The bandwagon effect and failing new business start ups

[Harold Mansfield]

I was thinking today about all of the bandwagon ideas for websites that people have called me to do over the past 4 years, and how quickly those ideas fizzle out.
Most times these ideas aren't well thought out and are just knee jerk reactions from people who think that it's all so easy and that people are sitting around just waiting for new websites to launch. They also want to do it on a budget of 0.0003% of what the site they are copying spent to do it.

Oh yeah, and they all want them to run on their own as a side project that they only have to spend a few hours a week to manage.

4 years ago it was Facebook. Everyone and their mother wanted to build a community website with all the functionality of Facebook, but with some ridiculously unimportant twist that was supposed to change the face of social media. Many tried. They all failed.

After that it was Groupon. Tons of Groupon clone themes and website templates and software's were popping up all over the place. I heard ideas from "The Groupon of ..." some small town, to "Like Groupon, but only for pets". Again, many tried. All have failed.

Then early last year everyone was on the Pinterest bandwagon. Again, no concept of how things work. Just a simple belief that these things are all done by a couple of guys in a garage on a shoe string budget. That one fizzled fast, as I don't see nearly as many clones as I used to. Actually I don't see any anymore.

There are many other examples of this get rich quick mentality in our society even before the internet was the "easy money" go to for everyone. Remember when everyone jumped into day trading? Tax Lean investing? No money down real estate?

When I see the statistic that 50% of all start ups fail, I wonder how many fail because they are just bad ideas started by people trying to piggyback something to "get rich quick"? And then that makes me wonder if the difference between a successful business start up is really about the knowledge of the person starting it, or if it's just because they have a better grasp of reality and realistic expectations?

If 2 people go into the same business, with the same budget, under the exact same circumstances, and neither having any previous experience or knowledge in that industry...who will be more successful? The guy that treats it as a get rich quick idea, or the guy that understands that it's hard work, has realistic exceptions, and commits to continuously learning as he goes?

I say anyone can be successful at almost anything if they are grounded in reality, and not fantasy.

What do you guys think?

[nealrm]

Sound like you pretty well hit the nail on the head. I know that many think I am a broken record (do CDs repeat?). But I'm I willing to bet that those wanting to do things on a show string budget and only spend a few hours each week, didn't sit down and do a business plan. Even a crude plan would quickly show that the budget, time and market will not support the idea.

[Wozcreative]

Yea this happens a lot.. had a guy contact me to market his internet site.. thing was he knew nothing about internet businesses, nor hiring proper developers to get the job done.
I had another guy want to create an online directory for all types of businesses... yellowpages anyone?

Not much you can do.. but our jobs is also telling these people if their idea is feasible, if it will work in our professional experience etc.

[Dan Furman]

goodness, I get the same crap all the time.

It's going to be like Facebook, except for xtreme sports. Look, we have a clever name and neat logo!!

And yea, Woz, that online directory thing... can't count the number of people who came to me with that idea "Yea, we're gonna have an online directory of all the local businesses, that way, when people need something local, they'll come here instead of Google. Plus, it'll be perfect for businesses that don't have a website!!!!"

Don't have a website??? In 2013?? You mean "can't afford a website", right? So you mean Angie's Stitching Barn, who is closed half the week and has an ad budget of $9? Uh huh, good luck with that.

[Harold Mansfield]

Man, trying to tell people that Directories are a really bad, and pretty much worthless idea is like telling a kid Santa Clause isn't real. With the exception that the kid will be disappointed, but they will eventually believe you.

People new to the web and think that they have come up with something ground breaking are the hardest to convince. Especially if their logic is "But I don't see anyone else doing it, and I've looked". You almost can never get them to believe that it's because the idea is 20 years old and obsolete.

Again, that "get rich quick" mentality. Rarely ever thought out or based on any real research or knowledge.

[KristineS]

I think my new favorite are the people who are going to start a blog, except they don't know what the subject will be, and they don't write very well, but they're going to start a blog like x's blog (insert famous blogger here) because how hard can it be to write about kids and your cat and what you did at work? They don't see all the work and talent that goes in to crafting posts and the work that goes into building the blog's reputation. That really annoys me.

[Harold Mansfield]

I think my new favorite are the people who are going to start a blog, except they don't know what the subject will be, and they don't write very well, but they're going to start a blog like x's blog (insert famous blogger here) because how hard can it be to write about kids and your cat and what you did at work? They don't see all the work and talent that goes in to crafting posts and the work that goes into building the blog's reputation. That really annoys me.

Again, living on that internet folklore of millionaire bloggers that started going around in the 90's. Much the same strategy that Tom Voo employed, "If I can make a million, so can you". Um, no you can't and neither did he. At least not from Real Estate.

[Freelancier]

I get that enough now that I regularly tell new businesses that I don't want to work with them unless their idea is completely out of the box and their financial backing is in the hundreds of thousands of dollars. I'll work with any existing business if it makes sense for their business what they want to do, but new businesses are untested and I've seen too many people waste too much money to find out that they really don't have what it takes to be in the business they want to go into.

I did have one guy tell me "that's a pretty interesting sales technique you have there" when I turned down his project... that was derivative of another existing web service and he already had his hands full with his existing business. Fortunately, he only cost me a click and 30 minutes of my time. :)

[vangogh]

Don't forget pixel advertising. Remember when one site did well and the next thing you knew everyone wanted to run a pixel advertising site?

