As entrepreneurs, we’ve all experienced the rush of excitement that accompanies the arrival of a bright new startup idea. There’s something magical about the belief that you are the very first person in history to figure out this secret. It’s hard not to start counting the billions of dollars in your future bank account.
The next time this happens to you, remember this: You are definitely not the first person to conceive of this idea. You are likely not the first startup to enter this market. In fact, the space is likely littered with companies that have already seen real successes and/or dramatic failures.
Too often, a naïve entrepreneur will carefully approach an investor with their unique, precious idea. They’ll pitch it as the next billion-dollar concept. Worst-case scenario, they may even demand an NDA. And then they’ll be crushed when the investor asks them how they compare to an existing, similar product on the market.
I almost experienced this exact fate. Before starting work on LabDoor in early 2012, I had never considered launching a technology startup. As an analytical chemist running a small laboratory in Michigan, I was far away from the hype and excitement of Silicon Valley. Coding tutorials were a fun diversion, but didn’t seem like a business opportunity.
A chance encounter with a business mentor sparked my obsession with product safety ratings. Consumers needed an easy way to understand the safety, efficacy, and price of products like pharmaceuticals, supplements, and cosmetics. Equipped with this vision, along with my knowledge of regulatory chemistry, I spent my nights and weekends for months testing products, building wireframes, and dreaming up strategies to bring my solution to market. Eventually, I exited from my laboratory business, and began full-time work on LabDoor.
Then, I stumbled upon the website for GoodGuide, another application that rated the quality of consumer products. This discovery crushed me. Not only had GoodGuide launched years before me, but they were also backed by huge venture capitalists, and had recently been named one of the most innovative companies in the world. It felt like all of my work on this new startup was a total waste, and I sat and drank a few drams of whiskey while contemplating my failure.
I shouldn’t have reacted this way. To be fair, the idea of product quality certifications has been around for nearly a century, with companies like Underwriters Laboratories, Consumer Reports, and Good Housekeeping originally leading the charge. GoodGuide was just the latest to take a shot at fighting marketing hype with consumer-focused data.
After my literal and figurative hangover wore off, I reevaluated my startup idea in the light of my new discovery. As I dug deeper into the fundamentals behind GoodGuide, I quickly learned about the huge challenges that face applications like ours, from customer acquisition and engagement to business models and monetization. One month later, GoodGuide quietly sold their product and assets to Underwriters Laboratories, having struggled to surmount these obstacles.
With this knowledge, our team regrouped and redoubled our efforts to build LabDoor into a sustainable, profitable company. We interviewed every target user we could find, and became obsessed with providing value to our early customer segments. We purposely took meetings with investors who had previously backed GoodGuide, knowing that they would ask us the toughest questions. We raised a smaller amount of money, and carefully built monetization into our go-to-market strategy. The result is our current product, constantly evolving, rapidly improving.
About a year later, I actually met the original founder and current CEO of GoodGuide. I’m sure they took my meeting with a mix of curiosity and skepticism. While they were very interested to see another company take a shot at their space, I definitely sensed in them a cynicism about the market. After nearly five years from great data scientists and over $10 million from leading VCs, GoodGuide was unable to effectively alter consumer purchasing decisions from bad products to good ones. How would we be any different?
A smart investor once told me: “Identify the biggest risks in your startup, and attack them first.” Instead of being the biggest impediment in our path, GoodGuide actually helped to highlight some of the largest roadblocks to our success.
In the months since, I’ve identified other companies in the space, and even a couple startups that have launched behind us. Now, when I hear about a potential competitor, I take a little time to study their story, and then get back to work at LabDoor. There will be a winner in this space, and I know we won’t be first or last, but I can guarantee we’ll diligently pursue our grand vision with a clear knowledge our market’s ecosystem.
There was commerce before Amazon, search before Google, social media before Twitter and Facebook, and computers before Apple. As cliché as it sounds, startups truly are about execution. When you find a company who got there first, calmly take note, learn from their mistakes, and most importantly, keep building.