This For That
My partner Brad, who is the conscience of USV, said something in one of our recent monday team meetings that has been rattling in my brain ever since. It was a throwaway line for him. He probably doesn’t even remember it. But I do.
We were talking about some investment opportunity and one of us turned to him and asked him what he thought. He said, “I generally can’t get excited about anything that is this for that.”
What he meant by “this for that” is Airbnb for boats, or Snapchat for emails, or Dropbox for videos.
What Brad is talking about is derivative works. There is nothing wrong with them, of course. But he was saying that it was hard for him to get excited about them.
We’ve made a few of these investments and some of them have worked out pretty well.Edmodo is Facebook for classrooms. SoundCloud is YouTube for audio.
If you are going to do a “this for that” investment, the first thing you need to make sure is the iconic company (this) is not going to go after this other market (that) themselves. Then you need to make sure the other market (that) is very large. And finally, you need to make sure that the founders are doing the startup for the right reasons.
Nic and Jeff, the founders of Edmodo, were tech administrators in local school systems. They were frustrated with the tools teachers were using to distribute information to their students. So they built a new way to do it, influenced by Facebook for sure, but different in some important ways.
Alex and Eric, the founders of SoundCloud, were musicians and sound engineers. They were frustrated by the tools that were available to them and their friends to put the sounds they were making out onto the Internet. They may have been influenced by YouTube (I honestly don’t know that they were), but their drive to make SoundCloud was most certainly to scratch an itch, just like Nic and Jeff.
The worst kind of “this for that” startup is one where you can tell that the founders have no intrinsic desire to build a solution for a recognized problem, but instead they are opportunists being influenced by the latest hot startup. We certainly try to avoid those sorts of things and comments like Brad’s certainly helps us do that.
And truth be told, what works for This usually doesn’t work for That, that well.Each is kinda different.
True. That’s another big issue with derivative works.
It’s important to differentiate when “this for that” used to rapidly communicate the bare bones of an idea (bitcoin as email for money) and when it’s the primary motivation for an idea.Founders should always be scratching their own itch, but they’re allowed to communicate their scratching in terms of other itches.
+100. I think you nailed it.
Agreed. ‘This for that’ doesn’t necessarily imply derivative. It’s a shortcut for hooking into peoples existing experience /knowledge framework.
Exactly, a “this for that” might be the quickest way to give someone a rough idea of what you are doing.
Right: “This for that” can be more of just ameans of very short communications insteadof a real ‘business idea’.There’s a problem: It is nearly necessary for agood startup ‘business idea’ to be new in somesignificant respects. So, the entrepreneur needsto describe something new, and its benefits andpromise, quickly. Did I mention the business ideawas new?So, how the heck to give such a description,in a very few words? How about just three words — this for that? Want more? Beforerejecting the three word description, might want more. So, read the, say, 200 worddescription. That sill won’t really justify aninvestment, so next read 20 pages of a business plan, have a phone conversation,watch a demo, etc.So, are using a ‘sequential’ or ‘iterative’approach, or, zoom in, drill down, or a sequence of investments of the reader’stime so that the first investment takes verylittle time but seems to give good ROI,and each iteration, which takes more time,also seems to give good ROI.Just to reject ‘this for that’ as the real businessjustification risks throwing out the baby withthe bathwater. If the description via ‘this forthat’ doesn’t ‘excite’, then just start with the20 page description in the business plan,etc., that is, move on to later iterationsin the sequence.There’s some obscurity and hidden utilityin the communications technique of ‘thisfor that’: A key lesson in life is to learn thatsuch obscurity is common; often there isa good reason for it; insisting that everythingbe literal and to be taken at face value ishighly limiting, too limiting and too oftenthrows out the baby with the bathwater;have to learn to work effectively with suchobscurity. E.g., a young man trying to wooa young woman commonly has to learn towork with such obscurity or spend too manySaturday nights alone. Young men: Nomatter how much you might like for her justto tell you in honest and clear terms howmuch she likes you, for some fairly good reasons likely she won’t. If you can’t workeffectively in that context, then you stand tomiss out. Same for investors.
Perfect.Without a common language to start we can never create something new.
You know what’s better than “this for that”, ” this…. but so much better ”
Very well put. That is more articulate than I could have said it.
great point. it does make for great elevator pitches
How about? Think this while I explain this ?
yes, just about every idea is typically based on other ideas, as a starting point.
Agreed. Thinking creative execution is the differential when piggybacking an idea. I can’t help every time I get an “edible arrangement” that flowers were cut and delivered for how any decades first? Harry and David’s in the early days of Web 1.0 commerce meets 1800Flowers, truly a touch of Thoreau. Original? Perhaps a Better display of innovative execution.
Agreed! But though they are allowed to use “this for that” as a comms tool, the shorthand often misses the point — what problem are you solving, and for whom? If founders can communicate their idea in need-based terms, they can probably open up a market a lot faster, and avoid having to recast the story later.
How do you tell the difference though?
Thank God you said this (hat tip to Brad). I struggled for a while trying to come up with a “this for that” analogy for my company because, well, frankly investors kept asking.Then one day it hit me: we are NOT. We’re actually making something new. Go figure!Realized around the same time that if an investor requires a simplistic and likely faulty analogy to understand my business, he/she is probably not who I want in my corner anyway.So: we’re not “Uber for Chicken Wings” or some foolish shit. We are Solution for Customers. And that’s how I like it.
Making something new is hard. Many investors have trouble wrapping their heads around it. Maybe This meets that vs. this for that is the way to go.
@leigh:disqus *everything* about startups is hard. ;)This meets That is not materially different from This for That, in my view. It’s still just a shortcut to lazy thinking, at least in my opinion.