I think in some cases it's people looking for a quick path to success. They see something that's popular and assume anyone can repeat the success. It's funny how little thought they put into it. I can't tell you how many times I've seen people asking how they can build a Facebook clone for $100, as if Facebook's success is entirely in some software that allows people to create profiles and interact with each other.

There are times though when I think people see another idea and genuinely think they can offer more value to the market. There's usually room for more than one player in any market. Some of the Facebook cloners realize they aren't ever going to be Facebook, but they hope to compete further down the chain. I actually think you could build a successful Facebook clone now by going after niche markets.

I don't think this is really about the copycats having bad ideas. I think they piggyback off a good idea, because it's a good idea. Where they fail is in thinking the idea is all they need. The put no thought into how their business will actually work. No one is leaving Facebook for FacebookClone, but some would leave for a site that offers something Facebook can't or won't. You could probably build a site listening to all the complaints about Facebook and offering something that addresses those complaints. You'd need to be realistic of course. You wouldn't be competing with Facebook in this case. You'd lose that competition. You could build a business around the people Facebook doesn't cater to.

Unfortunately many people don't even put that much thought into it. Their plan goes as far as find software that can clone successful site. Install. Profit. Retire.

[Dan Furman]

There are times though when I think people see another idea and genuinely think they can offer more value to the market. There's usually room for more than one player in any market. Some of the Facebook cloners realize they aren't ever going to be Facebook, but they hope to compete further down the chain. I actually think you could build a successful Facebook clone now by going after niche markets.

Actually, I can agree with this. But the big thing missing from these people is funds. They have no real money to put into it, nor will they risk any. Not even enough to get some prototype out there so someone else can chip in the big money.

You know who succeeds? The guy who has an idea (facebook for extreme sports people, etc), and takes a risk and runs 20k on his credit cards to fund it.

That's the type of story you read over and over again in terms of success stories. You almost never read of a guy who just brought an idea to the table.

[Harold Mansfield]

Actually, I can agree with this. But the big thing missing from these people is funds. They have no real money to put into it, nor will they risk any. Not even enough to get some prototype out there so someone else can chip in the big money.

You know who succeeds? The guy who has an idea (facebook for extreme sports people, etc), and takes a risk and runs 20k on his credit cards to fund it.

That's the type of story you read over and over again in terms of success stories. You almost never read of a guy who just brought an idea to the table.

People with bad ideas NEVER want to invest much money in it. They have the excuse "I just want to see if it makes any money first before I go all in". That's how you KNOW that they don't really believe in it either.

When I have a good idea that I believe in, I'll eat top ramen and hot dogs if I think money will give it a fighting chance. The, "I just want to see" people are just playing around. What they are really saying is, "I just want to see if I get lucky and a miracle happens without putting much work into it".

When I get people that tell me that they have begged, borrowed and stolen to finance something because they really believe in it, I get excited for them. But that's not always a slam dunk either.

The best phrase to describe starting a busines is, "It depends". The most sucky answer to any question....but it's true. There are just a million variables.

[vangogh]

You know who succeeds? The guy who has an idea (facebook for extreme sports people, etc), and takes a risk and runs 20k on his credit cards to fund it.

Yep. I didn't mean to imply you wouldn't have to invest in the site. I do think you can start a site for less than $20k, particularly if you start small and have the ability to do some of the work yourself. I'm thinking of a small team where maybe one or two people can handle all the development and another couple of people can handle the marketing and general business. If you have to hire people, then yeah it's going to cost something.


People with bad ideas NEVER want to invest much money in it. They have the excuse "I just want to see if it makes any money first before I go all in". That's how you KNOW that they don't really believe in it either.

These are always the people who want me to create their site. They make a lot of promises about all the wonderful money I'll make once the site gets going. I always say no thanks. If you want me to work for free then you better present me an idea I believe in and am willing to work on. Do that and I might partner with you. Ask me to build you a site for an idea you clearly don't believe in and the answer is no.

[Dan Furman]

Funny - I just did something today I hardly do - I actually gave a new customer a discount after he gave me the old "there will be more work later" thing (to which I usually reply: "Ok, I'll give you a discount on the later work. Good?"

But anyway, I liked this guy's idea, and I liked his website. He's put money into this business, so yea, someone like him I'll take a chance on with a small discount. Plus, after I agreed to a $100 discount, he said "send me your deposit invoice - I will pay it right away". I can already tell he's going to be the kind of client I like working with.

But the key was, he clearly spent money. As a vendor, that mattered to me.

[Wozcreative]

I sometimes will go above and beyond if I see and believe this client's passion and dedication. It makes me a happy camper working on the projects knowing it will be used properly!

[vangogh]

So Dan I have this really great bridge in Brooklyn I'm looking to unload. :)

I think the key to what you did was in trusting the guy. The risk wasn't all that much and the potential reward much greater.


I sometimes will go above and beyond if I see and believe this client's passion and dedication

Also a good reason. When you see someone passionate and dedicated you feel more likely that they really are going to do the work required to succeed in business. The problem people are the ones who are clearly trying to get you to do something for free or low cost because they aren't sure enough in themselves or their idea.