A Twitter, a Hoverboard, or something in between

Posted: July 22nd, 2011 | Author: | Filed under: Startups | 16 Comments »

There are two very special types of startups that you should know about: the Twitter Startup and the Hoverboard Startup.  If you’re one of these and don’t know it, you’re going to screw up your pitch.

Imagine walking in to hear a startup pitch its goods.  The CEO gets on stage, clears his throat, and starts talking about the number of teenagers in western countries, and their per capita disposable income.  As he drones on about trend cycles and market prediction, you rudely glance at the company summary and it says “Foot-propelled play device with gravitational repulsion field for friction minimization”, and you realize that he’s trying to pitch you a hoverboard.

You’re thinking about this:

and the slide he’s on is this.

You seriously don’t care about his viral strategy or exit strategy, you just want to know if he’s invented the secret of levitation.  If he has, you’re pretty sure the rest will follow.  If not, then… well, then you’re going to have some stiff words with the “friend” who suggested you meet.  A Hoverboard Startup is one where the problem is screamingly obvious, but the solution is prohibitively hard.  The only real question in a Hoverboard Startup is – how good is your solution?

Now imagine a second pitch.  Someone charismatic and exciting is painting their vision of a new future.

“Facebook has hundreds of millions of users.  But you know what?  It’s too complicated.  Here’s what we’re going to do.  First, we don’t host apps any more.  They’re distracting and a security risk.  Second, we get rid of pictures.  Too much storage.  Third, we get rid of profiles, or at least all but one sentence of them.  We also get rid of school and work affiliations, skip all the new stuff like location and checkins, and pretty much kill all the privacy settings so everything is just public by default.  Won’t that be AMAZING?”

You look confused.

“What’s left?”

“Well, you can friend people.  But of course we removed the feature where they have to confirm that you’re friends, so we’re going to rename it to either ‘following’ or ‘stalking’, we haven’t decided.  And you can post status updates to your wall. But we decided to cap those at 140 characters.”

“That’s it?”

“Yes.  It’s going to be huge!”

Now think about the questions in your mind.  You’d probably look at the technical chops of the founders, consider that what they’re trying to do is a tiny fraction of the complexity of Facebook, and assume that it’s not going to be very hard to solve the problem technically (you’d be wrong, of course, but that’s besides the point).  You’d just be sitting at there, staring in wonderment, going, “Why the hell would anybody care?”

In other words, this startup is the exact opposite of a Hoverboard Startup. A Twitter Startup is one where the solution is straightforward, but it doesn’t appear to actually solve any problem.

Now most startups are neither fish nor fowl.  Both the problem and the solution seems intuitively reasonable but neither one is totally proven.  But recognize if you’re a Twitter Startup or a Hoverboard Startup:

Twitter Startups

  • Instagram (What exactly is the market for mobile photoshop filters?)
  • AirBnB (Really, how many people want to sleep on an airbed?)
  • CueCat (Do people want their own personal dedicated hardware barcode reader?  Oops – no, they don’t.)

Hoverboard Startups

  • EnerG2 (Yup, if you can make batteries that hold twice as much juice, people will buy them.)
  • Mint (If it were somehow possible to make personal finance like 500 times easier, then people would want that.)
  • Steorn (Free energy?  Yup, that would be nice, if it were possible.  Wait! It’s not.)

If none of these apply to you – congratulations, you’re a normal startup.  Use the standard pitch deck template, and divide you’re time accordingly.  But if you’re a Twitter, you can almost skip the demo – you want to show customer research and traction, because the only thing they’re going to want to know is if anyone gives a damn.  And if you’re a Hoverboard?  Well, you’d better be levitating by the third slide, or your investor is going to be out of there.

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  • EverClassify

    Great analogy Here.  Definitely information to think about when considering your audience and message. 
    http://www.everclassify.com

  • http://about.me/mikemawhorter Mawhorter

    FYI, you typed “you’re” when you meant “your”. In the last paragraph: “Use the standard pitch deck template, and divide you’re time accordingly.” Just giving you a heads up. Feel free to delete my comment after you correct the error.

  • http://twitter.com/VineetDevaiah Vineet Devaiah

    I have very honestly been surprised by the amount of emphasis that investors give on the PERFECT pitch. I feel that if you have a working product and users then there is no need to make a perfect pitch and its just a matter of sitting down, using the product and listening to the long term vision of the startup and then taking a decision on that. Well I am an entrepreneur so I am guessing I am biased that way..

  • http://twitter.com/VineetDevaiah Vineet Devaiah

    I have very honestly been surprised by the amount of emphasis that investors give on the PERFECT pitch. I feel that if you have a working product and users then there is no need to make a perfect pitch and its just a matter of sitting down, using the product and listening to the long term vision of the startup and then taking a decision on that. Well I am an entrepreneur so I am guessing I am biased that way..

  • http://www.ocodewire.com Krishan @OCW

    There is a thing called gut feeling. What about a startup making its way towards something totally unpredictable ? Twitter is still not able to figure out as to how they will make money….. just by more and more venture investments ???
    Facebook will be profitable soon but .. what if Google+ catches on ….