I agree it’s hard if it’s new, even more so when the idea can scale to be very big.
Brand new ways to create value within a segment though is referential and positive.I honestly don’t think Twitter or even Facebook were referential to anything in the early days.Most everything else is and finding the analogs is part of telling the story.
Twitter was “texting to groups for everyone”Facebook was “digital, interactive yearbook for everyone”…they aren’t always copies or iterations of another company…but almost *everything* is an iteration, evolution, or combination of *something*…one of many good posts on this line of thinking -> https://medium.com/i-m-h-o/…
Nice, but…The mass market still doesn’t know what texting to groups for everyone is though. That is one of Twitters main barriers to mass market adoption.I can describe anything and I can to point evolution as an ongoing real process in product creation but some things are just breakaway and just brand new.
I don’t think “this for that” is generally used to communicate to the market (agree that would be a *horrible* way to frame the story)…I was thinking of it simply in terms of communicating ‘within the industry’ (ie. investors, potential employees, early partners, and other startup connections).
Understand–we all draw images in language that works.That’s what storytelling is all about of course.I shy away when ‘this is that’ starts to sound like a cloned market.
Facebook was referential to the paper face-books printed by Ivy League schools. Twitter was SMS.
Descriptions like these are like SIC codes to me. True, useful to a handful, market wise not at all clarifying.But of course you are right!
Anyone remember the movie where there was a whole riff on pitching film industry execs, punchline was around “It’s like Jaws with claws”?
@annelibby:disqus No, but that’s funny. Made me also think of “Crazy People” where residents of a mental institution come up with blatantly honest taglines for products. “Volvo: Boxy But Good”. “Porsche: For Guys Who Like Handjobs”
OK, now I need to see “Crazy People.”
I don’t own a Porsche, but I might want a little more than that outcome for driving one. (off color attempt at humor)
What’s interesting is that a Porsche is actually more of a guy magnet than a girl magnet. So if you want that kind of hand job …
Hmm maybe I’m a guy, then 😉 I’m definitely a Porsche girl.
You may be. Or at least 6 parts out of 10.My brother in law is now married but he’s very artsy. And I always thought he might be gay. He certainly sounds and looks a bit gay and dramatic. (Helps him career wise since he has to interview with show types.) Anyway when he saw the car he didn’t even know what it was. He thought it was a Ferrari. (He is in his 20’s and uses zip cars.)
@domainregistry:disqus that’s hilarious! I’m always suspicious of men who don’t know one thing about cars. Must be one of the last vestiges of my upbringing as a Southern girl. Or maybe it’s because my Dad is the total opposite of a “car guy”.
Ha! Ya, that seems a high price to pay…
Actually, this is a great game to play with kids. Mine loved the silly startup videos with Facebook for cats and Snapchat for hamburgers. It belongs in the realm of silly to be funny. IRL it’s just sad.
I’ve never seen that one!But “Jaws for Claws” recently came up in my mind when looking through Angellist, where many many startups are using a “this for that” tagline.I’m sure that many of the possibilities are much bigger. And that this is more an indication of the overwhelming pressure to distill yourself and your business into a tagline, elevator speech, or something that fits on a business card.It’s complicated!
Was it “The Player?” I tried Googling it and got nothing.
Yes iirc it was “the player” with Tim Robbins. Great move.By the way on netflix there is “tales from the script”  which is also interesting to watch if you liked the player. http://www.imdb.com/title/t…
Added to the list!
There is no point in The Player where I did not want to punch Tim Robbins in the head. Great movie.
There is no point in any movie with Tim Robbins where I do not want to punch Tim Robbins in the head. Apparently, it’s a thing.
> Realized around the same time that if an investor requires a simplistic and likely faulty analogy to understand my business, he/she is probably not who I want in my corner anyway.Yup.Or, maybe the next step in the business is a nice stepforward but needs some work. So, the Board will haveto approve the work and its budget and track the work.If the Board didn’t really understand the business to beginwith, then they promise to be hole in the bottom of theboat crossing rough waters when it comes to the nicestep forward.A guy in business once gave me some advice: “Iflie down with a skunk, then will smell like a skunk.”.Or to have a good team, have to be careful whenassemble the team, including the Board. If somecandidate Board member has to work only at thelevel of ‘this for that’, then they promise to be a real danger to the team when the real work on thenext step forward begins.Think of a high end restaurant: There’s a happycustomer who really likes the food — beautifullyconceived, prepared, and presented. So, therestaurant wants an investment, and the customeris interested. Well, maybe the customer shouldspend a few days in the kitchen to see some ofthe blood, sweat, tears, struggles, flops, secondand third efforts, etc. of the real work. If theycan’t ‘take the heat of the kitchen’, then can’thave them there as a member of the team.
Be aware that you are not an island.As lame as the ‘this for that’ method is, it goes right into the lizard part of a VCs mind (as Fred says, great elevator pitch).You do need to connect yourself to your market, in some way. Usually, a historical evolution makes sense; we are taking THIS (accepted way of doing things), but we are going to make it THAT (super powerful new attribute not associated with THIS).Also, simple does not equal simplistic.
@jameshrh:disqus that’s a good point. One of the big issues that we’re facing, to be honest, is navigating within (around?) the investor’s lizard brain. We’re actually targeting the Plus Size market first, which as I’m sure goes without saying, is not the typical profile of a VC’s wife or the women he’s surrounded by (I say he, because: statistics). When confronted with any novelty, the male brain automatically evaluates it by basically asking “can I eat it? do I need to kill it? can I mate with it?”. My shorthand for this is “eat/kill/f*ck”. Clearly, I need to do a much better job of explaining why he can most definitely eat this business, to distract him from whether or not he wants to mate with it, because the answer is unequivocally NO to that one.
