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Who will win Tim Ferriss’s Business Competition? (and the need for a Z Combinator program)

Today Tim Ferriss and Shopify announced a $100k business competition.  They will award a $100,000 prize to a new company that has the highest two months of consecutive revenue within the next six months.  I immediately thought – can I predict the type of business that will win this competition?  Who will be the entrepreneur that will win?

After looking into the competition, I found out the business had to be built on a Shopify store (duh, why else would they sponsor it), so the type of business that will win is fairly obvious – it will be a online store.  They will also likely sell a product at zero profit margin or even at a loss (higher volume of sales).  They also won’t waste time building the product they sell, but will instead sell an existing product.

However, the second question still remains…

Who will be the entrepreneur that wins?

***Spoiler Alert ****

It is someone who you already know.

I love this competition because it addresses a challenge that is rarely talked about in entrepreneurship classes or the early days of a startup– the challenge of acquiring customers.  When I talk to many new startups I often hear them channeling Kevin Costner —  “if you build it, they will come.”

We need a Z Combinator Program

yc500I loved my experience with Y Combinator – and I love the motto “make something people want.”  My co-founder and I went through the Y Combinator program, and Xobni would not exist if it weren’t for the money, guidance, and network Paul and crew provided.  The problem however is that many startups come into Y Combinator, build a product, and expect a Techcrunch blog post to accelerate their startup to escape velocity.  This almost never happens.  Making something people want is still the most important step for a startup, but users turn a product into a business.  We need a Z Combinator program to address this second step ( zcombinator.com is already taken – I tried buying it).

The next step after building a product is making sure people know about it.  I like to say the role of an entrepreneur/founder is to “make something people want and make sure they know about it.”  I see these as the two important roles of product and marketing inside a company. The final step is becoming a profitable business, but in my experience few companies that have solved these first two challenges falter on the last piece.

The Rich Get Richer

There is a huge advantage for to companies that already have distribution – they sidestep the difficult second step.  A simple example that proves this point is Axe body spray (let’s forget for a moment that they are a division of Unilver).  Axe started with a simple new product with a great marketing campaign.  They succeeded and got huge distribution.  Now they can easily sell new product lines: body wash, shampoo, etc, because they’ve already solved the distribution problem.

Axe

A favorite counter example often heard is, “what about Google, they won because they had the best product?”  I think there is a lot to this, and with technology-enhanced megaphones like Twitter and Facebook amplifying word-of-mouth, great products are even more quickly bubbling to the top (this is an exciting trend I hope to write more about soon).  However, do you know how Google really hit escape velocity?  They did a deal with Yahoo, who at the time was the world’s biggest search engine. I remember seeing it “yahoo search, powered by google”  That was a huge mistake by yahoo and it was a coup for google.  Google made something people wanted but yahoo made sure people knew about it.

Back to the $100k business competition…

Because existing businesses are not permitted to enter this competition, the winner will most likely be an entrepreneur with an existing strong personal brand.  Someone like Tim Ferris (as a co-sponsor he won’t be competing), ijustine, or Ashton Kutcher.  The winner will have 100,000 or more twitter followers, a name we all know, and they will sell something they didn’t make.

Oh, and one more thing about the entrepreneur that will win – the person is going to need some free time to work on this new business, and not be tied up with another project.  Or, at least enough time to hire someone else to work on it for them.
May the best, already popular, currently available entrepreneur win!

  • brezina

    Testing Disqus Comments <insert something witty>

  • Jonathan Chamberlin

    Enjoying your blog so far, it’s really something else – insightful and a great read.

    I have two personal thoughts, both marketing related.

    Entrepreneurs shouldn’t believe, “If you build it, they will come”. (If everything were so simple) Instead, they should say “If I create a product worth talking about, tell a story and stay authentic to that story, they will come”.

    I think that counter argument is invalid. Early on, if you placed Yahoo search results, next to Google search results, they were practically indistinguishable. What enabled Google to compete back in the day was due to word-of-mouth. People who had a search problem would ask their friends who they use. The default response was “Google”, since it was so easy – two buttons compared to Yahoo’s 100+.

  • jonathanchamberlin

    Two thumbs up on the blog so far. Keep it up.

    I have two insights to add.

    Instead of entrepreneurs quoting, “If you build it, they will come”. They should be saying. “If I build something remarkable, create a story and stay authentic to that story, and allow avenues of discussion, they will come”.

    That counter example is wrong. Back in the day, if you placed Google search results next to Yahoo search results, you couldn't tell one from the other. It wasn't always clear who had the best product (assuming the product is the search result). If we are talking about the big picture, Google had the better product due to its front page.

    What allowed Google to compete early on were people who had a search problem, asking their friends for help. The default response was “Google” due to the two buttons on the front page compared to the 100+ on Yahoo's. The marketing, distribution and product were all related.

  • http://thedreaminaction.com/ Ryan Graves

    Matt-
    Great work on the blog so far, I'll be reading.

    As much as I have to agree with you here I'd really like to see a Dark Horse take this one…an entrepreneur who is up and coming and unheard of would be so much more exciting…

    I'll be watching.

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  • http://www.tylerwillis.net Tyler Willis

    Hey Matt, like your idea about a Z Combinator. I definitely think there's a need for something after a startup accelerator to help with the practical concerns of continuing to build the company and grow as a founder.

    BTW: Here's an interesting example of a buddy of mine trying to tackle this problem, it's early on but he's getting good traction so far: http://forceforthefuture.com/founders-first/

  • brezina

    Hey Tyler – thanks for introducing me to Force For the Future – i just checked it out. I know several of the guys on the team, but didn't realize they had started this project. I'll reach out and learn more. thanks!

  • http://www.tylerwillis.net Tyler Willis

    drop me an email: tyler@involver.com

    I'll intro you to the guy who founded it, Max Marmer.

    Cheers,
    Tyler

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  • corneliawork

    I also had a great experience with the Y combinator, it actually made something that I wanted, and I was more than willing to pay for. Still let's face it: Google will always have the greatest programs and hardware – they're investing a great deal in development. Michelle Trianz

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    Hello I am very impressed with this blog, thanks for sharing.
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  • http://twitter.com/reneighbor Renee

    Interesting thoughts re: a “Z Combinator” for a startup's second step. There was a profile on a written of Zipcar in Inc magazine a couple of years ago that explores this theme. The company was founded by Robin Chase, who implemented many of the key features we know today: online booking, pay by the hour, key-card entrance. However, the second CEO, a guy with a consulting background, took the company from startup mode to established, profitable company solving seemingly small inefficiencies. For example, he found out that weekday daytime usage was low, so he made discreet-logo cars to target business users. He also focused marketing and car placement on key neighborhoods to make bookings reliable to the early users. The article gives a good illustration of tweaks a creative young company can make to get to the next step.

    Article:

    How Fast Can This Thing Go, Anyway?

    Zipcar was a classic founder-run company–long on passion, short on cash. Until a new CEO came aboard, gave the business a seven-step tune-up, and put the pedal to the metal.
    http://www.inc.com/magazine/20080301/how-fast-c

  • brezina

    Thanks for the thoughtful comment Renee. Great example. I definitely think the stage between initial product and scaling the marketing and business model is super interesting. And, I also think this is a stage that is under represented in most of the discussion on startups. I hope to change that.

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