"X for Y" Startups

“Uber for Car Washes” or “Pinterest for Dudes” or “AngelList for Real Estate.” We’re the “X company for Y niche.” Elevator Pitch Shorthand.

While not as bad as asking investors to sign an NDA, it’s a bad practice. Why?

1) It’s a Terrible Signal. The elevator pitch is the very first opportunity for a founder to prove they can communicate and inspire confidence in a sales situation. A founder using “X for Y” is either lazy, doesn’t truly understand their market or incapable of communicating why they’re special. All are fatal flaws.

2) It’s Unnecessarily*Risky*. If a startup fills its marketing materials with we’re the “X company for Y market”, what happens if X company is indicted for securities fraud — or it’s founder pulls a McAfee?

3) It’s Limiting. By being “X for Y”, a startup starts to punt on thinking critically about how to create a business model that works for its market. The startup also inherits all the public concerns with the business it’s copying.

4) Finally, it Probably Means The Startup Is Screwed. If AngelList’s model would work well for real estate, wouldn’t they be in a better place to attack it than a new startup? The best “Groupon for Pet Owners” is going to be Groupon.

Tech startups that matter create categories rather than refine one. Dropbox, Google, Facebook, Angellist, Zillow, Parse, Heroku, and Rackspace couldn’t be described as “X for Y” businesses.

Given reporters and investors love the “X for Y” shorthand, it will happen. However, it’s the startup’s job to explain why it is defining a new category and not a “me-too.” — and that’s easiest to do when a startup chooses a path that isn’t a “X for Y” business in the first place.

Michael Girdley