Tremendously successful web startups tend to solve very obvious problems. They innovate in how they do things, not in what they do.
Take for example:
Sold for $1.65B, now the ninth most trafficked website on the internet. Their innovation? Making it stupidly simple to put your videos online and share them.
Making a successful business is incredibly hard, you're nearly always best off keeping things as simple as possible. Most people I talk to seem to think the success has more to do with the right idea with the right people at the right time, i.e. luck... it is that, but much more. Just as important (if not more) as those obvious factors is something much more subtle. In a startup a million and one things can go wrong. The wrong hire, the wrong market, wrong brand, wrong back end technology... etc etc. If you get just one thing wrong chances are you're toast.
But people win... some routinely, the ones that seem to play the game with ease. The savvy ones have read the rules better than anyone and apply strategy where as others rely on just their guts and friends. The general two-bit understanding of the business horizon for the technology sector reads as follow: backed by the drum beat of Moores law, technology will steadily advance at an exponential rate, and in our lifetimes we will see innovation flooding all technology gaps until all floats atop a seamlessly perfect techno-utiopian first class world.
It is in the quickly flooding narrows of sillicon valley that the nerd-cowboys catch their waves and jostle for control of the floods, navigating their carbon fiber racing yachts and suborbital starships from opportunity to opportunity. But it is not brawn, speed, or fitness that counts the most in this race, it is your timing.
As my Bulgarian fencing coach Iana Dakova could demonstrate with ease on her students, the best fencers were those who were not competing through their blades and finessed footwork, it was the ones who had such impeccable physical game that they could afford to think and strategize, in the middle of the bout, in between the tenth of a second second actions and reactions. These were the ones who could always kick your ass. The ones who could turn your own sense opportunity, your own sense of timing, and spin it's momentum back around and impale you with it so quickly and cleanly that you knew you were through even before the blade hit, and the buzzer sounded, and the judge or anyone else watching had time to even think about what just happened.
Since YouTube.com got bought for 1.65B everyone i've heard talk about it mentions something like "But it's just a stupidly simple website that people used to upload video, how could it be worth so much!" But think back a bit. In 2005 it was nuts that nobody had yet figured out how to make video work the web. We had 40% broadband penetration, and our juicy 25 and under target market spending more time on the web than on any other medium... the kids who used to watch more tv than anyone and watching more and more each year were suddenly ramping back the tube watching in favor of online games, websites, and im'ing. But nobody figured out how to get them video. I guess in the mentality of the time it could be rationalized that "The web is so much richer a medium than tv. Kids don't care anymore about video". But that's a load of crap. Kids were only online because the content available in a medium no richer than FM radio and newspapers, was better than the extremely well produced video content pumped through the now ignored tv's in their living room.
It wasn't that they didn't want video, it was that they found internet non-video more interesting than TV. But as soon as YouTube figured out how to create internet TV they had a new daily destination, and one little dot-com miracle came true.
Ok, but couldn't that be explained as simply right place right time?
No, I don't think so. People have been putting video on the web since the web took off.
So, what did YouTube get right?
I think the biggest reason YouTube was successful was something so incredibly simple that when I explain it you'll probably think I'm full of crap (which often times I am). YouTube won because they encoded their content as flash files. Hear me out... The norm for video content at the time was to offer it up in a stream-able format such as Real Video or WMV which were theoreticaly easier to copy protect. The only problem was that they hardly ever worked. Do you remember buffer hell? Of course video on the web never took off, it never worked. But YouTube did theirs in flash, with a big play button and a pre-loader, so videos would load instantaneously and would never stop halfway through. And so people watched them, uploaded their own, told their friends, and within half a year YouTube had a daily audience of more than 100M.
YouTube won because they solved the simplest problem, literally how to put video files on the internet in a way that other people could actually play them. And that was stupidly ingenious. And that is why they won.