Startup ideas and validation

Thomas Edison and a light bulb... Isaac Newton and an apple... Market sizing techniques:... Market sizing techniques:... Market sizing techniques:... Market sizing techniques:... Market

Startup IDEAS

Every startup

Links in websites can be ranked like

citations in academic papers

Professionals need an online presence and social network

This is a talk about coming up

And picking

a good one

It’s based on

the book,

Hello, Startup

hello-startup.net

I’m

Yevgeniy

Brikman

ybrikman.com

Founder

of

Atomic Squirrel

atomic-squirrel.net

PAST LIVES

Where do ideas

come from?

Is it from a

flash of insight?

Thomas Edison and a light bulb

Isaac Newton and an apple

Archimedes and “Eureka!”

Actually, most historians believe the “Eureka!” story is made up

An apple did not hit Newton He

studied gravity for 20 years

Edison didn’t invent the light bulb,

but an affordable filament.

After testing thousands

of materials.

“I have not failed I've just found 10,000 ways that won't work.”

– Thomas Edison

Ideas are not just flashes of

Which means first, you must

plant seeds

The seeds of ideas are

knowledge

What do the following songs have in common?

They are all based on the

exact same 4 chords

And so are dozens of

other hit songs

Axis of Awesome

4 Chord Song

Top 100 movies, 2000 - 2009

74 of them were sequels, remakes, or adaptations

The sequel to a movie based on a cartoon based on a US toy based

on Japanese toy.

Microsoft Windows (~1990)

Apple Mac OS (~1984)

Xerox Alto (~1973)

Stanford NLS (~1968)

Not the first search engine (Yahoo,

Altavista, Excite, etc.)

Key idea copied from bibliometrics

and citation analysis

Not the first social network (SixDegrees, Friendster)

Not the first professional network

(Ryze, Xing)

This talk is

a remix of my

book

My book is

a remix of

other books

Knowledge

Ideas

Ideas are connections between the

knowledge in your mind

The more you know, the more

connections are possible

To form connects, you need

the right environment

Throughout history, we often

Calculus : Isaac Newton and Gottfried Wilhelm von Leibniz

Evolution : Charles Darwin and Alfred Russel Wallace

Telephone : Elisha Gray and Alexander Graham Bell

“I invented nothing new I

simply assembled the

discoveries of other men

behind whom were centuries

of work Had I worked 50 or

10 or even 5 years before, I would have failed So it is

with every new thing

Progress happens when all the factors that make for it are ready, and then it is

inevitable To teach that a comparatively few men are responsible for the greatest forward steps of mankind is the worst sort of nonsense.” – Henry Ford

The environment plays a huge role in coming up with ideas

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

Not a diary, but a way to log ideas

whenever you have them.

No filters Don’t judge your ideas Just write them down

Write down not only ideas, but also problems and questions

A UC Davis study by

Dean Kean Simonton

found eminent achievers produce not only more

“great” works, but also more “bad” ones.

“The best way to have a good idea is to have a lot

of ideas.”

– Linus Pauling

Review periodically This is how ideas grow and evolve.

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

First, work intensely to load the problem into your mind.

Then get away from work

Einstein had his best ideas during

Some people get ideas in the

shower I get mine on walks

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

Try this exercise from Made to

Stick:

In 15 seconds, write down as

many things that are white as you can think of.

Do the exercise again, but this time, write down white things in your refrigerator

Which was easier?

Constraints breed creativity

Someone once challenged Ernest

Hemmingway to write a story in just

6 words The result:

For sale: baby shoes, never worn.

If no ideas are coming to mind, try

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

“Live in the future, then build what’s missing.”

– Paul Graham

But how exactly do you

live in the future?

At Xerox PARC, they used to play the Wayne Gretzky Game

“Skate to where the puck

is going to be, not where

it has been.”

– Wayne Gretzky

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

Where there is

pain , there is

opportunity

“This is stupid, there must be a better way”

Al-Qudsi

“Is this how the world should be?” – Reid Hoffman

The key ingredients:

1 Keep an idea journal

2 Get away from work

3 Add constraints

4 Live in the future

5 Look for pain

6 Talk to others

Don’t keep your ideas secret.

If someone could beat you just by hearing your idea, it wasn’t a

defensible idea to begin with.

Two minds are greater than one

Just explaining your ideas out loud will reveal new ideas

Even if the other person isn’t an expert in that domain

Even if the other person isn’t a person (rubber duck debugging)

“The surprising fact is that

companies large and small, established corporate giants as well as brand new startups, fail in

9 out of 10 attempts to

launch their new products.”

CB insights looked at the mortems of 100+ failed startups

post-The #1 cause of failure:

“no market need”

Don’t spend years working on the

wrong problem

It’s easy to find something that

sounds like a problem, but isn’t

Consider the dental industry

Problems to solve:

Healthy teeth, healthy gums

Problems to solve:

white teeth, fresh breath

Wrong problem means wrong products, marketing, sales

“People don't want to buy a quarter-inch

drill They want a

quarter-inch hole!”

– Theodore Levitt

How to validate you’re solving the right problem:

1 Ask who will buy it?

2 Ask the 5 whys

3 Ask why now?

4 Ask why you?

How to validate you’re solving the right problem:

1 Ask who will buy it?

2 Ask the 5 whys

3 Ask why now?

4 Ask why you?

Find a customer before you build the product

Don’t build anything until they

commit to buying it.

Who would buy a non-existent product? An earlyvangelist.

