Me-too startups: Doomed from day 1 or a better idea than most people think?

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

– Mark Twain

The question is…

When was the last time you got ‘the expert advice’ to not create a me-too startup?

Well, I am not a psychic but if you are an active startupper chances are not long time ago…

And the idea here is, that by being a me-too startup you start playing a game you can’t win (more on that a bit later).

But before we go any further let’s make sure we’re all on the same page. By me-too startup people typically refer to a super early stage business that a) either copied their business model (product, pricing, positioning, etc.) in its entirety from an existing market player or b) somehow end-up having a business with no meaningful differentiation over the competition.

Definitions-aside, really the question is: can a me-too startup survive, or even thrive, in today’s hypercompetitive world; or is an inherently lost case?

And that’s what we will try to answer today…so let’s dive straight in!

Yes we they can!

First, let’s start from those that believe me-too startups are a better idea than most people think…

Why do they think this way?

Reason #1: The market has already being proven (so no need of stabbing in the dark)

This one doesn’t need much explanation. If there is a market with multiple players serving it, a wide range of products, thousands of paying customers, and many others actively looking for such solutions you factually know that the market exists for a reason.

Hence, ‘going me-too’ prevents you from jumping on a non-existing market and aimlessly try to solve imaginary problems, a common trap many new entrepreneurs fell into.

Reason #2: You have reference points (and yes that helps a lot on building something better)

Straightforward isn’t it? When the completion is out there – exposed and open for business – by just doing your homework you can learn a lot from them both about the market and where each one stands.

As a result rather than spending your energy trying to prove that there is a market (see earlier point) you can focus on beating the incumbent companies by:

a) Building something better or,

b) Moving faster and be more responsive to changing customer needs or,

c) Outmarketing them

The moral of the story? Is an execution and not an idea game, or at least that’s what the me-too advocates claim…

Reason #3: There is enough space for everyone (especially when the market is growing)

Last but not the least, is “the size factor”.

What do they argue? Simple – if the market is big enough, it grows year-to-year and doesn’t have a monopolistic nature, chance are will be enough space (almost) for everyone.

So if companies of the likes of Google, Microsoft, Facebook, Amazon were comfortable releasing me-too products* what’s stopping us from doing the same?

Before answering this question it kind of makes sense to first hear what the other camp have to say!

Doomed from day 1: And here is why!

Why doomed?

Well, according to the “differentiate or die” believers it boils down to this: unless you figure out a way to create something that sets yourself apart from the pack, inevitably you’ll have to play the price game which at least for startups rarely ends up pretty.

And the reasoning behind this argument is that me-too startups practically sell a commodity good (a product that is indistinguishable from others) and when a customer has to choose one, the deciding question is almost always this: who is cheaper?

The bad news? Unless you’re the one with the deepest pockets embracing a cost-leadership model is an exercise in futility…

But that’s not the only problem – before even get the chance pitching/convincing a prospect you have the best product, you have to first get him bang on your door.

What; Bang on your door?

I know, some might say that’s not even necessary because you can initiate this process – after all, that’s not what good marketing is about?

The differentiate or die believers response? Probably something along these lines: whether you initiate this process or not you’re playing a hard to beat game because with so much noise out there, making a customer really pay attention to you and your me-too proposition is at best tough (plus extremely costly).

If that’s the case, it sounds like a vicious cycle to me…

But wait. The “experts” say there is a better way!

The “better way”

Can you guess what I am about to say?

Drum roll please…

Yep, innovate your way out of the pack!

Please don’t laugh, some people are dead serious about this stuff.

Take for example our friend Niko Bonatsos a big shot VC. In an article at, wait for it…TechCrunch said:

I meet with hundreds of ambitious, passionate and insanely talented tech founders every year. They are all working hard 24/7 to make their dreams come true. But it breaks my heart when I see talent wasted on solving derivative problems a bit too late in the cycle… Now is the time to innovate. If you do something hard and break new ground, you’ll have the chance to build a category-defining company. That is what you should aim for: The “it” company in a new space enjoys a huge premium over its competitors.

So, what are you waiting for; go and revolutionize an industry – it shouldn’t be that hard 🙂

The inconvenient truth

I think now is time to put things into balance…

Let’s first start from me-too startups. Although I accept that this model comes with some advantages, I have to say I find it striking that so many people out there can’t get that in today’s unforgiving competitive marketplace there is NO space for everyone.

However, please let me draw a distinction here – me-too startups and me-too products are NOT the same thing.

Why do I emphasize this? Because getting an edge over the competition doesn’t start and end with the product. In fact, as Ash Maurya famously said:Your product is not the product. [In fact] your business model is the product.”

What’s my point? Simple – even companies with me-too products can succeed (and that’s not even a secret just look around you) if they manage to put together an edgy business model that stands out.

And because I know some will ask, an edgy business model could derive by having a different (and superior) pricing/distribution/marketing/sales/targeting/revenue model…

So yes, a me-too startup might be doomed from day one but not necessarily a company with a me-too product.

Nonetheless, if I am perfectly honest with you is not something I’d advise you doing…

Why? Because still a core element of your business proposition will be pretty much the same like everyone else and yes there are better ways!

What about the radical innovation option? Well, let me put it this way – if you are keen embarking on a suicide mission go for it!

Yes, you read that correctly – a suicide mission. If you’re an aspiring first-time entrepreneur and you think “going disruptive” will level up your chances of making it I hate to break it to you but you’re delusional.

And I say this because as a newbie playing Steve Jobs and coming up with a game-changing business is as likely to happen as winning the lottery…

Willing to take that risk? Be my guest just be aware on what you’re getting into and don’t buy the BSers hype-driven rosy narrative carefully built for suiting their business model.

My take?

Real entrepreneurship is NOT about innovating, disrupting, exiting, capital raising, growing, hacking, etc. but fundamentally about this: building an entity that produces something people want that generates net cash. That’s all. So let’s at least try to not miss the wood for the trees…

***

Ok guys, that’s all from me for today.

If you enjoyed today’s post, check out my brand new book, The Aspiring Entrepreneur Entry Strategy: A practical Step-by-step guide for finding a validated, winning business idea that stays true to who you are, that is currently available at Amazon.

I hope to see you soon.

Best,

Andreas

“Simplicity is the ultimate sophistication.”

― Clare Boothe Luce

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