Tuesday, May 18, 2010

How To Develop Startup Ideas

Besides the better weather, access to great skiing, hiking, and any other outdoor activity you can think of, I love living in San Francisco because people "get" startups. New York (my previous home) is largely a city of bankers and consultants (although that's starting to change). San Francisco is a city of tech entrepreneurs and it really only takes overhearing conversations at any restaurant to figure that out. What's great is that it gives me the opportunity to talk to and learn from many peers who are in the process of starting their companies or have already folded many successes under their belt.

I firmly believe that great ideas are not necessarily what makes a successful company -- it's ultimately all about execution, with the most challenging part being building the inertia required to get started. It's really easy to convince yourself not to pursue an idea (the commitment, challenge, lifestyle changes) -- so it's certainly not for everyone. It's significantly harder to connect all the dots to translate an idea into a path of success.

In talking with other entrepreneurs and recounting my own experiences, I feel that I've narrowed in on a set of traits that are vital for successfully pursuing a startup idea:
  • Core competency is really important. Pick one thing that is core to your company and do it extremely well. Ultimately, as you grow, you will naturally expand into complimentary areas, but trying to grow a company on several fronts at one time can lead you to do many things adequately or poorly instead of simply killing one core area. Going away from your core competency seems like a likely recipe for failure. Even Google (a company with 100+ products) adopts a 70/20/10 mantra to focus 70% of their effort on their core businesses: search and ads.
  • Look for a niche. Find small things that make a big impact. Everything does not need to be the "next Facebook" or "next Google" and I'd argue that thinking like that trivializes and overlooks the inordinate sequence of small steps (which are far more important) that are needed to build something as powerful and sustained as those incredible companies.
  • Ideas have to be grown, not scrutinized. I can't count the number of times I've had an idea and spent time thinking about all the ways in which the idea would fail, only to see others execute those ideas. Nobody can know it all, but you can trust your instincts about what has the potential for success. In the times I've spent brainstorming with my friends, I've tried to focus on how to translate an idea into an execution strategy instead of worrying about the obstacles in the way.
  • Look for unmet needs. One of my pet peeves is describing an idea or product as a repositioning of an existing market leader -- "This is a [Facebook/Twitter/YouTube etc] for XYZ". The problem with this line of thinking, in my opinion, is that, often times, this feels like shoehorning a product into a market that may not have a need. And, if that is how you describe your product to others, then it's likely how you think about your product internally and force you to chase features and functionality that may not make sense for your market. It seems basic to say, but focusing on the singular problem you are solving is how I'd describe my company. This isn't a "Twitter for business" but instead "this is a product that solves the challenges people have communicating with each other within the workplace".
  • Explore emerging markets. As a tech entrepreneur, I like to look at industries or verticals that have traditionally been under-served by technology. Even simple ideas in these markets can make a huge impact, because the problems are numerous, competition limited, and the potential impact of small things can be large. It's best to be ahead of the curve as opposed to being caught up in a frantic land grab.
  • Get feedback early and often. Somewhat related to the concept of "growing an idea", it's hard to execute in a silo. In thinking through ideas, I'll try to get feedback from people I trust as soon as I can. I take these things with a grain of salt, but everyone I talk to usually has a perspective that can help me refine my ideas and path to execution. I often hear the people are worried about their idea being stolen, but the reality is that ideas are typically not unique -- it's your ability to execute that is.
These are things that I've found to be helpful in the brainstorming and ideation process. How about you?


Kelly said...

great points! especially liked "ideas are typically not unique -- it's your ability to execute that is." note to self!

GiovaniLocatelli said...

i'm developing a great start up here in Brazil. It's about the Grain mkts, commodities and e-commerce.
The name is tradincom, maybe if you have time to give some tips.
Nice article.