Whether you’re an aspiring entrepreneur or going through a pivot, finalizing a startup idea could be overwhelming.
A good founder usually has a bag of ideas. Having multiple ideas is good, but not ideas are created equal.
In this post, I’m sharing the process that I use to decide what ideas are worth executing and how to eliminate weak ideas.
1. The power of scratching your own itch
The best business ideas usually come from scratching a personal need. When you solve your own problem, you spend your time building something that you’re passionate about. This is more common in creating direct-to-consumer businesses.
Start with a list of problems that you’d like to solve for yourself. Rank this list in the order of pain point. Then rank this list in the order of how frequently you experience the pain point. Ideally, you want to pick the idea that ranks top in the pain point as well as in usage frequency.
Once you’ve found your top problems, do some research in market sizing. There is a good chance that there are enough users who also struggle with the same pain points you’re experiencing.
This is how my consumer app Nucleus was born. Nucleus is a supercharged calendar app for busy professionals, who have multiple external meetings in a day, to quickly collect the context and get ready for their next meeting on the go.
Problem: Before Nucleus, to prepare for my meetings, I would check my email to find what we’ve already exchanged. I will go on Linkedin to learn more about their background. I will check the location: check directions or call a Uber. If it’s a breakfast/lunch/dinner meeting, I will check Yelp to find what’s popular. All of this takes time hopping from one app to app, entering the same information again and again.
Frequency: This was a frequent problem. On average, I’d have 4–6 external meetings every day.
Market Sizing: This problem applies to recruiters, sales professionals, founders, executives, venture capitalists, or anyone who’s meeting new people multiples times day.
More about Nucleus — https://www.producthunt.com/posts/meet-by-nucleus
2. Be an Insider — solving problems for a business department
Most of the B2B business ideas are formed by experiencing a pain point at your job. This is how Salesforce, Workday, ServiceNow, Zendesk were founded. In this case, you don’t actively found a problem, but the problem finds you.
This happened to me while I was working at Twine, acquired by John Hancock.
Problem: With the proliferation of cloud computing and opensource, launching a web business takes just a few days. Accepting payments takes hours. But starting an investing business takes months, millions of dollars, and regulatory approvals.
Having experienced the pain point first as an entrepreneur and later as an operator building on top of legacy tech, I embarked on a personal journey to help build Finos, a modern investing back-office APIs that enables developers to delight users, increases business’s speed to market and reduces the total cost of ownership.
Market Sizing: Incumbents looking to modernize their back-office or a fintech startup looking to add investing features in their app.
More details on my journey of discovering and founding Finos.
3. Find who you want to serve
This is for my entrepreneur friends who have nothing in their idea bag or don’t want to execute any of their current ideas. I usually don’t recommend this path, because a good idea is a function of time. Starting a company is a calling, not a job. But sometimes you’re actively searching for new business opportunities, especially when the current business is undergoing a pivot.
The conventional wisdom suggests finding industries that interest you, skilled at, or is growing. While this is good advice and useful (more on this later), you’ll eventually have to define your early adoptors or personas. Moreover, keeping the focus on who you want to serve makes it more human and adds specificity in purpose.
Once you have defined who you want to serve, you need to spend as much time as you can with them. The goal is to get as close as you can in experiencing the problem first-hand. This means customer and market development. This means understanding the motivations, goals, and problems of your persona. This means learning how they solve this problem currently. This means watching them solve the problem with their current workarounds.
You need to do this until you have identified some problems commonly experienced by everyone in your target persona.
Once you have a list of problems identified, you can apply the same approach of ranking them by pain and frequency. Assuming you have identified the top problems, you can apply the industry filter to further prioritize the ideas.
Here are some examples of personas you may want to serve: office managers, sales professionals, recruiters, managers, business travelers, remote workers, early-stage startups, marketers.
Pro Tip: Find a persona who is underserved, learn why that’s the case, and figure out a way to serve this persona.
We found ourselves in this position when we decided to pause our startup Finos. In early 2019, we made a bet that the future of work is remote. and remote-first structure will be more common in tech startups.
Our Persona: remote worker.
Problem: Going remote-first means less facetime. When teams are not co-located, there are fewer opportunities for social interactions, chance meetings, organic conversations. This creates a feeling of loneliness and isolation of not seeing your co-workers daily. Furthermore, when remote work involves a lot of async text-based communication, you see more words and not the person saying those words. You miss the more human form of communication: audio or video.
Solution: Stay tuned. If you’re a remote worker interested in learning more, let me know in the comments.
A great idea is a function of time. Keep learning from customers, and refine your idea until you’ve figured out a differentiated approach.
I’ll be writing a follow up on how to evaluate your business idea and save time, money, and stress. Stay tuned!
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