The Transcript #1 - Avoiding the Tarpit

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In this episode, Michael Seibel and Dalton Caldwell discuss the concept of "tarpit ideas" in the startup world. Tarpit ideas are startup ideas that attract founders but tend to lead to failure. The hosts explain that these ideas are commonly found in the consumer space, where products are marketed to individual people rather than companies.

Seibel and Caldwell suggest that founders are often drawn to consumer ideas because they are consumers themselves and are constantly exposed to consumer products and advertisements. Additionally, many success stories in the startup world revolve around consumer founders and consumer startups, further contributing to the allure of consumer ideas.

However, the hosts emphasize that consumer ideas can be challenging due to the high bar set by existing successful consumer products and the importance of timing. They use the example of Google to illustrate the level of success that consumer products need to achieve. Google gained millions of users without any advertising or user acquisition efforts solely because their product was so good and in high demand.

To avoid falling into the tarpit, founders need to understand the high standards set by successful consumer products and the potential disadvantages of entering a market dominated by established incumbents. By recognizing the common pitfalls of tarpit ideas, founders can increase their chances of success in their startup journey.

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Key Points

• The term "tarpit" is used to describe startup ideas that attract founders but have a high rate of failure and tend to be difficult to pivot away from.
• Tarpit ideas are often consumer ideas, where the product is marketed to individuals rather than businesses.
• Consumer ideas are popular because founders are often consumers themselves and are familiar with consumer products and problems.
• Founders are also influenced by stories of successful consumer startups and famous consumer founders like Steve Jobs and Mark Zuckerberg.
• However, consumer ideas can be challenging because the bar for success is high, with existing successful consumer products setting a high standard.
• Timing is important in consumer startups, and founders may not realize when the timing is in their favor or against them.
• Existing incumbents in the consumer market can have a significant advantage.
• Google is used as an example of a successful consumer startup that achieved widespread adoption and success without spending money on marketing or user acquisition.
• The bar for a successful consumer startup is to build a product that people are obsessed with and that is of very high quality.
• These types of consumer startups often have a strong word-of-mouth component, with users evangelizing the product to others.
• The success of consumer startups like Google sets a high bar for new consumer ideas.
• Founders should understand the challenges and risks associated with consumer ideas and consider other types of startup ideas that may have higher odds of success.

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Q&A 

Q: What are tarpit ideas?

A: Tarpit ideas are startup ideas that many founders try but fail to succeed in. They are consumer ideas that attract founders because they seem like good and original ideas, but they often lead to failure and can be difficult to pivot away from.

Q: Why are consumer ideas so common among founders?

A: Consumer ideas are common because we are all consumers and are constantly exposed to products and marketing. When we think about problems in our lives or the problems that interest us, they tend to be consumer-focused. Additionally, many of the success stories we hear about in the startup world are consumer founders and consumer startups, so there is a lot of hero worship and attraction to consumer ideas.

Q: Why is it challenging to work on consumer ideas?

A: There are two main challenges with consumer ideas. First, people often don't realize how high the bar is for consumer products. The consumer products they use on a daily basis are often very good and have many failed competitors. Second, timing is crucial in consumer businesses, and sometimes founders don't realize when timing is helping or hurting them. Existing incumbents can have a significant advantage in the consumer space.

Q: What is an example of a successful consumer startup?

A: Google is a prime example of a successful consumer startup. When Google first launched, it relied on word of mouth and had no advertising or growth hacking. People were so impressed with the product that they actively sought it out and even evangelized it to others. Google's success shows the high bar for consumer products and the level of quality and desirability that founders should strive for.

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