Starting from Red Oceans to Find Startup Ideas

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Startup ideas can emerge in various ways—a personal pain point, a unique insight one has acquired from life experiences, or just spotting opportunities from market trends. One effective way to look for opportunities is to use a top-down market analysis approach starting from a red ocean and then redefining it into a blue ocean.

Below are three ways to redefine the market from red to blue.

Technical Breakthrough: Pure technology breakthroughs that enable a 10-times greater difference in experience can create a blue ocean. Google is a classic example of competing in an already competitive search engine market, but Google’s algorithm gave them a huge advantage and redefined their business into a blue ocean. If a company is able to do anything 10 times faster, better, or more efficiently than existing players, then there is a possible blue ocean market up for capture.

Vertical Specialization: When a specific segment or platform is saturated, one can find opportunities to capture the market through redefining it vertically. Craigslist is being unbundled by companies like Airbnb, Uber, Starhub, and many more.
Value can be created and experience enhanced through specialization as well—99Designs is a specialized online crowdsourcing site for design, Handy specializes in on-demand tasks for cleaning, and so on.

Paradigm and Platform: Mobile was a big platform shift that enabled a lot of great companies to form (Instagram, Uber, Instacart, Snapchat, etc). With a more ubiquitous platform, creating a better experience than existing solutions becomes possible.

The top-down approach from red to blue is one way to find opportunities and white spaces in the market. However, it merely helps you find a starting point. From there, it will take rigorous thinking to figure out the validity and execution—a great team must band together to create defensibility and sustainability in the business.

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