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How to Choose What Problem to Solve
- Nathan Wailes
- 1 Find out who else is working on this problem / what other solutions are on the way
- 2 Compile a list of vulnerable/weak companies/products
- 3 Look for companies that are charging for a product that could be monetized without charging those users
- 3.1 Examples
- 4 Compile a list of things that you are more knowledgeable about than others
- 5 Compile a list of projects for which you can take risks that established companies/governments can't
- 6 Compile a list of powerful new technologies
- 6.1 Deep learning
- 7 Misc ideas to file
- 8 Ways companies get valuable
- 8.1 Lots of users
- 8.2 Lots of revenue
- 9 How to identify a good idea
- 10 Make sure the new solution to this problem could be a lot ("10x") better than existing solutions
- 11 Make sure you're building on a platform that is growing or remaining stable
- 12 Make sure people will want to use the product
- 13 Make sure that this solution can be adopted very quickly
- 14 Make sure an incumbent won't be able to destroy you
Find out who else is working on this problem / what other solutions are on the way
Find out what startups various VCs have funded.
Example: There are already lots of innovative schools out there.
Compile a list of vulnerable/weak companies/products
Look for companies that aren't being run by the founder or a similarly-powerful leader
Explanation
Once the company no longer has a single powerful leader (eg the founder), different interest groups within the company can get stuck in a political gridlock with each other, as new advances in the product / technology could be bad for certain of those groups, and those groups will fight to undermine those advances.
Examples
Nature
This would be analogous to a lion looking for prey that isn't in its right mind; maybe the animal is senile or suffering from some infectious disease or poison that affects its thinking.
Politics
2016.11.11 - Medium - Larry Lessig - On “faithless” (but democratically faithful) electors
[A]n amendment to alter [the electoral college] would be virtually impossible to enact — both because the even more drastically malapportioned US Senate would very likely never pass it and because the smaller states, which benefit from the malapportionment, would never ratify it. (Quoting Michael Klarman in 'The Framers' Coup')
I think this may be one of the reasons that companies become vulnerable: once the company no longer has a single powerful leader (eg the founder), different interest groups within the company can get stuck in a political gridlock with each other, as new advances in the product / technology could be bad for certain of those groups, and those groups will fight to undermine those advances.
Look for companies that are charging for a product that could be monetized without charging those users
Examples
WhatsApp beat the telcos this way.
POF took users from competing paid dating sites this way.
Instagram stole the market opportunity from Hipstamatic this way.
Compile a list of things that you are more knowledgeable about than others
What are you better at than other people?
This is mentioned by Felix Dennis when he says the three elements of searching for what kind of company to start are inclination, aptitude, and fate.
Look at the past projects / problems you've worked on, and see if you can combine the experience you've gained from working on those into a single solution.
-- Example: Woz and his smaller electronics projects giving him the expertise to work on the Apple computer (could you find 10 different people who've solved each sub-problem?)
-- Example: Jonatan Soderstrom and his short game experiments teaching him a bunch of techniques that he was able to put into Hotline Miami
Playboy interview with Gates: He first gives an insightful-sounding rationale for sticking to software. But then (and this is what I found very interesting) he admits that he just stuck with what he knew: software. He didn't know hardware, so he didn't try to get into hardware.
Compile a list of projects for which you can take risks that established companies/governments can't
SpaceX
http://news.nationalgeographic.com/2016/09/elon-musk-spacex-exploring-mars-planets-space-science/
“It always seemed like we should have gone there by now, and we should have had a base on the moon, and we should have had space hotels and all these things,” he said to Howard. “I’d assumed that it was a lack of will … it was not a lack of will.”
Instead, resources devoted to space exploration were scarce, and government spaceflight programs couldn’t assume the kind of risk that a private endeavor could tolerate. With an accumulated fortune from his time at Paypal, Musk founded a company dedicated to building rockets and vastly improving the vehicles that form the foundation of an interplanetary journey.
It seems that at least part of the reason YouTube grew as quickly as it did was because it was able to behave in a way that an established company like Google could not.
Airbnb did things to grow that established companies like Google would not have been able to do.
Compile a list of powerful new technologies
One thing I've noticed from studying Pieter Levels is that a lot of his most-successful ideas seem to have been when he just jumped on a new platform / technology at the very beginning and tackled a relatively common problem.
