VERY easy to start
  This directly translates into absence of vision and low barriers to entry. When you don’t have to invest time thinking about why you are doing something, you end up doing a quick but messy thing. This is especially true for startups. Today, starting an internet startup is so easy that anybody, really anybody, with a basic knowledge of web can start a so-called internet company. People find it cool to have a company these days. And, successful startups are seldom cool. So, in a nutshell, either try to do something not-so-cool and/or try to do something hard, which will force you to think about the reasons for your motivation.
• There are Gazzilions of Internet Startups
  While for the industry and consumers, it is good to have so much of choice, for entrepreneurs it not so good to have an idea and then discover that there are already tens of internet startups offering *exactly* the same service or product (and, chances are, for free). How is your new internet startup going to make money when some freaks are offering the same thing in a better package, at a better price and with a better marketing budget. So, get a little away from Internet and think if you can do something useful in traditional fields where there is a moderate amount of competition and where barriers to entry are higher.

So, now we agree that most startups suck, what should you do to prevent your next internet startup from suckage?

• Do away with relying on advertising solely.
• Don’t give away stuff for free.
• Repeat, Don’t give away stuff for free.
• Don’t jump at every idea you get. Give it the sweet time it deserves.
• Think about entering into an industry/category/idea where barrier to entry is low and there is not too much competition out there
• Know when an idea is a project and when it is a startup. Mostly, what you call a startup is actually a project. So, call it a project.
• Do something serious. Really. There are a lot of problems waiting to be solved: poverty, digital distribution, literacy, government accountability, etc.

Lastly, one suggestion: Do justice to your time. It is more important that you think.

This entry was posted on May 07th, 2008 and is filed under Entrepreneurship, Personal. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or Trackback from your own site.