Why "Me Too" Startups Are Not Always A Mistake

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Why "Me Too" Startups Are Not Always A Mistake

 


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).

 

Posted by Dharmesh Shah on Wed, Feb 07, 2007

COMMENTS

Google started as a "me too" search engine and look at them now. I guess the secret is to offer something the bigger players can't or won't.

posted on Wednesday, February 07, 2007 at 10:12 AM by Peter


Thought provoking post. I am launching my startup this month, but when I started developing it the market wasn't that crowded, in fact there were maybe 2-3 competitors, now that’s grown to around 8 that I know of. But what keeps me going forward with my idea is that I believe I have a better product. Like you said “Yes, there are competitors, but nobody has built a product yet that users really like…”. Now I know its easy for me to say that I have a better product because its my "baby" and your baby is always the prettiest, but if you truly believe in something...go for it. Great post.

posted on Wednesday, February 07, 2007 at 10:29 AM by Noah Winecoff


I'm wondering if starting up a "me too" company could be considered a viable business strategy as long as you really understood what the guy who came first did wrong.
If they solved a really tough problem, but turn new features out too slowly, then you could focus on beating them by just being faster.
Likewise, if they move quickly and are smart but are missing something in their offering, you could beat them by being a little more imaginative.

I wrote about this in a blog post yesterday (sorry about the shameless link here), but I really do think these two ideas are connected.

posted on Wednesday, February 07, 2007 at 10:40 AM by John K


Sorry, the link was: http://themicrobusinessexperiment.blogspot.com/2007/02/how-to-compete-as-entrepreneur.html

posted on Wednesday, February 07, 2007 at 10:41 AM by John K


Thanks for those that have commented already. Also, in re-reading my article, I discovered that I have not yet really looked at the advantages of being a "me too" company. I had planned to do that, but the article got too long, so I saved it for a future post. Will revisit and provide a (hopefully) deeper analysis in the follow-up.

posted on Wednesday, February 07, 2007 at 10:42 AM by


Even if the first-to-market companies also lead the market and have happy customers, the me-too strategy can work. Twice at my last venture-backed startup I saw our team sieze the lead in their markets, only to have the bizdev opportunities (OEMs and acquisitions) "stolen" by smaller, younger companies that had cloned the 80% of our product the market seemed to like best. With equivalent-seeming products and a much lower revenue multiple valuation, the followers had an easier time closing deals.

posted on Wednesday, February 07, 2007 at 10:56 AM by Thomas H. Ptacek


There wouldn't of had been a MySpace or FaceBook if they didn't say "me too" after the Friendster buzz. Not many talk about Friendster but people will remember MySpace for a long time. So I would also recommend people to always look for an opportunity to say "me too" but "a little better than you". If you can twist any idea then you can always go for it.

-Guna

posted on Wednesday, February 07, 2007 at 11:29 AM by Guna the Startup Booster


As a 'me too' startup, it has many distinct advantages: a. its has the second mover advantage (market has been validated i.e. users need such a product, enough mistakes made, pitfalls avoided); b. can concentrate on the experience instead of technology c. can compete against a benchmark; or has a rough direction already in place

posted on Wednesday, February 07, 2007 at 12:04 PM by kopos


Hi Dharmesh, Just responded to your comment: http://www.startupdunia.com/2007/02/06/herd-mentality-and-indian-startups/#comment-420

posted on Wednesday, February 07, 2007 at 12:29 PM by StartupDunia


Um . . . iPod? iPhone? How much more of a "me-too" market could you want than (yawn) music players and cell-phones. But if everyone hates their cell phone, then "unsatisfied cell phone users" is a HUGE unserved market despite all the competitors that think they're in that space. Everyone's excited about the iPhone because of how well Apple served the people that hated their music players.

posted on Wednesday, February 07, 2007 at 12:48 PM by Peter


In the next 20 years, there will probably be at least 10 superstar startup success stories where the startup's claim-to-fame will be some new formulation of the tired old technologies of e-mail, search engines or video.

posted on Wednesday, February 07, 2007 at 2:23 PM by Dan Howard


Microsoft wanted to write software like atari did but just not for games. I guess they figured that by dominating every piece of computing hardware with thier os would be better then creating great software for just one particular vendor...and and a company was yet to create an OS that home and business users really liked - thats probably still true to this day.

posted on Wednesday, February 07, 2007 at 3:56 PM by L2D


"Me too" .... It's competition, simply put. If someone is running a successful business, someone else will want a piece of the pie and create a competing service. I would even say that it is very smart to enter a marketplace where we already know people spend their money. Being an innovator is much more risky and dangerous than trying to compete and learning from the errors of the originators. It's only on the Internet where people think you are a copycat or a plagorist if you want to compete. If I open a dry cleaning shop down the street, nobody would say anything except maybe, "oh good, a dry cleaners close to home." Since there is no "close to home" on the Internet competing services are often times based on slight feature enhancements, differences or levels of support.

posted on Wednesday, February 07, 2007 at 4:47 PM by Ben Mc


Were you at the last WebInno, and did you come talk to us at the Mobatalk table?

