Unbroken Startup Markets



Many startup pitches start off with the simple claim that something is broken. “Email is broken.” “Messaging is broken.” “Advertising is broken.” If you hear too many pitches, you might start wondering how anything gets done since everything around us is so broken.

It’s a common refrain that you expect from aggressive founders who are eager to change the world. When your vision of the future is powerful and truly innovative, the current state of the world can seem very broken in comparison. However, such powerful vision and dismissal of the status quo overlooks the fact that the status quo exists for a reason.

If something is broken, why are people using it every day?

Activation Energy

In chemistry, changes come through chemical reactions. Reactions don’t just happen on their own; they require some minimum amount of energy to get started. That energy is known as the activation energy of the reaction.

Innovations are similar to chemical reactions. Where chemical reactions transform materials, innovations transform markets. What, then, is the activation energy of innovation? In business, activation energy takes the form of the amount of effort you need to displace existing tools and services with new innovations. That effort is a combination of how radical the innovation is and how much you need to invest to get that innovation adopted in your market.

Depending on the characteristics of a market, the activation energy required for innovation can differ greatly. For example, a highly mature and slow-moving market with large, entrenched competition such as the taxi industry requires a massive innovation and investment in the form of Uber/Lyft. A young but fast-moving market like online messaging requires less innovation and investment in the form of WhatsApp/Snapchat to transform the market.

Your activation energy is not only overcoming the existing market competitors, but the ingrained habits of your customers. Customers who have a regular habit of using a product, even if that product is bad, will resist changing out of sheer momentum. In these cases, you need even more activation energy to transform the market.

Unbroken Markets

So how does chemistry help you start a company? By helping us make good assumptions.

It is dangerous to assume that the activation energy for your market is low, but that is exactly what you are doing when you assert it is “broken.” Instead, assume your market is stable and healthy, so that your innovation needs to be radical to succeed. Also assume that the effort to bring that innovation to market will be significant as well, so you will plan accordingly. Any other assumption will allow you to become complacent.

Your market may, in fact, be broken, but assuming otherwise will ensure that you do not underestimate your challenges.


Reprinted by permission.

Image Credit: CC by Jef Poskanzer

About the author: Sean Byrnes

Sean is the founder of Flurry, the leader in advertising and analytics services for mobile applications. He is currently an advisor, mentor and angel investor in the San Francisco bay area. You can read more of his advice and thoughts on building businesses on Sean On Startups and his personal website.

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