Someone did steal my idea, a sales rep I fired. He took my product samples and copied it down to the flaws (small errors I had made in CAD), and on top of that made their product in Taiwan (vs mine USA), and they had much better execution, marketing, and much deeper relationships in the industry. They quite literally got the front cover of every industry catalog, of all the major distributors in all 50 states (1). I have estimated that by the time they got the first 40' container of product in from Asia that they were double our size; we worked out of a 16'x16' garden shed at the time (2).
I have battled them for 10 years and they just sold for 12 million. I would be happy with 1 million. But the truth? The truth is that having a competitor HELPED not hurt. The sales conversations went from "why would I buy that?" to "How does it compare to the other guy?" . in short, their aggressive marketing towed me along in their wake. The geeky informed buyers would buy the USA made original (mine), and the mass market would buy his.
The main outcome is that I could stop spending marketing on advertising, and focus on innovating and product development. Since my industry is distributor based, and my competitor was #1 in all of them, the best way to compete was to out innovate. Also the easiest, and most fun way. Anytime a new truck comes out I usually have a 3-6 month exclusive window before his overseas operation can deliver product. We pick up a lot of new wholesale customers when that happens.
I think that the outcome could have been worse without the 'copy'. For years we couldn't have made the product any faster, we had massive growth in sales. $90K first year, $500K second, $800K, 1.2M, 2M .. it was hard to buy steel some months we grew so fast. In the end. a competitor is not the end of the world, it is a way for the buyer to make a choice - this guy or that guy. It can be easier to sell if they have someone to compare to; when they have nothing it is a little disorienting for a buyer and they tend to not buy anything.
1. product: leveling kit for trucks, so people can put aftermarket wheels and tires on. Another 20 companies copied the product afterward but we don't hear much about them.
2. We have moved twice. From the 16x16 garden shed, to 6800 sq ft, to the current 15,000 sq ft. We now employ 10 people and 5 robots.
He also followed our sales guy around and went into every reseller right after him. He has a bag full of tricks. In the end, here we are. At least every day I don't look at the mirror and see a liar and thief looking back at me. I am ok with it at this point.
It's very saddening how much discrimination and hate this society has and still is suffering from. Their grand-grand-grand-...-parents were ruthlessly killed, today they're accused of taking jobs away from other citizens. The media keeps creating horror stories portraying them as the ultimate evil, and the only time someone ever people stop whining is when there's a war to win. It's very nice and refreshing to see a different attitude.
Actually we are! We are a little unusual for having 50% female employees in a industry that is 99% male. I think I like the robots more than the humans most days though :)
Yes, the conversations with customers totally changed once he was on the scene. Instead of them asking "What is your product again?" in a confused voice, they would ask "How are you different from the other guy?" which then gave a nice opening to tell the story, and get the customer most of the time. Everyone loves the underdog.
Revenue on physical products is dramatically different to profit.
Given that growth rate and the need to invest in new facilities and production facilities (ie, robots) it wouldn't surprise me to find the OP is running at break-even.
We are mostly cash flow limited, and credit limited. For example I am trying to buy 4kw laser cutter right now and I am having trouble getting financed. The business is 11 years old, but because of things it is a 3 year old LLC that looks like it doesn't have enough business history.
Yes. 2008 was very hard on my industry and everything went to hell. I started the year with 23 employees and ended with 10. I developed a chronic health problem and sold out to my partners and the sales manager, and carried the loan (nobody was lending for anything at the end of 2008). I had to repossess the business in 2011 when they stopped paying me for 6 months.
It has been a long, long, slow climb back to the business being healthy. Real revenue in '12 was about $800,000 and we have climbed about 20% per year since, but we are constantly cash limited. I would be happy to sell and do something else, and that much money would fund the 'something elses' I have in mind. The business is not fun anymore, and I am trying to pivot it a new direction but the Queen Mary takes time to turn around.
I think he meant he hopes to eventually get some money out of them for stealing his design, and that just one-twelfth of their recent sale price would be satisfactory.
I'm pretty sure he was comparing the value of their company to his not saying he was hoping for them to randomly cut him a check for 1/12th their selling price.
He was saying that he didn't even have a grand aspirations as what his product was worth, a smaller payday would have made him happy, if fates had just been less cruel.
Actually I took a tiny payday in 08 because of health problems - $200K over 10 years for a third of a $2M per year business with 66% gross margins. Nobody was buying or lending any money at that time and the stress was killing me. I was 38 with children and developed arrhythmia. My wife and I decided it was better to risk being broke to being dead. Fates have been plenty cruel, but things are looking better these days.
I don't have the money to sue, and I don't think it would be worth it anyhow. It would be great though if the group that bought him decided that they wanted to roll up the other players in the industry. If I get the chance I am selling. We are probably number 3 for unit volume in the industry and the only independent one. It could happen :)
Yes, I learned that one 25 years ago. I had a tool truck, selling tools to mechanics at auto shops and for half my area I was the only one. One day a competitor showed up at all these shops that I had an 'exclusive' on. My sales to them went up, because they now had some point of reference. My stuff was 5% more expensive, but 25% better. With something to compare to, it now appeared to be a better value than previous.
What a great write up! It's so refreshing to see people not succumbing to the life of fear that is pushed upon us so heavily by all aspects of modern society.
I am pretty much unemployable, so the only choice was to make it work somehow. Don't worry there was plenty of fear, I just could do anything about it. "Feel the fear and do it anyway" is a favorite expression in my household.
Stockdale's quote has been taped to my wall since 2008
“This is a very important lesson. You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
Quite pleased to hear this. I take the same view with competition. Its bloody hard work to educate your market segment.
