5 brave but crazy startup ideas that paid off

There are startups, and there are startups. Venture capitalists, particularly in Silicon Valley, want to identify startups of the rarest kind. Not those seeking a quick exit or cloning another business, but startups with a shot of becoming the next Facebook, Apple, or Google.

A common trait among many of these startup ideas is how audacious, stupid, or crazy they sound. They’re trying to create a market where none existed. Instead of taking competitors head on, they’re sidestepping them altogether by doing something entirely different.

Of course, it’s a thin line between ideas that are straight up bonkers and ideas that sound nuts, but actually have legs. Here’s a rundown of five startups that had those legs firmly planted on the ground.

Xiaomi

What? Founded in China in 2010, Xiaomi is the world’s third largest smartphone maker. It has ventured beyond smartphones into other consumer and smart home devices. As of 2014, it has over 8,000 employees and a valuation of over US$46 billion.

WTF? Xiaomi doesn’t want to make money by selling phones. Instead, it sells phones at or near cost. It relies purely on online distribution while others ship their goods to physical retail stores. It uses Android. It manufactures and sells its products in small batches, and relies on its users heavily for feedback. It plans to make money from ecommerce and services.

Why did it work?

The combination of these practices drove its product prices down. As a result, its devices punch above their pricing points, providing value for money to consumers. Manufacturing in small batches serves two purposes; it saves money from warehousing, and enables quick changes to its products.

Gathering and implementing user feedback drives up user loyalty: the users are flattered their suggestions made it into the product, which turns them into fans and evangelists. Next to Apple, Xiaomi is one of a few consumer electronics companies with as devoted a following.

Slack

What? Slack is an office communications chat tool. It launched in August 2013 and is now valued at over a billion US dollars, with over 30,000 teams using it. It was founded by Stewart Butterfield, who started photo sharing site Flickr and sold it to Yahoo.