There are a couple of nice articles out on the wire today that focus on starting a company. Since this is something that I've pondered for some time (and eventually see myself doing), these are of particular interest to me.
The first is entitled Ten Reasons Young People are Afraid to Start Their Own Business , and is a list of questions typically raised by young people (myself included), with concise answers to back them up.
Don't Have the Ideas: "I'm not creative enough to come up with something novel. Entrepreneurs have these great ideas, and even then it's not always enough to make a new business work." Perception, not conception, is the key to entrepreneurial success: Paying attention is far more important than creativity. It's all about finding a need and filling it, not coming up with an idea and then trying to find someone who might buy it.
The second article is titled Tips for Startup Companies deals more on the financials of startup companies, delving into topics such as VC funding. The author does touch on briefly how to go about setting up a successfull startup, similar in thesis to the quote above.
The most reliable source of supranormal profits is superior knowledge of one kind of customer (Way #3). Ideally this will be the kind of customer that larger companies are overlooking. The founders of SAP, for example, were employees of IBM Germany for many years and got exposed to the accounting challenges of large manufacturers. When they quit IBM, they were among the best situated programmers in the world to build an accounting system for manufacturing companies. It is not because these guys were the world's best programmers that SAP is today bringing in $10 billion per year in revenue and has a market capitalization of $60 billion. It is because these guys were the best programmers who understood the problems of their customers.
These guys found a need, and filled it. Simple as that.
As a side note, Microsoft just announced their "Made in Express" contest, for people developing solutions using Visual Studio 2005 Express. The top prize is $10,000 and the notoriety alone could be interesting. I contemplated for a while entering this idea I've been tossing around lately of a "Job Scheduler" for the .NET platform. Unfortunately, since it's a derivative work of someone else's, it's ineligible. Also, though the exposure would be nice, I'm not sure that I would want to hand over the rights to Microsoft on something like that.
Who knows, perhaps I can come up with another idea, or rather -- fill a different need.