The lessons learned by a startup in LA which took a different look at the dry-cleaning business have much in common with the kind of startup mentality that could drive the next Big Ideas on 4iP.

Last week I was invited to attend old haunts at Edinburgh University as Doug Richard held another of his School for Startups for 150 Scottish entrepreneurs, hosted by the uni's School for Informatics. Within an hour or two I had seen how some of the current proposals had come about, both the compelling exciting ones and those which leave the Commissioning Editor genuinely hoping there's something really obvious and cool (s)he's missed.

"All businesses aren't created equal."

(William Egan II, Venture Capitalist)
When we're starting with an idea we have to ask whether the opportunity really stacks up. The key starter question has to be: "Why won't this work?" In almost every case, I find myself putting forward the "devil's advocate" position, trying to draw out the answer to this question. In more than a few cases, there is no genuine answer, yet taking the time to consider it is important, so that version 1.1 is better than version 0.1 that you're proposing now.

Finding your micromarket (aka "The Niche")

We always need to know who it is we're trying to appeal, and you can work this out on two levels. In the small, ask yourself how attractive your idea is to the people you see using it or having fun with it.

This question needs to be answered not with USPs or product descriptions, but with benefits to people - another reason for driving people to submit all their ideas online, where we ask about this specifically. Doug tells the story of the dry cleaning business in LA which based its business on speed: with drive-thru windows and pre-packaging of your clothes ready for pickup, his business thirved despite, in fact, being the most likely to lose your clothes. Dry cleaning success was not about clean clothes or accuracy, as 'normal' people would have expected. It was about speed.

In the large, we have a more tricky question about how attractive the market is to us. This is all about niches. So, by all means tell us which market are you in but, more importantly, which segment or niche are you in? Entrepreneurialism works when the marketplace is sufficiently large to sell into but your business starts in the infinitesimally small. In appealing to the marketplace, growth potential comes above accessibility. So, in your market segment, what do the customers have in common and is this group of customers growing? Where's the proof that it's growing? What other segments adjoin this group. What unique capabilities would make this appropriate for another, adjoining segment? All of these questions help come up with ideas for the web, mobile or in social gaming which will not end up one-hit-wonders, but which will find growth well into the future without the need for much more support from 4iP.

Niche Thyself

Guy Kawasaki sums it up nicely in his Art Of The Start talk, and book of the same name: Niche thyself:

You can hear more of Guy and plenty of other inspirational starteruppers at Stanford's Entrepreneurship Corner.

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Comment by Andrew Mitchell on November 2, 2008 at 15:46
Stuart, I had a room full of local heros from Cambridge and Scotland together on Thursday (e.g. Peter Denyer Vision Group, David Milne Wolfson Micro, David Simpson, HP/Elvingston). One thing that was debated was the whole company of scale focus, right or wrong. Many agreed with your view. Gave us in Informatics much food for thought.
Comment by Ewan McIntosh on November 2, 2008 at 13:23
The thing about the niche is, that when the whole market is 1.1b large (t'interweb) or 3.5b (mobile), you have a fair chance of hitting quite a large micromarket. The only barrier that can get in the way is language and culture - there's a post somewhere which I'll find and blog about later, pointing out how hard it is to break into MySpace China, for example. It still hasn't stopped my friend Stephen Heppell running a 'pilot' of a new social learning environment there with just 25m users. The pilot, that is.

However, for the more faint-hearted there's plenty to be getting started with in Engerlish.
Comment by Stuart Cosgrove on November 2, 2008 at 13:07
Spoke at the Board of Scottish Enterprise on Friday, arguing that Scotland needs to shift its mindset to truly accomodate digital media, and that may mean moving from the macro-economic theory of supporting companies of scale, to embrace 'smart-companies,' who by their nature will be smaller, new entrant and 'niche'. Would love to see this debate grow and develop.


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