lots of options

The Pick

Picking what to start is the most exciting and terrifying phase of starting a new company. Every entrepreneur goes through this phase and yet there is shockingly little information about how to navigate it.

The pick accounts for a large percentage of your success. Pick wrong and waste years of your life on a dead-end. Pick right and spend +10 years getting to a successful outcome.

Entrepreneurship is a no-called-strike game. You don’t have to swing at every opportunity that comes along. You can take your time, research and test assumptions before going all-in.

I’m currently exploring what to start next. Here are a handful of posts and talks that I’ve found helpful.

“The Pick”

Josh Koppleman talks about the importance of “The Pick” and the mistakes founders make in this Twenty Minute VC podcast. He explains that setting an arbitrary time forces founders to focus on set reduction when they should focus on set expansion. “You say… I’m going to quickly build a set of ideas and then I’m going to spend the next 3 months reducing them to reducing that set to find the one idea. In most cases, the best pickers are people who are constantly focused on set expansion. They don’t feel the time pressure of an arbitrary deadline. So they’re consistently reevaluating and consistently collecting data.”

Idea Generation

Sam Altman’s post on Idea Generation highlights the importance for founders to get good at coming up with ideas. “Having ideas is among the most important qualities for a startup founder to have — you will need to generate lots of new ideas in the course of running a startup.” Here are a handful of key takeaways:

• What idea makes sense in context of this tectonic shift?
• Does this idea help a small number of people a lot or a lot of people a little?
• Can this idea be huge?
• Founder market-fit — are you well-suited to tackle this idea?

Pick a market, not an idea.

Everything David Cummings writes is gold. His post on Markets or Ideas is particularly helpful when thinking about starting something new. Cummings believes that “market, inclusive of timing, is more important than the initial startup idea.” He recommends founders should spend months in a market, learning and really experiencing in order to find the trends and gaps. “ Take any famous entrepreneur. I bet they picked a great market (and timing!), found an opening in the market (an initial idea), and then built a suite of offerings to service that market over many years…. Pick a market, not an idea.”

Give me a place to stand and with a lever I will move the whole world. — Archimedes

Entrepreneurs with a tiny wedge into a large market can build a great business.

Japanese-Style Entrepreneurship

Masayoshi Son spent a year and a half researching over 40 different business ideas. In this 1992 HBR interview, he shares how he choose software distribution over the other 39 directions. “I had about 25 success measures that I used to decide which idea to pursue.” Four of the most important success measures are:

1. “I should fall in love with a particular business for the next 50 years at least. Very often, people get excited for the first few years, and then, after they see the reality, they get tired of the business. I wanted to choose one that I would feel more and more excited about as the years passed.”
2. “The business should be unique. That was very important to me. I didn’t want anyone else doing exactly the same thing.”
3. “Within 10 years I wanted to be number one in that particular business, at least in Japan.”
4. “And I wanted to pick a business where the business category itself would be growing for the next 30 to 50 years. I didn’t want to choose a sinking ship.”

Non-visionary Process

Nat Turner, co-founder of Flatiron Health, shares his process for finding the next big thing in this Firstround blog post. “Turner’s entire process can be boiled down into a handful of steps: 1. Begin with a general space of interest (a market) and look for any seed of an idea. 2. Network like crazy in the industry and take introductions extremely seriously. 3. Create a deck and start pitching anyone smart and relevant you can find on the specific idea — and be sure to take meticulous notes and follow up. 4. Tweak the deck between every meeting and hack together a demo and start pitching (pre-sell software that doesn’t exist yet but will). 5. Find a trusted group of advisors to discuss key learnings from the field and get feedback. 6. Continue to iterate as hard and fast as possible on the feedback you’ve received.” The post goes into detail on how Nat and Zach used this process in founding Invite Media and Flatiron Health.

Founder/market fit

Chris Dixon sheds light on founder/market fit, a term coined by David Lee. Before product/market fit, founders must choose or “fit” their market. Having founder/market fit means “the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”

You don’t need an idea

Paul Graham’s 2005 essay, How to start a startup goes into detail on why you don’t need a good idea to start a startup. His TL;DR advice…

“look at something people are trying to do, and figure out how to do it in a way that doesn’t suck.”

Remove steps

Ev Williams give similar advice to PG in an XOXO talk… “Take a human desire, preferably one that has been around for a really long time… Identify that desire and use modern technology to take out steps.” He describes the internet as “a giant machine designed to give people what they want.”

Run the maze

Balaji Srinivasan’s Idea Maze white paper explains that “good ideas are a bird’s eye view of the idea maze, understanding all the permutations of the idea and the branching of the decision tree, gaming things out to the end of each scenario.” As a gamer, I find this mindset advice particularly helpful… “The execution mindset is thus about running the maze rapidly. Think of each task on the list as akin to exploring a turn of the maze. The most important tasks are those that get you to the maze exit, or at least a treasure chest with some powerups.” Chris Dixon’s post does a good job of summarizing Balaji’s paper.

Factors for evaluating ideas

All of YC’s advice on evaluating ideas including this Dalton Caldwell talk. Handful of important factors when evaluating ideas:

1. Do people want this?
2. Has anyone tried this before?
3. Why are you the team to tackle this problem?
4. Why are you excited about the idea?
5. Is the problem popular, growing, urgent, expensive, mandatory or frequent?

Get out of the building

Steve Blank’s “Get out of my building” post is one of my favorite lessons on customer/product development. Talking to customers is critical at this phase. I echo the CEO’s advice…

“I want you out of the building talking to customers; find out who they are, how they work, and what we need to do to sell them lots of these new computers.”