Uber for Chicken Wings sounds fucking amazing.
Actually it kind of does.
As a founder, thinking “this for that” is a way to quash creative ideas if you are trying to solve a tough problem. Something Elon Musk had said about “first principles” thinking inspired me to write this post 15 months ago which goes hand-in-hand with this post:http://takingpitches.com/20…
.Brilliant blog post BTW.Well played.JLM.
@takingpitches:disqus Thank you for sharing your post! Fantastic. What really blows my mind is that so much of Elon Musk’s genius is, at its core, simply about taking stuff apart and then rebuilding it better. Much, much, much better.
The post mentioned reasoning from first principlesfor analyzing markets: That’s usually a strain.Here is a better ‘paradigm’: (A) Real Problem.(B) Assumptions. (C) Problem Statement in Termsof First Principles. So, (C) is a precise problem that can be attacked with logical, mathematical,scientific, engineering techniques. (B) Convertsthe often messy real problem (A) into a preciseproblem (C). So, get to argue about the assumptions(B). Typically the work from (C) can be checkedwith high accuracy. So, if agree with (B), then are carried all the way to the results of (C). Thereasoning from first principles usually has tostart with (C) and not with (A) — (B) is needed.For a marketing question (A), usually have something so messy that the assumptions(B) needed to get to something precise enoughfor argument by first principles (C) are a bitmuch to swallow. In some cases, an especiallygeneral, and, hence, powerful attack in (C)can need less in (B) and, thus, still get somevalue for a messy problem (A).Or, usually can’t argue from first principlesstarting directly with (A) which usually is toomessy to be in the ‘world’ of working withprecise logic, math, science, engineering asin first principles. Instead usually have toconvert the given problem (A) to more precisely stated problem (C). Make theconversion via assumptions (B). As in a physics course, might have to assume thatthere is no friction and no air resistance. Then can directly apply Newton’s laws ofmotion and calculate how long it will take forthe ball to roll down the inclined plane.
Agree with @JLM:disqus – brilliant blog post!I think it also falls a bit inline with what @hymanroth:disqus was saying…X for Y can work really well as explaining something once it exists…not so great for getting to the idea in the first place though.
Great [email protected]:disqus is smack on that we build stories and belief using words and ideas that resonate with the listener and the market.But squishing things into preexistent models invariably doesn’t work. Models aren’t the innovation, value creation is.Good share.
Great post. Read it after making my comment.I think it’s important to differentiate between using it as a framework for idea creation and using it as a 10-second commercial for your project after the fact. I don’t think the prior holds much promise, but the latter can be useful under the right circumstances.
Or, I see now, “what David Semeria said.”
shared it on the Hyde Park Angels Facebook Page. Thanks.
you must have a substantial number of such ‘opportunities’ landing in your inbox. is this post the new filter?
no. because as i said, we would do “this for that” in certain situations
Wattpad comes to mind as the YouTube of e-stories.
Hailo as the Uber for ….oh wait.
Well…both Hailo and Uber are disrupting the Taxi business, which was ripe for disruption. I bet the Hailo pitch wasn’t “better/different than Uber”, but rather “the taxi business is big, we’re going after that with this approach.”
or the soundcloud of books
yes. and which is the refining of your filter, the certain situations you mention. everything else gets caught (hopefully)…*if* the entrepreneur reads your posts.when will wordpress be ready to go live? this current version doesn’t look too bad on a smartphone. i’m expecting great things of v2.
I started using the analogy to describe my business when Normlas told me so your Uber for Local Courier Services unprompted.
I personally don’t like it either…but I have found that it can be a very simple way to explain part of the story…For example, our business model is basically “github for youth activity and programs”…of course it’s not exactly that, and we believe there is a lot more to the vision, brand, and company (github wasn’t on our radar until *after* we tried explaining our model to a lot of people — and *they* said “so basically Github for youth activity?”)…but on a high level it has helped for people to quickly get into a frame of mind for a better conversation.I tried to avoid using this X for Y approach for awhile, but I found I was working too hard and not being clear enough on the story just to get around this…so sometimes you just have to take the path of least resistance…
“github for youth activity”Normals don’t know what github is. I would imagine many angel investors don’t either. And neither do people who read the WSJ, NYT or watch the nightly news. My guess is that my brother in law who is all into sports and coaching has never heard of github.Don’t ever forget to incorporate the puny brain into your marketing.
We would never use that to tell our story to users…I only use that to explain our business model to investors and people that know what github is.For coaches it’s basically “public free, private pay”…meaning if you let anyone and everyone see and use your program plans/details it’s free…If you have coaching magic you want to keep private, for just your team use, you pay a tiny subscription.
How do you define puny brain?
Essentially trying to emulate a simple person, that is someone who doesn’t know all the jargon that people in the business know.
.There is a bit of a difference between a seasoned and successful VC’s view of the investment and deal flow and the business opportunities in the marketplace.There are huge numbers of potentially very successful business opportunities out there that are, in fact, just a variation on a theme and always will be so.Many of these potentially successful business opportunities are only successful because they are a better projection of the 4 P’s — product, price, placement, promotion.I recently took an in depth look at four fledgling hamburger chains. All of them were financially successful — more than $1MM in the founder’s pockets at the end of the last two years — and yet each was just a variation on the same theme.Each was unique in some aspect of their product, price, placement and promotion when compared to each other. Each had multiple units and the economics between and among the units were comparable — no one hit wonders in this crowd.All four were looking for the secret sauce that would allow them to grow locally, regionally and nationally. Not all of the founders were inclined to do just that and it was interesting to see how the personal friction impacted each of the founders.There can be a big difference between lucrative business opportunities and venture capital investment opportunities.I think that the ability to improve on the mousetrap with a bit of technology is a huge opportunity even if it is not a wholesale transformation from an old economy business to a new economy business.Nothing in this comment argues with Fred’s assertions. It is a comment about business in general and not just venture capital financed businesses.JLM.
