Imitation Is Not Just a Form of Flattery, It’s Good Business

To Mark Pincus, a 37-year-old Silicon Valley entrepreneur profiled in a recent issue of Forbes Small Business, being a copycat can be a virtue. As the magazine puts it, Pincus has made a lucrative career out of “lurking behind the leaders in the hot high-tech sector.” Though a few of his copycat ideas — those that capitalized on investing fads — burned brightly and then failed, his first three startups made him and some of his investors a ton of money.

Forbes asked him about his penchant (see “Word to the Wise,” below) for “launching companies strikingly similar to other startups.” “No one has ever accused me of being a copycat,” Pincus says. “But it’s true. I am.” Is copying a good thing? “It’s capitalism,” Pincus says. “If you see a business model that’s working, you’d be stupid not to follow it. Think of Coke and Pepsi. They’re always looking at each other’s good ideas and analyzing, ‘Why did that take off?'”

Actually, Pincus does more than copy. He refits, reinvents, remodels, and often improves the business idea he imitates., his latest business (which is backed by Knight-Ridder among others), is a good example. Based on the successful model of online classifieds, a $4 billion business that is international in scope, focuses strictly on local markets. isn’t making money yet, and Pincus is spending money to get it working.

That’s not a business model I generally approve of. But I do like the idea of looking around at the marketplace, identifying business/marketing ideas that are hot, and asking, “How can I do the same thing in a new and different way?” You may not like this idea at all. You may think that following trends — copycat product development — is the most banal and least-interesting thing a businessperson can do.

And you’ll find plenty of encouragement from the media for doing your own thing. Understandably, the stories that beg to be told are the pioneering ones — the tales of bold men and women who moved against the grain and created something wholly new that caught on. But for each success of this kind, there are dozens of failures that you don’t hear about. If you want to give yourself the best chance to have a profitable business from the get-go, shoot for seconds. If you can piggyback on a trend, don’t be ashamed to do so. But get in early.

Remember, trends can end as quickly as they begin. Plan your sales and inventory operations accordingly. If you want to succeed in business, you need to make profits your primary concern. And if you do that, you will come to understand that following trends is generally the smart way to go. If you do so long enough and consistently, when the time comes to test your own special new idea your business will have built up the cash and other resources needed to make it happen.