posted on Wednesday, February 07, 2007 at 8:28 PM by Jeff


Jeff: I was at the last WebInno meeting, and no I didn't visit any of the side-dish tables. I'm way too introverted for that. I generally lurk in a corner during these things, watch the presentations, talk to a few people that I know and then leave.

posted on Wednesday, February 07, 2007 at 10:44 PM by


Very great and motivational post.It'll really help youngsters to decide competition strategy and how to add competitiveadvantages to there services over existing one.

posted on Wednesday, February 07, 2007 at 11:48 PM by Uday


Cant help thinking of Michael Porters thinking on differentiation plus the rule of three. Every industry has place for 3 big profitable players. ( again there is a book on this as well)

posted on Thursday, February 08, 2007 at 12:26 AM by Vaasu


There are too many web apps. Too many passwords, usernames, sites to do one thing. What if I have to do 5 things online, that is 5 sites to visit, 5 passwords with 5 usernames. If on average, a person only visits 5 to 7 web sites in their daily routine, give me a reason why you should be one of them. I suppose that is why there are aggregators--but guess what, these are too complicated for most folks. But certainly, I do like the usability and appearance of mypunchbowl, but more than likely I will only use it maybe twice before I forget about it. I won't mind getting a site that will visit all my sites with all my banking needs, shopping, news, blogs, credit cards, so all i have to click on is what i want to do and everything else is on that single site. Is this a "me too" problem? I don't know of such solution out there. Nice post, got me thinking of my frustrations with all these "me too" sites.

posted on Thursday, February 08, 2007 at 12:40 AM by me3


It hink the critical thing is to to follow the *customer* and not the competitors. That's a good lesson regardless of whether there is 1 competitor or 20.

Companies often go wrong trying to watch the competitor, rather than the customer.

If you're a "me too" company because you see XYZ, Inc. doing something and you think you can do better, that doesn't bode well for your success.

posted on Thursday, February 08, 2007 at 12:45 AM by Aphasia Software


I agree with the last comment. Don't be suckered into a feature war, but be aware of what competitors offer because they are likely just responding to feedback and requests from their customers.

posted on Thursday, February 08, 2007 at 1:13 AM by Scott Carpenter


Background Check Please
=========================

Checkout the background of each "Me-To" startup success STORIES, you will see a strange coincidence, all of them are owned/controlled by members of a particular 2% minority community.

So if you are not a member of "2% minority community" who has "money from thin air" access to financing from control of the Fed reserve, major Banks and Vulture Capital firms, don't waste your time with a "Me-To" startup it will fail.......... Only way to beat the system is to start your own "Me-To" Fed Reserve, Banks......... think.......

posted on Thursday, February 08, 2007 at 7:59 AM by Commons


Good article. I tried and liked Matt's site.

On me too: My last company managed all the paid search marketing for Match.com- "several" million dollars a year for Google & Yahoo. The suprising thing to me was that Match.com is clearly the leader in online dating but was fighting it out for clicks everyday with a ton of other dating sites. One is a local Boston companywww.singlesnet.com that does very well. Not being in the dating game (sorry ladies) I had never heard of them before but with a good site and tight management of search/conversion metrics they built a nice business.

Business schools and VCs tout first mover advantage but I always think of the McDonalds - Burger King example. McDonalds had a huge team of real estate and traffic analysts do tons of research before choosing their locations. Burger King just located their restaurants near McDonalds.

A fast follower/me too strategy will only last so long assuming some success. At some point you will have to lead and innovate to surpass the company you have been following. Thoughts?

posted on Thursday, February 08, 2007 at 10:51 AM by Mike Ford


Mike, I think you are spot on. As I commented above, I think there's nothing inherently wrong with being a "me too" company. Too many entrepreneurs are afraid of competition, when competition can actually be a good thing, because it can help validate your business. Excellent McDonald's / Burger King example! You are right, I think in saying that at some point you'll have to innovate to surpass the company. That's true. In the Burger King example, McDonald's was really good at choosing real estate locations, and I'm willing to bet that Burger King was really good at quickly putting up a new restaurant. McDonald's had the smarts, Burger King had speed. In that example, did Burger King eventually do anything different to surpass McDonald's?

posted on Thursday, February 08, 2007 at 11:06 AM by John K


"we did talk about was how hard it was to find great technical people to join an idea-stage company"

Entrepreneur works hard
Technical person works hard

Entrepreneur creates business value
Technical person creates business vale

Entrepreneur gets 99%
Techical person gets 1% (maybe)

Talk AIN'T cheap, Engineering IS.

posted on Thursday, February 08, 2007 at 2:54 PM by Mark C


we started out in '99 when we had nearly no competition! now there are millions but we are still going strong with our particular business model.

posted on Thursday, February 08, 2007 at 8:00 PM by MarieLu


As usual, another excellent post and a belated thanks for the co-founder post of a few weeks ago. @Mark C: hard to believe your story. The dearth of technical talent is such that a person with web software skills can write their own check. Maybe you have to move out to the SF Bay Area.

posted on Thursday, February 08, 2007 at 8:37 PM by SFGary


It's easy to see why little me too sites can survive and thrive against the big players. Big sites have Big dev teams, Big marketing, and Big process. They can never turn the boat fast enough to catch the latest trends as they happen.

