Do Successful Startups Come in 3s (or more)?

8 Nov

When Cyota started more than12 years ago, it was developing a solution to provide online shoppers with a single use online credit card number, so that their primary card would never be revealed online.

It sounded like an extremely innovative idea at the time, particularly because e-commerce was not well developed yet, and shoppers were very concerned.

Shockingly – there were 3 different companies (1 out of Israel, 1 out of India, and 1 out of Ireland) who were developing the exact same solution at the exact same time.

Indeed it seems like good startups, like good ideas, come in threes, or even fours.

In today’s celebrity culture, where we hold up the start-up founder or patent registrant as superstar, visionary, and inventor extraordinaire, the concept might seem surprising.  But for those studying the history of innovation, simultaneous invention is now the norm.

As Stephen Johnson notes in Where Good Ideas Come From:

One of the most remarkable patterns in all of intellectual history [is] what scholars now call “the multiple:” A brilliant idea occurs to a scientist or inventor somewhere in the world, and he goes public with his remarkable finding, only to discover that three other minds had independently come up with the same idea in the past year.  Sunspots were simultaneously discovered in 1611 by four scientists living in four different countries… The law of conservation of energy was formulated separately four times in the late 1840’s. (34)

Given the Cyota experience, we looked through the history of Internet startups to see if a similar trend holds, and it indeed it seems it does.

Early Search Engines Altavista, Ask.com, Yahoo Search
Social Networking Friendster, MySpace, Facebook
Social Bookmarking Delicious, Digg, Reddit
Online Video Editing Jumpcut, EyeSpot, Cuts
Instant messaging Powwow, ICQ
Video Sharing YouTube, Metacafe, Daily Motion
Webmail Systems Hotmail, Yahoo mail, AOL mail
Video Advertising Tremor-media, AdapTV, Yume
Shopping Comparison Dealtime, My Simon, ShopSmart

Great startups, like classic inventions, represent the product of networked individuals collectively identifying real needs in the world and simultaneously deciding to address these needs.

So, startup founders and entrepreneurs, next time an investor asks you to do a market analysis, take a real look around for those competitors. If you find them, you should see it as a sign of your brilliance and a foreshadowing of good things to come.

But more importantly, the notion that startups come in 3s has profound implications for how we cultivate innovation in entrepreneurial communities and the amount of weight we put on the good idea relative to other indicators of startup success.

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