At Launch, we emphasize that your potential solution to a problem in the market should be ten times better than existing alternatives of your customer. There is a lot of customer education and switching costs of customers that make it hard to be successful if you are only incrementally better. While this might vary among different industries, our students have found a few in particular that are especially strict.
Everyone eats. And everyone would like to eat better in some way – be it healthier, more adventurously, or cheaper. So there should be a lot of opportunity for this, right? While existing solutions aren’t perfect for many nuances of finding the best meal, they’re “good enough” to satisfy customers’ needs. Yelp and TripAdvisor spearheaded the industry and have almost the entirety of the market for looking up places to get food. Industries with this level of concentration of market share are notoriously difficult to penetrate, with high barriers to obtaining enough data and scaling (you need a lot of info from restaurants) and customers (they will only be valuable to the restaurants if there are a lot of them) to make the platform valuable.
We encourage students at Launch to start something for which they are passionate about, and who isn’t passionate about travel? Planning trips takes a lot of time, and ideally, there would be a better way to book the ideal trip – getting that perfect combination of relaxation, local experience, and tourist attractions suited to you. But a small competitive advantage is not enough. Success in this field requires significant experience in the travel industry, AND a unique competitive differentiation to obtain information on activities, which is extremely difficult to aggregate in a scalable way. Many flight booking sites have even tried to tackle this feat, without success. And if companies who specialize in this industry struggle, that leaves a difficult terrain for new entrants in this field.
College Connection Platforms
Applying to, getting accepted to, and choosing your ideal college is a huge life decision. High school seniors want more assurance that they are making the right decision and are optimizing their chances of acceptance and ultimately, happiness at their school of choice. We have seen countless teams at Launch try to tackle means of connecting high school students with students at the college to which they hope to attend, that have typically had trouble sustaining the business. The demand is inherently seasonal, and the turnover in customers and connection students is inevitable, making this business model a huge operational hurdle. Additionally, while talking to a student at the school could be helpful, most students visit their potential schools to get a better understanding of what they would be getting into. This means that the incremental value to most students would be minimal, and not near the 10x recommended.
This isn’t to say that these ideas or business models can’t be successful, but that they would need a vastly superior advantage over what typical ideas in the space contain. And regardless of the differentiator, be warned that these industries are all a tough road – wrought with operational challenges and difficulty acquiring and retaining customers. It takes a lot to take on the DIY (do it yourself) approach that most people take in finding restaurants, booking travel, and exploring college options, and competing with individuals doing research on their own takes significant resources.
So what should you do? Find problem areas where customers are so desperate for a solution that there are already fragmented options that aren’t good enough, and where you have a potential solution and path to reach these eager potential customers. These are the companies where you can be ten times better.