If you’ve ever thought of building a startup, chances are the first thing you think about is having a “great idea.” You may look at many successful startups and think they all started with a unique, groundbreaking idea, and that is what led to their success. But that’s not always the case.
Hi! I’m Diane Prince. I co-founded a company that we built from scratch to $50 million in six years and sold to a strategic buyer. In this series, I take questions from the internet on building startups, founding businesses, and entrepreneurship. I discuss two perspectives from other professionals in the industry, and then share my perspective from my own experience from over 25 years building, scaling, and selling businesses.
Check out my thoughts on today’s question by reading below or watching my response on Youtube
I am obsessed with the thought of starting up a company or becoming an entrepreneur. How do you go about finding an idea to pursue? Do you look for a problem to solve or does the problem find you?
Thoughts from others:
According to Jared Friedman, an investor at Y Combinator:
The first most common mistake is believing that you need an amazing idea to get started with this usually looks like is someone who believes that the key to having a successful startup is starting with a brilliant idea. They’re waiting to have a brilliant idea before they start anything it’s really easy.–Jared Friedman
He goes on to mention how Google and Facebook are not incredibly successful companies because they had a unique, brilliant idea. In fact, when Google started, it was like the 20th search engine. When Facebook started, it was like the 20th social network.
What made them successful wasn’t a brilliant initial idea. It was a good enough idea combined with great execution.
Another investor at Y Combinator, Paul Graham, shares a similar viewpoint:
Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas. That m.o. is doubly dangerous: it doesn’t merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them.-Paul Graham
A key point he focuses on in this article is that coming up with startup ideas is a question of seeing the obvious.
I hear this all the time that people are worried the market is too saturated, there are too many competitors, etc.
A good idea should seem obvious and when you have that idea, you’ll probably feel like you’re late. Don’t let that deter you.
Even if you find someone else working on the same thing, you’re probably not too late. It’s exceptionally rare for startups to be killed by competitors. It is so rare that you can almost discount the possibility. Unless you discover a competitor with a lock-in that would prevent users from choosing you, don’t discard the idea.
I believe that there is so much information out there for entrepreneurs. I’ve been doing this since 1996, and I have had the experience and the vantage point of building businesses back before “being an entrepreneur” was such a thing.
I bootstrapped my business, which means building it from revenue. We did bring in some investors in the form of co-founders. But, most of my experience is in actually building companies through revenue.
In today’s world, the startup era, sometimes there’s so much noise and there’s so much advice, it can be overwhelming.
To me, being an entrepreneur means that we get to build the business, how we want it. That to me is the most exciting part about entrepreneurship.
So on the topic of startup ideas, one of the most important things to me is to first get clarity on what you want. What do you want to get out of being an entrepreneur?
My first company was a staffing agency, specifically for title insurance people – the ones who wrote title policies and did all the research and technical work behind real estate transactions in the United States. Super specific and random, right? On the surface, the idea for this company was clearly not something that was a passion of mine when we started.
What we did have was product market fit, timing, and clarity around what we wanted out of our business.
I didn’t think of a problem to solve and then create the business. As we explored business ideas, some would come up that were great ideas and maybe would even build a credible business, but they weren’t ideas that would get us the results that we wanted and what we set out to accomplish.
I knew that I had a goal of building a business, growing it, and selling it to a strategic buyer in under 10 years.
There is a huge difference between starting a small-town bakery versus building a commercial wholesale bakery that’s going to supply all of the restaurants in Los Angeles with baked goods versus innovating an industry disruptor like Postmates.
All of these things could be good ideas, and they’re all going to be a very different way that you’re going to live your life. Do you want to build a family business that you commit to for the rest of your life, or do you want to build a unicorn tech company that could be a billion dollar company — or choose one of the endless options between these two extremes?
Your answer to the question: “what do I want out of this business?” will drive the decision around the business idea you commit to.
If you are looking to build a family business, your focus will be on revenue generating activities. If you are looking to build an industry disruptor, your focus will be on raising money, pitching to venture capitals, creating pitch decks, and managing the fundraising. As you can see, each one is unique in its own way.
Businesses are successful when the people involved see them as a vehicle to get what they’re looking for out of their life.
As a founder, you need to find ways to stay motivated to do the really hard things. There will always be hard things, whether you have that family bakery or that billion dollar food industry disruptor. There are going to be really hard things either way, which hard things do you want to do to get the results that you’re looking for?
To stay committed, you need to see that the business is going to get you to where you want to go.
When it comes to startup ideas, there is a lot of advice out there, but ultimately we become entrepreneurs because we want to control our own lives and futures, tap into our creativity and put something new out into the world.
I coach entrepreneurs on how to show up in their own entrepreneurial path in the way that best fits them and their unique needs and goals. I know the rush, and the fear, of creating a business from scratch. I’ve scaled from zero to million-dollar weekly sales. I’ve been through 5 exits and I sold one of my startups to a public company, after the deal fell apart 6 times.
First-time entrepreneurs need a place where they can go to get experienced-based coaching, to learn about tried and tested tools, to receive honest feedback, and to have someone hold them accountable every step of the way.
I use a straight-forward approach to teach entrepreneurial tools and systems that work.