Thread by Gagan Biyani

twitter.com
1 Recommender
1 Mention
Recommend
Post
Save
Complete
Collect
Thread
The hardest part in starting a $100m business: picking the right idea to work on.

Pick wrong and you’ll spend years working away with little to no results.

Pick right and you'll have a much better chance to succeed.

Here’s how I’ve decided what ideas to work on…
Disclaimer/

I feel like I’ve picked the right market 3x (Udemy, Lyft, Sprig)

That said, Udemy isn’t the clear category winner I hoped for.

I was a (very) small player at Lyft.

Was right about food delivery but picked the wrong model w Sprig.

/Disclaimer over
5-step process for coming up with startup ideas:

Explore to find a market that you’re interested in
Research to understand the landscape
Define an attack strategy
Test your strategy
Get early traction
Step 1: Exploration. Think you might want to start something but don’t know where to start? Relax and take your time. Don’t rush it. Instead, be a BUM.

Focus on learning as much as you can about Business, User, and Market
Business: Study other businesses voraciously. Ideally you aren’t just looking at one specific area but trends overall. Read biographies, listen to podcasts, watch YouTube. Don’t jump right into an idea until you’ve surveyed hundreds of them across dozens of sources.
User: DON't ask for advice from investors or peers. Instead, hang out with potential users. Join communities in areas of interest. Become a regular consumer of the products + services in your market. The deeper you get, the more you’ll see the cutting edge of an industry.
Market: Start to narrow in on markets and trends you like. Pick at least 3. If you pick only one, you’ll force yourself to come up with an idea in a market where the timing is wrong. Instead, with 3+ markets, you can pick the one where the timing for disruption is best.
Step 2: Research. Once you pick a market, dig deep. Find out all of the companies in the space and understand how they operate by reverse engineering them.

Use SimilarWeb to see their traffic.

Use 10-Ks to figure out their growth and profit margins.
Study their marketing by removing ad block and watching their copy and advertising.

Go to Facebook ad library and look up the demographics and creative they use.

Use SEMRush to figure out what keywords they are bidding on.
Consider big businesses that are due to be unbundled.

Look at big companies that have lots of verticals (think: Craigslist, YouTube, Proctor and Gamble). Take each of their product lines and see if there’s a new trend that consumers in those industries are looking for.
Step 3: Definition. Now that you know how the industry works, you need a plan of attack. Your goal is to generate lots of ideas, then narrow on the one you think is most likely to work.
To generate, try analogizing. Look at companies that are already successful in other spaces and apply them to the market you’re interested in. A lot of people shit on “Uber for X,” but in reality it resulted in plenty of big businesses: DoorDash, Instacart, Postmates, and Eaze.
You can also build on top of platforms. In the past, dozens of $100M companies came from blogging, YouTube, the iPhone and e-mail. What are new platforms for today that you can build a business on top of?
Don’t forget to look at a wide variety of business models when you think about your wedge. If you’re in B2B, have you considered pricing based on usage? SaaS? Enterprise sales?

Entrepreneurs often only consider one iteration of their idea, only to lose to indirect competition.
(interruption - continue for steps 4 and 5)

Btw if you have further questions or want to dive deeper into coming up with company ideas, I’m teaching a course with @thesamparr about this in early May: maven.com/samparr/ideation-bootcamp
Step 4: Testing. Once you have an idea, that is just the start. The next step is to figure out whether it is viable through trying it in the real world.

I talk about this at length in my article in First Round Review about Minimum Viable Testing. review.firstround.com/the-minimum-viable-testing-process-for-evaluating-startup-ideas
Run multiple MVTs. Even the best ideas have a number of extremely risky assumptions: You assume who the target customer is, whether they want your product, whether your pricing model is right.

MVTs will help you modify your assumptions to be more accurate before you go build.
Even if you end up being generally right, MVTs will lead you to unique insights that will shape your company’s strategy.

Once you have run a few MVTs, then you can build an MVP or even just go straight to market.
Step 5: Traction. Getting customers is one of the most critical aspects of starting a company. You can’t just come up with an idea and hope people love it.

Lenny does a great job of talking about this in these two articles:
www.lennysnewsletter.com/p/how-the-biggest-consumer-apps-got?s=r
www.lennysnewsletter.com/p/how-todays-fastest-growing-b2b-businesses?s=r
My advice? Start by talking to your prospective users and asking them a series of questions about their lives, and what they currently do to solve the problem you solve today.

Then ask them the magic question: what resources do they use to learn more about this problem?
The answer will be your first set of marketing tactics. If they listen to podcasts, get on those podcasts. If they search Google, nail SEO. If they ask their friends, find out more about who they talk to and why.

Let your customers will tell you where to market.
If you loved this thread, you’ll love our course on ideation. We’ve now done it 4 times and each time students rate it over 4.5/5.

Join us: maven.com/samparr/ideation-bootcamp/
Mentions
See All