1 They have a problem.

2 They’re aware of the problem.

3 They built an interim solution.

4 They have money to spend.

To find these customers, you’ll have to get out of the building

How to validate you’re solving the right problem:

1 Ask who will buy it?

2 Ask the 5 whys

3 Ask why now?

4 Ask why you?

If you ask people what coffee they like, most would say,

“a dark, rich, hearty roast.”

But what most people actually like

“If I had asked

people what they wanted, they

would have said faster horses.” – Henry Ford

You have to dig to find the

real problems and solutions.

Try out the 5 Whys Technique:

“The truck won’t start.”

“The battery died.”

“Why?

”

“The alternator wasn’t working.”

“Why?

”

“The alternator

belt broke.”

“Why?

”

“The belt wasn’t replaced on time.”

“Why?

”

“We didn’t follow the maintenance schedule.”

“Why?

”

How to validate you’re solving the right problem:

1 Ask who will buy it?

2 Ask the 5 whys

3 Ask why now?

4 Ask why you?

The famous question from Sequoia Capital: Why now?

Why not 2 years ago? 2 years from now? What changed?

Example: Webvan vs Instacart

How to validate you’re solving the right problem:

1 Ask who will buy it?

2 Ask the 5 whys

3 Ask why now?

4 Ask why you?

You found a real problem Should

you be the one to solve it?

Don’t ignore aspirations

It takes, on average, 10 years to build a successful startup

Are you willing to dedicate a

decade of your life to this?

If you’re willing, the next step is to

evaluate the market

How many customers do you need

to be successful?

For example, if you want to do $1B

in revenue some day:

Sell product at:

$1 to 1 billion : Coca-Cola (cans of soda)

$10 to 100 million : Johnson & Johnson (household products)

$100 to 10 million : Blizzard (World of Warcraft)

$1,000 to 1 million : Lenovo (laptops)

$10,000 to 100,000 : Toyota (cars)

$100,000 to 10,000 : Oracle (enterprise software)

$1,000,000 to 1,000 : Countrywide (high-end mortgages)

(from the Stanford Startup Engineering Course )

Market sizing techniques:

Market sizing techniques:

Competitors are a form of validation too

Tools to research competitors:

Market sizing techniques:

Use ad-targeting tools to

explore market demographics

Market sizing techniques:

There may already be a

Market sizing techniques:

Research tools:

1 Newspapers, books, journals

2 Government reports, SEC filings

If the market is big enough, the next validation step is the MVP

A Minimum Viable Product is not a

product It’s a process.

“You know that old saw

about a plane flying from California to Hawaii

being off course 99% of the time—but constantly correcting?

The same is true of

successful startups—

except they may start out heading toward Alaska.”

– Evan Williams

Nạve view of product

development

A more realistic view of product development

In a trial-and-error world, the one who

finds errors fastest, wins.

The MVP process is repeatedly ask

yourself two questions :

1 What’s my riskiest

assumption?

2 What’s the smallest experiment

to test it?

The smallest experiment doesn’t

have to be a product.

Landing page

MVP

( Buffer )

Explainer video MVP (Dropbox)

Crowd-funding MVP (Pebble)

Wizard of Oz MVP (Zappos)

Piecemeal MVP (Groupon)

The smallest experiment does have

to be viable

How to build an MVP

Let’s go through an example

For more info, see

Hello, Startup

hello-startup.net

For a list of startup ideas, market sizing tools, and MVP tools, see

hello-startup.net/resources

Axis of Awesome

4 Chord Song

Questions?

Light bulb (blue): Serge Saint

Light bulbs (many): Andrew Moore

Thomas Edison with bulb: Wikimedia

Isaac Newton: Wikimedia

Archimedes: Wikimedia

Thomas Edison: Louis Bachrach

Potted plant: Craig Sunter

Windows: Wikimedia

Mac OS: Wikimedia

Xerox Alto: DigiBarn

NLS Computer: Mother of All Demos

Journey: Wikimedia

Elton John: Wikimedia

Beatles: Wikimedia

Lady Gaga: Wikimedia

Information vs knowledge: gapingvoid

Everything is a Remix: Kirby Ferguson

Copy, transform, combine: Kirby Ferguson

Gottfried Wilhelm von Leibniz: Wikimedia

Isaac Newton: Wikimedia

Alfred Russel Wallace: Wikimedia

Charles Darwin: Wikimedia

Elisha Gray: Wikimedia

Alexander Graham Bell: Wikimedia

Henry Ford: Wikimedia

Moleskine: Barn Images

Linus Pauling: Wikimedia

Glasses: Matheus Almeida

Walk in the park: Brian Smithson

Barbed wire: Alexandre Dulaunoy

Wayne Gretzky Game: Alan Kay

Blueprint: Will Scullin

References & image credits, part 1

Egg: Kate Ter Haar

Meeting: Simon Blackley

Steve Blank: Wikimedia

Death Valley: 白士 李

Men shaking hands: Didriks

Toothpaste: William Warby

Colgate aisle: Fredrik Rubensson

Crest Pro Health: m01229

Listerine: Mike Mozart

Crowd: Scott Cresswell

Arm wrestling: U.S Army Europe Images

Community: Kat

Clock: Earls37a

Evan Williams: Wikimedia

MVP car: Henrik Kniberg

Wayne Gretzky: Wikimedia

Paul Graham: Wikimedia

Lab experiment: UCL

Dean Simonton: UC Davis

Google Analytics: Blue Fountain Media

Coffee cup: OiMax

Truck: darkday

Report: Juhan Sonin