02. Coming up with an idea for a startup
Estimated Time
- Reading: ~6 minutes
- Video: ~24 minutes
- To Do: ~30 minutes
To-Do:
1. Create a list of your skills + passions that could become a startup2. Take your list of ideas for a startup and answer these 4 questions
- Why will you solve this problem?
- Why is now the time for this to work?
- How big is the market?
- How will you make money?
3. Select your startup idea that you will iterate on for the rest of
Top Insights
- Most of the great startups of our time were evolutionary, not revolutionary.
- Building on, improving on, and innovating on previous ideas can be a great way to start a company
- Make something 10-20% better
- When coming up with an idea - have answers to the following questions
- Why will you solve this problem?
- Why is now the time for this to work?
- How big is the market?
- How will you make money?
How do I come up with an idea for a startup?
- There are several ways to come up with an idea
- Conduct user interviews & study customers
- Then back into an idea based on pain points
- A magic, lightbulb moment
- Pivot
- Start with one idea, learn something during the first idea that informs the pivot
- Ideas do not have to come out of thin air
Evolutionary, Not Revolutionary
- Jason's blog from 2015 - "Is inventing something new necessary for startups?"
Let's look at a few of the big technology players today:1. Google
- There were a dozen search engines before Google
- Improving on search has served Larry Page and Sergey Brin more than okay
- They built something 10x better than what existed at the time
- They had a better business model
- Was Google a better search engine than what was available in the late 90s? Yes
- Was it still just a search engine as far as users were concerned at the time? Yes
- They took an idea and solved the problem in a better, faster, and cheaper way
2. Facebook
- There were other players in the social media space when Facebook started
- Facebook was a stable, faster version of MySpace and Friendster
- Facebook focused on growth from the beginning
- There was nothing original about it
- They copied most of their ideas (and still are today)
- Facebook simply executed at a very, very high level
- It is now the fastest company to $1T valuation
3. Apple
- Apple did not invent the mp3 player, or the smartphone, or the tablet, or headphones...
- Those products were in market for years before Apple entered.
- Steve Jobs had the vision, and he said in 1980 that Apple was “building tools that amplify a human ability”
- His focus was building the right tools at the right time
- This vision allowed Apple to revolutionize several fields
- Not only the personal computer industry
- But music, TV/entertainment, health, and others as well
4. Tesla Motors
- Tesla was not the first battery-powered car
- Although it was the first serious effort in a long time
- Elon decided to go for the high end of the market first
- Tesla has dozens of innovations that collectively add up to one of the greatest car ever made
- Some of the best products examine the previous solutions deeply and build on them
- So to clarify building on, improving on, and innovating on previous ideas can be great
- Stealing or copying an idea and calling it your own is not!
Making a product 10x better
- Paul Graham said:
- "What matters is not ideas, but the people who have them.
- Good people can fix bad ideas, but good ideas can't save bad people."
- Executing on your idea is the key
- Although you need an idea to start, remember that everyone has ideas
- An idea is not special
- An idea is not a company
- If you stop at the idea phase - you have nothing
- Jason wrote a twitter thread [March 2021] that speaks to this exact point
- Making something 10x better is tough
- As an aspiring founder, ask yourself
- What five things can I make 20% better?
- This can dramatically improve the user experience
- What can I remove that isn't adding value?
- This allows me to focus on core features!
- Small improvements everyday will compound to big results
Skills + Passion = Startup Idea
- Ask yourself a few questions:
- What is the purpose of the startup you want to create?
- Is it a passion?
- Now, "passion" gets thrown around a lot
- By passion we mean, will you do anything to ensure it is successful?
- Is it going to be a hobby to make some money on the side?
- Or are you going to take a side project, quit your job, and tackle this full time?
- What are your current experiences?
- What problems do you experience every day?
- Especially ones that drive you nuts.
- How can you use your expertise in the field to solve it?
- What (if it existed) would make your life better, easier, faster, cheaper?
- What experiences, education, background, knowledge do you have that you can leverage?
- Is there a problem experienced in your current profession that needs a solution?
- Do you have any inside info, based on your expertise?
- Deep dive into what you know best
- Identify challenges within each interest and brainstorm creative solutions
- Is there an Audience/Customer you can help?
- It can sometimes be helpful to identify a specific audience with a problem
- Is there a manual process to improve with technology?
- Warning: creating a startup is hard, hard work!
- You have to want to solve the problem ever day or you'll give up
Market Timing
- Timing is everything!
- What enabled some of the most popular products today?
- What is changing in the world that will enable your idea tomorrow?
- You need to research the space and know your competitors
- This can validate the space and offer insights on how you'll stand out
- What is your differentiator?
Start Building an MVP
- You should build an MVP that solves a real problem
- Get users to try the product and collect data
- Interview users to gather feedback
- At first, these could be friends, family, neighbors, etc
- Identify the problem and solutions that align with your goals and expertise
- The people getting the meetings with investors are building
- Focus on building and focus on delighting customers
Be completely objective with yourself at all times
- Why will you solve this problem?
- Do you have the expertise and understand the problem well enough to solve it?
- Do you have close acquaintances in the space?
- Who else is solving this problem?
- Why is now the time for your idea to work?
- Why should this product exist now?
- What changed that will allow it to work this time?
- How big is the market?
- Is this idea for 10 people or 10 million people?
- Do you have a niche?
- Reverse engineer the total addressable market (TAM)
- Jason provides example on how to reverse engineer the TAM in TWiST Episode 1211
- And most importantly - how will you make money?
- What is your business model?
- Marketplace?
- SaaS?
- Consumer?
- (We'll go more in depth on these in future modules.)
- Talk to customers
- What is your ideal customer profile
- Gather feedback
- Conduct user interview and listening labs
- Ask probing questions
- What are your users saying?
Additional Insights
- Learn the vocabulary and speak the industry standards
- Build an MVP and get it in front of potential users as soon as possible!
- Talk to those users as early and frequently as possible
- Focusing on your solution is key to success
- Don't get distracted!
- However, understanding potential problems can also prove valuable
- Think about and list why your idea won't work
- How will competitors beat you?
- Ask friends and family (especially if they are in the space) to be completely honest
- What are the biggest problems in their minds with your idea?
- Identify others who are solving this problem?
- If you know any investors - you should ask for their thoughts
- Not their money at this stage!
- Continue to research - research - research
- In depth competitor analysis
- Look at their websites, their Youtube channels, who they are hiring, what are they building, etc.
- This will help you understand your journey ahead
- Remember this isn't for everyone → 80% of startups will fail
- It is hard work to create a startup
- It is important that you are always doing the work, are ready to pivot, evolve, and lose everything
- If you can't afford to lose everything then you can't afford to start - this is a cut throat business, but it is a lot of fun!
To-Do:
1. Create a list of your skills + passions that could be a startup idea
2. Take your list of ideas for a startup and answer the 4 questions
- Why will you solve this problem?
- Why is now the time for this to work?
- How big is the market?
- How will you make money?
3. Select your startup idea that you will iterate on for the rest of