Starting a company is an uphill battle. The odds are stacked against you from the start. According to analysts, a whopping 90% of startups fail. Why is the failure rate so high? There are many factors, but one biggie is founders picking the wrong idea to pursue.

Some startup ideas look enticing on the surface but turn out to be tar pits that suck in unsuspecting entrepreneurs. I call these “tarpit ideas” – startup concepts that seem appealing initially but quickly become sticky quagmires from which it’s nearly impossible to escape.

In this essay, I’ll explain what exactly tarpit ideas are, why they’re so dangerous, and how to spot them from a mile away.

Let’s start with a quick overview:

What Are Tarpit Ideas?

A tarpit idea is a startup concept that seems promising at first but gradually reveals itself to be an uphill slog with a low probability of success.

The name comes from the idea of a tar pit – an inviting pool of water that conceals thick, sticky tar underneath that can trap anything that falls in.

Tarpit ideas share several key characteristics:

• They are consumer-focused rather than enterprise-focused, meaning they target individual people instead of businesses.
• They are pursued by an excessive number of founders due to the initial appeal of the idea.
• Even after data shows the idea is failing, founders remain stubbornly attached due to emotional factors.
• Success stories in the space are extremely rare, but those few wins encourage a constant stream of new founders trying their luck.

So in summary, a tarpit idea seems sexy, and draws in masses of founders working in parallel, but has an extremely high failure rate compared to startup ideas in general.

It’s a dangerous trap disguised as opportunity.

Why Tarpit Ideas Are So Tempting

Tarpit ideas manage to lure in so many founders for a few key reasons:

We’re All Consumers

Most startup founders are naturally inclined toward consumer product ideas because we all use consumer products every single day. It’s easier to notice consumer pain points and think “I can build something better than this!” 

Selection Bias in Success Stories

The biggest startup success stories we hear tend to be consumer tech companies like Facebook, Instagram, Snapchat, etc.

This selection bias makes the consumer startup path seem more viable than the often less glamorized enterprise startup path. 

Low Startup Costs

Many tarpit ideas feel achievable because the upfront costs of just getting a consumer app or website off the ground are low thanks to cloud hosting, open source tools, mobile app stores, and global distribution channels. 

Optimism Bias

Founders are naturally optimistic by default. We tend to discount the struggles faced by failed consumer startups before us, believing “But my execution will be better!” This optimism blinds us to the clouds of tar surrounding an idea. 

The Warning Signs of a Tarpit Idea

Despite their allure, there are usually red flags waving around tarpit ideas:

1. An Idea Many Startups Are Already Pursuing

If you look around and see hundreds of other startups already attacking the same problem from different angles, that’s a warning sign. It indicates the idea may be a tarpit.

2. Lukewarm Existing Demand

For a consumer app to really take off, it needs to fulfill a passionate, widespread need – not a lukewarm want. If demand seems mediocre based on current solutions, the idea may be a tarpit.

3. Seductive But Vague Value Proposition

Be wary of ideas that sound awesome in a flashy pitch but get vague when you dig into the actual functional details and value proposition. Vagueness could signal a tarpit.

4. Leaders Struggle to Pivot

Successful founders pivoting away from an idea is often a sign that the idea was a tarpit all along. Leaders in an area frequently doubling down can mean the same.

Examples of Infamous Tarpit Ideas

Some of the most notorious tarpit ideas that have drained startup resources over the years include:<div class=”scalar-list”>

Local Event/Nightlife Discovery Apps

So many startups have tried and failed to build a definitive app for discovering local events, parties, concerts, restaurant recommendations, etc. Despite obvious demand, these local discovery apps never seem to gain critical mass.

New Social Networks

Trying to create a new general-purpose social network to take down Facebook or Twitter is one of the most tempting but deadliest startup ideas out there.

Decentralized/Web3 Versions of Successful Apps

More recently, pitches to re-build hugely successful centralized apps like Instagram or Uber as decentralized web3 apps powered by cryptocurrencies and NFTs have become a new tarpit category. 

Stock Trading/Investing/Gambling Apps

Personal finance and stock trading apps seem alluring but have a razor-thin edge over established fintech behemoths. They have become startup tarpits.

How to Avoid Falling into the Tarpit

So how can founders pick startup ideas wisely and steer clear of the tarpits?

Here are some tips:

Study Timing and Trends

Realize that some of the biggest consumer successes like Google, Facebook, and the first iPhone apps benefited immensely from getting the perfect product/market fit at a specific time when that consumer demand was underserved. Trying to replicate that fit years later is exponentially harder. 

Find Unappreciated Opportunities

Instead of going after consumers directly, look for opportunities in unglamorous but crucial enterprise spaces, area-specific verticals, or industries full of hard problems. These types of startup ideas tend to face less competition. 

Prioritize Revenue and Profits

Move away from the overriding VC-driven goal of simply achieving massive user scale. It’s better to start a company with a feasible path to real revenues and profits from Day 1. 

Apply The Supply vs. Demand Test

Before pursuing an idea, gauge both the supply of other founders working on it and the actual market demand. The best opportunities have a low supply of founders compared to high demand. Consumer tarpits are the opposite.

TL;DR

In summary:

• Tarpit ideas are consumer startup concepts that initially seem promising but are actually uphill slogs with low probabilities of success.
• They are alluring due to optimism bias, low upfront costs, and our instinctive familiarity with consumer apps as users ourselves.
• Red flags include heavy competition, lukewarm demand, vague value props, and struggling predecessors.
• Infamous tarpits include local discovery, social networks, decentralized web3 clones, and finance/trading apps.
• To avoid tarpits, study timing, find enterprise/B2B opportunities, prioritize revenue, and apply the founder supply vs market demand test.

Q&A

What if my consumer app idea feels really novel and different?

Having a new spin is rarely enough. The tarpit designation comes from founders stubbornly persisting despite data proving an idea isn’t working out. Even if your approach seems unique, you’ll need to define clear exit criteria and remain open to pivoting.

Should I abandon my tarpit idea immediately then?

Not necessarily. Some tarpit survivors do emerge against the odds. Just be self-aware that you’re attempting something with very low probabilities of success. Validate or pivot quickly based on actual metrics, not gut instinct.

How can I realistically assess founder supply vs market demand?

For supply, look at things like applicants to accelerators, speed of open job postings getting applicants, general recruiting efforts required, etc. For demand, you need hard data – ideally paying customers. But market research, scraping public data sources, and testing minimum viable products can help gauge real demand too.

Let’s be brutally honest – starting a successful startup is hard. But we can all improve our odds by being mindful of alluring tarpits and picking our battles carefully.

Maybe your Path of Least Resistance could be someone else’s tarpit. Keep questioning assumptions!