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Start for freeIdentifying Tar Pit Ideas in Startups
Michael Seibel and Dalton Caldwell offer a candid discussion on the nature of startup ideas that founders often pivot into and away from, which they aptly term 'tar pit' ideas. These are the alluring concepts that attract founders but are treacherous because they frequently lead to failure due to their deceptive appeal and high rate of prior unsuccessful attempts.
What Are Tar Pit Ideas?
The term 'tar pit' relates to the natural phenomenon where animals mistake tar pits for water sources, get trapped, and eventually perish. Similarly, tar pit startup ideas look promising, drawing founders in, only to become a quagmire that's hard to escape from.
Why Do Founders Fall for Them?
- Familiarity: Founders, being consumers themselves, often come up with ideas related to products they use or want, leading to an affinity for consumer-focused ideas.
- Influence from Success Stories: The successes of consumer-focused companies like Facebook and Google can be misleading, creating a false perception that there's a gap in the market for similar ideas.
- Appeal of Originality: These ideas often appear original, with no apparent competition, which can be very enticing for founders wanting to make their mark.
The Reality of Consumer Ideas
Consumer ideas are those marketed to individuals rather than businesses. They can be enticing but are accompanied by challenges:
- High Bar of Quality: Founders often underestimate the quality of existing consumer products and the number of failed attempts that preceded them.
- Importance of Timing: The success of consumer startups is often linked to their timing in the market, with early entrants gaining a significant advantage.
Common Tar Pit Ideas
- Discovery Apps: These are apps intended to help users discover new restaurants, events, music, etc. Despite the perceived need, they often fail due to limited real-world options and the actual preferences of consumers.
- Social Networks: Many founders believe they have a fresh take on social networking, but they face a saturated market with high incumbents' advantage.
- Trading and Betting Software: Inspired by trends like Wall Street Bets, many founders are drawn to creating trading platforms without considering the saturated market.
Pivoting Away from Tar Pit Ideas
The best pivots involve moving away from oversaturated markets with low customer demand to areas with less competition and higher demand. Examples of successful pivots include companies that shifted focus from generic consumer apps to solving specific, often technical, problems for businesses.
Advice for Founders
- Research Thoroughly: Understand the history of the space you're entering and the true bar for success.
- Evaluate Timing: Assess whether the market conditions are favorable for your consumer idea or if incumbents have too strong a hold.
- Consider Supply and Demand: Reflect on whether there's an oversupply of founders with similar ideas and whether there's genuine demand for the solution you're offering.
- Recognize When to Pivot: Be prepared to change direction if you find yourself in a tar pit, focusing on areas with less competition and higher demand.
In summary, founders must be vigilant not to be seduced by the deceptive allure of tar pit ideas. Instead, they should aim to understand the true challenges and market dynamics of their chosen field, seek areas with genuine demand, and be ready to pivot when necessary to chart a path to success.