“There can be a big difference between lucrative business opportunities and venture capital investment opportunities.”absolutely. in fact there is a very small slice of the world of business that is relevant to VC investing
Lifestyle business are still good businesses. I recently saw two opportunities in fin tech that are great businesses. But not for a VC.
Lifestyle businessI wish people would stop using the term “lifestyle business.”Just like they say “mom and pop”. It’s used like a pejorative similar to “can’t piss in the weeds like the big dogs”.I wonder how many people are working as drones for a big corporation because they don’t know the boatloads of money people make in things that press and bloggers don’t care about.
Agreed. A friend on Facebook that is a parent (starting to see lots of these now) posted an article about how crazy the price of babysitting is and saying that parents should only pay their babysitters minimum wage and that most high schoolers should get “real jobs” at McDonalds. For some reason there is a segment of the population that believes a job is not real unless you are answering to some kind of corporate overlord. When I was in middle and high school I made my money doing computer consulting for small businesses. Back then I used to be shy about it, it didn’t feel like a real job. It took a few years to realize that my bank account doesn’t care if I’m churning out websites in my pajamas or sitting in a cubicle farm, the checks (or direct deposits) are equally real.The harder part was money management. Instead of making a smooth fixed amount every week, I was making a lumpy profit based on when work came up.
and that most high schoolers should get “real jobs” at McDonalds.Getting a job working at McDonalds is lame. Any (entrepreneurial) parent should be creative enough to get their kid to have a job that is better than working at McDonalds or as a supermarket checkout clerk or at the CVS. Shows no creativity. There is value in those jobs short term. Would be a valuable learning experience for maybe a month just to get a taste of what goes on their. (Or Starbucks).I had a friend who owned a small manufacturing business and I remember when he told me “David is going to get a job at the local supermarket”. I thought it was totally lazy to just send his kid to get that type of job. Instead of discussing with him strategy and opportunities for much better learning experiences.In the end his business failed because likewise he wasn’t creative when the going got tough. He then survived bankruptcy and bought a franchise (because you don’t have to be creative and think – you just follow instructions.) So it all made sense to me.
But how many of those things require a large chunk of capital to bootstrap?I can think of many businesses and business models that are completely out of the public eye, but required years of personal investment of time and money to get off the ground.Reminds me I need to read The Millionaire Next Door.
.Long before VC ever got organized, folks used to go to the country club and raise money from high net worth members.I raised millions in that manner. That was the norm.JLM.
HUMMMM, I was talking to my mentor the other day, we are trying to help out this business….He made reference to a fund raising term called “Clubbing”
Let’s come up with a new name…but until somebody does I’ll be content with Lifestyle business.
I’m content with a great lifestyle honestly.I work with a few in this sector, in the $15-30M range. Profitable. Support their communities, bring home real dollars to the founders and good dividends to the investors.Goodness in my book whatever you call them.
.I have to disguise this comment as it would ruffle some feathers.I knew an older gent who was in a business so pedestrian and mundane that you would be tempted to say — wow, is that really a business?He was manufacturing a common product — think something like coat hangers for the best suit makers in the world, all branded — but at the highest possible quality.He was making about $5MM real cash flow every year. Putting it in all in his pocket as he had some substantial real estate depreciation and interest expenses.Son gets an MBA — Dad lets him screw with the business. Revenue explodes, lots of capital expenditures — cash flow goes down to $1MM.Dad is irked. Fires sonny. Retools business back to where it was before making $5MM cash flow. Business contracts substantially.The Dad, who is now a grandfather, is happy as Hell making $5MM and living large.These type of business are all around you but they are difficult to see. They are everywhere.He now wants to leave the business to his son and grandson but he knows they will try to modernize it.JLM.
Millionaire next Door businesses.
Guy growing up in the neighborhood (and his brother) join his fathers quite successful food distribution business. Dad was doing so well he bought his daughter a 280z in high school (remember those?).Dad (still in his 60’s) decides to retire down to Florida or take time off whatever.Kids (who were actually pretty hard workers) start to goof off a bit (from what I hear they would watch cartoons at the office of something like that) and I think they lose a big major account. Company has to file and next thing you know the kids are working for Sysco the big conglomerate.Trump also found that when he took his eye off the ball (when he married Marla Maples) business went to pot.Revenue explodes, lots of capital expenditures — cash flow goes down to $1MM.The type of story that business writers would have a field day with. (Either outcome success or failure).In general there are many more stories of the engine that could (starting small) than there are stories of a business like this that actually didn’t work when they gambled. (In a large business you hear about the gambles that worked and didn’t (because it’s a big train crash)( but when you think about it the only things you hear about small businesses are the ones that made big bets and those bets worked.)In the printing industry the trade rags would always feature cover stories of some guy in the midwest who bought a big printing press and landed some big accounts and was doing very well. You didn’t hear about the guy who bought the big press and filed for bankruptcy (of course these were trade rags supported by advertisers.)
@JLM:disqus I know a bunch of guys like that; friends of my husband’s family. Paint roller manufacturer is one who comes to mind immediately. Nearly identical story.
Most 1st time founders don’t get this (including myself).Props to moot who called it as it is & is trying to scale back DrawQuest to a lifestyle business.
