7 Tempting Startup Ideas I’d NEVER Build (And Why)

0:00Some startup ideas are so seductive they're almost irresistible. You'll hear them pitched at every coffee shop, on every forum, at every hackathon. I've spent two decades building businesses, and I've talked to thousands of founders. I can tell you some ideas are almost guaranteed to waste your time, your money, and your sanity. Today, I'm pulling back the curtain on seven startup ideas I would never build, and why you probably shouldn't either. I'm Rob Walling. I've started six companies, written five books on entrepreneurship,

0:27and invested in more than 220 startups. If you're an earlystage founder or just dreaming about launching your own startup, you want to maximize your odds of success. But here's the thing, not all ideas are created equal. Some are so tempting, so popular that you'll see them everywhere. But they're actually traps that have burned more founders than I can count. I've watched countless founders pour years of their lives into these ideas only to hit a brick wall. I want you to skip the heartbreak and focus on ideas that actually work. Stick around to the end because I'll also share a resource that can help you find startup ideas with real traction so you

1:03can spend your time building something that lasts. Let's dive in. Idea number one I would never build is anything ad supported. Unless you're going to raise buckets of venture capital and plan to push off revenue for years and years and profitability even further than that, advertising as a sole revenue source is a really bad model for a tech startup. When I talk about being ad supported, I mean needing ad revenue to survive. So think maybe a free mobile app or a news website. Adup supported businesses sound great, right? You just need to get enough eyeballs and then the money pours in. The problem is ads mean you're not

1:38only beholden to advertisers, but you need massive scale to make any real kind of money. And your users often hate the ads. So they put in ad blockers is a lot. It's so much really the scale is the hardest thing. And I know few if any bootstrappers who have successfully built incredible businesses based on ad revenue alone. Bad idea number two is a percentageon revenue model. This is where you start a startup that charges only a tiny percentage of transactions or the savings that you generate. So, for example, a fintech app taking a small slice of each financial transaction. This is even a business like Stripe. And you might say, well,

2:16Stripe is very successful. That's true. They've also raised a cajillion dollars. They went through Y Combinator and they are on that venture path, a decacorn, but they're even beyond that. Aren't they worth 100 billion or 70 billion? It's incredible valuation, but they're the one, you know, and if you want to go down that path, then this channel is probably not the channel for you. And that's what I mean when I say I wouldn't start that type of business because I want freedom, purpose, and relationships. I want to be in control of my business. I want to mostly bootstrap things. And so this model of just taking a percentage, it's called

2:44GMV. It's the gross merchant volume that is processed through your platform. So taking a percentage of GMV sounds appealing, right? Easy sale, no upfront costs. But the problem is unless you handle enormous volumes, tiny percentages almost never add up to anything sustainable. Even Shopify, which started years ago in what maybe 2005, they only took a percentage of GMBB at the start. Then they quickly realized we can't make enough money doing this. And so they moved to monthly pricing plans. And if you go to their pricing page today, that's what you'll see. Another startup idea I would never pursue is one that requires me to invent a new category. This is where you try to

3:23create a completely new type of product or a market segment from scratch. It's visionary. It's romantic. It's amazing. But inventing a new category typically means spending, I don't know, 5 to 10 years and 5 to$50 million educating your customers before you can have an incredible business, right? Category creation requires huge upfront investment, deep pockets, and patience that most bootstrap founders don't have the luxury of having. If you're enjoying this video, I'd love it if you'd hit the like button and subscribe to the channel. I'm almost at 100,000 subscribers, and I'd really appreciate your help getting there. The fourth startup idea I would not pursue is anything that sells to consumers. When

4:05you sell directly to consumers, like if you're selling a mobile app, a consumer gadget, a lifestyle product, or BTOC SAS, it looks glamorous, but these are incredibly difficult businesses to bootstrap because your customer acquisition costs have to be almost zero. Consumers are fickle. They take a lot of support. Their churn rates are high. Profit margins are typically razor thin. Everyone complains when you raise your prices. You know, you think about Netflix or HBO Max raising their prices a dollar and everyone panics. So unless you have significant funding, strong marketing skills, and real knowledge of BTOC, I would avoid it. The fifth business idea that I would not pursue is

4:43a two-sided marketplace, unless I already had one side of the market in place. Two-sided marketplaces are platforms that connect two groups, like Uber connects drivers with passengers, and Airbnb connects guests and hosts. Marketplace startups have the chicken and egg problem, the cold start problem. You need users to attract providers and providers to attract users. Solving this issue usually requires significant

5:07upfront capital and extensive time. Bootstrapping two-sided marketplaces is extremely challenging, often leaving founders stuck without enough traction on either side. Building a SAS company, which is what this channel is about, is hard enough. But if you make it a two-sided marketplace, you've now at least doubled the difficulty of the task at hand. Idea number six I would not pursue is trying to bootstrap a venture scale business. A business that requires venture capital but you figure ah maybe I can just bootstrap this thing to success. So bootstrapping a startup that inherently requires massive scale to work like a social network or say a hardware company. It's just not going to

5:46work right. Bootstrapping is amazing. It's super powerful. But venture scale businesses require significant capital for growth, rapid customer acquisition and infrastructure. and trying to bootstrap these types of businesses means constantly being outspent by competitors who are venture funded. You will inevitably exhaust yourself trying to compete without the necessary resources. And the seventh and final business I would not start is an AI model, an underlying LLM. Creating your own foundational AI model or a generalized AI solution from scratch is something that I'm going to leave to Google, Facebook, Open AAI, whoever else is in the game right now. They have billions, if not tens of billions of

6:27dollars in the bank, and that's what it's going to take to compete in that landscape. AI is so incredibly tempting right now, but building your own model is just ridiculously expensive and ridiculously technical. You're going to spend huge sums just on compute costs and AI talent with no guaranteed income. And in fact, all of these companies that are building these models are losing a tremendous amount of money on them right now because that's how venture capital works. You need to invest a ton of money and a ton of time and lose a bunch of money usually upfront to seize as much of the market as you can and then you

6:55monetize that over the long term. So unless you're already sitting on millions or hundreds of millions or billions in funding and you have an elite technical team, creating your own foundational AI model is a quick way to burn through cash without meaningful progress. So in this video, you've learned what not to build, but you're probably thinking, "Okay, Rob, but what should I build?" And I get asked that question like 19 times a week. So I built something to help. It's called the SAS Launchpad. I packed everything I know about finding and validating profitable SAS ideas into a 9 and a halfhour video course. But you don't

7:30have to dive in all at once. I'm giving away my favorite part for free. It's the 28minute module called the DNA of a great SAS idea. In it, I break down the exact criteria I'd use to choose the right idea to work on next if I was starting over from scratch. And you can grab that now at saslaunchpad.co or find the link in the description for this video. Once you think you found a great SAS idea, the next step is making sure your idea is actually solving a real problem for people who are willing to pay you real money. In this next video, I'll show you

7:59exactly how to validate your SAS idea before you start building. Go check it out to get the step-by-step plan I would use to make sure I was building something worthwhile. Make sure you've subscribed to the channel for more videos like this, and I'll see you next time.