I compete in the Travel Blogging space, and I've been watching these Big sites burning through millions trying to get a simple Google Maps interface up an running. One host has even ditched their expensive looking custom map interface for a clunky looking, hastilly cobbled together GMap with a few pins stuck in it.

In a few months, Google will release a Flash port of the API, and these big companies will have start steering their giant teams in the new direction. Meanwhile us small guys will have a new version out inside of a week.

posted on Sunday, February 11, 2007 at 6:25 PM by Jason Kester


Small companies don't succeed because post 2001 net crash most successful internet companies are run by the same people who run the "Fed Reserve, Banks, Newspapers, TV stations. 1) They print money from thin air, we have to work our ass of to gather some capital or pay interest to them 2)They have access to free publicity through mainstream media, we have to pay for advertisements to them 3) They control most large data centers, your algorithm you took 2 years to perfect sits on their machine! Shhh.... don't tell anyone. 4) The only way to succeed in this corrupt environment is to start "Us Too" Fed Reserve, "Us Too" Banks, "Us Too" Newspapers/TV to serve your community then think of capturing WWW market...... think.............

posted on Sunday, February 18, 2007 at 9:57 PM by Jobson


Wow! The energy generated in an enterpreneur in this article is immense, more so by the numerous inputs from a variety of contributors. Thanks a lot, publisher.

posted on Thursday, March 01, 2007 at 7:26 AM by Kapil


Hi Dharmesh Just a little late in finding this post (I was led here by a businessweek mention). Did you guys find any solutions for the "how hard it was to find great technical people to join an idea-stage company" dilemma? I'm in the same shoes as Matt was, in that I am a business guy and not a software developer.

posted on Saturday, March 03, 2007 at 3:24 AM by Jon Bishop


http://onstartups.com/home/tabid/3339/bid/1173/Why-Me-Too-Startups-Are-Not-Always-A-Mistake.aspx

posted on Thursday, June 28, 2007 at 5:54 AM by Araba Yarışı


Wonderful Article i enjoyed reading it, thanks for with us!

posted on Sunday, November 11, 2007 at 8:44 PM by zutestrane


It's silly to think that you need to invent something brand new to start a business. it's not the case at all and never has been. Seems like a "Duh" to me.

posted on Wednesday, January 02, 2008 at 10:31 AM by chrisco


thanks.good article.nice site.

posted on Wednesday, April 16, 2008 at 9:08 AM by Youtube


Me-Too definitely can work if you focus on what the other players are doing wrong. Many of the first starters simply didn't know about the problems they could encounter; and financial or just motivation challenges (amongst many other challenges) may mean that they cannot fix those problems, and so the market is divided between a whole lot of new start-ups. The market is hoping to find at least one who might deliver better than the others. 
 
Then the me-too may come along and, from the start, be able to already have the current problems overcome. As in Matt's case, they build a site or idea and form something that the public really LIKE and can find as useful as the others promised it should be. Just like the first poster said – Google got in as a “Me Too” company but just managed to get everything right, taking the market away from everyone in no time. 
 

posted on Saturday, July 05, 2008 at 11:28 AM by online shopping


Very smart and cost effective animation production.... Great job

posted on Friday, August 08, 2008 at 2:00 PM by porn


ss güzel

posted on Saturday, August 23, 2008 at 5:56 PM by sohbet


Wonderful article... it only proves that the service/product should be customer centric.

posted on Monday, November 10, 2008 at 2:41 AM by Vijay Kumar


ondann aglamam ondan :) gullu abla söylüyor ben yazıyorum daha ne olsun?

posted on Friday, January 02, 2009 at 1:26 PM by vaziyet


thankx for meas.

posted on Saturday, April 11, 2009 at 10:50 AM by youtubeye nasil gidilir


cok thanxk mee.

posted on Saturday, April 11, 2009 at 10:51 AM by msn ac


ebruli thanks me.

posted on Saturday, April 11, 2009 at 10:58 AM by ebru şallı plates


I completely agree with Christopher B. It really is inspiring to see carefully considered typography playing a central role in a site’s design. Thanks also for compiling the appetising list of resources that I am very much looking forward to reading. 
 
 
 

posted on Friday, July 03, 2009 at 2:20 PM by sohbet


Quite interesting article about Internet start-ups.

posted on Tuesday, July 07, 2009 at 10:17 AM by cirugia


What I do care about is which candidate is most likely to be willing and able to take advantage of the current political moment and move the political center of the country clearly to the ideological left. And given what I care about, I think supporting Edwards is a bit of a no-brainer.

posted on Sunday, July 19, 2009 at 11:02 AM by sohbet


The reason is that nobody had really solved the problem quite right" - too true! I studied numerous competitors' sites and almost all of them seem to be dead by now, and I seem to know what to do to revive the idea - in a word, for my project,it's to flip focus from shops to customers.

posted on Sunday, July 19, 2009 at 11:04 AM by yonja


thank you was a useful article...

posted on Sunday, September 20, 2009 at 9:05 AM by youtube izle


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