Can pioneers ever make money?

by Ashok Nayar

Innovate or imitate? Probably one of the most overused phrases in the web space these days, but understandably so. There are so many “Me too” companies in the cloud that it’s impossible to keep up withe very startup these days, half of them offering the same service, with a different name. Innovation drives this industry though, that’s a fact. The bottom line is that unless you stay innovative, someone else will and take over. It’s been done before and it will continue to happen. But can true pioneers really make money? At what point are we all just imitators of a former technology? How much value should we give to the evolution of ideas? Also, what truly is responsible for the success of a startup, is it management, innovation, technology, or brute work?

If we look at the internet specifically, we can see the trend of successful companies innovating existing products. Rarely does a company come along with a completely novel idea and grab the market. User’s don’t catch on quick enough to keep up with truly innovating ideas. Altavista, Friendster, and Slashdot are all examples of relatively novel and remarkably innovative ideas, but none of them are still around (yes I know, they are still around, but they’re really not making much/any money). But with these innovations, Google, MySpace and Digg have come along and killed their respective competition. Why? Well they didn’t imitate the existing technology and model but rather built on it. Innovated while imitating. Filling gaps in existing models is what these companies have done. Building upon products, and providing the customer with a truly better (and not marginally better) service and platform.

That doesn’t mean that if you start a company that’s a YouTube + (x feature), you will have a successful project. Typically you will not. The “x feature” has to be revolutionary in itself, or at least provide enough value to have users switch platforms. This industry is still extremely hit driven, and to produce a hit, you need to have a catch. For Google it was their unique voting system. For MySpace it was the ability to completely customize your profile. For Digg it was the transparency of the system. I find many entrepreneurs caught up trying to think of the next million dollar idea. And I see them wasting hours and days racking their brain for the next completely innovative model or platform. This is not only inherently a waste of time, but as I’ve said above, is not even the way to go about it. Find a product you like, and find what it’s doing wrong. Or rather what it’s not doing. Think about what you have to do because it’s not providing that feature(s). And build your heart out. And while you may think you’re lacking in innovation, by noticing discrepancies in existing models you are ironically enough being innovative. Don’t copy, but create. Steal if you must, but build on top. I think Picasso said it best, “Good artists copy. Great artists steal.”