I love investing in web 2.0 startups. As a micro VC and former head of an internet startup in my college days I am always on the lookout for exceptional companies.
That being said, I look for companies that abide by the path of lease resistance philosophy. All this means is that people typically choose the easiest method of doing something over the other. A great quote from Mark Cuban sums this up.
“I recently read and article by Paul Kagan referring to George Gilder’s “vision” that in the future TV will die, regardless of delivery medium, simply because people will watch only what they want to watch.
How wrong he is. Why he is wrong is a lesson in basic business.
It was Aaron Spelling, I believe, who said, “TV is the path of least resistance from complete boredom.” Which is another way of saying that it’s easier to watch TV than to sit there and do nothing.”
I ask every web 2.0 project this question before giving them a dime of my money, who has the path of least resistance, you or your competitor?
I’m a firm believer that you can compete in the same market as other “big” companies, but only if you have and edge through the path of least resistance.
Companies that have capitalized on this philosophy are apple, facebook, living social, wordpress, youtube, amazon, and google just to name a few. All had extremely large competitors, but managed to simplify things and eventually win out over there competition.
Thinking about investing in a company? What is their path of least resistance?