Focusing only on trendy sectors leads to intense competition where the vast majority of startups fail. True opportunity lies in contrarian ideas that others overlook or dismiss, as these markets have fewer competitors.
Pursuing a genuinely non-obvious idea feels risky, not just uncertain. This feeling of danger—the fear of wasting years on a potential failure—is often a signal that you're working on something truly contrarian and valuable, as it deters others.
While the early crypto market was dominated by cypherpunks advocating for anonymity, Coinbase took the opposite approach. They worked with banks and implemented KYC, betting that mainstream adoption required a compliant, trusted platform, even though it alienated the initial user base.
Flock Safety was dismissed by VCs because its initial market of neighborhood associations seemed too small. This perception of a small TAM acted as a moat, deterring competition and allowing them to build a foundation to later expand into much larger government contracts.
When OpenAI started, the AI research community measured progress via peer-reviewed papers. OpenAI's contrarian move was to pour millions into GPUs and large-scale engineering aimed at tangible results, a strategy criticized by academics but which ultimately led to their breakthrough.
Many laws were written before technological shifts like the smartphone or AI. Companies like Uber and OpenAI found massive opportunities by operating in legal gray areas where old regulations no longer made sense and their service provided immense consumer value.
The forward-deployed engineer (FDE) model, using engineers in a sales role, is now a standard enterprise playbook. Its prevalence creates a contrarian opportunity: build AI that automates the FDE's integration work, cutting a weeks-long process to minutes and creating a massive sales advantage.
To be truly contrarian, find what's becoming the new "consensus playbook" among startups and bet against it. DoorDash chose a simple marketplace model when competitors were pursuing the trendy but complex "full-stack" ghost kitchen model, which ultimately proved to be the right decision.