He was successful on YouTube and had started out relatively early on the platform.
PhotoAI and InteriorAI were released relatively soon after these new image models became available.
Pieter's pattern of success reminds me a lot of what I've noticed about Stack Overflow, which is that the most-efficient way to get a lot of upvotes seems to be to answer an extremely common question before anyone else does, either by having been on Stack Overflow early on or by answering questions for a particular technology early on in its development before a later larger wave of people started using it. Of course there are also people with a huge Stack Overflow reputation who just spent tons of time answering questions for many years, but I'm not sure they end up with the highest ratio of reputation to time invested. But they may end up with a fairly high ratio simply because they answer enough questions that they eventually hit on some questions that will become very popular / common ones and will receive a ton of upvotes.
Deep learning
Misc ideas to file
Make sure that the created value will be high: multiply the number of likely users by the amount of money they'd be willing to pay for the solution.
A lot of people who have good technical knowledge end up creating things that scratch some personal itch but are extremely niche.
Examples:
The MOnSter 6502 - A dis-integrated circuit project to make a complete, working transistor-scale replica of the classic MOS 6502 microprocessor.
They noticed that most people don't back up their computers.
There were existing solutions. They asked people why they didn't use them, and the top reasons given were that those existing solutions were 1) not easy to use, and 2) expensive.
They asked people how much an easy solution would be worth to them, and the most common answer was "$5/mo".
They figured out that what people meant by "not easy to use" was that it was a lot of work to organize their files to decide what to back up.
They realized that the easiest solution would be to back up everything by default, and ask people instead what they don't want backed up.
Somehow they decided that they should offer "unlimited" backup. I think this was to make it easier for customers to understand, since the customers didn't generally have a good idea of how much space they needed, and some were even confusing megabytes and gigabytes.
"Providing unlimited data backup wasn’t specifically about providing more storage — it was about making it easier. Since users didn’t know how much data they needed to back up, charging per gigabyte meant they wouldn’t know the cost. Providing unlimited data backup meant they could just relax." (Source)
So their problem to be solved was to offer unlimited backup for $5/mo.
2017.04.12 - YCombinator - On Growing: 7 Lessons from the Story of WeChat
Summary: The Y Combinator slogan is the north star for most early stage startups: Make Something People Want. (...) [T]he easiest way to “Make What People Want”: Make What People Ask For. (...) whether it’s on Stack Overflow, Quora, or Reddit
Displacement of Concepts aka Invention and the Evolution of Ideas
this was in the GSB library under the 'Invention...' title.
If your product is so much at the forefront of the law and technology that it helps your users get away with piracy, that may help you grow.
Examples: YouTube, Alibaba, Napster
2007.06 - Marc Andreessen - On product/market fit for startups
My thoughts:
I'm very suspicious that there's some tautological reasoning going on here.
He asks, "What's the most important thing for success?", and then seems to answer it by saying "Do whatever is required to get to the point where your product is being used/purchased as quickly as you can make the product available". How is that different from success?
I think a more charitable interpretation might be, "Make sure things are working brilliantly on a small scale before you try to scale up."
Summary / excerpts:
what correlates the most to success — team, product, or market? Or, more bluntly, what causes success? And, for those of us who are students of startup failure — what’s most dangerous: a bad team, a weak product, or a poor market?
The size of a startup’s market is the number, and growth rate, of those customers or users for that product.
If you ask entrepreneurs or VCs which of team, product, or market is most important, many will say team.
On the other hand, if you ask engineers, many will say product.
Personally, I’ll take the third position — I’ll assert that market is the most important factor in a startup’s success or failure.
NW: This reminds me of my Ancient Philosophy class, where the different philosophers were debating what the fundamental makeup of the universe was, and they had answers like "Everything is water!" and "No, everything is air!". It's failing to recognize the complexity of the situation. It's like asking, "What's the most-important ingredient in a BLT?" and then having people debate: "It's the bacon, of course!" "No, the tomatoes!" "Fools! The lettuce is most important!"
In a great market — a market with lots of real potential customers — the market pulls product out of the startup.
when you have a great market, the team is remarkably easy to upgrade on the fly
Rachleff’s Law of Startup Success:
When a great team meets a lousy market, market wins.
