Biggest myth of bootstrapped businesses

Ever heard about these golden words?

The market is already proven. Some companies are selling to millions of customers in this market. All you need to do is find a product to sell to them.

You might have heard these words in one form or another from various marketing gurus, wannabe coaches and business bloggers.

And some of them are also running successful blogs or content based (mostly educational) websites- so you have no reason to doubt them.

So you start looking for that 'cool' product idea that you can easily build and sell to those millions of hungry buyers poorly served by inefficient behemoths.

This looks all good on paper until you come up with the million dollar product idea, build your product, your website/landing pages, some email marketing forms, reach out to people via social media and emails and what not and realize that people are well off buying from those inefficient Goliaths instead of an efficient David.

You think there's something wrong with your marketing channel. So you go ahead and fix it.

Insta is not working. Maybe my audience is in YouTube. Oops YouTube was a wrong choice too- what about Tiktok? they say it's still untapped. You try one channel after another. You burn money on ads. Post tirelessly in those mediums. Try out every trick in the book.

And then it occurs to you. What if it has to do with my website copy. You start fixing that too. Still nothing.

By now you have tried all the messaging alternatives and all the channels in the book. Now what?

Suddenly you realize that the idea you were chasing was too big. Audience needs education in this space as they are ignorant of your product. Or somehow you failed to communicate the true value of your product to them.

No problem, let's turn over a new leaf.

Let's not waste our time and effort in chasing something that's ahead of its time.

So you find something else. Some new idea that fits exactly the definition of a 'perfect' business idea- "The market is already proven. Some companies are selling to millions of customers in this market. All you need to do is find a product to sell to them."

Does this sound familiar to you?

If not in full, maybe in parts?

Happened to me and a lot of people I know a number of times.

Now, let's break down these golden words and find out why these are flawed.

There are essentially 4 things that are being told here-

1. The market is already proven.

2. Some companies are selling to millions of customers in this market.

3. All you need to do is find a product

4. and sell to them (the existing customer base for the companies)

And it sounds so believable because each of these claims are partly true.

The market is proven. But for whom?

For the purpose of this post market consists of 4 things- buyer, channel, offer and seller.

To explain it further- when you are buying an e-book from amazon, you are the buyer, Amazon is the channel, the book with all its cover, description, price point and reviews is the offer and the you the 'Author' is the seller.

When someone says "there is a market for this"- they essentially mean that there are buyers for an offer like this. They take the following for granted:

1. The seller's reputation

2. The inherent restrictions in the channel and

3. The dynamics between the existing offer, buyers and the channel AKA 'the story' behind the product)

Let me elaborate it even further.

If Kylie Jenner can sell her cosmetics using Instagram does it mean anyone can copy the same business model and beat her with a better product?

There are 3 reasons why it doesn't work that way.

1. Channel's algorithm works against newcomers

2. Word-of-mouth publicity is biased

3. Incremental changes are hardly noticed by users because of inertia (or it gets lost in the narrative)

Channel's algorithm works against newcomers

Those creators are not popular because they have a great product. It's the other way round.

They are popular because they are selling a story and the product is just a small part of it. So as long as the story sells, the product too will sell.

Even the social media algorithms know what's a good story? it's something that already has an audience.

That's why when they suggest you new content in social media, they pick the contents produced by well-known creators in that space over better content from newcomers.

Because their usage history tells them the old content creators have an audience. The new content has no usage-history (likes, share, retweets or whatever). So it will not be recommended by algorithms.

That's why it takes newcomers months to get established in algorithm based channels like social media or search engines (Google, Bing, YouTube, Instagram, Twitter- you name it) because their brand story is not good enough (or old enough) for the algorithms.

Word of mouth publicity is biased

But word-of-mouth organic publicity is even more biased than algorithms. Because everyone likes a good brand story, we humans like to repeat stories that we hear.

We human beings are much more lazier than algorithms.

We would still pick stories about a known person, brand or a cult to start a conversation more than we'd do for something or someone new. "Hey, heard that news about Disney?", "What's Elon Musk doing next?", "Guess how much Amber Heard will have to pay?" and so on...

It's easier and it's how conversations always worked (do you remember the last time you told a colleague about some ground-breaking new product you have stumbled upon?)

Incremental changes are hard to notice

Even though all those previous points are true, this is the biggest factor that works against new products.

We always come across stories about those breakthrough products like Ride, Jet.com, Lemonade, Slack and Mixpanel and think good products will always win.

But in order to beat a behemoth, just being incrementally good isn't enough. You have to be a game changer.

And by being a game changer, you control the narrative. The media, the influencers, the entire free publicity machinery starts working for you.

So, if story is what drives a business, the story should come first before the business idea or the product. But if you search 'How to start a business' in Google the result will always tell you to start with an idea.

And that's so because people writing those articles in the search results have never started a successful business themselves.

Starting a business with a story

Here are 2 examples.

How to find profitable opportunities in so called markets

All this analysis don't imply that you should refrain from entering a market. It calls for more due diligence.

The key to entering a market that looks saturated from outside is to 'find a niche'.

What finding a niche actually means is to gather deep insights about the buyers in a particular market and understand their buying pattern and behaviors. When you discover that for a particular use case existing products fail drastically you've found your niche.

The key difference here is that you are not looking for a product to serve a market. You are looking for an unserved segment of the market and creating a product for it.

Let's understand the difference with some examples.