An Expert Guide to Developing the Perfect Startup Idea
“An idea that is not dangerous is unworthy of being called an idea at all.” — Oscar Wilde
For entrepreneurs, ideas that are deemed impossible by the masses are oftentimes the only ones worth pursuing. Yet how does one stumble upon those rare gems that lead to prosperity and recognition? True, many major companies were the result of serendipity on the part of the original founders, individuals lucky enough to just “come up” with a solution to a pervasive problem.
However, finding a potentially lasting and lucrative startup idea does not need to be left to chance. In fact, there are a multitude of ways that fledgling founders can discover and develop their startup ideas, and we’ve collected just a few of them here for your benefit. Hopefully, hearing from industry experts will give you the inspiration you need to mine your own gems.
Define Your Focus
“You can’t depend on your eyes when your imagination is out of focus.” — Mark Twain
Paul Graham, programmer, venture capitalist, and co-founder of the noted seed accelerator Y Combinator, explores the creative process of generating startup ideas in a comprehensive essay on the subject, “How to Get Startup Ideas”.
In his essay, Paul asserts that simply thinking of potential startup ideas is an inefficient means of generating startup ideas. Aspiring entrepreneurs should instead direct their efforts towards focusing on very specific targets during the ideation phase.
“The very best startup ideas tend to have three things in common: they’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing.”
Focus on Existing Problems
While focusing on existing problems seems like an obvious strategy, too many “wantrepreneurs” attempt to solve problems that no one actually has, and end up wasting time on creating non-existing solutions to non-existing problems.
“Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas. That m.o. is doubly dangerous: it doesn’t merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them.”
Focus on the Depth of the Well
Paul posits that a startup can either deliver something that a large number of people want in a small amount, or deliver something that a small number of people want in a large amount. Opt for the latter, as a startup should strive to dig a well that’s narrow and deep rather than a well that’s broad and shallow. Basically, a startup’s initial offering should cater to the small group of users who not only want to use the startup’s offering, but who urgently need it. You can worry about expansion later.
“When you have an idea for a startup, ask yourself: Who wants this right now? Who wants this so much that they’ll use it even when it’s a crappy version one made by a two-person startup they’ve never heard of? If you can’t answer that, the idea is probably bad.”
Focus on Yourself
When in the process of contemplating startup ideas, what you should really be doing is not “thinking up” but “noticing”. This may come as a shock to many (not that formal brainstorming and research methods aren’t effective — we’ll get to those later), but countless ideas for lucrative companies grew out of someone noticing what’s missing in the world around them.
And how do you learn to notice the potential ideas that are all around you? Become an expert in the industry you are most interested in. Try it — it might be easier than you think.
“Being at the leading edge of a field doesn’t mean you have to be one of the people pushing it forward. You can also be at the leading edge as a user. If you’re not at the leading edge of some rapidly changing field, you can get into one. Since a successful startup will consume at least 3–5 years of your life, a year’s preparation would be a reasonable investment.”
Keep it Simple, Stupid
“Simplicity is the ultimate sophistication.” — Leonardo da Vinci
Adeo Ressi, the founder and CEO of the Founder Institute, has developed his own school of thought when it comes to formulating winning startup ideas. As you’ll see throughout this section, the resounding refrain is that entrepreneurs should concenctrate on keeping the ideation process as simple as possible.
According to Adeo, the following are what you need if you want to start a company:
- Passion — If you are going to pursue a potential startup idea, you need to have an unconditional passion for it, as it is something you are going to deal with everyday for possibly many years.
- Reality — If reality does not support your idea or your business being built in it, it’s not worth it. Your idea needs to exist within a clearly definable realm (i.e. market, industry, domain, etc.)
- Idea — You need to have a coherent and compelling idea that is actionable and feasible.
- Business — Regardless of how much passion you have for your idea or how well it fits within a certain market or how compelling it is, your idea needs to be able to make money to sustain itself.
Once you have an understanding of these fundamentals, Adeo has provided a list of concepts to keep in mind while you are brainstorming for potential startup ideas.
- As stated above, start with something you are passionate about. Not only will you enjoy the process more, but having experience and interest in your ideas will give you a competitive edge when you begin bringing your them into existence.
- Refer to your ideas as “projects”, as it makes them easier to kill. If each idea is treated as if it was something that was only temporary, it will be more painless to ditch it if does not hold up under scrutiny.
- Once you’ve conceived several ideas (at least three, if not more), look over what you have and spend some quiet time thoroughly reflecting on each. You may find that you naturally gravitate towards one idea over the others — take note, as this may be the one you continue with.
- Assemble a board of friends, family members, and colleagues who will give you honest feedback on your idea. However, since you are acquainted with these people, they are biased and may not give you the harsh truth. Encourage them to hold nothing back.