When a lousy team meets a great market, market wins.
When a great team meets a great market, something special happens.
Since team is the thing you have the most control over at the start, and everyone wants to have a great team, what does a great team actually get you?
A: a great team gets you at least an OK product, and ideally a great product.
In my experience, the most frequent case of great team paired with bad product and/or terrible market is the second- or third-time entrepreneur whose first company was a huge success.
Conversely, I can name you any number of weak teams whose startups were highly successful due to explosively large markets for what they were doing.
Can’t great products sometimes create huge new markets?
Absolutely. This is a best-case scenario, though. (NW: In other words, this is very, very hard and unlikely, and thus not your best route.)
As a startup founder, what should I do about all this?
Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required.
When you get right down to it, you can ignore almost everything else. I’m not suggesting that you do ignore everything else — just that judging from what I’ve seen in successful startups, you can. Whenever you see a successful startup, you see one that has reached product/market fit — and usually along the way screwed up all kinds of other things, from channel model to pipeline development strategy to marketing plan to press relations to compensation policies to the CEO sleeping with the venture capitalist. And the startup is still successful.
The only thing that matters is getting to product/market fit. (NW: I'm putting this section after the explicit answer to the question, since it makes it all easier to follow.)
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.
2016.06.27 - Michael Seibel - The Real Product Market Fit
Here’s how Andreessen defines product/market fit: "The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can."
You have reached product/market fit when you are overwhelmed with usage—usually to the point where you can’t even make major changes to your product because you are swamped just keeping it up and running.
What I look for is a frantic founding team trying to deal with ever-growing numbers of happy, loyal, and ideally paying customers.
Your unique and special v1 idea on how to solve that problem is usually wrong and only through launching, talking to customers, and iterating will you actually find a product that reaches product market fit.
You need to find problems so dire that users are willing try half-baked, v1, imperfect solutions.
The advantage that small companies have over big ones is that they can move fast, deal with problems by having unusually good customer service, and their customers expect less. So to find product market fit, choose a market where users have a real, meaningful problem, launch quickly, and listen to your users.
Good heuristic: is your software replacing a pre software solution or is it replacing other software? PayPal replaced checks in the mail, eBay replaced catalogs, Uber replaced taxis.
Software is eating the world, so look for the things that haven't yet been eaten. Any pre software solutions.
Think about what the CAC will be:
How much will it cost to find people / groups that are a good fit for your product?
Example: Suppose your product would require cold-calling undercover spies. It would be extremely expensive to find such people.
How much will it cost to communicate with those potential customers, once you've found them?
Example: Suppose your product was designed for Amazonian tribes, and you live in the United States. It would be extremely expensive to communicate with those tribes.
David related Ben Horowitz talking about how a great startup idea solves a problem where the user's hair is on fire; they're just desperate for something, anything.
I thought that might be a bit extreme, but I definitely think it's worth asking, "Would users be happy to use a buggy, limited version of this idea?" That was definitely the case with Pokemon Go, Facebook, eBay, etc.
Alok made the good point (which I'd also thought about in the past) that a lot of successful companies involve mapping things that already existed before the internet to the internet. So, Facebook is just the internet version of the pre-internet actual books with faces, Craigslist is just the internet version of classified ads that were in newspapers, etc.
So what I want is a list of all of the pre-internet things that have yet to see an internet version. And hell, I want a list of all the pre-internet things that did see an internet version.
One thing I'd like to do with others is to analyze the really big companies and see what technological / social changes were very important to their success.
Example: Uber was only possible because of the existence of smart phones, the widespread use of smart phones, online payments, people comfortable putting their credit card information into the internet, etc.
Once you have a bunch of these kinds of analyses, you can use them to try to predict what new companies might be possible when some new technology comes out.
Look for inefficiency in the world and try to think of a way of changing people's behavior to eliminate that inefficiency.
The big example I'm thinking of is Airbnb. You could have said, "It's inefficient for these rooms to go unused when the person isn't present", or "It's inefficient for this couch to not get slept on", and then your only task would have been to figure out if people could be persuaded to adjust their behavior to allow other people to use that space. Having online identity, online payments, fast-loading of high-res images made it possible in a way it wasn't in the '90s.
