Contrarian Examples from How I Built This

Allen Cheng writes the best book and content summaries on the web. He wrote this post summarizing what he learned from 50 episodes of Guy Raz’s How I Built This podcast.

Many of the businesses were built on ideas that seemed polarizing or crazy at the time. Pulling directly from Allen, these are the ones that jumped at me:

  • Airbnb: idea of staying in someone’s house was crazy
  • Sam Adams: American beer at the time were watered down lagers. Didn’t want to compete with Budweiser.
  • Southwest: Violated all the “rules” of airlines. Discount airline (some tickets cost $10), no frills, direct routes between second tier airports. Focused not on market share but profitability.
  • Jose Andres: Did crazy things in the kitchen at El Bulli with Ferran Adria. “Don’t take things for granted. You have to discover things for yourself. If you only follow the teachings of people before you, you are only following others.” Also was part of the tapas sharing-food movement in the US – “just move your plate 20 inches to indicate sharing.”
  • Patagonia: “If you want to understand an entrepreneur, understand a juvenile delinquent.” If you can’t win at a sport, invent your own sport that you can be best in. Don’t go head to head against Coca-Cola, they’ll kill you. Do it differently. Figure out something that no one else has thought about.
  • Melissa & Doug: In the digital age, they went retro, building physical toys that gave parents nostalgia. “Don’t go with the tide. If we copy every good model out there, we’re going to be mediocre by definition.”
  • Warby Parker: Got a lot of feedback of glasses being weird to buy online, people wanted to touch them. They offered free shipping and returns for home trial program.
    • Price was believed to be signal of quality. Would be absurd to consumers that a comparable product was sold at 10% of price. $100 presents a psychological barrier, so they priced at $95 so it looks deliberate (as opposed to $99)
    • Conventional wisdom was to either build a brand or ecommerce site, not both. They wanted to build a vertically integrated brand.
  • Zumba: Novel in how much fun people had while exercising. Make it easy so your mom can do it. Don’t use microphone or it’ll interrupt the music – cue visually.
  • Drybar: Gave blowouts at $40, in between the expensive $100+ salons that would guilt you into cutting hair, and the discount Supercuts experience (classic Blue Ocean).
  • Honest Tea: Saw there was a sweetness gap, between unsweetened and super sweet. Also made its tea by brewing, not by powder. People who liked the tea were loyal since other teas tasted so different. But distributors for Snapple etc. rejected them thinking there wasn’t a market for it.
  • Zappos: Seemed like classic bad dotcom idea – no one wanted to buy shoes without trying them out. But footwear was a $40B industry in US, and mail order was fastest segment of shoes.
  • Kate Spade: Felt handbags at the time were too complicated, wanted simple architectural shapes.
  • Lyft: In 2012, saw Uber with elite black cars picking up on demand. Thought, we should do this for personal vehicles. Getting into a stranger’s car was absurd at the time (like Airbnb) and regulation was heavy. Even as they gained traction, other companies were waiting to see how the regulatory problems would be resolved.
  • Beyond Meat: All an animal is doing is taking in plant matter and water and creating protein and lipids. Why can’t we do this too outside the animal? Wasn’t a big hit among investors until Kleiner Perkins got involved.
  • Crate & Barrel: European furniture was expensive and out of reach of young couples. In addition to their direct-from-factory purchase model, a few trends grew the market – jet travel to Europe, food culture (eg Julia Childs), and America was getting wealthier.
  • Atari: Home arcade machines were completely novel. Toy vendors didn’t think people were willing to pay much for them.
  • Stripe: Around the time of founding in 2010, payments seemed like a relatively solved problem. From the consumer side, payments (eg to Amazon) were already frictionless, investors thought Paypal would take care of developer ease.
    • Also, Stripe targeted developers rather than businesses through a salesforce, which was of unclear value to investors and competitors. Stripe assumed that targeting developers would let Stripe grow with its customers (as did happen with customers Lyft and Shopify).
  • Betterment: Starting a fintech company required wading through regulation, something many tech entrepreneurs were unwilling to do. Around 2008, faced some criticism around starting a financial company around the time of the recession, but they believed it was the best time, given the confusion around what to do with money then.

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