Understanding founder-idea fit

Founder-idea fit

There is an opportunity cost to the startup you are building now — it’s the other startup you could be building. A simple way to make sure you’re building the most valuable startup for you, is to ensure you leverage the skills and knowledge you already have.

It’s likely there are many ideas you could be good at executing, but you want to choose the one where you have an unfair advantage compared to other founders; the idea where you know more, or have better skills than other founders. At EF we call this your edge (you can read more about this here).

Founder-idea fit framework

The founder-idea fit framework is a tool we use at Entrepreneur First to help our cohort ideate. **It’s worth noting that 95% of the people we work with come from a technical background, so this framework is designed to support them**.

The framework is a simple way to understand whether you are utilising your existing assets (your edge) — your technical skills and knowledge — to build your startup. You can use it to develop ideas, or to evaluate existing ones.

The framework highlights that,where possible, you should work on an idea that is at the intersection of your deepest problem knowledge and your most advanced skills.

1. Using your assets

The best founders work on ideas at the intersection of an area they know deeply and where they have advanced skills that allow them to out-execute others. Sometimes it will be a through combining one founder’s skills and another founder’s knowledge.

Why doesn’t every founder focus on advantages they already have?

Many founders see startups as a way to explore new interest areas. Founders discount the value that their previous experience and skills give them. Building a startup requires you to constantly learn new skills and leveraging the insight you already have gives you an advantage from the start.

Make sure you read about edge.

2. You are a domain expert

Founders who have deep problem knowledge, should see this as an asset that they can ideate around. This quadrant works well when they can find a co-founder who can provide complementary skills.

Deep problem knowledge means that you can provide unique insights to the problem. When a founder tells me something shocking or surprising about an industry, that I couldn’t have guessed as an outsider, I know that they are in this space.

Most founders in this quadrant have 5+ years of experience in industry. Many founders believe they have deep problem knowledge, but if you are thinking about a problem that you experienced once, or an inconvenience that has come up in your life it is unlikely you are in his quadrant. NB it is hard for fresh graduates to be in this quadrant.

For example, Gareth, CEO of Adbrain, joined EF with deep problem knowledge about the mobile advertising industry. He was able to leverage his 6 years of experience working at Google, Somo and DoubleClick to identify the problem of tracking consumers across devices and he used this knowledge to build Adbrain.

3. You have spent years building your skills

Many of the founders we work with come to us with advanced technical skills. This is typically from their academic work — PhDs in specialist areas of computer science, engineering or physics for example.

If you have advanced technical skills that very few other people have in the general founder population (rather than comparing yourself to your lab peers), this gives you a unique advantage compared to other founders. When thinking about ideas you should work on, you should be leveraging these valuable skills.

For example, Zehan had just finished a Computer Vision PhD at Imperial before joining EF. He was able to use his skills to create a new form of video compression. The company he created, Magic Pony Technology, then sought out applications for their new technology.

4. “I experienced this problem once”

This is the quadrant where most first time founders pick problems. You may have experienced the problem once, but you don’t have deep expertise or advanced skills that allow you to solve it. This is where ideas around food delivery, dating, house renting etc often come from.

Why do founders pick this quadrant?

It feels easy.

When you have limited knowledge about a market, or a problem, you don’t know the challenges that you will face. The founder compares this to an industry where they know how hard it will be to, for example, sell to disillusioned customers, or where their research means they know how hard it will be to build and deliver the product.

This space is often highly competitive — there are low barriers for founders to enter the market (it’s relatively easy for other founders to come up with the same idea and many founders have a similar skill set), which makes startups in this space hard to defend. Without a unique insight or skills advantage, it’s hard to build a big, enduring (read ‘valuable’) company.

Most ideas we hear belong in this quadrant. Typically it’s individuals with deeply technical backgrounds shunning their PhD work to produce something that focuses on a skillset they don’t have e.g., operations and logistics.

What is the right idea for you to be working on?

Peter Thiel says that the best founders should have a secret. At EF, we believe the most reliable way to find a secret is by leveraging your existing skills or knowledge.

For example:

  • Larry and Sergey used their research from their PhDs at Stanford to create the first version of Google (quadrant 3, advanced skills).
  • The Collison brothers knew the pain of trying to integrate payments and created Stripe (quadrant 2, advanced knowledge)

Would Larry and Sergey have been the best people to build Stripe? No. They lacked the understanding of the problem. Would the Collison brothers have been well placed to found Google? No. They didn’t have the academic background to build PageRank.

There are high profile stories of founders who didn’t follow this model. Did Mark Zuckerberg have unique knowledge about social networking? Did the Instagram founders have a unique insight into how people like to create and share photos? No, they didn’t. But they are the survivors of highly competitive industries with a proliferation of identical startups. This isn’t where you want to build your company.

The right startup for you to build is different from the right startup for your peers to build. Leverage your assets, understand why you’re unique and build something valuable.

Entrepreneur First funds individuals to build their co-founding teams and to experiment with ideas. You can find out more here.