Go Big or Go Home

I'm talking to a lot of technology entrepreneurs these days.  One question that frequently comes up is, "How do I know if my idea is good?"   While this is a difficult question to answer, invariably, my answer always includes an assessment of market size.

A good idea should address a large market -- preferably a mature industry ripe for disruption.  After all, if you are going to jump into the risky business of doing a startup, the rewards had better be commensurate with the risk.  "If it's high beta, make sure it's high reward," as Sharon Wienbar once said to me.  If the market isn't very big, there isn't much to take.  Sounds so obvious.   As a corallary, disrupting an existing large market is even better.   However, finding a large market to disrupt is often hard to find because you need to be "there" at the right time and place with the right idea.

When Ben and I started MerchantCircle, we decided to attack the local Internet and we knew our customers were going to be local merchants (not consumers).  However, it took us a few months to realize  that it was the Yellow Pages industry that we were going to disrupt.  The Yellow Pages business was/is  mature, successful, and generating  multi-billion dollars a year in advertising.  And, yet, it was clear that consumers were abandoning the phone book for the Internet.  Figuring this out was key to how we focussed the company.

Today, is it really "news" that "Telephone book companies are heading for a long slow decline?"  Well, at least it gives affirmation of our approach, a few years later.  This seems so obvious in 2008.

Nonetheless, we have yet to see a runaway winner disrupting the lucrative Yellow Pages business.  We've seen a few challengers come and go.  As the successful Yellow Pages businesses continue to grapple with their "Innovators Dilemma,"  someone will  "crack the code" in this space and send the Yellow Pages down the path of music labels and newspapers.  Hopefully, it will be MerchantCircle.

As an entrepreneur, I'm bullish on disruption -- go big and transform an existing/successful/mature industry by disrupting it.  Or go home and do something else.

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This page contains a single entry by published on June 2, 2008 3:08 PM.

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