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How To Think of a Startup Idea (with Co-Founders)


Mike Chan

Coming up with a business or product idea is the easy part of launching a startup, but it’s an important one. This is especially true when you’re doing so with an existing team.
 
Many budding technology entrepreneurs come up with ideas first then either start building the product (if they can) or recruit a team to help build it. But with my latest startup endeavor, we put together a team first then came up with an idea.
 
This was pretty difficult because we had to agree on an idea that aligned with each of our interests, strengths and experiences. We knew there would be some heated debates and that tough choices and compromises would have to be made. Here’s what we learned and how we came to our idea together.
 
How we initially tried to think of a startup idea
 
Brainstorming sessions are fun and many times effective in conjuring up good ideas, but they only work if there is some structure to them. In order to come up with an idea that we all wanted to work on, my co-founder and I would:
 
1.      Meet at a restaurant
2.      Drink beers
3.      Each propose some cool ideas in which we were interested
4.      Drink more beers
5.      Weigh the pros and cons of all of the ideas that were proposed
6.      Eat some food
7.      Narrow down the list to a couple of ideas that we thought were cool
8.      Drink more beers
9.      Leave the restaurant motivated and excited
 
When we got home, we would research the ideas and many times find out that a million other companies had been building similar products for many, many years, and we couldn’t really identify a problem that needed solving.  Oh well, back to the drawing board.
 
We repeated this process every few weeks, again and again, for a few months.
 
This was not productive. It was fun, but not productive. Something had to change.

 
How we actually agreed on our startup idea
 
Typical brainstorming wasn’t working, so we needed to put more structure around our ideation process. We decided to put a little less emphasis on our meetings and do more thinking and research on our own. Here is the process that we followed.
 
1) List target customers whom we understood
 
Instead of just spewing out ideas that we thought were cool, we took a step back and identified potential customers to whom we could relate.
 
My co-founder was a software developer, so he targeted mobile and Web developers and software architects as potential customers. I come from a marketing, strategy and consulting background, so I identified marketers, social media users and business service providers as targets.
 
We also looked at our personal life activities to determine other target customers. We added sports fans, avid TV viewers, gym goers, online class students, frequent online shoppers, homebuyers, parents and a few more customer segments.
 
2) Identify the problems these potential customers faced or needs that were unmet
 
The next step was leveraging our understanding of these target segments to identify what problems they faced.
 
We asked ourselves questions like:
  • What inefficient tasks consumed software developers’ time?
  • What kept marketers up at night? 
  • What do fans need to enjoy their sports more?
  • Is the home-buying process optimized?
 
And many, many more.
 
Asking these questions helped us flesh out customers’ unmet needs and think through what they faced when trying to accomplish their goals.
 
3) Brainstorm potential solutions to these problems
 
After understanding the problems and needs of our potential customers, we now had a more focused way to brainstorm possible solutions.
 
While we knew that we wanted to build a software product, we didn’t limit ourselves to technology solutions. We came up with a few offline products in addition to websites, mobile apps, and other software.
 
4) Rank and rate these solutions
 
At this point we had over 40 product ideas. To narrow this list down, we each selected five ideas in which we were most interested and then rated them from 1-7 (7 being the highest) in the following factors:
 
1. Market momentum
  • Does this market have a lot of traction lately? Have companies attacking this space recently received a lot of funding?
  • How often is this market written about in technology publications? Is it trending upwards in coverage?
2. Market opportunity
  • How large is the market in terms of potential customers and revenue?
  • How fast is this market growing?
3. Competition
  • How many competitors are there, who are they and how long have they been around?
  • Can you find points of differentiation from existing competitors?
  • Note – identifying a few competitors isn’t a bad thing; it actually helps validate that you’re building a needed solution. But if you find that there are 25 competitors who have been around for 15 years, you might be a little late to the party, unless of course you can really differentiate your offerings.
4. Alignment with interests
  • Is the idea and industry interesting enough for you to dedicate the next 5-10 years of your life to this business, even when the poop hits the fan? 
5. Alignment with expertise
  • How much knowledge and experience do you have with this subject matter?
  • How vast is your network in this arena?
 
5) Discuss and select the winning idea!
 
After the scores are all set, you’ll have a much better idea of where each of the ideas stands in the minds of your team members. At this point, you can get together with your co-founders, have some food and beer, and discuss which idea to select. This discussion will be much more focused than the brainstorm sessions in the past.
 
During this conversation, you should:
1.      Narrow down the list of the 10 or so ideas to 3 or 4 with the highest scores.
2.      Talk through each of the ideas on the short list to weigh pros and cons and why you rated them as such.
3.      Refine the idea to something with which the entire team is comfortable.

 
And the winner is…
 
After all that, we’ve decided to build Locatize, a mobile development platform that makes it super easy for mobile app developers and marketers to deliver content, such as images, video, audio, app pages and push notifications, based on the location of their app users. This will help companies deliver location-relevant deals and messages to their customers and can be applied to industries like marketing, security, tourism and many more.

Let’s take a look at how Locatize stacks up against our criteria:
 
1. Market momentum
  • Mobile is eating the world and location is an absolutely critical part for targeting customers and delivering relevant content.
2. Market opportunity
  • I won’t bore you with numbers here, but for all of the potential uses for Locatize, the markets are large! Of course they are! :)
3. Competition
  • There are plenty of companies who compete in the mobile location space but most are focused on location analytics and push notifications. Thus, we think we can deliver a unique, differentiated solution for marketers and developers.
4. Alignment with interests
  • My co-founder and I are absolutely enthralled with the mobile space and have worked with mobile technologies for many years.
5. Alignment with expertise
  • My co-founder is an expert in mobile location technologies, having built these kinds of location-based content management systems for Navteq and Nokia.
  • As a marketer myself, I completely understand the goals of our potential customers and the importance of delivering relevant messaging, at the right time, in the right place.
 
We think we’ve come up with a great idea that may have legs. While it took some time, we believe that putting forth more thought and analysis early in the process will save us time and effort down the road.
 
For those of you out there struggling to come up with a startup idea like we did, hopefully this process will help!
 
Next steps
 
The journey has only just begun. Now that we’ve decided on what we think is a solid idea, we need to further validate this concept. We’re in the process of doing this now, and I’ll write about it in future posts.
 
What do you think about this process? Have you had trouble coming up with product ideas with your team members, and how did you overcome it? I’d love to hear your stories in the comments. 

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