SaaS is an exciting business model that'll lead to a lot of opportunities:
Examples
We started shipping Dell machines with a Dialogic telephony board inside loaded with our call center software. It wasn’t sexy, but it sustained us enough to hire a few more people and start growing.
Then one day, for some odd reason, I had another epiphany.
Instead of building software to load on cheap servers to sell like everyone else, why not build one “mega-server” that we host ourselves and let people rent the functionality over the web?
My former boss told me, “No, that’s stupid, that’s killing the Golden Goose.”
The engineers told me, “No, that’s going to be a pain in the ass to build.” They sent me all sorts of studies from reputable analysts showing that “ASPs” (the buzzword before it was replaced by “SaaS”) was not a profitable business model after all.
I said, “Guys, what’s the alternative? You want to be the low-cost leader for the rest of your lives hustling these shit-boxes?” I pointed to the growing pile of Dell boxes accumulating in our small office.
Arguing vehemently with them for a month, I realized that on-demand software services weren’t profitable because everyone had just tried to take traditional client-server software and host it themselves.
They hadn’t thought to build something that was truly multi-tenant, meaning building software that was solely designed to handle multiple clients and accounts as a service. That would be a critical advantage for us, if we could pull it off, as it was significantly less hardware to purchase and much easier to manage customer accounts.
Write about how the USA Today game and LSAT logic game puzzles work, where you need to make many passes over a list of potential tools to see which of them is appropriate to make the next advancement.
Similarly, you should compile a list of all of the problems in the world and all of the technologies that exist and that are coming into existence, and then have some algorithm for checking to see if any new business has become possible because of a new law, or new technology, etc.
I think this is the way innovation is going to happen in the future.
Look at existing businesses / solutions that solve problems for a wide variety of people, and see if any large subgroup might prefer a more-tailored solution.
Examples
Airbnb is a more-tailored solution to something that could have been done with Craigslist
Slack is a more-tailored solution to something that could be done with Gmail (AFAIK).
The division of restaurants into specialties (Italian, Mexican) is an example of more-tailored solutions to a problem that could be solved by a single type of restaurant.
Take what someone else has done, but hasn't taken full advantage of, and squeeze out as much from it as you can.
Examples
Family Guy extracted the funniest bits of the Simpsons, removed the fat, and just kept using the same tricks over and over because they worked.
Examples
In this clip, the Simpsons use the "like that time you..." trick that Family Guy is famous for using ad nauseum:
Create a tool that can be used in many different ways!
Examples
YouTube is used by people to share music
Justin.tv was used by gaming streamers, which led to Twitch
Instagram is used by businesses to show off their stuff
Goat herders in the Middle East
One of the major services that start-ups can perform for big companies is to act as a legal / social barrier for legally- or socially-risky endeavors.
Examples
Legally-risky endeavors
Uber was / is taking on legal risks that the top people at Apple / Google / Facebook would never want to expose their company to.
The same thing happened to YouTube: they took on legal risks that the bigger players would not have wanted to expose themselves to.
Socially-risky endeavors
Airbnb was socially risky. Google probably would not have wanted to risk tarnishing their brand if people ended up thinking it was weird.
Google Glass was socially risky.
So look for opportunities for legal or social innovation!
One of the major benefits that big companies can offer to start-ups is to magnify the impact of the startup by giving it the capital / infrastructure / etc. necessary to bring it to many more people.
Look for any project that a bureaucratic organization is supposed to implement, but it's taking them a long time to do it, possibly because they're tied down to laws.
Examples
Napster / iTunes
They took the initiative to do what the music industry should have done.
Napster violated the law in a way that the employees at the existing big companies would not have been willing to do, and it helped them grow faster.
YouTube
They took the initiative to do what the television industry should have done.
They violated copyright in a way that the employees at the existing big companies would not have been willing to do, and it helped them grow faster.
Facebook
http://www.thecrimson.com/article/2004/2/9/hundreds-register-for-new-facebook-website/
“Everyone’s been talking a lot about a universal face book within Harvard,” Zuckerberg said. “I think it’s kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week.”
(...)But Director of Residential Computing Kevin S. Davis ’98 said that the creation of a Harvard facebook was not as far off as Zuckerberg predicted.
“There is a project internally with computer services to create a facebook,” Davis said. “We’ve been in touch with the Undergraduate Council, and this is a very high priority for the College. We have every intention of completing the facebook by the end of the spring semester.”