Good points JLM. The technology business is quite a bit more complicated than the hamburger or food business, at least from a continuous re-invention and speed of innovation point of view.Marc Andreessen was envious of Campbell’s business. He said “they figured how to put soup in a can, and they’ve been doing it for 100 years”.
I found some ways to make fast dinnersstarting with three Campbell’s cannedproducts; one dinner uses two of theirproducts, and the another dinner uses oneof their products.So, how to get the three products withoutpaying too much, driving too much, or struggling with low stock on the shelves?Sure! Technology and Jeff Bezos to therescue! So, in the last two months or so,a major fraction of my grocery spendinghas gone to Amazon. So, a fast search,a ‘One-Click’, and get back to work untila case or two or three of cans arrivesat my front door at which time I depositthem on some basement shelf units untiltime for dinner again. It’s working great!One of the dinner options uses somefresh, shredded Mozzarella cheese andsome fresh, grated Pecorino Romano –so when Jeff gets to ‘same day’ delivery,I may also be able to get such fresh products from him. A&P, Wal-Mart, andSam’s Club are on the way to losing a major fraction of my business.So, technology still has a role for Campbell’sproducts!
Interesting distinction – continuous reinvention vs speed of innovation.This for that is continuous reinvention, the application of innovation to well suited (or sometimes not) markets. Through reinvention, or maybe reapplication, companies make our lives better and change the competitive landscape.Social media is simply connecting humans but is hugely important. Edmodo is Facebook for classrooms, I suppose there’s facebook for bridge clubs, facebook for concert goers, facebook for drug dealers. Facebook was MySpace for colleges.That’s where speed of innovation comes in. The innovators are the first to apply new capabilities to a problem. They become the leaders in such important trends as commerce and social. That’s happening right now with Bitcoin. Get ready for many “innovative” startups claiming “bitcoin for medical insurance” “bitcoin for phone contracts” etc.I am surely more excited by early innovations and tire of hearing “this for that.” Still I wouldn’t mind having been in on the ground floor of MySpace for Colleges.
Continuous reinvention certainly.Complex–food business change with the damn weather!
Interestingly, the most VC investable hamburger chain (not that it was, but it could have been) used technology extensively, as a competitive advantage.Ray Kroc sold equipment to restaurants before buying out the McD brothers.
Technology there is an enabler to running the business, of course. but it’s not the business itself.
I don’t want to argue semantics, because it is hard to discern.Mickey D’s created a category and the three key elements were: speed of service, consistency of product and low cost but consistent labour.They basically created & perfected the drive thru (speed) and they turned medium skill (high volume fry cook) jobs into ‘McJobs’ based on automation of key elements of the business.It probably is properly categorized as tech enabled, but it was pretty central to the core value prop.
What was their financial route?Cash, investors, banks?
I don’t have to ask: working their ass off to start.
.Every single one had a founder who worked his ass off. There is no harder work than a restaurant as it can literally expand to the ends of the universe.JLM.
A supply chain that changes with the weather.A workforce where the majority of majorly skilled workers make less than $20/hr.Every time my favorite dish arrives perfect from any of my favorite places, I sigh contentedly–and tip with appreciation.
.Bootstrapping and private investors — Reg D type investors not VC and angel type investors.It was not difficult to raise the money on favorable terms because of the low interest rates.Funny thing is that this was originally the role of community banks. The community bank is long gone.JLM.
Nothing in this comment argues with Fred’s assertions. It is a comment about business in general and not just venture capital financed businesses.No question that Fred gets this (and he confirmed in his comments below). Not everyone does though. (Paul Graham for one and his protege Sam Altman). Some of the talking heads on the Internet were hatched into the business world in the 1990’s (or even mid 2000’s) and have a totally distorted view of what business opportunities are. It’s like if I joined the army 5 years ago and tried to match my knowledge learned during that small time period with what you have compiled growing up in a military family and going to VMI. The thing is I know what I don’t know about the military and for that matter sports (and music).
Fred is far more attuned to the natural limit of the VC space. 500 startups & Angel list sometime remind me of Nortel in the late 1990s (they seemed to think that the world would always need MORE fibre).
Maybe the fault of my generation. Many of us are staying single longer and do not cook often. Going to a counter service restaurant that serves burgers or burritos is much more appealing than Wendy’s or McDonald’s, especially with fast food prices rising.
.In every instance the product is of better quality but it also presents unique selling advantages.Organic beef, freshly ground beef done visibly, never frozen beef, bigger patties, hand made patties, crinkle cut FFs, hand dipped milkshakes, hand squeezed lemonade, bigger glasses, broad selection of bottled drinks, vintage trade dress, exquisite cleanliness, beautiful and sanitary bathrooms, great condiments, personal face to face service — in every instance something that was distinct from fast food.Then they used the “kitchen as theatre” approach, softdrinks iced down as queing control, lots of seating, lots of flat screens, storage within the sales space, exterior hand sanitizers — in every instance something that was more pleasant than fast food.Perhaps the most powerful elements were trade dress — superior graphical presentation — and the training of their staffs.One uses a promotional channel which texts you a discount coupon once a week — my reaction is now Pavlovial.JLM.
Cooking is not as difficult as people think. If you can boil water, you can cook.My generation is a nutritional failure if they can’t figure that out.
Ave you ever listened to In C by Terry Riley?He makes the point that much of good music is just that. and that there are nearly infinite successful variations.
IN n OUT burger heiress is the youngest female billionaire. Their menu can fit on a large placard and consists of a total of about 10 ingredients!
.Elegant, simple, profitable. The Holy Trinity?We just got our first one in Austin.JLM.
<redacted> because @DavidSemeria made the point before I did.
