April 26, 2019

Examples of successful startups in a red ocean?

Would love to hear stories and key insights of companies that entered a crowded marketplace very late and were/are successful.

Off the top of my head, these are some I can think of:

  • Intercom (there were already so many chat widget software tools)
  • ZenDesk (there were already so many helpdesk software tools)
  • Slack (there were already many enterprise messaging apps)
  • DigitalOcean (cloud computing against AWS/Heroku/Google)
  • WhatsApp (Facebook Messenger and 100+ non-SMS chat apps already existed)
  • Notion (many software tools to keep docs in one place already existed)
  • Loom (many video recording Chrome extensions existed)

Do you agree/disagree with any of the above or have more examples? It'd be interesting to understand what exactly made these companies special amongst the crowd.

  1. 8

    I hear a lot of people say you should avoid a red ocean.

    But I think that only holds true if you want to build a company to the size that it needs a significant chunk of the ocean to sustain it.

    The nice thing about oceans is that they are really, really big. And diverse.

    You can totally create a very respectable business by focussing only on the priorities of people living on a small island in the south-west corner of that ocean...

    Because their needs will be totally different to the bulk of people up in the north east (for example).

    You don't need to be the best for everybody, just be the best for somebody and take it from there...

  2. 1

    Baidu, Tudou, Weixin (WeChat) and Weibo each entered Chinese markets dominated by very similar foreign competitors (Yahoo/Google, YouTube, LINE and Twitter, respectively). All of them won and all the incumbents left the market. All grew to be truly gigantic.

    What made them special was social capital, connections and willingness/skill in working with local regulators.

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    I disagree that many of those companies entered late.

    I can't think of example companies that gained traction before Zendesk (maybe getsatisfaction but this was a different kind of product), Intercom (this launched in 2011 - I thought it looked amazing when I first saw it inside a product dashboard), and Slack (maybe Skype but this wasn't fit for purpose).

    I would say many of these were first to gain market traction for the specific thing they do.

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