I have come across a few fintech startups who have voiced the same opinion. They don't feel threatened by the other startups playing in the same space trying to change people's habits..
We fired him* mostly because he was a real jerk to deal with. I found out later from other people in the industry he got fired a lot, mostly for being very abrasive and difficult to work with. A friend of mine fired him 4 hours after hiring him. After I fired him he actually shut down his rep agency (20 product lines and 7 reps) to focus on competing with me. That really surprised me that he would close his company to go head to head with me, at that point I realized I must have a way better idea than I thought.
* technically we fired his sales rep agency, since all 7 of his reps sold our line, his company repped for about 20 product lines at the time.
If your startup is based on execution and/or customer relationship sure this is true. However some startups are IP based in which case this is not true, now admittedly there is a low % of IP based startups on HN.
Some startups can execute better than you and can be better funded. Remember Hojoki anyone, nope - Slack moved fast got the momentum, scaled and wham! Hojoki used to be better than Slack btw. However if you operate in the public arena most people will know or guess your plan as soon as you spin up your MVP anyway :)
Right now down to the elephant in the room. Apple regularly release products/features that look remarkably like 3rd party apps, but not enough to be sued. So yep, idea stolen, implemented and market cornered by a virtual monopoly.
The truth is a complicated thing and the word Nobody is just factually inaccurate.
I'd go with:
'You're more like to fail executing than have your idea stolen.'
University IP based endeavors tend to be non-software areas where patents are legitimately results of very expensive research endeavors staffed by multiple PhDs, not "using a database engine to store a wish list."
They do resemble patent trolls in that most of their business is licensing, not directly making products. However it is more based on selling: "Hey we have this cool technology, license it!" rather than showing up out of nowhere and extorting settlement.
More that the university gets a cut by licensing patents to the employee inventors, in exchange for incubation support. Not trolling the general business public.
For example, Google paid Stanford something like $1B in exchange for the patents of work developed by Googlers at the university.
You're right it isn't. But also he's right, that the odds are against all startups - so a competitor also has the odds against them too. In an unproven market this is so much more true!
In regards to comments about IP :- compression and encryption are two obvious IP led areas. But also those working in the cutting 'technical' edge - such as high speed trading may well have solid IP.
The thing is a lot of SV based startups (a lot, not all!) are driven to solve customer/logistic problems not technical problems so they are less likely to have IP - unless (grrrr...) you count business practises as IP.
However startups out of a University incubator are more likely to be solving technical challenges and therefore have richer IP. As seen by the comments :-)
The light is shone so strongly on public facing SV startups it's easy for us to forget how many different types of startups there are and how they execute differently. For example most customer facing startups don't need stealth mode, they need MVP. Not true if your product is IP lead, in which case you need to be stealth while you secure IP rights and test the product internally.
There's a lot of massively useful advice coming out of SV - proven by startup after startup - but there is also a tendency to view all startups the same. The very fact that they are different means you need to have smart folk at the helm to navigate their own unique course based on the experiences of others.
It's a directly drawn from the premise that each startup is likely to fail. Stealing an idea doesn't make a company more likely to execute well and having an idea doesn't make a company less likely to.
Execution can make a difference on how likely you are to fail. There are so many examples out there where one execution won over even if the original idea was the same.
"Competition is not a key source of concern to your small business" might be a better title, and I totally endorse it. BCC was cloned at least five times, AR at least once. (I don't mean "Someone entered the market" I mean "Someone literally had an oDesk project whose description was 'Create a clone of bingocardcreator.com.'")
You could barely it happened from the inside perspective, since the effect of competition was dominated by e.g. the business cycle, the whims of the Google gods, and my health/focus/energy level/ability to continue executing on the businesses.
People tried to clone Bingo Card Creator because you meticulously documented it being capable of bringing in small profits, and because there are some particularly lazy and stupid people out there -- the type who would post a want ad to "Create a clone of bingocardcreator.com." They read your popular blog, and in their stupidity thought they could use it as a recipe to make $X/year. I agree that they represent some form of competition, but that it is the weakest kind imaginable. Like you said, BCC succeeded on the back of "health/focus/energy level/ability to continue executing on the businesses." Without those things it scarcely could've turned any profit, let alone year after year, which is what makes your story so compelling. But I'm not sure it's a useful lesson about the supposed small threat of competition.
I have a smallish site that brings in between 5k and 10k in revenue each month. I have not documented anything about it anywhere. AFAIK we were first of the kind. There are new direct clones popping up all the time, I know of at least four now, and one in particular has to be outspending our ad budget by at least 3x.
People will "steal" your idea as soon as they believe that it will be profitable to do so, even if you don't write blog posts about it. You have to realize that it's not theft to compete, it's just competition. If you started a chicken restaurant, some guy who opened the first chicken restaurant wouldn't have any claim to shut you down. Competition is part of business, and there's no doubt it's made our offering much better and provided motivation that is hard to drum up without an externality. Competition is good, even if it's often unpleasant.
Some of that is a structural difference between sites which are built on paid traffic and sites that use SEO / brand.
Paid traffic is live by the sword, die by the sword; you can spin up a large audience fairly quickly using your checkbook but the next guy (with a large checkbook) can go outbid you. Boom, traffic drops. Blogging about paid traffic or how to improve conversion rates is suicidal.
The funny thing about SEO-based traffic models is Google is often very conservative about handing over the top spots if you're established in the niche. Established incumbents get the benefit of the doubt (from an algorithm perspective) in many major searches; I've seen old sites with very weak SEO and outdated offerings stand off new entrants (who execute better on the product & SEO fronts) for YEARS despite no content changes or link building.
Given that blogging usually helps your site rankings by a) feeding Google fresh content and b) earning a few backlinks and the most interesting story about a boring site is often how you promote it.... the extra kick from blogging may be the edge you need to stay on top in an SEO-driven category.