…but it was a good enough point that it could be made more than once! =)
I think the This For That framework is only useful when This and That are from very different worlds. AirBNB for boats is basically saying that AirBNB should get into boats. But, I know someone whose opening pitch is, “OpenTable for Tennis.” I think that works. If someone said to me, “It’s like IFTTT for your house,” I’d be intrigued.This For That is only powerful when it’s capable of instantly communicating the concept. That’s it’s only purpose, I think.So, with those two requirements, it’s probably the right option a small percentage of the time.
sometimes VCs don’t understand the business model, or if they make an investment and someone looks at them funny you use shorthand to describe it so you don’t have a long conversation. If you say it’s Uber for X, people get it faster-even if it has nothing to do with Uber. That being said, could Uber do Uber for X? Yes, in the long run but probably not the short run. Amazon started with books. When they started, did Sears think they would disrupt their business? No-but if Amazon didn’t, someone else would have. The retail industry was totally complacent.
“AirBNB for boats”Which is funny because there is already and established for many years pre internet airbnb for boats.Here is just one:http://www.moorings.com/An idea that would be good is actually zipcar for boats. My first instinct is that there are just to many legal and safety issues though with doing that (but I could be convinced otherwise).If you have ever owned a boat (I have) you know that most boats sit idle most of the time. And they are expensive to upkeep. I would have definitely given consideration to renting out my boat for a days when not using it. (There are issues with marina access and other friction but that’s up to the founders to figure out).The more I think about it that is something that someone should look into doing. There is tremendous inventory of idle boats and typically renting a boat at a rental place is both a buzz kill and expensive for what you get.You can’t even go many places on vacation and get a good small rental sailboat.
I think Tom Perkins is a boat person… 😉
I’ve used “airbnb for boats” many times for bare boat charters. Interesting niche — you might not clip many tickets, but they’re usually pretty big.
From 2005: Youtube, the Flickr of video? “A new folksonomy website that seems to be catching on is YouTube, a service similar to Flickr, except that it is for sharing and hosting short video clips instead of photos” http://tech.slashdot.org/st…
hmm, Folksonomy, proof enough that language changes and with it our entire reference point for the world.Also, pretty sure the original vision of YouTube was built around photos from parties.
Maybe this is how to sell an idea…
Thanks for posting this, Fred. We’re 6 months into our launch of our enterprise SaaS mentoring platform (we have three paying enterprise clients and growing!) and I’ve been pressured to have a “This for That” pitch line for our upcoming funding discussions. I’ve avoided it so far because it just doesn’t feel right and our product should speak for itself in how we’re solving corporations’ problems related to onboarding new hires, leadership development and knowledge-sharing/succession planning. You and Brad have verifed my feeling — no “This for That” for Pivot Enteprise.
Your site pivotplanet.com redirects to https and the cert doesn’t match. So you get a security exception (you need to get that fixed).A quick look at your site to me seems to indicate that the market for the advisers is eithera) people who have already received angel or vc funding (OPM)b) angels and vc’s who need to hook up their investments with advisers.c) Corporate people with severance packages or who have parachutes that will pay for things like this.Most individuals have a hard time parting with hourly fees for advice. Even if they have the money.One thing though is there is a benefit to having a “this for that” in terms of getting main stream press (I see the logos on your site). The press needs soundbites to make the story work. Along those lines you may want to seriously consider playing along.
Hi LE, thanks for the note re: pivotplanet.com! Appreciate it. We were aware of this issue this morning and have our lead IT guy working on it. Something went awry last night w/GoDaddy and/or Heroku. It’s still a mystery what occurred over night.PivotPlanet is our consumer product — most of our individual clients are wannabe small business or exploring a career transition while still working for someone else — aspiring bakery owners, corporate-to-nonprofit, etc. It rides on our SaaS platform just as our Pivot Enterprise clients’ programs do. PivotPlanet is a smaller bit of our business.Meanwhile, Pivot Enterprise enables corporations, large nonprofits and universities to private label and host their own internal expertise-sharing and mentoring programs (so they’re not open to the public) using our platform — with their own set of SMEs and mentors. We charge a standard SaaS-model set-up fee plus an annual recurring fee for Pivot Enterprise.Thanks!Brian
My feeling is you should consider spinning off pivot enterprise as a completely separate offering (site) linked to the main site (and vice versa).If that has potential it might be the thing that clicks on a large scale.Having two distinct sites will allow you to appear to be an expert in both areas and take advantage of more opportunities and build each brand independently with different marketing.Not sure that use of the word “pivot” accurately describes the enterprise offering.Might need a different word. I thought of “mentorplanet” but that is already a site that appears to be a competitor although geared to social issues.Maybe pivotmentors.com which is available. pivotmentor.com is also good but you’d have to buy it from the owner. Or pivotenterprise.com (would have to buy) or you could register pivotent.com
Agree 110%. We’re doing all of that.
Let’s be honest, although most businesses strive to be transformative, in reality very few are. We live in an era of parity product, where borrowed interest, derivative ideas and lack of product differentiation are more the norm than not. Although there obviously are many, many success stories refuting the above, they pale in comparison to those who fail because of a lack of legit product uniqueness and/ or an inability to identify/deliver a meaningful need to a sizable and monetizable audience.Further, isn’t the term “this for that” the basis for virtually all successful product segmentation schemes today? It certainly is w/ vertical segmentation. IMHO it seems shortsighted to view this term disparagingly, especially when used as an expeditious way to communicate an idea.
It’s surprising that some are even still going after “this for this”, like trying to do videos better than YouTube.But there is nothing wrong in disrupting “this” if you can do “that” 20X better and the current “this” is weak or has attackable holes in it. If “this” is strong and a market leader, forget about it.