Davis said that the principle complication with the creation of an official facebook was figuring out how to design an interface so that directory information could not easily be compiled without authorization.
Do not assume that just because you can say, "Oh so this is like X", that means the idea is bad!
Examples
WhatsApp was just AIM / SMS / BBM, but WhatsApp ended up solving the problem.
Facebook was just a primitive LivingSocial, but it ended up solving the problem.
Airbnb was just like Craigslist, but it ended up solving a problem that Craigslist did not solve well-enough.
Reddit / Stack Exchange were just like forums, but they solved the problem in a way that dispersed forums weren't able to.
https://medium.com/the-story/medium-is-not-a-publishing-tool-4c3c63fa41d2
"Understanding Blogger as we did at the time — as a software tool for creating and publishing web sites — we found ourselves in the race many software makers know well: Add features, get more users. Competitor adds more features, lose users. (Marketing and others factors have some effect, depending on the market. In blogging, that was minimal.)
This game was particularly hard to play for us, since Blogger was hosted software (I mean, in the cloud), unlike most of the tools we were competing against. The operational and engineering challenge was that we had to build features that scaled to all our users. And when we wanted to change something, all the users had to accept that change.
At the time, scaling centralized systems was a less-solved problem (even at far smaller numbers). More importantly, though it was easier due to this setup, we weren’t creating network effects. Though (I believe) we had more people publishing with Blogger than anything else, that didn’t make Blogger better. In fact, it made it worse, because it got slow and harder to add features to."
"Chris Dixon had a great post a while back — Come for the tool, stay for the network — describing how, unlike Twitter, some platforms started out with tool value and transitioned into network value (which, ultimately, became a much bigger part of the equation, such is the case with Instagram)."
This is exactly how videogames work. I wonder why videogames end up dying out while these things keep going...I think it must be because the videogames don't have users creating new content!
From Slack and Airbnb:
Look at a situation in which you could use an existing solution to solve a particular problem, but it wouldn't work so well and would be a lot of effort (eg setting up custom filters in Gmail and using 'team+reading@infer.com', and needing to teach every new employee to do that).
Think about how a solution in one area might be
Larry Page's toothbrush test
Look for areas with rapid growth / adoption. Example: Amazon saw the rapid adoption of the Internet. Airbnb and Uber profited from the rapid adoption of smart phones.
"The late Richard Feynman, a superb physicist, said once as we talked about the laser that the way to tell a great idea is that, when people hear it, they say, 'Gee, I could have thought of that.'"
- Charles Townes, How the Laser Happened
"Most interesting phenomena have multiple causes."
- N. P. Calderwood
Paul Graham @paulg Aug 8
The best way to increase a startup's growth rate is to make the product so good people recommend it to their friends.I think this is a very, very important point. I agree with him that virality is the best way to increase your growth rate.
I'm not sure if "good" necessarily captures exactly what you're going for. For example, the Pokemon AR game was described by the people I asked about it as not being very good, but it was so unprecedented that people posted about it on Facebook. Tony Hsieh talks about "Wow" experiences leading to virality.
Marc Andreessen @pmarca Jun 27
In tech in the early 1990's, it felt like all the good ideas were already taken. Really.Paul Graham @paulg Sep 10
The spectral signature of a big winner is when people ask "How did I function before x?"(Jessica just asked it about HelloSign.)
Ways companies get valuable
Lots of users
Facebook
WhatsApp
Instagram
Lots of revenue
How to identify a good idea
Facebook, Airbnb, Slack, Twitter all involve dealing with communication between people.
It's like humanity is a giant brain, and each person is a neuron, and these companies are making the neurons interact with each other more quickly.
So you want to look at all of the different kinds of interactions that people have with each other.
BUT you also want it to be defensible. AOL chat rooms, AIM, IRC all met the first condition, but they weren't defensible because there wasn't a big switching cost for users. You could get a bunch of your friends using a new chat client and they would not have lost anything.
Google tries to make its things defensible (like Gmail) by just running as fast as it can to make them better and better, so no one could easily copy its features. Like building new defenses for your castle as quickly as possible.