(obviously, if your initial SEO success was from buying 500 links from a black hat private blog network, you may want to keep your mouth shut....)
Theft is a genuine option that some choose to take. However, it can also be attributable to a cross-roads of ideas that emerge at the same time. Often, A product (or products) enable another product. Other times, ideas are rediscovered (eg. Luck, influence through a TV show).
As you said though, the competition is good for us all. If someone is asleep at the wheel, someone else will take over.
To the extent that BCC was reliant on SEO and paid conversions... let's say you'd told someone the idea 6 months before you had availability to actually execute. Do you think the competitor could've established a beachhead?
For example, they'd have 6 months' lead on SEO, and on the paid acquisition channels they'd have either (a) CPC and LTV data that you'd still be guessing on; and (b) the ability to keep your bids arbitrarily high while you're still spinning up.
In other words: I think your sentiment is valid if you're both executing right now... but there's certainly some first-mover advantage.
So the scenario is that on January 1st 2006 someone comes out of a time machine to a young programmer and says "Hello world plus a random number generator is worth hundreds of thousands of dollars. Believe it! Start your SEO engines now!" And that programmer actually starts competently executing on that, because time lords are known to be trusty, benevolent, and curiously forgetful of all the many, many more lucrative messages that could be sent given that opportunity?
Then yes, that would have been problematic, I guess?
The more meaningful question to me seems "Does BCC's modest success necessarily mean that the operators of pre-BCC competitors were worse off?" In the large, I'm thinking "Nope." DLTK Cards (no reason any of you would have heard of them, but its a mom-and-pop operation which does a variety of school printables, including bingo cards) is still up there and probably still worth several tens of thousands of dollars in AdSense revenue a year. (Might even be six figures.)
I think it would be unlikely. I remember the first time I heard about BCC. I could not believe anyone was making money from an idea like that. Bingo cards for teachers. Well, first of all teachers don't typically have a lot of spare money. They aren't generally thought of as spendthrifts. Many of them are already spending their own money on classroom supplies, and I'm supposed to get them to spend more? My thought would be that the only way to make money selling to educators is to sell to school districts. That sounds a lot like enterprise sales, only probably even more political. Doesn't seem like a very lucrative idea.
So I don't think the idea would have appealed to very many people to begin with. Even fewer would have had the motivation to actually create the product and do the work to market it, and go through the effort of A/B testing idea after idea to figure out the best way to sell it. And even if they had, the world is a big place. No business has a lock on 100% of its market.
The idea is something, but it's hardly the whole enchilada.
I agree. I was going to get into this in the next post, but actually it seems that the pie has just gotten bigger along with these competitors (http://www.google.com/trends/explore#q=%22japanese%20candy%2...), and it doesn't seem to be impacting the subscriber numbers.
Yes, although small business might be an operative word. I'm thinking of Germany's Samwer brothers who have had great success in cloning successful US startups:
"You could barely it happened from the inside perspective, since the effect of competition was dominated by e.g. the business cycle, the whims of the Google gods, and my health/focus/energy level/ability to continue executing on the businesses."
If a larger company had a larger budget and larger team than yours, BCC would have been crushed. However, there is little money in the business (If I recall, it was making ~#2500/month before you sold it) and it's most likely not worth the effort for so little return for a larger company. In most parts of the world $2500 is barely enough for one person to survive.
"Competition is not a key source of concern to your small business"
If your business is in an extremely small market, I agree. However, as soon as it seems like you are making money, competitors will come sniffing around and if they have a better plan than you, can put you out of business. I've seen it many times at small companies. They ignore the competition and suddenly find themselves going bankrupt because the majority of their customers left.
100% truth here. I was working with a client rolling out a new offering circa 2007. Client was a top-tier player in his field and was our premier client. We presented our rollout together at a conference. We met to deepen the relationship and talked about new features and launching another initiative.
Then, he stopped returning my calls. No more emails, calls rolling to voicemail.
I was distraught and depressed and so was my partner, we didn't know what went wrong and eventually wrote it off as a misunderstanding.
I had forgotten about it and met with someone else in the industry a few months later about how to take what we were doing to the next level. In her research, our colleague another company offering our exact same product, and the company was winning industry awards for the concept. It was lead by my ex-client, who had deep pockets. Things unraveled after that, heart ripped out of chest.
Ultimately, the niche this lived in was short-lived and didn't grow much as a market, but it still was a painful lesson.
I think your last sentence may be the ultimate lesson here. It may have been a painful lesson, but it didn't materially affect your success.
People steal each others' ideas all the time in business. However, it seems like it's mostly folks fighting over the dregs; things are vicious and cutthroat, but they're vicious and cutthroat over things that are ultimately inconsequential.
I suspect this is because of something Paul Graham's noted in a few of his essays: "Good ideas look like bad ideas". Or as I've heard elsewhere: "Don't worry about people trying to steal your ideas; if your ideas are any good, you'll have to ram them down peoples' throats." If your idea is obvious enough that anyone else thinks it's a good idea, it's probably been independently discovered a dozen times and any profit will get competed away. The ideas that become world-changing are those where everyone actively thinks they're bad ideas, and stays away because they couldn't possibly work.
CandyJapan has been a great source of inspiration for launching a business with a similar business model: Tomotcha (https://tomotcha.com), a Japanese green tea subscription service.
Bemmu gave me a lot of advice at the last HN Kansai meetup to find more customers... thank you again Bemmu :)
At first I hesitated to do it the other way around: to import French wine in Japan and sell it as a subscription, but from the outside it seems harder. The rules for importing goods (especially alcohol) are quite a bit harder than the rules for exporting...
