GENERATING STARTUP IDEAS

For the MIT Entrepreneurship Education Forum Dec 3, 2014 Giff Constable www.neo.com @giffco

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About Me CEO of Neo (global innovation consulting firm) 6 startups, founder of 2, multiple exits Author of Talking to Humans

“The way to get startup ideas is not to try to think of startup ideas.”

− Paul Graham, Y Combinator

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What about when you need to come up with an idea?

What is a good startup idea?

•  It is rooted in a real human need

•  You can see how it can become an impressive business (even if no one else can)

•  You are passionate about it

•  You have some sort of advantage in solving it

•  Is a mission, a north star, not a set of features

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The paradox of startup ideas is that they are simultaneously worthless and invaluable

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Don’t be a slave to the idea

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What is a bad process?

“Find a wave and get in front of it”

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What the VCs are chasing

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What is a good process?

First, know thyself

•  A personal problem?

•  A particular customer?

•  A particular industry?

•  A particular business model?

•  A particular funding or exit profile?

•  A lifestyle or a go-big-go-home business?

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Domain Insight

Change Unmet Needs

Second, go looking at an intersection

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Domain Insight

Change Unmet Needs

Bring a cross-functional mindset

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BUSINESS

ENGINEERING DESIGN

Apply a classic VC filter: why you?

Problems you want to solve*

Problems you can solve

Problems you have an

advantage in solving

Problems you can build a business

by solving

* I mean “willing to dedicate the next 5-10 years of your life solving” 15

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Let’s work via an example

My constraint, for this talk, will be a personal challenge I have observed and feel close to. I’m friends with working moms, and married to one. Can I make their lives better?

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Instead of brainstorming in a room, I need to gather domain insight. Sometimes you can observe customers, but in this case I need to talk to people.

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By talking to 15 working moms, I learn:

1. they are exhausted all the time

2. they feel guilty about not doing more for their children and their work

3. they feel like they have no time to do anything well

4. they are both proud of themselves and jealous of the stay-at-home moms

5. they compare themselves against stay-at-home moms, who can go to ballet practice and cook dinner

6. they struggle to find time for their relationship with their partner

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The bottom two insights feel actionable:

1. they are exhausted all the time

2. they feel guilty about not doing more for their children and their work

3. they feel like they have no time to do anything well

4. they are both proud of themselves and jealous of the stay-at-home moms

5. they compare themselves against stay-at-home moms, who can go to ballet practice and cook dinner

6. they struggle to find time for their relationship with their partner

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Instead of jumping to solutions, immerse yourself deeper in the problem

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By talking to 10 working moms on having no time to cook:

•  No one can cook dinner because neither they nor their spouse can’t get home early enough

•  Half of them don’t even like to cook

•  Attempted solutions are fragmented: some get frozen dinners, some get fresh packaged meals, some cook on the weekend in prep for the week, and a few are trying new ingredient delivery services that make it easy

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By talking to 10 working moms on having no time for partner:

•  They struggle to find time for their relationships with their partner, because date night has been so inconsistent that they can’t keep a steady babysitter

•  And they have struggled to find new babysitters that they trust, because they aren’t comfortable with strangers

•  And their friends hoard their babysitters so that they are available when needed

•  Current solutions are babysitter agencies (the cost is egregious) or hitting up friends whose kids are now older (inconsistent)

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How to choose?

Questions you can ask

1.  does it seem like a real problem?

2.  does the addressable market seem large?

3.  do current market incumbents feel vulnerable?

4.  do I possess an unfair advantage in addressing the problem?

5.  am I more passionate about one versus another?

25 Note: these questions often require more research into the domain

In this case, we’re most passionate about solving the relationship challenges for working moms

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(our North star)

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Now you can brainstorm solutions

Four exercises

1.  has something changed that is opening up new opportunities? (technology advance, government regulation, consumer behavior, market structure)

2.  if you had to do one of the current market solutions 100x cheaper, how would you?

3.  if you had to do one of the current market solutions 10x better, how would you?

4.  are there analogs in other industries, with similar characteristics, that you can learn from?

28 Credit to Shane Snow’s Smartcuts for the bottom three

Suspend the inner naysayer and question the impossible

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Let’s examine a few changes that might lead to inspiration for our hard-working couples

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Teenagers are now so over-scheduled that they don’t have time for babysitting

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1

This is an information hoarding / information efficiency problem, and the Internet is solving many of these kinds of problems through crowdsourcing and the power of connected, motivated humans

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2

This is a “trustworthy supply” problem, and the sharing economy is solving many supply problems with things like AirBnB and Lyft

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3

This is a need-it-when-you-need-it problem, and mobile phones mean that participants now can communicate effectively in real-time

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AIRBNB FOR BABYSITTING! Stay-at-home moms can earn extra cash by babysitting their friend’s kids in the evening, allowing for those never-happen date nights.

Brilliant? Dumb? The idea is really a question, and that’s where lean startup comes in.

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In summary

1.  Know your constraints

2.  Look at the intersection of domain insight, change and unmet needs

3.  Get into the market and learn

4.  Filter for passion and unfair advantages, because it will be a long road

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An entrepreneur is “someone who solves problems, making the world the way it ought to be.”

− Sean Ammirati (Entrepreneur & VC)

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THANK YOU Giff Constable

giff@neo.com

giffconstable.com

@giffco

For more on qualitative research, read Talking to Humans

APPENDIX

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On Domain Insight

•  what is the structure of the market? (vendors, customers, distributors, indirect competitors, business models)

•  how big is the addressable market?

•  how has the market been evolving?

•  what new pressures are the different players feeling?

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On Unmet Needs / Customer Insight

•  Observe customer behavior (get out of the building) –  focus on their goals (jobs to be done)

– what are they struggling with?

– how are they solving things today?

–  study the fringes: power users, extreme users

– don’t speculate on solutions with the customer

–  study analogs in different sectors with similar customer dynamics

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On Change

•  technological / scientific

•  societal

•  governmental

•  industry structure

•  customer behavior

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What is a bad startup idea?

•  What VCs are chasing

•  Something that is a feature, not a business

•  Something that is only an incremental improvement over market incumbents

•  Something you don’t care enough about to commit years to

•  Something you have no special insight into how to tackle

•  Something you don’t have, and can’t get, the resources to bring to market

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