The Secret to Startup Success: It’s Not About Being Amazon, It’s About Starting Like Amazon
Entrepreneurs can learn a lot from one of the most successful companies in history. Just make sure to learn the right lessons.
“I’m building Amazon for the travel industry,” an entrepreneur told me as we sipped coffees. He was in his early 20s, and, technically, he didn’t say he was building Amazon for the travel industry. His vision involves a completely different industry, but he’s still working on his startup, so I don’t want him to see this article and accuse me of sharing his idea with the world. Instead, let’s pretend he said he’s building for the travel industry because the specific industry doesn’t matter nearly as much as the fundamental mistake he’s making in his approach to building startups. It’s a mistake nearly every new entrepreneur makes, and it’s what causes most of their first companies to fail.
“What do you mean by ‘Amazon for the travel industry’?” I asked.
“There’s no centralized place to buy everything,” he explained. “The market is incredibly fragmented. You have to buy plane tickets from one place, hotels from another, tours somewhere else, then there’s equipment rentals, car rentals, food, nightlife. Plus, there’s all the research people do before trips that happens on dozens of different websites. By putting everything in one place, I’ll be able to streamline the travel process for consumers while consolidating the entire travel industry under one company. It’s a massive opportunity!”
Again, he wasn’t actually talking about travel. But he was making equally bold claims about a similarly large and fractured industry, and I was skeptical.
“You understand that was never Amazon’s business model, right?” I replied.
“That’s what Amazon does,” he insisted. “I can buy basically any type of consumer product from them.”
“That’s true,” I agreed. “Today you can buy most consumer products from Amazon. But, when Amazon launched back in the mid-1990s, Amazon just sold one thing — books. It’s evolved over time to become the Amazon we know today.”
“Yeah, obviously I know that,” the entrepreneur agreed. “We’re going to launch with just a few products, too. I’m sure it’ll take us until at least the end of the year before we have full coverage across the industry.”
“The end of the year?” I questioned.
Is that too long?” the entrepreneur worried. “We could probably be done consolidating by the winter holidays if we really push things. Do you think we should do that?”
“I think you misunderstand how long it takes to build companies,” I told him. “And I think I know why.”
“What do you mean?” he asked.
“You realize Amazon is a 30-year-old company, right?” I asked him.
“I guess I never really thought about it,” he replied.
“You should think about it,” I responded. “It’s older than you.”
“Why does that matter?”
“It matters because you can’t build a strategy for the startup you’re launching now based on a company like Amazon,” I told him. “Or, really, any mainstream company.”
“Why not?” he asked. “Clearly the strategy works for Amazon.”
“Sure, it works for them,” I countered. “But they’re a trillion dollar company with nearly unlimited resources.”
“And that’s what we want to be,” the entrepreneur argued back. “I don’t understand why that’s a problem.”
“It’s not a problem that you ultimately want to be like Amazon,” I told him. “In fact, I hope you get there. But you have to remember Amazon didn’t start where it is today. It grew into the company it is now over the course of decades.”
“So it’s going to take time,” the entrepreneur responded. “I’m OK with that. I don’t mind putting in the work, and I’m ready for a long commitment.”
“I’m not doubting your commitment,” I assured him. “I’m doubting your strategy. If you want to be like Amazon 30 years from now, you can’t start a company doing what Amazon is doing now. You have to look at what Amazon was doing 30 years ago.”
“But how is that still relevant?” he asked. “It was 30 years ago. So much has changed.”
“That’s true,” I agreed. “The technologies have changed. And the people using those technologies have changed. But the fundamentals of building successful businesses always start the same way.”
“And what’s that?” the entrepreneur asked.
“Land and expand,” I told him. “In the beginning, when you’re just getting started, don’t try to be everything to everyone. You can’t. You won’t have the resources for it. Instead, find one thing you’re really good at, be amazing at it, and then slowly grow your business into other, related areas over time. It’s the only way you’ll survive long enough to grow into a company like Amazon.”
The entrepreneur I was meeting with was clearly annoyed at me for suggesting he resize his expectations. And, to be fair, I respect that. Having huge ambitions is a big part of what motivates startup founders and helps them succeed.
Just be careful not to let your ambition get in the way of logic. No company starts as a huge company. They evolve into huge companies over time.
Entrepreneurs who understand this launch companies by identifying a small, narrow gap in a market, filling it extremely well, and then evolving into something bigger. Entrepreneurs who don’t understand it launch companies that try to serve too many customers, run out of resources, and inevitably fail.
Which would you rather be?