For when someone says “I’ve seen this before, it didn’t work”

If you’re a founder you’ve probably heard someone say “oh, I’ve seen this idea before - it didn’t work” or “isn’t this just like that other thing that person/company X tried?”

As a founder, I heard this dozens of times. It’s likely to come from investors, but you hear it from other founders, potential employees, advisors, customers, even family members. Like it or not, pattern matching is strong.

I get contacted from a new company every 3 months working on a idea that's similar to Frank (our old startup). And our idea was similar the original Lending Club and Prosper idea - but with a unique twist, of course :)

Each generation of founders comes back to a few ideas that were tried by a previous cohort. Micropayments to users to sell their data is a one I’ve seen in various eras. Computer based designers is another. In the end, Chewy sounds a lot like Pets.com.

So here’s the thing if you’re a founder hearing “someone tried this before”: this isn’t a reason to be discouraged.

Successful companies often look like previously unsuccessful ones, but with a few differences that are only obvious in retrospect.

Choose whichever cliche you like best - past is prologue? back to the future? - but it’s undeniable that the future often starts off looking pretty similar to the past. In fact, because consumers favour things they know, this can be a feature, not a bug.

While hearing ‘someone tried this before’ doesn’t mean your startup is doomed, it does mean you need to do your homework. And that is much easier said than done.

In this discovery phase, you to need to answer three questions:

(1) has this been tried unsuccessfully before?

(2) why did that company fail?

(3) am I really different?

These sound trivial, but if you're answering them honestly they’re actually very hard. In fact, each one is harder than the last.

‘Has this been done before’ is hard because most startups fail quietly. It’s not like there is some central repository of failed startup ideas.

The ones we tend to hear about in the press are either the huge successes (Airbnb) or the notorious failures (Theranos). 99% of startups end up in the middle.

And once a few years have passed, people have shifted in and out of the ecosystem so community memory erodes. “Who was doing that? Shoot I forget what exactly they did. Ahh nevermind”

Best thing you can do is find nodes - investors, advisors, recruiters - that see a lot of things and might remember. Extra points for finding people who have been around a long time or from different cohorts.

It’s really a grind game though. Ask everyone you meet: “have you seen anything like this before?” The trick is to ask it *honestly*. It’s discovery not promotion. It’s “Have you seen this?” Not “have you seen THIS!”

“Why did they fail” is even harder to get answers to. Ask 3 co-founders why their start-up failed and you’ll probably get 3 different answers.

It’s like a Rorschach test for the founder mind. One might say they went after the wrong market. Another might say the product had a fundamental flaw. Another might focus on execution mistakes.

They’re all probably right in some form or another. You need to continue to push and prod to get to the second and third layer

To borrow a legal term: ask them to connect the dots between the proximate and the cause in fact of their company not working. Keep asking why. Keep going down the ladder of inference. The more specific the answer, the more likely you’re at something real.

Keep in mind you’re talking to someone about something they may have spent years on and is -- for better or worse -- a part of their identity. Be empathetic as you dig. It’s part investigative journalist, part therapist and part pastor.

“Is my startup really that different?” is the hardest question to answer because it’s the most personal to you. Whether you believe it or not you’re probably already emotionally invested in the answer. You’ll really really want it to be “of course we're is different”.

In a lot of cases the answer is yes. A small product change can open up a set of users that never existed before. A unique go-to-market can make all the difference. Even a new competitor can help users and investors understand your category.

But you can also get tricked. You can be different in a way that doesn’t actually change the outcome.

At Frank we made the experience of social lending way better, but we never solved the customer acquisition problem that took down our predecessors. Better product didn’t change that, so our potential was limited.

You need to be super self-aware at this point. You’ll want to weave a narrative that makes all the pieces fall into place. It’s the natural thing to do, and if you’ve started fundraising you might already have a nicely packaged story.

Superhuman self-awareness can be one way to manage this ... or you can try to set up a process that forces you to find real facts that could only be true if the answer to "am I really different" is YES!

Find the evidence that means your unique twist will help you succeed where others have failed. Give yourself a time limit to find that evidence. If you can't find them, then make them your initial OKRs. Work to prove that in the initial phase of your company.

So when someone asks “didn’t someone try this before” you know exactly what to say.

(Originally published as a tweetstorm on July, 13, 2018)