Red Oceans in venture.


In startup land, folks worry about competition. In business strategy world there is a term that refers to this “red oceans” that are bloody with combat.

These are usually valuable markets, though perhaps not profitable ones, in the case of mature industries. In mature industries often there are a few players who have competed down the margins to make the market bloody yet not profitable. Maybe cars is one of these, or cereal. A few very large players make large profit dollars though low profit margins.

But many of the bloody markets in startup land are quite profitable — back when everyone was chasing Microsoft Windows or Office or Google/Yahoo/Altavista or chasing Facebook/Myspace/Friendster…the winner took all and made lots of profits for a long time. Like Apple right now in smartphones.

But your odds of winning are low.

So what about blue oceans?


Startups in blue oceans face a different question. Let’s say you don’t have a better bike but you have a bike for people who don’t ride bikes. You are a city bike share system or an electric-assist bike for women who are worried about getting sweaty or a bike for kids to go long distances or a bike you can ride indoors.

Well then people say you are working on something people don’t want.

Would anybody want it? Why? Prove it…