What kind of domain specific expertise did Mark Zuckerberg have when he wrote Facemash (Facebook's predecessor)?
The answer is "none." It was a pure hobby project - he didn't even plan on monetizing it. Yet here we are.
1. "I have experience in this area" Yes, yes, and hell yes. Zuckerburg was conscious of social dynamics to the nth degree. This is the executive who publicly admitted his company is no longer cool because he's just that realistic and expert.
2. Wow there are under-served market needs here He seemed to know that it was at the point where the web had become so universal that both male and female students would be entertained by this idea and treat it like a game. American college students f'ing love social games. What Facemash did isn't really possible in the physical world, so it was a new kind of game that appealed to both genders. Young women were an absolutely underserved segment of the digital entertainment market. And for anyone of either gender who doesn't usually like games played on screens, this game was easy peasy and required no hand-eye coordination and had zero learning curve.
3. "have some relevant experience to start a company that addresses it and can attract talent"
He's a coder. He had the idea. He executed. He attracted talent immediately. Coding became a whole helluva lot sexier than before because this was a social game and people liked it. It wasn't DOS or LotusNotes, other runaway successes by coders that probably never got them laid at a frat party. Bill G on the Byte cover anyone?
4. -> Facebook.
What happens when we fill in the alternate?
1. "I'm a wannabe entrepreneur" Debatable. I was kind of being snarky with this point anyway. But he was a CS major, and he seemed fueled by parlaying his coding skills into social status. I am not his therapist though.
2. "I have no domain specific expert knowledge" The way he is portrayed, he was an absolute expert at negative social dynamics and appealing to people's social motivations, often in a less than wholesome way. He seems way expert to me.
3. "let's randomly find something we guess people care about and overspecialize" Here's the CRITICAL point you missed. He did not sit around trying to come up with ideas. He had a razor-sharp, almost game-theoretic perspective on college socialization. He honed in immediately on how to exploit that, scraped the dorm directories, and manifested his idea quickly.
4. -> start coding blindly or find a Rails dev on Odesk
THERE WAS NOTHING BLIND ABOUT WHAT HE DID AT ALL. It was razor-sharp, targeted, deliberate, and in my view, brilliant.
Ie, he had his idea and executed and holy shit did he succeed. He wasn't sitting around twiddling his thumbs dreaming up what feature he could steal from something else as is basically the main point of this article. Friendster and MySpace were knocked out quickly because Zuckerberg was considerably more expert than them.
I will also add, it is important to have a good combination of good team with a good idea. You can't just have a great kickass team and expect your idea to be successful. Think Color, Foursquare, Cuil etc.
A perfect example of finance domain knowledge.
But I don't think we can attribute it to finance domain knowledge.
To call Amazon a bookseller is missing their entire raison d'etre. Bezos wanted to be King of Volume, and how much of their current revenue is books? Can you imagine Barnes and Noble starting BNWS?
As a hedge funder he'd be looking for secure, smaller returns through diversification. Sound anything like Amazon's business plan?
From what I've seen it goes "I have experience in this area" -> "Wow there are under-served market needs here" -> "I have some relevant experience to start a company that addresses it and can attract talent" -> startup.
Not "I'm a wannabe entrepreneur" -> "I have no domain specific expert knowledge" -> "let's randomly find something we guess people care about and overspecialize" -> start coding blindly or find a Rails dev on Odesk. Seen that one fail innumerable times.
One other thing. If you have to go searching for ideas, you probably have no business experience. Let's say you manage to find a good idea using something like the techniques of this blog post. You manage to secure some funding. The startup starts to do well. You then become a sitting duck to be ejected by your investors, as you've built the product, but are inexperienced in business, and they specifically will want you out for that reason.
An exception to this is incubators like Y Combinator, who are more concerned with team chemistry than idea. If they weren't buying the concept but want to give you a shot, they might stick your team on an idea other than yours. But they probably already have an appropriate idea in mind, they don't have to go hunting.
Another possible exception is Stanford MBAs, specifically.
So much advice on blogs. Be careful.