Why Most Cloud Computing Companies are Doomed to Fail

It's that time of year again. You know what I mean, the weather is starting to get warmer, people are starting to venture out and most importantly, the spring conference circuit is in full bloom. Yet underneath this façade is an unspeakable truth. That of the annual PR migration, where flocks of unoriginal, formulaic press releases hit bloggers inboxes.

In my ever so brief review of this years crop, I've come to a stark realization. Most cloud computing startups are doomed. They are doomed for a number of reasons, but never the less, they are doomed. Here's why;

Now Appearing: The Johnny-come-latelies. 

Now I'm the first to admit, being first is not necessarily a good thing when it comes to technology. Just look at Facebook as proof that being second or third to the game might be the optimal location. But being 200th is probably not. Being a better version of another leader generally means you'll end up being copied by that leader at some point, while you struggle to monetize your version, except without the funding required to adequately build it, manage it, and market it.

A feature disguised as a product.

The vast majority of the companies who pitch me fit this bill. The pitch generally starts with the following; "we built this because ABC platform didn't do what we needed. We had an itch, so we scratched it." This is how most startups begin, building the missing feature to a massively popular platform. The problem is that most of these so-called itches, are actually minor niches, not massive market opportunities which results in one of three things.

1. You're fabulously successful and sell your business to the larger platform.
2. You're pretty successful and the platform you're built on copies your product forcing you to either compete directly or pivot to another focus area.
3. You just fail, like most startups do. Because you, unlike the platform you're built on, are not a multi billion dollar global conglomerate.

Everyone else is doing it.

Seriously, if everyone was jumping off a bridge would  you do it too? There are so many "we're just like ABC but better" pitches it's amazing. Why would anyone want to be just like something else? Building a better mousetrap is generally not a path to success. Being cheaper and easier tends to trump high-quality and powerful.

Find the niche, start with the tribe. You need a beachhead to launch the attack.

In a recent blog post Michael Rubin from Adobe said it well "Consumer products are the hardest things to sell. If you hear yourself say "it's for everyone" you're doomed. Better is a product for a very clear, targetable, findable, audience. Ophthalmologists. Videogame players. As you broaden the audience, noise increases, competition increases. Go bigger slowly: moms with young kids, sorority sisters, travelers to paris. You should take pause if your audience is Men 18-45."

Michael Rubin has done a great job of outlining what he calls "Rubin's Rubrics for Entrepreneurs"