How 50 Startups Started – Part 3
This is Part 3 of “How 50 Startups Started”. You can read Part 2 here.
- Spotify. Having seen the popularity of Napster and Kazaa, co-founder Daniel Ek believed streaming to be the future of music consumption. His initial research identified a market of 500m music-lovers who confirmed his hunch. At the same time, many smaller artists did not make money from music sales (and relied on touring and merchandise) and so Ek believed there was a better way for both fans and artists to share and experience music. He set himself the goal of “creating a product that was better than piracy” and to make music consumption, sharing and discovery as seamless as possible.
- Etsy. Co-founder Rob Kalin is the poster boy of what taking action can achieve. Rob came up with the idea for his craft marketplace, Etsy and based its design on Flickr. He then proceeded to write a fan letter to Flickr founders, Stewart Buttefield and Caterina Fake saying, “I love what you did with Flickr. Here’s what I did. If you’d take a look at it, I’d be honoured”. Kalin got a reply and an invitation to fly out to San Francisco to meet with the Flickr founders. “I went out there and really just showed them what I had and was who I was”.
- Flickr. Co-founder of Ludicorp (which owns Flickr) Steven Butterfield originally set out to create a massive online multiplayer game. However, that idea was not feasible, requiring more money and labour than could raised. But out of that failed attempt, Butterfield was able to recognise that they what technology they had managed to developed could be parlayed into what is now Flickr.
- Nextdoor. Co-founder Nirav Tolia wanted to bring back a sense of past communities where it was easy to communicate with your neighbours. “Good things happen when you talk to your neighbours” but there was no easy-to-use dedicated service to help you do this. Whilst it may seem a mediocre concept to some, it has attracted over $100m in funding with big names such as Google investing.
- eBay. Founder Pierre Omidyar wanted to create an efficient market where everyday individuals could do business with one another. Prior to eBay, online commerce models were targeted at larger corporations wanting to sell more products to individuals. eBay helped democratise online commerce and provided a level playing field where individuals without the capital or infrastructure of larger businesses could compete.
- Patreon. Co-founder and artist Jack Conte wanted to find a way to make a living from making videos. He hit on the solution: a crowdfunding platform for artists and their fans. The premise was simple. Artists could effectively say to fans, “If you like what I’m making, please pay me so that I can make more”. Conte realised the value of a true fan – they buy everything you produce, they go to your shows, they tell friends about your music – the traditional advertising model ignored this passion, treating fans as just another number in a demographic pool worth fractions of a penny. Conte’s solution was to enable fans to directly connect with, support and encourage their favourite artists.
- Facebook. Co-founder Mark Zuckerberg set out to create a simple people-search application, targeted at colleges and universities. Fellow co-founder Dustin Moskovitz, eager to help but without programming knowledge, went out and purchased a copy of “Perl for Dummies” and together they began to build-out the site further. As word-of-mouth spread, more academic communities approached to ask about being included on the service. Eventually, the Facebook was rolled out to the world. It has come quite far from the days when it ran off rented servers for $85/month.
- Homejoy. Co-founder Adora Cheung said the idea for Homejoy – a site where you could hire cleaners for your property – came about when her brother complained about the mess his home was in. A simple idea for a simple problem. (Whilst Homejoy attracted strong interest in the beginning, raising approx $40m investment money, it ultimately failed as a result of overspending on marketing, worker lawsuits and faulty pricing models. As a result, Homejoy closed in 2015. The founders have announced a new cleaning business which sets out to remedy the mistakes of Homejoy but whether they will be successful remains to be seen).
- Quora. Co-founder Charlie Cheever said they set out to create the best “Q&A” answer pages they could regardless of the topic. They were not the first to come up with the idea but felt other sites lacked quality and authority. Quora introduced better moderation, minimised anonymity and democratised quality control by allowing the community to upvote the best answers. Users could follow topics and users and Quora began to develop a reputation for providing reliable, thoughtful answers. Some valuations put Quora at over $1bn.
- Kiip. Whilst waiting for a connecting flight to Singapore, co-founder Brian Wong wondered why everyone around him was playing games on their phones. He recognised that gaming had become a major way for people to interact with their devices. Although he could not put his finger on it, he knew there was “something there”. Wong spent the next month brainstorming and studying the mechanics and psychology behind games, what made them addictive, for example. He hit on the idea for Kiip, a rewards network and mobile app that offered real world, tangible rewards for virtual gaming achievements, and offered the service to brands.
Continue to Part 4 of How 50 Startups Started here.