One of the defining characteristics of the technology world is the pace at which innovations one day become standards the next. Twitter, Tumblr, and Facebook trained the world to understand what a feed of content was. We take this for granted now, but it wasn’t long ago that an activity feed was a foreign concept. In the same way, Pinterest offered a different take on the feed structure, deprioritizing time as the lead indicator of “interestingness,” with the result being a board structure. Soon after, lots of startups had adopted this interface.
The key lesson here is that the technology community is very observant about what succeeds and is quick to implement successful innovations into new products. Every product has core assumptions that are validated by looking to prior successes (e.g., “people like the board layouts”). And the best ones also push the limits in some variety. In other words, great products assume some things, and test others. Where Twitter had to test a chronological feed structure, a new startup may not because they believe it has proven to be a successful product feature.
This framework can also be applied to innovative business models inspiring a slew of “X for Y” companies (e.g. “Zynga for Twitter”). For every company that brings a new model to the market and raises capital, it seems 10 companies pop up replicating the model in different areas. Of course, this can have a tremendously positive impact on the pace of technological innovation.
However, problems arise when a company’s perceived success is decoupled from its actual success. It causes fast followers to assume things as fact that they should treat as unvalidated. “X for Y” is only interesting to the extent that “X” has proven successful. And when the “X” proves unsuccessful (or is simply perceived as unsuccessful), the consequences reverberate through the ecosystem. This is not to say that “X for Y” startups can’t work, only that you have to be ruthlessly honest about what the “X” startup has validated, and what it hasn’t.
Startup founders are taught to test each hypothesis they have. However, founders can easily overlook key assumptions in situations where speculation is disguised as fact, leading them to form hypotheses on top of that speculation. In other words, when they speculate on top of speculation.