Accelerators

Paul Graham Outlines the Mosquito Theory of How to Deal With Competition From Apple, Facebook, and Twitter

paulgraham Paul Graham Outlines the Mosquito Theory of How to Deal With Competition From Apple, Facebook, and Twitter During an interview with Bloomberg West this week, YCombinator’s Paul Graham weighed in on the start-up carnage lying around from the last two weeks. First from Apple’s WWDC keynote, which made a land-grab for territory previously held by some of its third-party iOS developers and then with the news that Facebook and Twitter are muscling their way into photo-sharing. Graham’s advice on dealing with competition from Goliath? Start with this basic principle:

“They have to make something that actually makes people’s lives better. It’s funny how straightforward it is. People often think business requires some trickery, you have to corner the market or something like that. But actually what you have to do is make people’s lives better. And the amount of value you create is the sort of rectangle where one side is the amount of people and the other side is how much you make their life better. Big rectangle, big value, you’re rich.”

After that, it’s just a matter of being Zen:

“You know actually the right thing to do in a start-up is not worry about it too much. The right thing to do in a start-up is like you’re a mosquito, right? And like maybe it’ll work and maybe it won’t, and you just like zoom along and don’t spend your time looking over your shoulder. And if you get killed like okay, you do another start-up.”

For skeptics, Graham then offered some concrete evidence. “There’s only ever been one out of 316 companies we’ve funded, there’s only ever been one, that’s been killed by a competitor.” That company was Kiko, a calendar service that lost half its users in a month when Google Calendar came out. But the founders went on to create Justin.tv. Added Graham:

“Just work on making people’s lives better. Don’t spend your time on making people’s lives better, but also do it in a way Apple won’t do. Who knows what Apple’s gonna do? And mostly they won’t. Apple can’t do 500 different thing. So there’s a small chance they’ll kill you. You just take that risk.”

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com

Comments

  1. Anonymous says:

    It all depends on whether you believe in recarnation, like Paul apparently does.  I assume that if I’m a mosquito and I get killed, it’s not OK.  I’m just questioning the analogy; I have no criticism for the philosophy, which seems basically healthy.

    YCombinator?  Justin.TV?  What do you think about a FAQ with dramatis personae, both individual and corporate…

    1. Ben Popper says:

      Y Combinator is like the hive, and Graham is the queen, so from his perspective, there will always be another young soldier. 

      1. Anonymous says:

         Thanks again, I also like your prior answer though.  The answer you ripped out from under me, rending my world asunder.

        Will it hold true for long?  That is the big question.  The BIG question.  I don’t understand the strategy for many of these faddish companies.  My first question:  Is there any research on percent of people adblocking, domestic and global, and trends or projections on the same?  I think the only people who get to show me ads are Google.  The ads on Facebook are unspeakably mis-targeted.  I’ve never been tempted, nor felt that they knew me like I do with Google.

      2. Ben Popper says:

        (Should have stuck to my guns on that first reply)

        I’ve been having this back and forth with a lot of start-up founders, especially those who are working on serious hardware projects, as opposed to light weight web apps. 

        My feeling right now is that Americas are uniquely willing to fail. That is a strategic advantage. 

        The world is moving online and so we should be chasing every fad, failing a ton, and creating new Facebooks, Google’s and Twitter’s in the process. 

        There will be a lot of bad ideas funded, but that’s the cost of innovating in this ecosystem.