Niccolo Machiavelli is known to many as the Italian political scientist who justified the means by considering the ends, and advocating for a ruthless extermination of the opposition by a ruler of nation. However, there are several sides to Machiavelli's work that extend in all sorts of other directions applicable to a wide array of events in our society. For example, we have the following quote:
"And in truth the prince who seeks for worldly glory should desire to be the ruler of a corrupt city; not that, like Cæsar, he may destroy it, but that, like Romulus, he may restore it; since man cannot hope for, nor Heaven offer any better opportunity of fame."
What is Machiavelli saying here? In short, he is saying that in order for a ruler to gain fame and wealth, he should not simply attach himself to the most prosperous nation, but, rather, should work towards improving the state of a corrupt and decrepit one, because it offers an opportunity for achievement as well as a position as one who brought prosperity. This brings admiration of the people (which entails well-being of a ruler, as Machiavelli later argues), as well as individual economic prosperity. The same circumstances are not provided for those who seek to rule a prosperous nation - expectations are high, the people are attached to and invested in the current state of affairs (as well as the current ruler), making achievement and recognition difficult.
How does any of this relate to startups? Almost certainly, Machiavelli most likely had nothing of the sort in mind. Shift, for a moment, the focus of the quote, from nations to specific industries or sections within the startup world. Consider, for example, project management software. The world knows that we just have too many generalized project management SaaS companies and that there's a atleast a few good ones (e.g. Basecamp) and a lot (e.g. 6,232 signups per week w/ paid plans) of people are already using and seem to be pretty happy with them. So, we may consider the "project management software" industry to be something of a "prosperous nation", in Machiavelli's terms. The customers (translates to: citizens) have high expectations, are generally satisfied and will be extremely resistant to change.
Now, let's consider, as another example, the "industry" of online discussion board tools. phpBB, probably the reigning champion, is badly designed, terrible to look at, annoying to install and bothersome to maintain. It is in a "corrupt" state of affairs. Citizens (read: customers) are dissatisfied and would do well to find a new, modern solution - maybe even pay for one! Things have changed in the world outside of discussion forums, and phpBB now feels like the most antiquated portion of any well-run website. To gain the support of the citizens should be much easier: expectations are low, they are generally dissatisfied and will welcome change with open arms.
The comparison is clear. If you are going to try to pick an "industry" that is already populated with lots of good companies and the customers are generally pretty satisfied for your next startup, you will have a difficult time getting people to convert. Instead, if you pick an area where everyone is complaining and is annoyed with the service, you can quickly get large numbers of customers by simply producing a better product. This is what 37Signals has been trying to preach for quite a bit of time. But, really, the underlying idea has been with us since (and probably before) the 16th century.