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Companies Need To Stop Coming Up With Good Ideas


Seriously, we have enough. There were 2,200 new SaaS companies founded in 2022. That’s six per day.

60,000 companies already existed when they started-up.

And we all know the math--the vast majority will fail quickly. Many in the remainder will eke out an existence on the margins of a category. Others will become zombies unable to grow, but perhaps equally horribly, unable to fail.

Here’s why ---> the vast majority of these companies will be founded on an idea about how to solve a problem better.

And the tech behind that solution is likely quite impressive.

The rational alternative it offers buyers should be a no brainer (if brains were perfectly rational microchips). But human brains don’t work like that. We take short cuts. We use biases like categories to help make sense of--among other things--62,200 freaking SaaS start-ups.

Which means people are very unlikely to give your solution enough time to even realize it is better. Why?

Because #1. They’ve already solved that problem; and #2. They have procurement people to figure out who can do it the best for the least. Have a good time racing to the bottom of that commodity price war.

There is one other class of startups I haven’t mentioned, however. Those that go on to blow the doors off valuations, IPO and dominate their category.

These are quite often the companies that set out to solve DIFFERENT PROBLEMS. And create a new playbook for how to do that.

In other words, they Designed, Developed and Dominated a new Category.

And now, on average, they’ll soak up 76% of the market cap.

Stop coming up with ideas, and start coming up with problems.

Source: Pitchbook

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