Nice idea, we just might sign up! Have you considered launching Japanese pages? Most Japanese tea drinkers are Japanese, and it's surprisingly hard to get decent Japanese tea at decent prices overseas.
It's true that our service, as is, is not geared towards Japanese expatriates. There may be a large market there...
Do not hesitate to ask us anything about Tomotcha if you need more information about the service! Note that when you signup you can drop us an email to tell us that it's just for trial: you will be charged exactly once, and receive exactly one shipment. We should make a dedicated button to automate this process...
Thinking of offering more products/different kind of plans.
We are also still trying to figure out exactly the right price-point, so tweaking a bit the price/amount of tea. I have an Ask HN to do about that by the way...
Lots of people will steal your idea if it is good, but few will be able to execute on it correctly. There seems to be something about the people that copy other people's ideas that stops them from fully grokking what is involved - maybe it is those that are too lazy to come up with their own idea are also too lazy to correctly implement the concept.
My competitors actually seem to be executing very well, possibly better. For example http://www.japancrate.com have organized things very well, managing to import the boxes to US in a shipping container and then forwarding from there to local customers. That is obviously the right way to do it if you want to target mostly US, but I just lacked the expertise to pull it off.
I just read Japan Crate's about page [1] and I wonder if their opening paragraph, and apparently their inspiration, was their initial experience with you.
'One day, I had a craving for some Meiji Apollo Chocolates (one of the most popular chocolates in Japan), so I scoured the Internet looking for some. The only service I found was both expensive and slow as they ship from Japan. Nonetheless, I placed an order for about 10 candies to be shipped to me for around $40. 3 weeks later, I opened the package to find melted chocolate and broken hard candies because it was in transit for so long. I thought, there had to be a better way, thus Japan Crate was born.'
Their execution is quite impressive IMO and you could definitely take their example as inspiration yourself for iterative improvements: website, better packaging, bulk shipping, etc. Also, you could take a look at [2] and try to optimise for locations in that list - marketing, shipping, language, etc.
On another note, it's quite amusing, but fitting, that you both use Japanese style cartoons to explain the process to your audience!\
Good luck!
P.S I met Japan Crate's CEO at Collision Conf in May in Las Vegas - he's a cool guy and seriously passionate about getting Japanese candy to the world!
There are actually companies that will let you ship a big box of stuff to them and they'll break it up and ship it out to your customers. I used to work for one and we got a fair amount of business from people who did similar things to candy japan because it's often much cheaper (and faster!) to ship one huge box via air freight from one country to another and pay for a lot of local postage (and handling fees) than it is to ship everything direct internationally.
I think this has to do with the "someone has to touch it" premium that individual boxes have. In other words UPS ground in the US is $5 minimum (and that's with a big commercial discount) no matter how close the destination is and how light the box is. But 50lbs isn't $250, it might only be $35 or $70 depending on the distance.
I think (as I alluded to in another reply) that it's wrong to think that the only two outcomes are that you either lock in 100% of your market or you fail.
No business has 100% of its market. There are many profitable business that do not do everything as well as their competitors. They may be smaller, less efficient, less sophisticated---but they still attract enough customers to be a going concern. If I'm a customer, once I've made a purchase from you, you're a known quantity. Any competitor will seem like a risk. Evaluating whether it's worth changing takes effort, and unless I'm unhappy I probably won't do it.
Look at domain name registrars. There are hundreds. They all do pretty much the same thing. Some of them have really nice management tools, and some have really terrible ones. But even the terrible ones have repeat customers.
But this kind of is the point - ideas don't matter, execution does. If you suck at execution, you'll not be able to compete despite "your good idea". If you execute well, you'll get results but quite likely throw away the initial idea that seemed good at the time.
No matter how unique your concept is, the success or failure will anyway be determined by how well you compete with others doing the same thing, and this will have to be on the basis of execution.
If you execute something that everyone wants, there will be competition very soon - and then the execution will matter (as it should), not the initial idea.
This is why I mentioned few, not none :) There are people out there able to turn a good idea into a great idea.
Having said this importing containers is hardly cost free and requires good infrustucture in both countries to handle the process. It also ties up a lot of capital, but if you can achieve scale then it will allow you to deliver at a lower cost. Not so good for a hobby project though.
- In one case it was some fairly novel code, and the guy who stole it and put his name on it was soon called out because he didn't understand it enough to continue improving it. Elements of that code still keep me employed a decade later, but I've moved vastly beyond it. While he's out of the industry and looking for work.
- In another case, it went to another company who threw millions into marketing a collection of ideas that they had re-implemented (they had stolen ideas, and code, from a few places and used huge venture backing to buy their way into the market) and millions more in hiring groups of smart engineers to maintain it. For a while the company I worked for was able to simply out-innovate them, but their tens of millions in sales teams vs. our handful of many hatted engineers pressed into sales service wasn't sustainable for us and we closed shop.
However, recently I heard that in the places where we've both been, one of our customers had achieved such better results with our more innovative software that they simply bought up all the old assets from my company (and dealt with the debtors) and are now paying a new team to modernize the code and bring it all back to life.
The first one was some NLP work to find interesting things in free-text reports. Not terribly sexy to be honest, but versions of that code have found their way in various places all over the world, from government stuff to market research.
The second one was in turnkey analytical software -- pretty pricy per seat stuff ($10k-40k) so not a huge market. I'd rather not get into the customers because there's some pretty intense legal actions that have occurred over some of the shenanigans. But it was kind of like being an American steel company trying to compete against Chinese steel imports. When the Chinese decided to just start selling into the market under cost, nobody can compete regardless of quality of innovation. It was kind of the same way, several long-standing companies just disappeared almost overnight when a very well VC funded company entered our space, took everybody's ideas and just squashed everybody else by offering product and service at well under development cost -- basically subsidizing the customer's purchase with VC dollars.
