Thoughts on startups by investors that
fund them & entrepreneurs that run them

5 Entrepreneur Ideas That Investors See Too Often

People are always asking me for an inside tip on Internet sites that will be “the next big thing.” Those are hard, since someone has to invent something innovative, but I do have some views on other ideas whose time has come and gone.

In some cases, these are concepts that have already been done too many times, and the space is crowded. In others, the concept has been tried too many times, or no one has yet succeeded in making any money. Or both. Here are my favorites:

  1. Social and business networking sites. Just for starters, Wikipedia now lists about 200 sites by name (once over 300), which they claim is just some of the more notable social networking sites. I still get about one business “idea” per week for a new networking site, which will combine the “best of all the sites” into a new one. If you must do one of these, skip the “me too” and focus on a niche, if you can find an unoccupied one.
  2. Online dating sites. Feedback from my old diatribe on this subject tells me that there are over 8,000 existing ones world-wide, including two or three new ones per day. Most of these will fail, or never turn a profit. I hope you have a better idea than Women Behind Bars, or Herpes-Date.com. But then, this is an emotional need every single seems willing to spend money on (not to mention the 40% more who are already married).
  3. Search engines. You can find web sites like the Comprehensive List of Search Engines, which is nothing but a list of 250+ available search engines. Remember the three “big gorillas” in this space, Google, Microsoft Bing, and Yahoo. There may be room here for something really innovative, but just a better user interface, people prioritized results, or one millisecond faster will probably not do it. If you have more money than the incumbents, try it, but don’t look for investors.
  4. Micro payments, micro loans, micro investments. Micro “everything” has had lots of entrants over the years, but most are gone, or not making any money. Paying for your ice cream on your cell phone through Twitter is more trouble than cash, and getting a $10,000 loan accumulated from 50,000 people is hard to manage. The latest is “crowd funding” your startup with thousands of tiny investments. It’s already a crowded space, with over 450 sites already out there at last count, making it tough for new entrants.
  5. Portals and single sign-on sites. A portal is a “home page” which you can partition to be the entry to a dozen others, with a single login to minimize the “yellow stickies” on your computer. The trouble is there are thousands of portal sites, like My AOL and My Yahoo, so you need a portal for the portals. Single sign-on is a technical dream that requires world-wide standards be set before it can be implemented.

Somewhere below this list is another tier of questionable potential startups, including more calendar sites, blog aggregators, Craigslists, photo sharing sites, music sharing sites, or more instant messaging sites. Web site generators have made it cheap and easy to launch a site, but that doesn’t mean it’s easy to succeed.

In my view, the single biggest reason for startup failures on the Internet is a lack of real innovation. Changing the user interface, and adding a couple of features doesn’t compensate for not being there first (“me too”). The second biggest reason is lack of focus. Combining the features of several successful products will not assure success (“something for everyone”).

For other ideas, the wave has simply passed. Rather than trying to extrapolate linearly from solutions already popular, be the first to solve one of the myriad of current and future problems causing real “pain” in our society. Problems like health care and diseases, or alternative energy solutions, offer a wealth of possibilities, with huge potential paybacks for everyone.

These also have the potential of satisfying a higher purpose (socially conscious), as well as making money. The rewards are greater and longer lasting, and it’s a lot more fun. What’s your idea?

Written by Martin Zwilling

user Martin Zwilling Founder and CEO,
Startup Professionals

Martin is a veteran startup mentor, executive, blogger, author, tech professional, and angel investor. He is the Founder and CEO of Startup Professionals, a company that provides products and services to startup founders and small business owners.

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