Entrepreneurs pride themselves on being innovators. They fill in the gaps in daily living, bringing the public products and service before we realized we needed them. But a successful business can be built on the genius of someone else. Some of the most brilliant entrepreneurs in history have made their mark through spin-off technologies and products, from steel-making in the age of railroad construction (which earned Andrew Carnegie $480 million) to cloud creation software OpenStack, which was created to solve storage problems for NASA engineers.
Creating a prosperous business this way is so much more complex than simply glomming onto the most current fad and selling similar products. It’s about building on something that has changed the way we live, and filling in the gaps to make an even better product or service.
Success combines a perfect blend of being on the forefront of technology and choosing the trends that are destined to stick. For example, early Facebook embracer Farmville made a killing as one of the most popular user games, back when such games were limited and the competition not so fierce. However, similar early adopters of Google+, which tried to come in after the market was already saturated with social networking apps, were not as prosperous. You stand to make a bigger profit on the cusp of something new, but you’re also taking a big risk. If you latch onto a trend that doesn’t stick, you’ll go down with it.
The trick is to find the gaps where technology doesn’t already do well. You don’t have to look very far to find current examples of this. Video streaming pioneer YouTube just turned 10 years old. At its outset, YouTube was a place for users to upload videos to share with their social network – a fairly simple concept. It didn’t take long for users such as Michelle Phan to realize YouTube viewers craved niched serial videos and tutorials. The how-to videos on YouTube are some of the most popular and profitable. Some of the creators of these videos have turned their channels into full-time jobs, and even a path to fame.
Another profitable spin-off is Utah startup VidAngel. It piggybacked on the rising success of online video streaming services such as YouTube, Netflix, Hulu, and Amazon Prime. While content streaming sites had provided the public with millions of television episodes, movie titles and rental options, none offered a tool for concerned parents to block profanity or graphic violence. VidAngel launched their own streaming service to give users options to filter content down to each individual curse word.
The most profitable spin-off ideas and products are two steps away from the original. You must find a way to differentiate yourself by providing an entirely unique customer experience. As an entrepreneur, this concept is not news to you, but how to do it is always a challenge. It can be done through product innovation, exceptional service, patent protected technology, or carefully guided trade secrets. This is why copycat products are risky, and almost never lead to a solid business.
Long-term success of an entrepreneurial spin-off is determined by three factors: filling in the gaps of new technology, the timing of your launch, and the exceptional uniqueness of your brand. If you can build a company that plugs into an existing product or service and elevates the customer’s experience in a unique and fulfilling way, you’ve likely struck gold. You may not become the “next big thing,” per say – but you’re hooking an established market with a tried-and-true idea, and that can have a hugely positive impact on your bottom line. The key is to get started and see where your own genius takes you.
Related: Why Old Ideas Are a Secret Weapon