To give you an idea of the magnitude, the largest player in the space prior to that may have broken $200m/yr in sales. Most companies were in the $5-10m/yr range (I can think of a dozen or so). Within 5 years of the new player coming on the scene, only 2 companies remained (failed or stripped for parts), and the big player had sold themselves to a large system integrator to escape the market -- it had simply become noncompetitive.
At the time it was very crowded (until everybody closed up shop). Most of our customers had an incumbent vendor of some sort and it was quite difficult to get them to switch. Most of the vendors tried to get customer lock-in through customized integration services or proprietary formats or some such, so the software was often the cheap part of the purchase.
I think the real challenge though was customers who put very non-technical users in positions as "analysts". Everybody wanted very powerful software, but the end-users simply weren't prepared for the rigors of what these days has turned into the "Data Science" field. For example, most end-user analysts don't understand the difference between a csv file, and a pdf file with a table printed on it, and an Excel spreadsheet.
Most of our users were smart soft-science types, and their organizations had collected lots of data but simply didn't have the education or experience to understand the difficulties with dealing with the data, coming up with strategies to analyze it, knew what was in their data, the quality of it, what questions it could answer, or even how to formulate answerable questions.
Up to fairly recently, the state of the art in their fields was to read reports and summarize and draw some conclusion based on their reading.
Even up through the technical sides of the organization, they didn't have a good grasp of how to build and manage systems that could service these users. High level requirements like "users need analytic software" would often end up as purchase decisions of the wrong product. Or sometimes IT security was such that the software would never be installed!
It was frustrating because the separation of expertise on the user-side and technical side was such a wide gulf and neither side really understood the other.
On the other-hand, it was a great opportunity to try to educate the customers and educate them towards your product. I found it very high-touch pre and post-sales --sometimes in a good way, sometimes in a bad way.
Most of the incumbent software had highly complex back ends, was not as turnkey as they had claimed (hence all the integration work) and the user-side provided very limited functionality...usually providing functionality on the order of a very basic MS-Excel and MS-Powerpoint combined.
On the other hand, in some highly specialized organizations, the incumbent software had decades of work behind it and was kind of like Photoshop in terms of complexity, even if most of the users didn't use most of the things it did. Features had just sort of aggregated out of control. However, the features they did use were often very sophisticated and modeled carefully on that kind of specialist workflow (even if a better workflow would have been technically easy to build).
We worked very hard to provide tooling the customer could integrate themselves if they wanted, but it would work reasonably well right out of the box. We even provided a pretty nice visual data flow development environment for wiring up databases and transforming data and such. We were mostly successful as many of our long-time customers didn't ask us to do much other work for them. We had a few that paid us for some custom development or integration, but our goal was to try to build a tool that didn't require that. Even though the company has been gone for years, I'm aware of a few organizations that still use our software on a day-to-day basis because we succeeded in these goals and the high-TCO of the "winning" company in our space has dissuaded them switching.
It's too bad everybody else got chased out of the market, because I know of at least one of those old customers who's ready to upgrade to something newer, but there's just nobody in our space alive anymore except for one.
I think that if we had been flush with VC money we would have pursued some different strategies, but you often have to size your offerings based on your resources.
A lot of what I experience isn't too relevant anymore anyways, the market and technology have changed too much. These days many organizations simply solve these problems by hiring data scientists (usually cross-educated in the required field and CS/CE/DS or something) and getting them some hardware to play on.
Sure, I forgot to add that the "winning" company that remains has some kind of absurd valuation based on how much V.C. they've taken -- something like an order of magnitude larger than the size of the entire market and it's pretty well known on the street that they aren't anywhere near profitability.
It's from this experience that I really started to learn about how lousy a metric valuations are for just about anything.
Respect to OP for creating his own successful business - You're selling candy and blogging about it, I don't think it's even possible to steal your idea. Not to downplay the achievement either - as it's a great thing. I would call your site innovative but not an innovation, a 'business idea' rather than an idea for some sort of new technology that nobody has ever seen before and therefore might be inclined to rip it off.
There are people doing small time, applied research in cutting edge areas. These types of innovations can and do get ripped if they are good enough.
If you look at the history of science, there have been a ton of sharks.
TL;DR - just because nobody is going to steal your business idea doesn't mean a truly original innovation won't get ripped off if someone sees it.
You can say this, but the reality is that if you give out your good idea too quickly, someone with more resources and money will take it to market faster than you could and you will essentially have to compete against your own idea.
"Stealing an idea" is a poorly defined concept. What is one supposed to be stealing exactly? I.e., what is being owned? You can't own a piece of someone's brain (or otherwise privately owned information carrier... which, I repeat, is already OWNED by someone else -- not you), and platonic objects don't exist (or, at least, there is no evidence that they do, and the phenomenon of information can be explained without them, so... Occam's Razor).
So, it's like saying "square triangle" or "later than 3 but earlier than 1". It's an ill-defined concept and a legal fiction, and applying it in practice costs millions of dollars, people's lives, creativity, and violates people's rights to their ACTUAL, not fictional, property.
Hey, this is cool. I sent @bemmu an email a few months back asking him about Candy Japan and he sent me a list of all his competitors just like this article. I was stopping my Japancrate subscription because of the cost but I never did start a new one with anyone else. Seeing Candy Japan on here might convince me to subscribe for a bit.
Excellent, feel free to publicly announce all your future projects prior to completion! :p Your competitor's would love to be first to market with some of your ideas.
