I heard someone giving advice recently about how to come up with a winning startup idea, and to me it didn't make sense. Identifying random problems that need solving seems like a great way to make an already-difficult process more difficult. Here's an alternative approach.
Most startups fail. Most businesses fail.
The odds are against you. So your focus as an entrepreneur should be on improving your odds. De-risking.
How do you go about that?
Do you have unique insight that gives you an unfair advantage?
There are dozens of ways great companies are formed, but it's probably fair to say that the most prudent way to launch a startup is to base it around a problem you understand intimately.
Building a business in an area you know tangentially introduces a whole host of unknown unknowns. This increases your risk exponentially.
What's more, don't forget that investors are picking from thousands of potential deals (Andreesen Horowitz invests in approximately 1 in every 150 pitches it sees). They typically take a dim view of founders who are not subject-matter experts. They know how hard it is to build a great company, so they look for founders who have some kind of unfair advantage.
If you're not the obvious person to build this business, it means someone else out there probably is.
A different approach to come up with a startup idea.
If you want to de-risk the process of launching a startup, try the following:
Work out where the overlap is between what you're especially good at, what you know better than almost anyone else, and what you're passionate about. If there is no obvious overlap, take a breath and work out how to create one.
- Go and get a job in the relevant field (this is win-win: you can grow your knowledge AND take more time to save additional startup capital).
- Spend 1,000 hours building and refining your skills (a good example right now might be to master AI prompts for your chosen field).
- Start writing about the topic you care about. You don’t need to be an expert. Write honestly; ask questions; be vulnerable. Write to learn.
- Leverage your writing and learning to build a community within your chosen field. Post on social networks, comment on posts by others you admire, create conversations, take calls. Become known as someone trustworthy, respectful, kind and motivated.
- Attend relevant events, network, make contacts.
- Use your free time to freelance and build a professional network of people who already buy the kind of services or products you’re interested in. Maybe your side-gig will take off and become your startup!
Many entrepreneurs don't have the patience for this. They're in a rush...
"What if someone else does it first?!"
But that's rarely the problem. Most founders fail because they aren't knowledgeable enough to solve their chosen problem effectively.
If you were an investor, would you rather back someone random right now, or you after 18 months of doing the things listed above?
– Featured image: Midjourney