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Ask HN: A Taxonomy of Startup Strategies

13 points by bendtheblock ↗ HN
I've been observing online startups for a few years now and I'm interested in identifying a taxonomy.

I just put these together. Note that these are intentionally kept vertical-agnostic.

High-scope Infrastructure - use domain knowledge and innovation to provide a turnkey solution to a broad array of customers. Customers outsource to the service instead of attempting to roll their own equivalent. The company gives them a better solution than they could build for the same price. These startups usually ride on a new innovation and are capital intensive. (Amazon EC2, AppJet, Skype, Heroku, Sendgrid, Dropbox, iPad PoS)

High-scope Web App - as above but the utility is delivered via a traditional web app. These companies are still 'high-scope' even if they only provide services to a particular vertical, because their solution is usually more general than an equivalent in-house one would be. (Basecamp, Hoodle, Freshbooks, Convore, Wufoo, Xero, most SaaS)

Direct Marketplace - facilitates real commerce directly between two parties, where one or both can be a consumer or business. Users are attracted to these services because they can trade goods or services. Reliance on network effect. (eBay, Etsy, AirBnB, limos.com, Smarkets, Groupon, Kickstarter, 99designs, Theme Forest, GumTree)

Ad Marketplace - as above but for ads only (Gumtree, Craig's List)

Ads with peripheral service/content - visitors are attracted by the utility of a service or by engaging content, revenue from on-page ads. Even though the 'peripheral service' takes significant effort, the underlying aim is to drive traffic for the consumption of ads (Facebook, Google, SongKick, about.com, justin.tv, Reddit and other community sites)

Do you agree with these? What would yours be?

8 comments

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messel
Perhaps a better name would be a taxonomy of startup strategies. One startup may switch or select several strategies depending on it's size and market. I'm interested in seeing this list expand if you pursue it. Please send me a url to a destination where you'll further develop it. (messel at gmail dot com)
bendtheblock
Sure - will email. Name changed. The important thing is that the categories are not vertical or location specific.

I wonder if you could look for startup opportunities by taking the taxonomy and mapping it to various verticals and countries. When you find a gap with no existing startup, you'd examine if there's a good reason why there's a gap, and if you don't find one you build an MVP for it.

snikolic
Neat! I like the idea of algorithmically enumerating opportunities for innovation. I'm sure there would be some gems buried in the findings (and some pretty amusing ideas too :-). I'd totally be interested to see this go further.
gyardley
Without agreeing or disagreeing - I have to run, so I can't think about it in depth - why are you interested in startup taxonomy? What do you hope to get from it?

Not meant to be negative in any way - I'm curious.

bendtheblock
Initially, it was because I felt there was a series of underlying themes in all the startup strategies I hear about.

Then I wondered about using this as a framework for searching out new startup opportunities (see my comment below).

I also wondered if anyone else had already developed cohesive taxonomy like this.

triviatise
models can visually help you to find permutations that arent obvious at first. Think about a state table with states A - F. The state table helps you to examine all transitions even ones that may at first appear to be degenerate.

If you separate monetization strategy from customer acquisition strategy from maybe something like market or medium you might find holes.

monetization - ads, subscription, donations, one time fee

customer acquisition -

Im sure this has been done before, probably by mckinsey or HBR

Hisoka
Wouldn't DropBox be considered more of a web app rather than infrastructure?

Some companies also are a cross-breed between some of them such as SEOMoz(content + web app).

triviatise
games/entertainment/virtual goods (zynga,scvngr,foursquare?), retail (actually selling things)

I dont think the taxonomy is very robust. When you talk strategy what do you mean? Ads are a strategy to monetize, but direct marketplace describes the business.

Content is more like published (blogs) vs. user generated content (facebook, twitter)

monetization strategy is different than maybe the customer acquisition strategy. If you pull all mention of ads then I think the taxonomy works better.

Craigslist to me is more like a direct marketplace