“videos better than YouTube”It depends on whether you consider youtube a way to show and host your video or youtube as way to get your videos viral to a large audience.youtube is distracting. If you use the free hosting (I’m not familiar with the business offerings) to show your videos your viewers will be bombarded with other videos that might distract them. It’s hard to go to youtube and eat just one. I have a vimeo account that I setup and pay for (they also have free accounts but the paid accounts have some additional features) to post some videos. In exchange I get a generally better and higher resolution playback experience and since I’m not interested in the videos being discovered what youtube has to offer is not of interest. I think it’s classier.But I would still use another service instead of vimeo because since they were acquired it doesn’t appear they are moving forward at all in what they offer. At least not in what I am using it for.I guess the bottom line is is their a niche similar to traditional products for higher end experiences that solve some problem where people are willing to pay or pay more? My experience (both in offering some of those things) and using them says “yes”. That said it’s probably not a VC investible in terms of size but an entrepreneur can still make money by doing so.
Sometimes depends on what is meant by”strong”: GM was strong, but Toyota andothers cut them off at the knees. Xeroxwas strong with daisy wheel printers butmostly laser printers won; for some yearsHP was the winner and strong; now Brotheris has good products and is getting strong.IBM was strong, but Wintel and Ciscowon.Sometimes there are ways to take down a “strong” leader. How can that be? Because it is common, nearly standard, in businessjust to do well ‘managing’ an existingbusiness, that is, take care of the birdin the hand and forget about the ones inthe bush. The situation is partly describedby ‘the innovator’s dilemma’: So, disruptown successful product or wait for someoneelse to do it for you? If the disruptor issmall, then f’get about them? What if the disruptor gets big? Maybe then responding will be too late?In practice, nearly no CEO or BoD of a major company being disrupted wantsto shoot their own successful businessin the gut by working hard to respond to a disruptor.
Well, every leader has weaknesses. The attacker needs to focus on those weaknesses, and win that way.
I do not think the natural tendency is towards consolidation and a single player. Most markets seem to end up with a variety of companies servicing slightly different needs and desires of their customers. Just look at iPhone and Android. Android has a larger market share because it has a larger variety of handsets that satisfy the needs of different people. I could use only Facebook for social networking, but I use a bunch because LinkedIn makes more sense in some contexts than Facebook or Twitter.
True, but there are cases of “winner takes it all” markets on the Internet also. Sometimes the leader has 80% of the market, and sometimes 2-4 players divide-up the market.
Pitches also need context. Many founders hate feeling reduced to “This for That” because it lacks vision by imitating something else. Do you think “This Meets That” or “Next Generation That” is better? What is a good example of a pitch that did not reference another successful company or platform?
Great post. Another one that is super common is “Like X but Y”. I think both the “This for That” and “Like X but Y” are things founders either proactively use to help investors understand the problem they’re solving or something they do reactively once investors ask who their competition is and how big the market it.
I came here to make your point! So, thank you for being here to say it more clearly than I would have. This is very close to reasoning by analogy.I have found that when doing the 30 seconds elevator pitch (and I literally ran into Ross Perot in an elevator a few months ago and he asked me what I was up to) … I ended up saying that “It’s like using DropBox for video campaign syndication to digital posters across multiple locations, such as at each McDonald’s” or some such thing.If done well, it can act as a “hook” that can get people nearly to the same page fairly quickly. Done badly, it takes you **way** down the wrong path.
Metaphorical one liners for business concept pitches are great for conveying hard to explain ideas. Granted metaphors themselves don’t make good business ideas but they get the point across for existing good ideas.Wasn’t it Groucho Marx that said “A hospital bed is a parked taxi with the meter running.” – while not a business idea… you can immediately understand the underlying economics of hospitals.
Of the companies with derivatives cited wasn’t Airbnb “eBay for space”? Dropbox was also a “folder for the cloud”? Facebook: “A social network [Friendster] for your college friends”?There is definitely too much of this for that going on but whether companies are pitched that way or not could be a spurious variable for the real cause which is going after small opportunities.
Hi Jack. I hope you are doing well. We should catch up.
Thanks and same to you! I will shoot you a note 🙂
Really good points. I agree 100% but I feel like it can be a mistake to overlook some of these this for that companies.I want Uber for everything. So, if Uber isn’t going to provide this, then I’ll happily use Homejoy and others for different services. There is a lot of value in high quality trusted services that I can buy from my smartphone.I want to share almost everything too. Is Airbnb going to provide this? I don’t know. But sharing cars and boats (and other expensive things that aren’t used that often) seems to make a lot of sense.Github seems pretty awesome. People are starting to build other services on top. But if they don’t, collaboration and open source make sense in many other fields, so Github for X seems ok too. (Could Splice be Github for music?)To me, it’s partly a question of how many marketplaces we are going to see and this feels hard to predict.
I just hope that Github doesn’t abandon developers chasing after being a CMS for ordinary people.
Yeah good point. Not too worried about that, they know how important developers are. And, I think they can be one of the great companies of our time only serving developers.