I suppose the big thing you need to worry about in a situation like that is that some new invention might make it easier for people to copy your features, OR that some new platform will come out in which everyone will start off on equal footing (that's what happened to Craigslist w/ Airbnb).- But another way to make it defensible is to create tools that allow users to build on top of what you've created. Minecraft has tons of people creating content for it. Counter-Strike was born out of the modding tools for Half-Life.
During the RJR Nabisco, Inc. hostile takeover fight in 1987, Buffett was quoted as telling John Gutfreund:[161]
I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty.
—Buffett, quoted in Barbarians at the Gate: The Fall of RJR Nabisco
Speaking at Berkshire Hathaway Inc.'s 1994 annual meeting, Buffett said investments in tobacco are:[162]
fraught with questions that relate to societal attitudes and those of the present administration. I would not like to have a significant percentage of my net worth invested in tobacco businesses. The economy of the business may be fine, but that doesn't mean it has a bright future.
—Buffett, Berkshire Hathaway annual meeting
Tony Hsieh - What Poker Taught Me About Business
Aside from remembering to focus on what’s best for the long term, I think the biggest business lesson I learned from poker concerned the most important decision you can make in the game. Although it seems obvious in retrospect, it took me six months before I finally figured it out.
Through reading poker books and practicing by playing, I spent a lot of time learning about the best strategy to play once I was actually sitting down at a table. My big “ah-ha!” moment came when I finally learned that the game started even before I sat down in a seat.
In a poker room at a casino, there are usually many different choices of tables. Each table has different stakes, different players, and different dynamics that change as the players come and go, and as players get excited, upset, or tired.
I learned that the most important decision I could make was which table to sit at. This included knowing when to change tables. I learned from a book that an experienced player can make ten times as much money sitting at a table with nine mediocre players who are tired and have a lot of chips compared with sitting at a table with nine really good players who are focused and don’t have that many chips in front of them. (NW: This is exactly what Zenefits did.)
In business, one of the most important decisions for an entrepreneur or a CEO to make is what business to be in. It doesn’t matter how flawlessly a business is executed if it’s the wrong business or if it’s in too small a market.
Imagine if you were the most efficient manufacturer of seven-fingered gloves. You offer the best selection, the best service, and the best prices for seven-fingered gloves–but if there isn’t a big enough market for what you sell, you won’t get very far.
Or, if you decide to start a business that competes directly against really experienced competitors such as Wal-Mart by playing the same game they play (for example, trying to sell the same goods at lower prices), then chances are that you will go out of business.
In a poker room, I could only choose which table I wanted to sit at. But in business, I realized that I didn’t have to sit at an existing table. I could define my own, or make the one that I was already at even bigger. (Or, just like in a poker room, I could always choose to change tables.)
I realized that, whatever the vision was for any business, there was always a bigger vision that could make the table bigger.
I need to add Parker Conrad's comment about the market either being amenable to a new product or not. It is exactly what Tony Hsieh is talking about: choose the table you sit at very carefully.
Make sure the new solution to this problem could be a lot ("10x") better than existing solutions
2012.09.21 - Justin Kan (founder of Justin.tv) - The Divine Inspiration Fallacy
http://justinkan.com/divine-inspiration-fallacy He is basically just repeating the advice in the Lean Startup. Which is still useful (it's useful to know when smart people agree on something).
"Do the bare minimum to prove your hypothesis. [...] Invest in growth once you have external evidence that something is working. Before that time, keep as small of an overhead footprint as possible."
Exactly how much better does the product need to be?
There's a telling lack of specificity when people talk about this. They just say "10x".
I want to have a math formula for it.
It needs to be better enough that:
People will be willing to pay the switching cost.
They will switch quickly enough that you'll be able to take the market.
Make sure you're building on a platform that is growing or remaining stable
Examples of companies building on healthy platforms:
All of the internet companies of the '90s.
The mobile companies (Instagram, etc.)
Examples of companies building on dead / empty platforms:
People making NES games.
Make sure people will want to use the product
Remember that people buy what they want, which is not necessarily what you think they need.
How can you determine / predict whether people will want to use a product?
Are lots of people already talking about wanting the product?
Create a product you will use yourself
2014.10.17 - Ev Williams @ Medium - Hatching Inside Medium
Blogger was used as an internal tool by Ev and he then turned it into a product. This looks like the same kind of thing.
