- It’s sometimes a smart business move to observe where the market is going and follow the trend.
- But even better, according to investor and analyst Benedict Evans, is to envision where the market hasn’t yet gone.
- Snap and Netflix are examples of companies that understood the where the future needs of their markets were headed and built solutions for problems that were still emerging.
- Steve Blank and Alex Osterwalder, two architects of the “lean-startup methodology,” told Business Insider that sometimes founders need to destroy a pillar of an industry to remain at the forefront of innovation.
- Visit Business Insider’s homepage for more stories.
Last week, Andrea Cash, a small business content strategist, tweeted about how an old office idiom translates in the era of remote work during a pandemic.
“January: This meeting should have been an email. May: This Zoom should have been a call. June: This water should have been whiskey,” she wrote.
While each of those three statements are deserving of a ringing endorsement, the second raises an interesting question about business ideas: How do you create a product or service that doesn’t simply repackage an older version?
In a pair of posts on his blog, Benedict Evans, a former tech investor and current equities analyst, suggested that the answer lies in asking “a bunch of weird questions that no-one had really asked before.”
The catch to this is that no one can ask those questions for you — least of all a digital news outlet — but we can examine some clear examples of startups that successfully asked unusual questions and found possible answers that led to billion-dollar business ideas.
Old questions can lead to big businesses, but they may not last
Zoom has undeniably been on a tear during the pandemic for a number of reasons, chiefly its convenient and high-quality user experience. But Evans pointed out that video calls were nothing new — they’ve been around in the business world since the mid-’90s — and Skype was already a pretty successful company.
Of the dozens of competing video-call services, Zoom has clearly won the game of smoothing over many of the frictions that are baked into the technology. These were certainly difficult challenges and questions to solve, and the company deserves credit for making a better solution than anyone else, but “Zoom fatigue” is growing.
Evans wrote, “Zoom has done a good job of asking why it was hard to get into a call, but hasn’t really asked why you’re in the call in the first place.”
While that question may wax overly philosophical for some, visionary ideas can emerge only by spending time in that quasi-existential headspace.
Interrogate past fundamentals to imagine a new future
Evans’ leading example of a startup that asked and answered these questions well is Snap, which successfully reimagined picture messaging by going back to basics.
“Fundamentally, Snap asked ‘why, exactly, are you sending a picture? What is the underlying social purpose?’ You’re not really sending someone a sheet of pixels — you’re communicating,” he wrote.
Another example might be Netflix, whose original business model answered an old question that customers of Blockbuster were certainly asking: How can I make fewer trips to the video-rental shop?
That was a relatively simple problem that Blockbuster might have been able to defend against, but Reed Hastings had “a bunch of weird questions” in mind that the big blue business was completely unprepared for in the age of dial-up internet and low-bandwidth DSL connections.
Now Netflix is one of the biggest production companies in Hollywood, while Blockbuster is down to one store from its peak of 9,000. (Incidentally, if you enter the words “last remaining” in a Google search, the service will suggest you complete the phrase with “Blockbuster”).
Look for clues in present successes and failures
All of this is not to say that we should ignore or dismiss businesses that are successful right now. Companies like Zoom are winning today for a reason, and it’s wise to understand why.
What Evans suggests is looking critically at how that present success is reshaping the opportunities of the future.
“Every time we get a new tool, we start by forcing it to fit the old way of working, and then one day we realise that it lets us do the work differently, and indeed change what the work is,” he said.
This may mean different things for startups and legacy firms, and indeed as companies get more established, the harder it gets for them to take the necessary risk to stay ahead of those who stand to benefit from upsetting the status quo.
Still, Steve Blank and Alex Osterwalder, two architects of the “lean-startup methodology,” have each previously told Business Insider that sometimes companies need to build something that leads directly to the destruction of one of its mainstay segments if it wants to remain at the forefront of innovation.
Founders won’t build the next Zoom or Netflix by simply replicating the answers to the questions that Eric Yuan or Reed Hastings have already asked.
What founders must do is look closely at the fundamental problems that get introduced, even when those companies are dominating in their respective industries. Then start asking some really weird questions.