This is the first part of a series of articles around how to build and grow a startup.
Over the years I’ve seen people who think about building a startup fall into two categories. You either:
- Have a cool idea that you think would absolutely work.
- Don’t have any idea and you think it’s hard to find one.
There is a very low number of people I’ve met who fall into a special category. Let’s call it the goldilocks category. That is: you have ideas and can quickly identify market signals.
I believe that’s not only a hard-skills issue but equally a soft-skills one.
But let’s take a step back as we’ve introduced quite a lot of concepts. While our natural tendency is to jump right into a topic and treat it with our own pre-existing imperfect understanding of things we believe we know, I feel it’s important to go through the basics first.
On January 25th, 2010, Steve Blank wrote an article about the definition of a startup. I know, it sounds like this will quickly take an academic turn and we haven’t even reached the 200-word mark, but bear with me for a moment.
You see, for a long time, people mistakenly defined startups as just an early version of a business. This put many aspiring entrepreneurs on a path of writing highly-detailed business plans that when they finally started were not helpful in any meaningful way. Just imagine months of work doing nothing but writing a document that had so many underlying assumptions that it essentially misinformed you more than created a solid base to take action.
Steve grew up in that world where the core advice on how to start building a startup was to write your business plan. He clearly saw that it did not work, and it helped nobody. So back in 2010, he offered a better definition of what a startup is:
A startup is an organization formed to search for a repeatable and scalable business model.
I won’t go into more details because that post, detailing why this is a better definition to work with, is still available right here.
Now, let’s talk hard versus soft skills.
Just like any other thing humans do, everything requires certain skills that enable reaching some results. The business community divided these skills long ago into two major categories.
Hard-skills: which are things that are teachable and can be easily quantified. For example, it’s easy to measure if you speak English and at what level – there are tests available for that.
Soft-skills: are harder to quantify and test for. For example, problem solving and communication are not easy to measure. Being harder to measure, these are skills that schools and businesses do a poor job at teaching.
And this brings us back to the two categories of people that are most common. You see, I think people highly focused on hard-skills are in the first category and those high in soft-skills are in the second. Of course, there’s a spectrum with no hard lines – this is a generalization nonetheless. But I’d definitely see it as a good hypothesis to have in mind. Especially as being aware of yourself and how well-rounded your skills are, is key in what you need to grow into to perform in the startup world.
This is definitely a very long introduction. We’ll go deeper on the subject of skills and mindset in another article.
Now, back to how to pick the right idea to start a startup.
As a startup is an organization formed to search for a repeatable and scalable business model, you need to let go of thinking incertitudes and embrace exploration and play.
When I say exploration, I really mean it. If you ever went to visit a new place and felt anxious but excited to start discovering new interesting things, then you know what I’m talking about.
Just embrace the uncomfortable feeling of not being an expert at generating new startup ideas. Nobody really is. Welcome to the club.
We do use some tricks though.
Look at your own life. What are some of your challenges? How do you currently solve those challenges?
This is the easiest place to start exploring. Most of us aren’t really aware of the many challenges we have. We never really took the time to explore our lives in a mindful way. Now, take that time. Sit down with a pen and pencil and think of times you were even mildly frustrated about a situation. Don’t think about startup ideas, just write down your frustrations – it should be an interesting experiment if nothing else.
If you’re working for a company, think about issues people face there.
This should be an easy place to start exploring, as well. The larger the business, the more inefficiencies you should be able to spot. This should also give you an opportunity to learn more about how a company works. Don’t limit yourself to just your department or project, go beyond. Talk to people there but don’t make it an interview. Ask them what great about their job and what’s really frustrating – it’s a great way to learn more and connect. If something is interesting to you, ask them to show you how they do it.
Check out some communities and support forums.
You’re looking for problems. Why not go to where people already discuss problems? Communities built around professions (e.g. marketing) are full of people having challenges and asking for help. Support forums for many products are even better places to find such challenges.
These should provide you with a great start exploring a wide array of problems in the world.
Now, let’s talk about solutions.
The funny part about going to startup events, especially at Demo Days, is you see how easy it is to be blindly confident in 10 slides or less. And this is not intended to be mean. We all do it and it takes real courage to expose yourself like that.
I think it just goes to show that too many of us have been enchanted by the promises of fame and riches the startup world’s stories tell us. But those are stories of one in a hundred million.
I think being honest with yourself and taking the time to go through the process guided by curiosity and play will put you in a much better mental place.
As a startup is an organization formed to search for a repeatable and scalable business model, you now have to look at the most frequent problems you identified and start looking at existing solutions.
This is a crucial step. Not taking the time to do this properly will put you on the path to disappointment when you realize (and you will, eventually) that what you thought about is already a multimillion-dollar business.
Most of the ideas I think about I find other businesses doing them for years. Those I don’t find other businesses doing them usually mean there’s no real market need (no, I don’t think I’m a genius for being the first one to ever thinking about that idea).
There’s a sweet spot. That’s what I’m looking to find. That sweet spot can be described simply as having low competition and high opportunity.
How do you know if that’s the case for your idea? Well, if you’re looking for certainty, there is none. But, there are some tricks.
The almighty spreadsheet
Search for all your competitors and add them to a spreadsheet. Add some context information for each, like: number of employees, revenue, series raised, pricing, etc.
The more contextual information you add, the harder it is to process the data but you get a clearer picture of the market.
Reports and trends
Most of the in-depth reports cost hundreds or thousands of dollars but some have some key information in their abstract. Some of that in-depth information has been used by other companies to write articles on their blog – take the time to understand what research companies say about your market. Does it grow quickly, is it stagnant, or it’s heavily affected by global pandemics. You should find strong indicators from multiple sources that say your market is growing (the more the better). This means you’ll have plenty of room to grow among competitors.
Talk to people in that market
Most people skip this. Don’t be that person. You only really need to talk to about 10-15 people to get a better understanding of how things work and if there are things you should be careful about. Try not to talk about your idea in the first half of your discussion. Ask questions about their market, job, and products they use currently. You can present your idea if you want, just know people are nice and will most likely not tell you if your idea sucks. They’ll just politely encourage you.
And that’s pretty much it, to get you started.
One last thing. Nobody will steal your idea. Most people have a lot on their plate already. The chances someone will drop everything and build a startup that steals your idea is ridiculously low. Even if does happen, it won’t be the same idea after 2-3 iterations. So just be open to feedback and look for signals not noises in the market.
At Qubiz we love helping our clients build products and solutions that solve real-world problems. If you are looking for a great team to help you develop your startup, we would love to talk. Send out a LinkedIn connection request to Bogdan to keep in touch.