An example being my company: I run a web hosting company (http://www.fused.com, y'know those antiquated LAMP stack ones that aren't cool around these parts) & it's an idea anyone & everyone can execute with some effort. Yay, launch a host today! Good luck.
The main company aside, I've got a few internal projects brewing that can, and will differentiate us from our competition (or, quickly turn into something we wholesell to them directly) that are far beyond run of the mill ideas.
Those 'secret sauces' are too all about execution, but I'd still like to be first to market with them :)
Nobody is going to steal your idea, but people will steal successful ideas. An idea is just that, nothing. Lots people come up with plenty of ideas. Many ideas will lead to nowhere and fail. People don't want to steal untried ideas cause they don't want the effort to find out if they work. Successful companies have tried numerous ideas and doing minor or major pivoting before landing on a workable idea. That is the one people will steal.
Back in the 80's a friend of mine noticed that boxed software sold for much more in Europe than the US. So he started buying the boxes in bulk, shipping them to Europe, and undercutting the competition. He made bank for a few years, until others started copying his business plan. Taking advantage of price differentials is called arbitrage, and candyjapan is just another example of it.
Heck, read about the gold rush and how the arbitrage investors made the real fortunes.
Infinity is not a real number, it is a name for a concept that means no real number is large enough.
But actually, the cost of Japan candy was approximately a plane ticket and a week of time. But its still not arbitrage because the concept of arbitrage is based on the existence of a market with information assymetry leading to price errors, not introducing an efficiency to a production system.
When I was a kid in Germany in the early 70's, some types of American candy weren't available. But some of the kids had friends in the US who'd send them boxes of the stuff, and kids made pocket change by reselling the stuff to their friends at school.
From the moment the business had this idea I forwarded them your blog and website, don't think they really appreciated the amount of knowledge present there.
As an immigrant in Japan you're an inspiration for launching my own business (one day).
I started spinning the idea for an asian snack box thereafter. I found you in 2011 and gave up on it.
By 2012 it became the default business model for online wantrepreneurs.
Then Cratejoy spun up in 2013 and went gangbusters in 2014.
Now in 2015 it's the late comers to the trend with most of the profitable niches already covered.
I imagine by 2016 with all the low hanging fruits taken you're gonna need to be a established player to play the game considering the logistics costs and distributing something of substance.
Then we'll be on to something else to copy.
Biggest lesson I took out of watching the mail order box business is more or less it's a marketing game. It's all pretty much the same but reaching the potential audience is the hardest part.
This isn't competition like McDonalds vs Burger King where you can just drive a block down to get a burger, it's competition to being first to introduce the idea of hamburgers.
Cratejoy is basically a shopify clone so they got the software side covered.
The hardest part is still shipping.
When I looked into this the shipping was the killer, it eats up all possible margins until you get to scale. I learned about how FedEx and UPS works and how they handle last mile deliveries with the USPS and so on so forth.
Shyp is basically Postmate arbitraging on a national shipping account.
Amazon FBA is basically just Amazon arbitraging on Amazon.
That's the opportunity right there. Being somewhere in between Shyp and Amazon FBA. They call it 3PL, third party logistics provider.
You see that problem getting written about quite often. Everyone thinks they can solve it themselves but there's not quite a dedicated modern solutions provider.
But after working for a physical products company operating on a national level the only thing I've learned is that automating sending thousands of packages anywhere consistently is hard as all heck.
Also, I'll tell you the trick why Birchbox worked and became hundreds of millions of dollars and why these other box startups aren't in the same game.
Birchbox found the best opportunity to capitalize on. They charge subscribers to receive a box of makeup samples. In other words they've convinced people to pay money for ads.
The COGS are basically free and on top of that they leverage and poll their subscriber base for data that gets sold right back to the manufacturers.
Everyone else is just trying to replicate Sears Roebuck but unable to convincingly explain their value proposition.
I define fantastic ideas as ideas that I would have no qualms committing myself to for years on end.
I've only ever had a few of these ideas, and it took months to develop them to the point where I fully believed.
Upon sharing with people I trust, the reactions I received might have been approximated as anything from indifference to them secretly thinking "this guy is totally nuts." This in turn wavered my own belief.
Later, two of those very same ideas ended up successful YC companies.
The moral of the story is: if you need to seek external validation to confirm your own idea is fundamentally good or not, you probably have no business executing on it in the first place.
I know that flies contrary to the oft-repeated dogma of seeking validation at every step (market or otherwise), but having to do this in the first place - at least on a fundamental level - reflects negatively on one's sense of product. It also underscores a lack of vision, and I dare say vision is one part unwavering belief.
Generally speaking, unless you're having a casual chat with Sam Altman and Paul Graham, you probably want to trust your own laboriously-thought-out conclusions much more than you would someone else's off-hand opinion.
It boils down to a difficult psychological balancing act. On one hand, you need to drink your own Kool-Aid to a point where others view you as crazy. On the other, you need to be mindful of traps such as bias and fear creeping into your thought process, rendering you truly delusional.
>IMO ideas need space and air to bloom, grow and flourish and you can't do that under lock and key.
I would argue they can, provided they are continually evaluated and evolved with rigorous thought. That said, giving an idea space to breathe is certainly a positive thing and should be sought when appropriate.
> I thought it was pretty unlikely that anyone would also bother sending specifically Japanese candy.
Living in Japan, I often hearing foreigners coming up with the great business idea of selling Japanese products back home. Candy is pretty common as an idea.
The same for me living in Taiwan - most common idea is selling tea to back home (wherever that might be, but not in Asia:). One day I'll execute on that! :)
These are only made by one specific place in Tokyo from what I know. They are also made fresh, and expire quickly. When you get them abroad you often have just 2-3 days to eat them.
