Disclosure: I’m a startup guy, business developer, events organiser and advisor @ TransferGo. Here I express my views and encourage others to debate them. Thank you for spending your time reading this.
I want to talk about the first 1% of your startup – that’s the idea.
Entrepreneurs come up with many ideas, which at the moment of inception sound exciting enough to give you that much-awaited portion of dopamine surge. You know what I mean, right? Like most of us I tend to write my “dopamine” moments on a special notepad. By now I have more than four of them filled up.
Surprisingly enough (or maybe not), after a while majority of my old ideas don’t seem to look that creative, smart or innovative.
Yet a few of them still ring a bell. So how to pick the one and try running with it?
I believe that the sole purpose of technology/innovation is to make the future more productive, more social, more entertaining, more… etc. In a word – better.
I think startups are one of the most powerful tools out there able to tangibly improve people’s lives. That’s what they are all about. Money should be treated as a by-product, right?
So how to think about the few decent ideas left on the notepad. I’d like to construct a simplistic framework for entrepreneurs on how to do it.
I’d like to categories “the few notepad survivors” into three categories.
Out of the last few ideas-survivors on my notepad I’d choose one, which would potentially do good in one of these categories and then go on testing if it will.
Let me give you some examples of companies who represent these categories quite well.
The pain ideas.
Skype – made international calls accessible to everyone by substantially cutting down prices. Sorry if the examples look a bit boring.
All of us should remember the pre-Skype world when calling abroad was a luxury reserved for larger business or wealthy people. Skype removed the barriers and made global communication available for all. They made the world smaller, more inclusive, and dynamic. But most importantly by solving a huge pain they’ve disrupted an old-fashion telecommunications market and opened new horizons for businesses and global connectivity.
The good news is that unlike the “real value” or “addictiveness” ideas you can test if the problem hurts your target audience enough so they’d pay for the solution.
That’s why I think “pain” solutions are an ideal pick for first-time entrepreneurs:
Don’t get me wrong. Bringing “pain” idea to the market is as difficult as any other idea. But at least you’ll know fairly early if it’s something people want to use/consume/pay money for.
Important detail. Keywords here are “real” and “pain”.
When you start testing the good ideas on your notepad be open and objective by picking the one with serious problem to solve in a market that’s long overdue for disruption, especially if your goal is to build a business out of it. Only if the problem is serious enough and the solution is good enough will people pay you money for it.
Let’s move on to Real Value creators.
For those who don’t know AirBnB is an online platform where you can rent out a room or bed in your house for a certain time period.
So what’s the core difference between pain and value ideas?
If you’ve got an unused room (bed) in your house it’s not really a huge pain, right?
Yes, you may be paying a bit more in utilities than you should but that’s not painful enough. However, with AirBnB you can earn an additional $21k annual income (that’s how much an average AirBnB host earns annually in NYC) which is live-changing value for majority of homeowners..
$21k additional income is a tangible value offer, which is relatively easy to sell and comprehend. Nevertheless, this value proposition became accessible to homeowners when AirBnB achieved traction, grew loyalty and confidence.
If you’re excited about another social mobile location app, which re-adjusts my-social-graph-in-an-interesting-way sort of value idea, think critically about how much value will it really add to your users. Ask them. Be open.
Testing value ideas is it a bit harder because you have to have a working product or prototype in order to test. With value idea it’s common that the real value only kicks in after certain user adoption thresholds are met, which makes it that much difficult.
Keep in mind that most of us are willing to do more to decrease pain than to increase pleasure. Not sure where I’ve heard this but it’s certainly not my idea.
Let’s finish with the addictive stuff.
Some might argue but I don’t think it solves a painful problem or delivers so much value we couldn’t do without. It has improved our lives, made the world “more open and connected” but as a business it’s not yet great because it doesn’t really fit well in one of the three categories. That’s way Facebook is and will remain free.
Stickiness of the idea is very difficult to predict until your product or services becomes sticky. Imagine if you’ve brought the first version of Facebook prior to launch to a bunch of investors and promised it will grow like wildfire their response would have been predictable. Even when Facebook started growing like crazy only the brave and the visionary decided to chip in.
I know many people, especially from Silicon Valley will roast me for what I’m about to say but here it goes. If you have an idea left on your notepad, which neither solves a real pain nor adds real value I’d save it for a side project after you’ve failed a few times or done exits. This is specifically true when you’re not launching from Silicon Valley or similar eco-system. Twitter started as a side you know.
To sum up, picking ideas is not as black and white as I’ve portrayed because decreasing pain and increasing value are two sides of the same coin. However, if you are a first-time entrepreneur or planning to bootstrap heavily focus on the pain ideas or pain relieve part of your idea.
It should give your first-venture a better chance to run the longest distance or fail fast – either way learn the most.
Follow me on Twitter: daumis2475
I’m also on Quora.com
Advisor @ Transfergo.com