And then there are limitations to this concept too. Quantitative analysis and market size is obviously only a very broad first look that can be misleading if you don’t pay attention to other details.Say… “OKCupid for bloggers”. Following your criteria it’s easy to establish that (1) OKCupid is Not going into the blogging platform market, and (2) Blogging platforms are a large market.Add to that (3) The founders are bloggers who have an itch to scratch about people wanting to meet other people through their blogging activity.The idea is more or less obviously stupid, but it perfectly matches the three rules of your criteria. So what’s wrong with it?What is wrong with it is that It’s important to understand how the flow of information works, like understanding sea currents for navigation.What is wrong with “OKCupid for blogs” is that a public information broadcasting system (blog) defeats the whole purpose of findability and 1-to-1 matchmaking in private.It’s not the competition, it’s not just the market size: it’s the flow of information.Identifying where the valuable information is and how you’re standing in the middle as an arbiter/broker/gatekeeper/distributor of that valuable information.Yeah a large platform like Tumblr must definitely have some value deep there somewhere, but how do you find it, how do you extract it?More than anything else, you must have a rough idea where the value is, before you can even attempt to measure it, or learn how you’re going to extract it.Building large things to figure out what’s their value much later, years down the road after sinking in large sums in them doesn’t seem like a super smart thing to do in my book.This is one thing Twitter figured out before anybody else did, they were in search of the right questions, maniacally analysing the flow of information and what was genuinely valuable. This is exactly what makes them more genuinely valuable than Facebook, and hopefully will outlive them.
The something of somewhere is the nothing of nowhere – Peter Thiel
Much of this is driven by seed funded only companies getting flipped
I don’t know Brad, but honestly, if I were to hear pitches all the time, I might begin to think the “this for that” line does not indicate a high level of creativity/ingenuity from a founder. Likewise, it may also be that Brad is looking for completely new models and not the application of an existing model to a new market. The “this for that” pitch is useful, but in most cases not visionary. It is the visionary founders that really shake up the current world as we know it and lead us into the future. Investing for a multiple return is one thing, but being able to say “I helped someone change the world” is quite special.
Reminds me of the “This and That” episode from the show Seinfeldhttp://www.youtube.com/watc…
Poor guy! One thing I learned about women is justnever but never try to think that much about “that’,at least not in discussions with her. As Yoda said,”Do or do not. There is no try.”. And no deep discussions of all details!This should be a chapter in ‘Women 101 for Dummies –Men’!
How do I up vote That with 100 of This +1
I have heard this statement repeatedly from top investors, yet ‘derivative’ startups continue to have an easier time raising seed-stage capital. For example, Boatbound, the “AirBNB for boats” referenced in this post, raised $1M pre-launch. Meanwhile, AirBNB itself famously struggled to convince early investors of their potential, surviving on only $30K pre-launch from their cereal sales, then only garnering a $600K seed round despite a proven business model that was live in NYC and SF.
tell me about ithttp://www.avc.com/a_vc/201…
I know you had seen this before the Airbnb meeting http://goo.gl/nCE4nIs there a checklist you use to know which of the founders you meet pass the test for having a genuine desire to solve a problem that affects many. There are many who will use past performance as a metric but besides the obvious what else matters…
It wasn’t long ago that a whole category of your peers were espousing the benefits of an entrpreneur being able to describe her / his starter up as “x for Y” – the angellist folks, dave maclure, paul graham…..
i got an email from paul yesterday morning saying he thinks “this for that” is helpful for entrepreneurs because it allows them to take something that may be complicated in their minds and simplify itthey encourage founders to do iti understand that.it’s just a bit of a turn off at times for us
@fredwilson:disqus I find it entertaining that Paul emails you privately with his comments, instead of coming down here and actually, you know, mingling with the hoi polloi.In the comments section.
My ddx is that Paul lacks a certain self confidence to dangle out in public even though he is in public. Same reason he has to get 10 people to check everything he writes and give it the once over. And this is a guy that made it through Harvard.
saying he thinks “this for that” is helpful for entrepreneursThis is a good example of why it’s really hard to take parts of one person’s strategy or way of doing things and incorporate it into your own. Like my mom can’t complain and get a better table at the restaurant even if I give her the words and actions.What works for one person doesn’t always work for someone else it’s like using someone else’s hands and feet to fly the airplane.That’s one of the downsides of people who read things online instead of doing and making their own mistakes and coming up with their own style..
google for jobs worked out pretty well for you ;)good point though, don’t prove the market for the dominant company. Same is true for don’t build a feature.But, you can’t get to wrapped up in what if XYZ company goes after that market, they’ll crush you. It just boils down to execution. Companies either execute, or the get executed.
Everything is a this for that… with the exception of fire or the wheel, everything else was evolutionary. The lightbulb, it’s a controlable fire for people who need light.
“This for That” isn’t always a social network for pets owners. Most common use is a simple way of communicating the idea through some existing patterns. Analogy is one of the oldest tricks of communicating complex topics. Existing business patterns like DropBox, Facebook, Evernote, YouTube are the great way to quickly deliver a very high level picture of idea (or a business model) and get into the details instead of boring obviousnesses.There is a great alternative. Selling a dream. But if you are not well proven dreamer with a couple of successful companies founded then most likely your dreams wouldn’t have the same effect as “this for that” description. I have a dream of people having their personal Hollywood grade movies on every occasion which they could show to anyone whenever they want. They go on vacation – they have a movie about that, they go on a business trip – they have a movie for colleagues, they have children – they have an HBO grade series featuring their children (with less drama 🙂 )I heard a “Dropbox for Video” term here. This is particularly interesting for me as I do that kind of startup. In our case we are more like Evernote for Videos but the idea is to make mobile videos deliver much more value to users: make their videos and photos organized into stories (not file directories), allow easy access to their stories from everywhere, empower user generated video storytelling. Yes, there is a cloud behind; yes, we charge users for extra storage; yes, the shortest meaningful description is “Evernote for Videos”. I think being This for That doesn’t influence probability of any big player (a.e. This) getting into the startup field (i.e. That).
Just for fun: Facebook is Friendster for college students; Google is Altavista for nerds; Youtube is Flickr for video. What others can we come up with?
@proales:disqus I greatly enjoyed that.