MARTIN OMANDER: Hi.
Welcome back to Root Access, the show
on Google Developers Live where we talk about startups.
My name is Martin Omander.
I work in developer relations, and I'm joined here
by my co-worker, Don Dodge, longtime investor and startup
advocate.
DON DODGE: Thanks for having me.
MARTIN OMANDER: Don, we've had lots
of good viewer questions come in as YouTube comments.
One was from [INAUDIBLE], and he or she
asks, "How big does your idea have to be for it
to be successful?"
Pretty deep question.
DON DODGE: It is.
Multiple layers to that answer.
So how big does the idea have to be?
Not that big.
Here are some examples.
Carbonite is a company that basically backs up your laptop.
And the first time I saw that idea, I thought, that's silly.
You can do that many different ways.
But it turns out it wasn't silly.
It was a problem that a lot of people had,
and they're now a public company.
Dropbox is another example.
Dropbox is a very simple idea.
It's transfer big files over the internet.
So it's not a complicated idea.
It's a simple idea.
But they are probably worth several billion dollars now.
Twitter.
Twitter is going to go public this week.
But Twitter is a very simple idea.
It's basically instant messaging broadcast
to whoever wants to subscribe.
So are those big ideas?
No, not really.
But they were amazingly successful.
So I think the bigger question is, is it
an idea that's scalable?
Can it scale to millions and millions of users?
Or is it in a market where you can generate tens of millions
of dollars of revenue?
So that's really the way to look at that question.
Not is the idea big enough, it's is it scalable enough?
I think a few weeks ago, we talked about the difference
between lifestyle businesses and venture-backed businesses.
And lifestyle businesses can be very lucrative
and make you very wealthy, but they aren't venture capital
kinds of high growth exit kinds of businesses.
When venture capitalists invest, they're looking for an exit
to get their money back.
Lifestyle businesses are more cash flow profitable businesses
that may never sell.
So those aren't the kinds of things
that venture capital investors want to get involved in.
That's more like banks or loans or that sort of thing.
Still very lucrative and can make you very wealthy, but not
something that a VC investor looks at.
MARTIN OMANDER: So these lifestyle businesses
we're talking about.
What kind of-- like retail, services?
DON DODGE: Right traditional.
Retail can be a very, very lucrative business.
You can have one store and generate $10 million in revenue
and be very, very profitable.
Or replicate that and do four or five stores
and do $20, $30, $50 million in revenue and be very profitable.
But those don't tend to get acquired or exit
for 10s of millions of dollars.
So when you're thinking about starting those businesses,
you look at different sources of financing.
MARTIN OMANDER: Right.
Got it.
Great.
Thank you.
We have another question from [INAUDIBLE]
who said, "Very useful.
Thank you."
Thank you, [INAUDIBLE].
Just one question, "What if a startup
takes place in a third world country?
I'm going through this and find it very difficult.
Any advice?"
DON DODGE: Yes.
There are several examples of companies
that have started in third world countries that simply took
ideas that have worked or been successful in the US
and customized them a bit for their local market.
So those aren't that complicated.
It's just look at something that has worked
in the US or another market, and customize it
for your local market and make it work.
And you can be amazingly successful.
Don't be too proud to be a copycat because there
are lots of opportunities there where the bigger companies just
aren't watching.
Another approach is solve problems
that are unique to your market that may not
be problems in the US market.
So like SMS messaging or money transfers
or like WhatsApp is just an instant messaging system that
works across international boundaries.
And so those are problems that we don't have in the US,
but are very viable businesses outside.
So either copy something that works in the US
and make it work for your local market,
or focus on a problem that is unique to your market
and make that work.
MARTIN OMANDER: I assume [INAUDIBLE] is also
in a less-developed market having
problems with raising capital.
What are your thoughts on that when there's less
developed venture capital market?
DON DODGE: Yeah.
There's always a way to raise money,
it's just the investor expectations are different.
So in those countries, they very well
may be investors who want to invest in cash flow businesses
and lifestyle businesses.
So they might invest $100,000 or a million dollars and say pay
me back $0.10 on the dollar of your revenue until
my investment is paid back, and then I'll just have a small
percentage after that.
So there are different ways to structure it,
but there's always a way to raise money.
It's just a different set of investors
and different expectations.
MARTIN OMANDER: And I guess it could even
be an advantage to being a third world country.
Your costs might be lower.
DON DODGE: Significantly lower.
MARTIN OMANDER: All right.
Great.
Thank you, Don.
And remember, next time blue shirts, OK?
DON DODGE: All right.
Very good.
MARTIN OMANDER: [INAUDIBLE], [INAUDIBLE],
I hope those answers helped you.
Everybody else, please keep the questions coming in,
in the YouTube comments.
So if you're a cloud developer and you
want to run on Google's infrastructure,
then you can get a credit and you can get started.
The details are on the screen.
It's a $2000 credit to get you started.
Go ahead and sign up.
I use the Google Cloud platform all the time
for writing my Google internal app for my team.
That's it.
See you next time.