OnStartups

Why "Me Too" Startups Are Not Always A Mistake

Posted by Dharmesh Shah on February 7, 2007 in strategy startup 47 Comments


The “me too” label has been applied to a past when a company enters a crowded market of highly visible competitors.  Examples abound, such as the remote storage category, RSS readers, online calendars, personal website creators, etc.  Each of these categories at one time or another was pursued by over a dozen different companies.

 

It’s easy for us to scoff at these startup teams, disparagingly stick the “me too” label on them and move on.  Because it is so easy, I’ve found myself doing it in the past myself.  I can’t talk to founders that describe a company which I think is one of those over-populated categories without sometimes jumping to the conclusion that they are simply entering a market too late, with too many competitors and too little differentiation.  Most of the time (as you’d expect), I’m right in my gut reaction.  However, some of the times, I’m wrong – and that’s a story I’d like to share with you in this article.

 

Some time ago, I had a speaking engagement at MIT’s campus in Cambridge, MA to a group of entrepreneurially-minded folks (I think I blogged about this at one point, but can’t recall for sure).  In any case, there were three interesting things that happened that day:

 

  1. I met Ray Deck for the first-time (who is a fellow software entrepreneur, and an awfully bright guy).
  2. I discovered that the founders of reddit were speaking right before me (had met them before, but this is when reddit had really started taking off)
  3. I met Matt Douglas, who I had never heard of, because he wanted to chat about startups after my presentation.  (as you might guess, I’m always ready to talk about startups)

 

Matt had an idea (not quite baked at the time, or he simply didn’t want to tell me details) of starting a “web-based event planning company”.  I could remember thinking briefly to myself, “that’s going to be really hard to make money”.  But, we didn’t talk about the business idea much, because the topic we did talk about was how hard it was to find great technical people to join an idea-stage company (Matt is primarily a business guy, and doesn’t develop software for a living).  In any case, we chatted for a while that night, followed up several weeks later and continued the discussion over dinner once.  I tried (in my own humble way) to convey to Matt why I thought it was going to be really hard to get his idea off the ground.  Proving yet again that perseverance trumps pragmatism, Matt went ahead and did it anyways.  Ultimately, Matt went on to launch his startup and it is now called Punchbowl Software and the website is http://www.mypunchbowl.com

 

If you travel in the same web circles I do, you’ll likely have heard of My Punchbowl already.  Matt has been able to generate what I would characterize as a disproportionate amount of “buzz” for his new startup (disproportionate in the sense that the idea is not particularly radical and there are many others already in the category).  I caught up with Matt at the local Web Innovator’s meet-up in Cambridge, MA and followed up again via email to find out one simple thing:  Why?  Why pursue what most would call a “me too” idea?  (admittedly, I’m also trying to figure out how he succeeded in proving me wrong, so I can adjust my thinking for the future).  The answer is I think common to lots of companies that enter a market with existing space that has prominent competitors: 

 

“Yes, there are competitors, but nobody has built a product yet that users really like…”

 

And there, quite simply is the crux of the motivation.  It is easy to discount companies as being “me too”, but the reality is we have seen a fair number of successes in the past in categories that we have felt were already crowded.  The reason is that nobody had really solved the problem quite right.  This is what motivated Matt, and this is why you shouldn’t let me (or others) talk you out of a startup idea simply because it might be labeled a “me too” idea.  If you think “me too” might turn into “me too will make mucho money” (apologies for the grammar), then by all means go for it.  I love when I’m proven wrong by a persistent entrepreneur that pursues an idea.  My best wishes to Matt and his team at Punchbowl.  I plan on one more follow-up to this article to look a little deeper into what Matt has learned as a business guy trying to launch a software startup.  Stay tuned (I should have this out later this week).