- If this is your first time creating and developing startup ideas, there is a very good chance that the idea you settle on is too niche, too narrow to appeal to a large audience. While it is imperative to have a clear and specific target user base, be sure that your future company has the potential to expand and attract a large number of users.
If you take nothing else from Adeo’s ideation methodology, take note of his seven rules for startup ideas.
1. Simple ideas win and complex ones die. Your idea should consist of one company, one product, and nothing else.
2. Your idea should have one and only one revenue stream. If your idea employs a payment system, complicating it will only drive away your users.
3. Clearly identify your ideal customer. Embody your hypothetical customer with quantifiable traits to better market and sell to them. You may get it wrong the first time and have to change who your customer is later, but you need to start with an archetype.
4. Build something that you can explain in 10 words or less. If someone needs to be an industry expert to understand your idea, it is not worth pursuing.
5. Small markets suck. Remember, any market that is worth $1 billion or less is probably not worth diving into.
6. Mix in secret sauce. You need to be an expert in your respective industry, as your experience and expertise will give you valuable insights into the problem you aim to solve.
7. Be original. If you can’t build a business around a completely unique idea, build a business that’s similar to something that’s been done, find flaws in its model, and devise a way to do it better.
Methodize Your Madness
“The true method of knowledge is experiment.” — William Blake
Now that we’ve heard from Adeo Ressi and Paul Graham, let’s take a look at what Munjal Shah, co-founder and CEO of Health Equity Labs, has to say on the matter of startup ideation. Munjal’s methodology is split into two different systems: the organic approach and the manufactured approach.
The organic approach, which Munjal jokingly refers to as the “Beatles Strategy”, consists of four guys who come together and — voilà! — end up with a company. For founders, this may entail being a customer or an employee and noticing a problem that occurs in everyday life, ultimately deciding that the solution to this problem could result in a successful company. These types of companies tend to have a much higher return, but a much higher failure rate.
The manufactured approach, or as Munjal likes to call the “Spice Girls Strategy” because of the formulaic means by which the group came together, is a more methodical and analytical means of building a business. Because the “Beatles Strategy” is more often a result of happenstance, and therefore harder to rely on, we will focus on the “Spice Girls Strategy”, as it is easier to establish structure around.
Split and Twist
“Split and Twist” is a simple yet effective idea-finding technique developed by Munjal. As this strategy is exercise-oriented, it’s also conducive to gaining a more comprehensive understanding of your market.
- Pick a domain and split it on the main dimensions that an industry might think about itself.
- Identify an unmet need. Split the domain again, this time taking into account the unmet need, determine if it’s significant enough to change the landscape.
- Repeat. And repeat. And repeat.
Despite its simplicity, this tactic is useful for cultivating new company ideas and developing better features for an offering you already have. This method should motivate you to constantly keep abreast of existing products, services, and technology, and find new ways of looking at them.
“You don’t have to have a novel idea, but you have to have a novel advantage.”
Yes, conducting extensive research prior to launching a startup may seem like a no brainer, but too many entrepreneurs enter the game with a dearth of important data. To remedy this, Munjal recommends employing crawlers to search for valuable information related to the industry you want to start up in. If you have an engineer on your team or are acquainted with one, this should not be a problem. If no engineers are available to you, outsource it. Trust us, it’s worth the investment.
Crawlers are incredibly important in the idea formation process because they can be used to analyze the competition by determining what types of products they offer, which ones sell the most, and what their popular features are. Another benefit of utilizing crawlers is that they can be used to see what topics are trending on social media, blogs, forums, etc. All of this information can help you ascertain holes in your respective market, which can lead to innovative and original ideas.
Necessity is the Mother of Invention — and Intention
During the formative stages of harvesting ideas, many budding entrepreneurs develop the propensity for capriciously committing to any idea, only to decide to go ahead with another one later. It’s easy, and fun, to move from one idea to the next (Munjal refers to ideas during this stage as “brain candy”), but remember that you are going to have to land on one idea before launching your company.
And what’s the best way to commit to only one idea? Quit your job.
“You will never pick an idea until you have quit your job. You are never going to say ‘this is the one I’m doing’ until you are forced to.”
According to Munjal, being unemployed as your savings steadily decreases is an efficient way of following through with your entrepreneurial aspirations. Risky, but efficient.
As you plunge into your well of creativity to find that pearl of inspiration, you may discover that those waters are more treacherous than you thought. However, you must always keep in mind that your well is infinitely deep and that there is always something new to uncover. So, dive in!
“An idea that is developed and put into action is more important than an idea that exists only as an idea.“ — Buddha
Originally published at fi.co.