So I’ve got this idea...
We’ve all experienced that spark of inspiration. The adrenaline flows, your thoughts tumble through your brain at 1000 miles an hour. It is far too easy to get caught up in that excitement.
As someone who has tried multiple times to take those ideas and make them a reality. I’ve learned that those great ideas - often aren’t. I’ve learned many costly, painful lessons that those great ideas - often aren’t. Along the way, I’ve stumbled across some useful questions to help filter the good ideas from the bad.
1. Is your solution 10x better?
This first question is the hardest barrier to pass, as it is a high bar to hit. Truly great products or services fundamentally change a small part of your life. The following companies provide some examples of that 10x difference:
- Original iPod – 1000 songs in your pocket vs 20 on a tape
- Uber – book a cab in 60s vs 10 minutes of hassle
- Robinhood - trade stocks for free vs £5+ each trade1
- Spotify – unlimited music for £10/month vs 1 album for £8
- AWS - buy & manage your own servers vs rent what you need instantly
- Airbnb - a space that feels like home vs a dull hotel room
Whilst your new solution might solve a problem, often you’ll find the biggest competitor to your solution is simply doing nothing. Doing something new requires energy, and unless what you are offering is 10x better people just won’t make the effort.
When you look at your solution there are 4 different dimensions that your solution can be 10x better:
- Functional - A better outcome? Faster? More consistently? With less effort?
- Financial - Is it cheaper? Or requires less upfront? Or just offers better terms?
- Social - Does it help you connect with others? Or show your status? Psychological - Can you express yourself? Do you feel better about yourself?
You can take any one of the examples above and break it down along these dimensions to see how much better they were than the status-quo. A good rule of thumb for when you’ve got it right is that the idea sounds “too good to be true”.
That is why these 10x differences take off as it is not a slight improvement. Instead it is usually a totally new business model that enables that 10x difference. This is why finding these ideas is so difficult in the first place.
2. Is this problem painful enough?
Assuming your idea is 10x better and sounds “too good to be true”. The next question to ask is whether this problem is actually painful enough. There is fundamentally more leverage in the problem space, than the solution space. In other words, solving the right problem is more important than solving any problem. The companies from before are some examples of painful enough problems:
- Original iPod – listening to music on the go is difficult
- Uber – getting around quickly is expensive & time-consuming
- Robinhood - trading stocks is slow, painful and antiquated
- Spotify – maintaining a music library is expensive
- AWS - setting up servers is a huge upfront pain and financial cost
- Airbnb - finding a place to stay is difficult when you don’t know the area
As you can see these aren’t necessarily huge problems on their own, nobody’s life is ruined by the hassle of trading stocks. But the key is finding a problem that is painful enough, which you can measure through three variables: the depth, the size and the frequency of the problem.
- Depth - Is this a problem that impacts how people make big life decisions or is it a mild inconvenience?
- Size - Is this a problem that affects billions of people or one that affects a small handful?
- Frequency - Is this a problem that happens multiple times a day or once or twice in people’s lives?
Again you can take any one of the products or services from above and run it through this framework to evaluate their problem. A rule of thumb for when you’ve found a good problem is that it is a commonly accepted “joke” within your target audience.
This is why finding the right problem is difficult as it becomes accepted as just how the world works. Something to remember is that it is just as difficult to solve a big problem as it is to solve a small problem - you’ll spend just as many hours, have just as many sleepless nights. So you might as well try and do something that matters.
3. Is this a feature or a real business?
So at this point, you have a solution that “sounds too good to be true”, and it solves a problem that is so well known to the right people they joke about it. But just because it passes these barriers doesn’t mean you have a real business. It still needs to have a business model that generates revenue and it needs to be self-sustaining (at least eventually). If we take the companies from before:
- Original iPod – Sell you expensive hardware and then charge you per song
- Uber – Match you with a driver and take a cut of the total value of the fare
- Robinhood - Make interest on the large float of customer funds
- Spotify – Taking a cut of the revenue they generate for record companies
- AWS - Purchase servers in bulk upfront and rent them out by the second
- Airbnb - Match visitors with property owners and take a cut of the visit
As you can see each one of those products and services had a business that was at least equally as complex. There are many aspects to creating a business model with good fundamentals, but the following 4 questions are a good place to start:
- Value - Will people pay for you to solve their problem? - Juicero
- Usability - Will people want and be able to use it? - Segway
- Feasibility - Is it even technically possible? - Theranos
- Viability - Is it actually financially sustainable? - WeWork
This is the final big barrier to most solutions, as without a business model to support your idea it’s just a feature. And whilst it is unlikely, it is something that an existing competitor could easily copy if you prove it works. A good rule of thumb is that you should be as excited by the business model as the surface level idea.
If you’ve passed these three initial questions, you’ve got something worth investigating. The best book I have come across that I would recommend as a first step is Disciplined Entrepreneurship by Bill Aulet. It has a list of clear, simple, repeatable steps that will take you from here on out.