There are several independent importers of small quanties the rest of Asia and elsewhere, and the prices go quite high, especially if they manage to get them quickly after they've made.
I presented an idea at Startup Weekend that got a mediocre response so I shelved it, and a year later I met someone at another startup event who asked me to try their app (which looked suspiciously like what I'd pitched) and it turned out their co-founder had gone to that Startup Weekend event.
I would have been sore if their app had been successful, but it wasn't, so I'm glad I didn't waste my time on it =)
So yes, people will steal your idea if they think it's a good one, but that doesn't actually mean it was good.
That story only means that guy's execution failed. And that you didn't try and now rationalizing that your idea was bad just because someone else failed with that idea.
And sometimes ideas start organically at the same time: I pitched an idea at Startup Weekend and we got a prototype going that we didn't pursue, and then a few months later a group in Scotland started a business around the same idea -- crazy! I think given the distance that they did not hear about my Midwestern American Startup Weekend project. I don't know how successful they are, but I will just take it as a sign that I had a good idea :)
Am I right that you gave your idea away, it wasn't stolen?
The startup weekend I went to said very strongly that you shouldn't share an idea that you were not willing to have used by others (no IP, no NDA, no comeback).
So, sure, mail subscription candy to Japan
is an idea, a business idea, that is,
a short description like might be given
to a prospective customer, supplier, banker,
investor, prospective employee, etc. Such
a business idea can be really important.
(2) Secret Sauce. In addition to a business idea,
sometimes there is secret sauce that
enables the execution of the business idea
and, maybe, is intellectual property,
e.g., to be protected as a trade secret,
and that maybe can provide a barrier to
entry. Such secret sauce might be
technical -- from biology, physics,
math, engineering, technology,
etc.
Generally once a business has customers,
the business idea (1), at least in
broad terms, becomes quite well known.
Then it can be good to have some barriers
to entry. Some of those might be
the secret sauce (2). Some more might be
VC Fred Wilson's "large network of
engaged users", a "network effect", a
brand name, etc.
To many people what is crucial about
(2) secret sauce are ideas --
since they may be important to a business,
business ideas. But commonly
very much we want to protect the
secret sauce ideas and not let
them be stolen.
So, some business ideas we very much do
not want to let others steal them.
I really like "Ethical Me". Many small decisions we make throughout the day are supporting causes and trends that we could be greatly opposed to. A site that showed this would be very powerful. Seems like it'd be really hard to build though, since building a database of which companies support which trends/causes would be hard (near impossible) to automate.
I like a bunch of those. If you are in the bay area, we should organize a get together with a couple of other people who have similar lists of ideas. I find that iterating and brainstorming in a small group helps everyone improve.
So a couple of questions. What's up with the agar.io picture and what's up with the cursors? I'm intrigued.
I also find the "Update: Wow, this really exploded, thanks to all 366 people currently reading this page :-) We even got 26 orders since this post went live." cool. That's it's updating live that is.
Honestly people that believe that no one will steal your idea are frankly naive. People always point to patent trolls and want to get rid of all patents but cannot fathom reform. Yet this notion benefits the big fish in the market disproportionately to the everyday programmer/startup. IMO there should be narrow specific patents that are cheap and for the everyday programmer's startup and only for a short time like 6 months. They would not own the 'idea' but rather the rights to a commercial application of this 'idea' within a given time period. Patents could protect startups too if the system is reformed
There's of course the counter-example of Steve Blank where his startup E.piphany's entire slide deck was stolen verbatim.. they failed though. Does that make them nobodies?
It is not a rare case that some startup will have more seed capital than you and a lot more drive. They will probably have an entire team of hungry interns too working for free to push out product revisions. I say let them steal my ideas all they want, because frankly if my idea gains some weight, my job is done and I can go home. No I will not smoke a cigar in a Hawaiian beach house because of it, but that is not the point. If egoism and money gets in the way of idea dissemination we have a real problem.
Are there any restrictions selling food products from overseas, specifically in the US (FDA approvals, for example)?
In addition, is it also possible to run into export issues or licensing problems with the foreign candy/food makers?
I ask this because I've often thought about doing this for products from "back home", but ultmiately am stopped by stories about redistribution problems.
I've actually had a jlist subscription, one of the other options he links, for much longer than Candy Japan has existed. Although I do reading material, not sure when they started doing snacks. If it was before Candy Japan as well, then they wouldn't have had much different impact on him that wasn't already there at the start.
Funnily none of the competitors mentioned seems to target Asia. A friend told me of a friend who paid for his exchange in Japan by selling promotional toys and merchandise from Japanese shops to Taiwan.
Apparently there are a lot of Japanophiles in Taiwan who are willing to pay a premium for a Japanese mister Donuts toy you get with 5 purchases.
Startups are 1% inspiration and 99% perspiration. His description of running a market experiment is bang on the nail. 99% of ideas will fail. You have to see if market demand actually exists by getting a product out for people to try. During that process people can steal your idea. If you get traction you have to move fast.
Hey bemmu, Would be great if you could add a email newsletter service to the website, to showcase new candies being shipped/ or any new updates on your business. Although I could subscribe to the blog through RSS, but I bet email newsletters would be much more effective.
Sounds good. I wonder what would be a natural flow for that?
Right now the landing page starts by choosing between "subscribe" / "send gift". Not sure I want to complicate it too much by adding a third choice of "don't want to order, but only subscribe to the newsletter, enter your email here".
I don't really want to add one of those annoying newsletter popups if possible.
To be honest, if I have a great idea and somebody else makes it happen, I would be glad. All I care about is somebody executing it well. That's why I'd prefer to execute it, since I think I understand my idea better.
