Many people will tell you that the key to being successful as an entrepreneur is to do something that you're passionate about. I feel this is incomplete advice. There is a vast wasteland of failed companies out there because passion--not market opportunity--drove the business. Following your passions blindly can lead you to launching a doomed company.
I made this mistake early in my entrepreneurial journey. I launched a company called JoinSources, a (very, very) poorly-named file management start up ("join sources" of content...groan). Think Box before Box. As a Web designer, I saw how frustrating it was to gather and organize assets for website projects. JoinSources would make it easy to create a web-based file management system for organizing project assets.
So when Box launched and looked like a winner, I tried to pivot to a "market" I knew very well because of my years as a Web designer: content management systems (CMS). Think Squarespace before Squarespace. As a Web developer, I saw how difficult it was to build and host custom-designed, CMS-driven websites.
As a Web designer and Web developer, I was passionate about building custom, CMS-driven websites. I had personally experienced the frustration of trying to use the available tools to no success. The world needed a solution, and I was going to give it to them. The only problem was there were at least 500 other people out there with a passion for building custom, CMS-driven websites. They too believed the world needed a solution, and they were going to give it to them.
Needless to say, the company never got off the ground. My passion led me down a path to a crowded, commoditized CMS market, competing with Weebly, Squarespace and soon this tidal wave called WordPress. I wanted to be a successful entrepreneur, and apparent passion for an idea wasn't enough.
Passion Isn't Everything
By now you might be wondering it I'm about to question if passion is an essential ingredient to your entrepreneurial journey. Wrong. Passion is critical. It's what gives you the fuel to work 70-hour weeks. It gives you the words to inspire your employees, potential investors and customers. It should help you sequence your Founder DNA. But much like your love life, passion can blind you in your work life. Facts are facts: You need business acumen as much as, or even more than passion, to succeed as an entrepreneur.
I often meet people with more passion than you can imagine, but they do not have the business acumen to understand the realities of their market in order to compete. They're not educated on how difficult it will be to launch a company. And because their first idea is often the idea they passionately pursue, they don't realize this often means many other people have the same idea, or there's already a robust market. They're on a path to failure because they are blind.
Market research takes a lot of work. Many entrepreneurs don't really research the competitive landscape--in fact they're almost afraid to because uncovering entrenched competition or a fast-growing startup would pop their startup balloon. It's basically self-inflicted blindness in the name of passion.
Passion is definitely an essential ingredient to your entrepreneurial journey, but so is an underserved, untapped market. Without one or the other, startups--and therefore entrepreneurs--fail. If you enter a crowded market with entrenched, aggressive competition, you're almost destined to fail unless you develop the business acumen to uncover the (often hidden) market opportunity.
Knowing Your Market Is Everything
I'm not at all saying you shouldn't launch a company in a competitive space, but rather you should know your competitive landscape and uncover the marketing opportunity before you dive head first into any startup. For example, ZenPayroll definitely knew it was going up against big competitors like Intuit and ADP. In fact, I suspect being very much aware of the competition, and (most likely) studying the hell out of competitors in the crowded payroll space, made it easier to uncover the warts of their market. ZenPayroll is doing quite well nowadays positioning itself as the fix for the frustrations of the aging payroll providers.
My second startup, Resumator, is just as much market opportunity as it is passion. I saw that despite a large number of service providers, no one had created recruiting software for the "non-enterprise" employer that was both affordable and easy to purchase. I reviewed at least two dozen competitors and saw some pretty crappy software. I knew that after the first few competitors, all the remaining companies knew very little about selling in the cloud and were basically non-existent in the broader competitive landscape. The market opportunity was to create a well-branded, innovative and intuitive product that leveraged a free trial acquisition model in a sleepy, yet vast market (everyone hires).
When I first started my company, I was unable to articulate that last sentence the way I just did. But I had learned from JoinSources that I was can't build a product looking for a market. I had to find a huge market that needed a product, and I used my passion for software to capitalize on that market opportunity. Resumator is doing quite well nowadays.
The Top 20 Passion Traps
I've compiled a list of business ideas that are often pursued by passionate, yet dangerously-naive founders. These ideas are in highly-competitive markets where you must do your homework and develop your business acumen before you turn your entrepreneurial journey in that direction:
- The churchgoer who wants to create church management software.
- The former athlete who wants to create talent scouting software.
- The front end developer who wants to build a content management system.
- The campus employee who wants to start a campus community app.
- The teacher who wants to create software for managing students.
- The graduate student who wants to start a company based on their thesis.
- The avid shopper who wants to start a shopping site.
- The musician who wants to start a site for sharing music.
- The physician who wants to start a site for managing patient information.
- The college student who wants to build a website for college students.
- The MBA who wants to start a tech company without a technical co-founder.
- The teacher that wants to start a company for educating kids.
- The service company considering if it should spin out it's client management app.
- The restauranteur considering launching a dinner reservation app.
- The consultant trying to start their own consultancy.
- A sales rep trying to launch sales management software.
- Anyone trying to start a personal concierge service.
- Anyone trying to launch a job board.
- Anyone who wants to start a company that automates resume screening.
- Anyone who launches a start up for managing personal finances.
Don't be deterred--be informed. It's going to take someone to disrupt the status quo of these markets in order for us to enjoy wonderful new products and services. I'm a firm believer that the two most important personality traits an entrepreneur can have are self awareness and curiosity. Know yourself. Learn your market.
We sometimes forget that passion comes naturally to us--it's why we're entrepreneurs. Let your passion point the direction, but your business savvy drive each step forward.