If a Business Improves Peoples' Lives, It Will Succeed
Ben Lerer of Lerer Hippeau Ventures explains how investors and inventors alike can pursue success by following trends of disruption.
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"Probably the easiest way to think about how we think about opportunity is any area, any sector, any business that has not yet been totally disrupted by the existence of the internet will be."
Simply put, the internet's influence on the business world has resulted in profitable solutions to thousands of myriad inefficiencies. This often occurs through disruption. Companies like Uber and Hailo, for example, offer digital solutions to the problems innate in the taxi industry. Services like Steam, OpenTable, and Airbnb have changed the ways people perform regular tasks such as shop for video games, make dinner reservations, and arrange non-hotel lodging.
Inventors and entrepreneurs alike should seek to emulate these companies in how they identify structural weaknesses within their respective industries and conjure up a fix. Lerer is less excited about companies that trod ground already covered by someone else. If he were to meet with an entrepreneur touting a digital movie-rental startup, Lerer would likely be wary of investing because digital movie rentals isn't a new solution to an old problem. That road has already been traveled.
Lerer instead offers an example of an opportunity that recently piqued his interest: Casper, a mattress company with an innovative vertical integration approach (we've covered Casper briefly on this site before). "Shopping for a mattress totally sucks," says Lerer, and he's right. It sucks just like finding places to eat in strange towns sucked before Yelp, or how arranging live communication with your friend in Botswana sucked before Skype. Even if Casper isn't the eventual victor of the future-minded mattress wars, Lerer's investment represents a commitment to a company that has identified a problem and seeks to fix it.
These are the kinds of startups that attract the best talent and the most eager investors. As Lerer says, the key is that a company should exist rather than just could exist. It makes little sense to support a company not driven by an imperative urge to improve consumers' lives. It makes little sense to build a startup that isn't guided by a goal to tackle a problem that hasn't yet been solved. "Make people’s lives better with what you’re building," says Lerer, "and generally you’re heading in the right direction."
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