    So you can not really make a distinction about what type of startup you will be. There are Rovio, foursquare and Zyanga to name as well.

  • http://www.trendguardian.com/ Marcos Hung

    Both concepts are great, but which one actually produces a revolutionary approach to how people communicate or do something? I think it is the Twitter one, which is the least logical to prove to investors, but it is worth the shot.

  • http://www.trendguardian.com/ Marcos Hung

    What about startups that emerge from a personal problem? Those are the best ones…the Twitter ones, because founders themselves are motivated to solve their own needs.

    ‎”As I see it, there are two great forces of human nature: self-interest and caring for others.” Bill Gates

    The caring for others method is also a strong one, the Hoverboard ones. But what if you can harness the two at the same time? 

    You will have the greatest power ever created =)

    In the words of professor Xavier in X-man first class:
    “You know, I believe the true focus lies somewhere between rage and serenity. There’s so much more to you than you know, not just pain and anger. There’s good in you too, and you can harness all that. You have a power that no one can match, not even me. “

  • http://www.trendguardian.com/ Marcos Hung

    What about startups that emerge from a personal problem? Those are the best ones…the Twitter ones, because founders themselves are motivated to solve their own needs.

    ‎”As I see it, there are two great forces of human nature: self-interest and caring for others.” Bill Gates

    The caring for others method is also a strong one, the Hoverboard ones. But what if you can harness the two at the same time? 

    You will have the greatest power ever created =)

    In the words of professor Xavier in X-man first class:
    “You know, I believe the true focus lies somewhere between rage and serenity. There’s so much more to you than you know, not just pain and anger. There’s good in you too, and you can harness all that. You have a power that no one can match, not even me. “

  • http://twitter.com/jubal_ince Jubal Ince

    I would totally buy a hoverboard.

  • Pete Griffiths

    Nice.

  • http://twitter.com/ggdm GadgetGuyDaveMathews

    This post has been lurking in a window awaiting my reply and as the inventor of the CueCat I have some insight – sure the embodiment of what we created was clearly different.  But remember, we were in the days of tower PC’s and Google & WiFi were just garage & lab projects.  What smartphones have taught us is that we do want access to information quickly and on the go.  Barcode reading software fills the gap with cameras as the input mechanism.

    That being said, to this day, the CueCat is one of the most “hacked” gadgets in computing history and readily available on eBay and Amazon by dozens of merchants.  It makes me proud, as it was in fact a hacking project from my own garage.

    I hope that my latest startup NeuAer and it’s showcase application ToothTag is a combination of Hoverboard meets Twitter.

  • http://www.danshapiro.com/blog Dan Shapiro

    You have no idea how delighted I am that you took the time to reply.  I have a CueCat sitting in my basement; it was a sweet piece of kit. Good luck with NeuAer!  Does hoverboard-meet-twitter mean its probably impossible and even if you do it nobody will want it? ;)

  • http://twitter.com/michaelgsimpson Michael Simpson

    Dan, great post, thanks.

    One question – why do you classify AirBnb under Twitter startups? My understanding is that Twitter startups are companies the demand for which is not immediately apparent. I think the demand for AirBnb is clear. The site addresses a very real problem of travellers finding affordable places to stay, especially problematic in expensive cities such as NY or London. Low-middle budget travellers travelling to Manhattan are looking at $120-$200 / night for a bare-bones hotel room, whereas AirBnb has rooms for $60-$100 / night. Moreover,  the customer is likely to ultimately receive more value (a room that they can vet beforehand, extensive feedback on the room and host to inform the rental decision, and probably a higher quality room)  than they would if they had stayed in a budget hotel. The business also makes intuitive sense from the supply perspective: Having a spare room that is unused in Manhattan seems ludicrous given the premium placed on square footage in these apartments. 
    I agree that the concept may require a leap of faith (it may seem, at first bizarre to rent out a room in someone else’s house), and the arguments I outline above are accentuated in Manhattan, but you get my point.I think you could place Pinterest on your Twitter startup list. Why do we need a pinboard to share pictures when we already have so many avenues for sharing media online? In hindsight, the business drivers are clear – the application allows people to share / find what is important to them (a market not clearly addressed by the carpet-bomb networking approach of facebook), but that would have been a very hard sell prior to launch.

  • http://www.danshapiro.com/blog Dan Shapiro

     For most people I talked to, the demand was only clear in retrospect.  At the time it launched, most folks – including Paul Graham, if I recall correctly, who funded them – said it seemed like an unlikely scenario.  The reason is what you say: it was unclear that people would want to open their homes to strangers, or want to stay with strangers.

  • michaelgsimpson

    Sure – I guess things like demand for services like AirBnb always seems much clearer in hindsight. That’s just the nature of disruptive platforms.

  • ZBoard

    Hoverboards! Startups! Somehow this fits in I think haha:

    http://www.youtube.com/watch?v=tyKVBOgWULo