I would not really care about the money. It's pretty hard to execute an idea and make sure you are credited for it. I would gladly have a platform when people would just post idea for free and see how they're executed.
It's just a matter of making the world a better place, and I would be happy enough to just use a product that did not exist before, even if I don't get the profits.
The patent system is overrated. Are there really so many single inventors who benefited so much from patents ?
"Hi Mark, my name is Cameron, and this is my brother, Tyler."
"Good to meet you. Sweartagawd your idea is safe, my lips have a zippers." (makes zzzzzzzzip sound)
"Mark, me and my brother trust you. In addition, no one could possibly execute our idea as well as we can, since we have the original idea. Can you start coding right away?"
"Sure, yeah, come again though about that 'execute' stuff? I'm so clueless about business! My rate will be $20 an hour to code up your idea."
"Okay Mark, keep us updated when you finish -- and again, we're not worried you'll steal our idea. We're not even going to ask you to sign a non-disclosure -- you look so dadburned honest and humble, Mark! And reliable too."
"Thanks Cameron and Tyler, come again with that 'steal your idea' stuff? I'm so naive! I have no experience stealing ideas! I'm a virgin when it comes to betraying people!"
"Okay Mark, don't pop that cherry with us!"
___________________________________________________
LATER..............Cameron and Tyler discuss the Zuck hire...
CAM: "He's a bit naive but he can code, that comes from a trusted friend who worked on a project together."
TYLER: "To me, he came off as chronically baffled. I wager we're going to be disappointed in his work, Cameron."
Why didn't you patent it? I often think when I see the tag no one will steal your idea, only applies if you're idea isn't worth stealing - 'I'm gonna sell some stuff' isn't really an idea, it's just business, and so how you do your business matters - i.e. execution.
However if you come up with a truly new idea - a better compression algorithm for example - then the idea matters and execution matter as well. It's just truly new ideas are rare, and so the 'execution matters' mantra continues, because most new businesses aren't new ideas just different packaging.
You're adorable candyjapan. I want to bounce you on my knee. When you eventually run a biz that doesn't just generate millions in revenue but is massively profitable, give me a shout and let me know if you still feel this way.
Imagine you have a biz that prints money. You literally have dump trucks that roll up to your gate every morning and unload, and amazingly you get to keep about half of it.
It's rare to create a business like that and if word gets out you'll have competitors swarming all over you driving down your margins until you're blowing every last cent trying to out market them and all that profitability will go away.
So you learn to STFU. Because people will steal your idea.
In the Valley among startups almost no-one is profitable and so it's all about sharing the love and lots of hugs because no one has anything to defend.
Two ways businesses print money: either be unique and capitalize on tiny amounts of large margins or be popular to capitalize on lots of tiny margins.
If it's popular and is profitable people will copy it. It's not that hard to reverse engineer products, most people just don't bother or try. Give me any CPG brand on the supermarket shelf right now and I can show you the supply chain and equipment needed to manufacture and deliver it.
Everything new gets commoditized eventually, especially considering it's all made in China anyways, and trickles through the global markets at various pacing.
That varying speed is the only competitive advantage one has. Your only job is to stay ahead of the game then when the game is boring sell that information to others to replicate. AKA franchising.
Then you keep spinning and spinning until 30 years later you can stand to wait around while others jump into a new market, burn out, and just take whatever you want out of that situation to come up with a new product and utilize your large economies of scale to immediately sell it in your extended network of retail stores that's making more per square foot than Tiffany's.
But do agree with the second part. Silicon Valley is just a giant R&D college campus built off other people's money experimenting on each other's child like sensibilities.
I agree entirely with that, and find myself confused why you tell me that.
Obviously you think my post is a personal attack, yet i do not understand why.
Unless you care to hear them, i'll spare you the details, but i assure you i only intended to pointed something out that the person dearly needs to hear, in the hopes that it might lead them to introspection; not to attack them.
Someone did steal my idea, a sales rep I fired. He took my product samples and copied it down to the flaws (small errors I had made in CAD), and on top of that made their product in Taiwan (vs mine USA), and they had much better execution, marketing, and much deeper relationships in the industry. They quite literally got the front cover of every industry catalog, of all the major distributors in all 50 states (1). I have estimated that by the time they got the first 40' container of product in from Asia that they were double our size; we worked out of a 16'x16' garden shed at the time (2).
I have battled them for 10 years and they just sold for 12 million. I would be happy with 1 million. But the truth? The truth is that having a competitor HELPED not hurt. The sales conversations went from "why would I buy that?" to "How does it compare to the other guy?" . in short, their aggressive marketing towed me along in their wake. The geeky informed buyers would buy the USA made original (mine), and the mass market would buy his.
The main outcome is that I could stop spending marketing on advertising, and focus on innovating and product development. Since my industry is distributor based, and my competitor was #1 in all of them, the best way to compete was to out innovate. Also the easiest, and most fun way. Anytime a new truck comes out I usually have a 3-6 month exclusive window before his overseas operation can deliver product. We pick up a lot of new wholesale customers when that happens.
I think that the outcome could have been worse without the 'copy'. For years we couldn't have made the product any faster, we had massive growth in sales. $90K first year, $500K second, $800K, 1.2M, 2M .. it was hard to buy steel some months we grew so fast. In the end. a competitor is not the end of the world, it is a way for the buyer to make a choice - this guy or that guy. It can be easier to sell if they have someone to compare to; when they have nothing it is a little disorienting for a buyer and they tend to not buy anything.
1. product: leveling kit for trucks, so people can put aftermarket wheels and tires on. Another 20 companies copied the product afterward but we don't hear much about them.
2. We have moved twice. From the 16x16 garden shed, to 6800 sq ft, to the current 15,000 sq ft. We now employ 10 people and 5 robots.