Solving a Problem Where Several Others Have Failed

Should a founder even try to solve a problem that many others in the past have tried, and failed, to resolve? Or is a startup graveyard full of promising-yet-defunct concepts a convincing reason to choose a different category?

There's actually no easy answer to this question. While it's certainly a good idea to learn from the lessons of the past, all entrants in a formerly-crowded field are not necessarily DOOMED to failure themselves. After all, if several other founders have tried to tackle your same problem, that likely means it's a REAL problem that many people customers are confronting. Great minds thinking alike and all that.

So rather than just GIVING UP on a promising potential startup idea, consider not just IF previous founders failed to solve the problem, but WHY. Specifically, think about how the landscape has changed, and other variables have shifted over time. It's entirely possible that new technology, cultural developments, or other factors about the marketplace have opened up new opportunities and strategies that weren't available to the founders who came this way before.

There are dozens of examples of clearly identified problems that haven't yet found ideal solutions, but not for a lack of effort on the part of entrepreneurs. Let's consider a few:

HOME CLEANING SERVICES

A LOT of apps sought to become "Uber for Domestics" but the sector proves extremely challenging.

Homejoy connected home owners with service providers like cleaners and handymen. It got off to an extremely promising start. Y Combinator funded the company in March 2010, and at the time, co-founder Paul Graham called it "the fastest-growing Y Combinator company" of them all.

The company had strong funding and used it to quickly expand, but a lot of this growth was fueled by deep discounts. A 2.5-hour house cleaning that would normally go for $85 went for as low as $20 during some promotions. When these discounts ran out, so did Homejoy's customers. Only 15-20% of people who tried Homejoy booked a domestic helper a second time within a month.

Labor lawsuits were another major issue in this category. Homejoy and Handy, a marketplace for residential cleaning and other basic home services, were both sued by their independent contractors, who claimed that they should legally be re-categorized as full-time employees. Handy raised over $90 million in funding before being acquired by Angie's List owner ANGI Homeservices in 2018.

Clearly, there are a number of challenges confronting "Uber for House Cleaners" type companies. Margins are relatively thin, with the amount home owners are willing to pay roughly aligning with how much domestic workers want to earn. There's not a lot left over for founders to skim off the top. As well, customer acquisition costs (CAC) are high. A lot of people clean their own homes, or already have someone that they bring in once a month to help out. If you want to sell these folks on a new solution, it needs to have very competitive rates and other bells and whistles to ensure it's more convenient.

Finally, these business models require a company to maintain positive working relationships with large communities of freelancers an independent contractors, ensuring they feel fairly compensated and satisfied by the employment experience and aren't going to report you to the Labor Board or take you to court. That's increasingly harder to manage at scale.

Any new entrant in this field would have to ask themselves "why me?" and "why now?" Do they have potential solutions to these nagging obstacles and issues? Has something fundamentally changed about the nature of domestic work, the gig economy, the app market, or otherwise since the mid-'10s height of Homejoy and Handy? If you can't answer these questions satisfactorily, don't start a company in this space.

GROUP TRAVEL PLANNING

One more helpful example, cause why not!

Many companies have designed tools allowing groups to collaborate on travel plans and itineraries, but after promising starts, a number of them all seemed to flare out.

Utrip launched a smart itinerary planner out of beta in 2014, using machine learning to help users customize their travel plans based on personal preferences. They also had a white label product, Utrip PRO, designed to help travel agencies and hotels expand their vacation planning services and offerings.

But despite a promising start, attracting hundreds of thousands of users across 32 markets in its first year, the company failed to gain sufficient traction.

It's a common story across the travel tech space, with major established players like TripAdvisor and Expedia -- along with similar-enough offerings from giants like Google and Airbnb -- either crowding out or gobbling up new players, even if they have a clever or original approach to a specific problem. Utrip ultimately shifted to a B2B model, licensing its software to more established travel companies, but by 2018, after attempts to raise a new round or get acquired fell through, CEO and co-founder Gilad Berenstein opted to shut the operation down.

It stuck around for less overall time than Utrip, but the viral hit Tripnotes suffered a similar fate. This AI-based travel app was built on top of ChatGPT, to allow for even more creative collaborative vacation planning. A demo went viral in early 2023, and the app had been downloaded by nearly a million users within its first 45 days online. But just a few months later, Tripnotes had largely run out of team. Before 2023 was even done, the app was sold to restaruant reservation startup Dorsia, which ultimately decided to shut it down.

The same fate also befell Triposo, which also used machine learning algorithms to help users plan not vacations but "journeys."The big selling point on Triposo was that the app worked without an internet connection. All relevant info about your excursion was downloaded to your device prior to departure, avoiding horror film-esque "lost in the woods with no service" level scenarios.

The company raised a $3.5 million Series A, and within a few years of launch, it had been downloaded 10 million times. But as so many consumer-facing apps observe, maintaining momentum and continually funneling in new users is far easier said than done. (It's HARD to get someone to download a new app! People are very happy with the apps they already have.)

Failing to gain enough traction and scale fast enough, Triposo was sold in October 2017 to Italy-based tour booker Musement for an undisclosed amount. They stopped taking new users in 2021 and the service completely shut down in 2023.

So once more, this isn't to say DEFINITELY don't build a group travel planning app. But BEFORE you do, consider some key questions:

• Why me? And why not? What will make you a successful entrepreneur in this particular space, despite these past failures?
• Is this a REAL and painful problem? Are there already existing workaround that many or most people are using?
• What has changed about the marketplace since these failures?
• What do I know now that these other founders did not?
• Can I solve this problem in a simpler or more efficient way than others have tried?
• Can I retain more customers than these other startups? How?
• What can I do to avoid these other traps and pitfalls?

Understanding why companies and brands failed to fix a problem before can make your path to success all that much clearer.