Since the first days of Medium, we’ve had an internal version of the site at a different domain, accessible only within our internal company network. For inexplicable reasons, it was first at slowth.com. At this time, it was used more for testing/staging purposes than actual publishing. In fact, the database was dumped on more than one occasion.
It then moved to cupstep.com, and it evolved into our main platform for internal documentation and idea sharing. I couldn’t stand the name “Cupstep,” even as an internal brand, so I set out to find another name and domain to move it to. I settled on hatch.dm, because it was where we hatched new features, as well as new ideas.
Make sure that this solution can be adopted very quickly
2015.09.10 - Medium - Product Hunt - Ben Horowitz’s Best Startup Advice
Question: What are the 20% of techniques, mindsets, skills, etc. new/first-time entrepreneurs have that result in 80% (or a large part) of their success? - Troy Shu
Horowitz: The big thing to focus all of your energy on is product/market fit. Get to a product that people are adopting very quickly, or that you can reliably sell repeatedly. To some extent, everything else — culture, management, etc — is secondary. Don’t take your eyes off the prize.
What exactly are people referring to when they say to make sure that the "timing is right"?
I think the best way to come up with a list for this may be to think about it backwards: start with a vision of a successful company (eg Facebook), and think about the path they took to success, and all the variables that needed to be in their favor to be successful, and then ask yourself whether there are any large time-dependent barriers that would
There could also be other barriers that are not time-dependent. For example, not having access to enough money to pull off the idea. Elon might have had a lot more trouble succeeding with SpaceX / Tesla before having made a lot of money with his previous companies.
I'll try to list the time-dependent barriers I can think of here:
Social attitudes: Are people close enough in their thinking that they could be pushed into trying / adopting it?
Examples:
Amazon - Paying for things with credit cards online was something that took time for people to adjust to. On the other hand, Amazon jumped in at the beginning and was able to hold onto the early adopters while the rest of the country caught up.
Legislation: New legislation or the removal of existing legislation
Examples:
Zenefits - Apparently they benefited from the fact that Obamacare required lots of businesses to provide health insurance.
Hitch - They benefited from the DC government mandating that all taxi drivers have a credit card machine
Make sure an incumbent won't be able to destroy you
2015.10.30 - TC - What’s Really Killing Digital Health Startups - founder of Five9
Barriers to Competition
Jobs: [...] Once IBM gains control of a market sector, they almost always stop innovation. They prevent innovation from happening.
Playboy: Why?
Jobs: Look at this example: Frito-Lay is a very interesting company. They call on more than half a million accounts a week. There’s a Frito-Lay rack in each store, and the chips are all there, and every store’s got the identical rack and the big ones have multiples. For Frito-Lay, the biggest problem is stale product— bad chips, so to speak. For Frito-Lay’s service, they’ve got, like, 10,000 guys who run around and take out the stale product and replace it with good product. They talk to the manager of that department and they make sure everything’s fine. Because of that service and support, they now have more than an 80 percent share of every segment of chips that they’re in. Nobody else can break into that. As long as they keep doing what they do well, nobody else can get 80 percent of the market share, because they can’t get the sales and support staff. They can’t get it because they can’t afford it. They can’t afford it because they don’t have 80 percent of the market share. It’s catch-22. Nobody will ever be able to break into their franchise. Frito-Lay doesn’t have to innovate very much. They just watch all the little chip companies come out with something new, study it for a year, and a year or two years later they come out with their own, service and support it to death, and they’ve got 80 percent of the market share of the new product a year later. IBM is playing exactly the same game. If you look at the mainframe market place, there’s been virtually zero innovation since IBM got dominant control of that market place 15 years ago. They are going to do the same thing in every other sector of the computer market place if they can get away with it. The IBM PC fundamentally brought no new technology to the industry at all. It was just repackaging and slight extension of Apple II technology, and they want it all. They absolutely want it all.
Bezos, Jeff; Playboy; Ted Turner, Steve Jobs, Lee Iacocca, Bill Gates, David Geffen Malcolm Forbes (2012-11-23). The Playboy Interview: Moguls (Kindle Locations 2124-2138). . Kindle Edition.
Nathan: So the trick is to find some problem to solve where you'll be protected against this kind of behavior.
Build something that optimizes a metric your potential competitors are not measuring or are optimizing the opposite of