Stop telling yourself that you can’t come up with business startup ideas.
You can, and here are 6 proven methods to do just that.
Over the last few years, I’ve studied hundreds of hours of material on the subject of business startup ideas.
Where do they come from? Which ones succeed? Which ones don’t? And why?
My search led me to academic studies, books, interviews, and real-life examples of successful startup ideas in action.
There are no magic answers in life (or in business). But what I found was 6 recurring methods that underlie many great startup ideas.
This list is by no means exhaustive. A full list of what I discovered through research would contain well over 50 items.
Instead, think of this as the 80/20 rule applied to generating startup ideas. These are the 6 methods that generate 80% of the startup ideas that work.
Startup Idea Generation: 6 Proven Methods
1. Tinker outside your field
A Harvard study from 2006 demonstrated that tinkerers working completely outside their field of expertise had a 10% better chance of solving a problem than experts within that field.
On the one hand, this is a staggering finding. What’s the point of having experts if they can’t solve the problems within their own professions?
On the other hand, this discovery should not surprise you if you know anything about specialists.
What happens in the process of becoming an expert? You become more specialized. You focus narrowly on your field and read less broadly. You get tunnel vision and become more bureaucratic about process.
As the researchers put it:
Most problem solvers extensively use prior experience and knowledge in their attempts at solving problems, resulting in a “local search” of the potential solution space.
Opening up the search process and broadcasting problem information to outsiders can alleviate the negative effects of local search. We call this problem solving approach “broadcast search.”
The premise of broadcast search is the central insight that knowledge is unequally and widely distributed in society and that the locus of innovation and problem solving shifts to where knowledge is stickiest (i.e. difficult to access or move).
The conclusion from this study is that you should do two things:
- Become more of a generalist if you’re an expert in a field already.
- Be willing to contribute ideas outside of your field.
If you can do those two things, there’s no telling what kind of business startup ideas will spring to life.
- Steve Jobs wasn’t a calligraphist when he revolutionized typography with the Mac computer.
- Richard Branson’s never been an airplane pilot, but he has built one of the most-loved airlines on Earth.
- Howard Schultz was a sales guy at Xerox before he introduced a better way of getting coffee with Starbucks.
Tinkerers, tweakers, and dabblers are a phenomenal source of original startup ideas.
2. Target a small number of people who need your solution urgently
Paul Graham is the co-founder of the startup incubator Y Combinator. He helped develop some of the most successful business startup ideas of the past decade. Paul Graham knows what he’s talking about when he says the following:
When a startup launches, there have to be at least some users who really need what they’re making–not just people who could see themselves using it one day, but who want it urgently.
Graham would rather a startup founder come to him with a solution that a niche market desperately needs, than an idea that an amorphous number of people could find semi-useful. In Graham’s experience, nearly all good entrepreneurial ideas are like the former and not the latter.
This is a trap I see many people fall into.
Everyone wants to build the next Facebook. But the Facebook they have in mind is the Facebook of today. The Facebook that Mark Zuckerberg started was in fact extremely narrow: an online yearbook for current Harvard students.
“The Facebook” as it was originally conceived was a solution that was only useful to a tiny audience. But that audience really wanted his product. It wasn’t until much, much later that Facebook became the enormous social site that it is today.
When you’re starting out on your own, you might be tempted to shoot for the #1 ranking in Google for “personal finance” or “real estate developer” when it would be far more realistic (and profitable) to reach the #1 spot for “personal finance for young lawyers” or “real estate developer in suburban Dallas.”
3. Think like a futurist
But what you might not realize is that the future isn’t just something that happens to you. The best and brightest take an active hand in shaping that future.
Paul Graham agrees. He argues that the folks living at the head of the curve can see into the future, even just a tiny bit.
By living in the future, or having some of their mental cycles devoted to thinking about life in the next 5-10 years, futurists can generate better business ideas.
Live in the future, then build what’s missing.
That’s how a video service like Netflix Instant Streaming can disrupt an industry. By recognizing that in the future ownership is less important than access, a revolutionary startup idea can get its legs.
4. Find a gap in the market
Gary Leff was an avid travel hacker and frequent flyer mile expert. Because he knew all the tricks and tactics to maximize redemptions, people kept coming to him for advice about booking their dream vacations.
That’s when Gary got the idea for BookYourAward. Gary put up a simple 5-page website (chronicled here by Chris Guillebeau, a noted frequent flyer himself) where people can hire him to book the best flights using their frequent flyer points.
The business took off and now Gary makes six figures from this simple side project.
Whether consciously or not, many successful entrepreneurs seek gaps. Places where there should be a product or service, but there isn’t. In Gary Leff’s case, there’s frequent flyer miles and airline tickets, but no guided service that turns one into the other.
Sometimes it’s really as simple as that.
5. Build a solution for you
There are moments of friction every day of your life. You may have become so accustomed to these moments of friction that you don’t even recognize them anymore. But they are there.
Imagine you’re living in a big city with little to no street parking. It’s too expensive to buy a parking spot in a city like this, and most of your days you walk, bike, or take public transportation.
Still, there are days when you would really like a car, like when you go on those big CostCo trips or pick up friends from the airport. What do you do?
Well, if you are Robin Chase or Antje Danielson, you might start ZipCar, the car-sharing service that’s revolutionized the concept of rental cars.
The user story I just laid out (or one like it) is happening to you a hundred times a day. But it takes a special awareness, an entrepreneur’s sense so to speak, to grasp that these little moments of friction are happening because most people just put up with it and go on with their lives.
If you’re looking for the next great startup idea, take a look at what’s causing friction in your life and figure out a solution that could benefit a thousand other people. That’s all you need to get started.
6. Use the Barnacle Strategy
Brett Kelly wrote Evernote Essentials, a comprehensive manual to the popular note-taking app, and sold it from his site for $29. Turns out a lot of people needed a manual. He now earns over $160,000 a year in profit from this one manual alone.
Olloclip is a case that adds an optical lens to your iPhone so you can take better pictures. DODOcase is an old-fashioned, book bound carrying case for your iPad. Paleo Plan is a membership site that offers shopping lists and meal plans for the popular Paleo Diet.
What do all of these successful entrepreneurial ideas have in common? They all ride on the popularity of another product, service, or movement.
You don’t have to create a massive whale yourself. Instead, you can be the barnacle that rides on the whale. When the whale eats its massive meals, inevitably some plankton don’t make it into its mouth. That’s where the barnacle comes in: it draws its nutrients in the whale’s wake.
Similarly, when a whale in the market (like Evernote, iPhone, iPad, or Paleo in the examples above) already exists, your entrepreneurial venture could simply exist to reap the benefits the market that the whale already created.
I call this The Barnacle Strategy.
The easiest way to become a barnacle (or “barn”) another product or service is to provide an accessory–but you can also write the missing manual or guide like in the examples above.
This is such a big concept that I will leave it to another article to dig into The Barnacle Strategy in all its genius. But it works, and the Barnacle Strategy has become a go-to technique for entrepreneurs seeking freedom from their 9 to 5’s.
Not everyone wants to be an entrepreneur or found a startup. I get that.
But a part of embracing change and living agile is incorporating the ideas and insights of entrepreneurs into your career, your volunteering, your consulting, or your freelancing.
The 6 methods I’ve outlined in this article have one thing in a common: They’re all about creating value for other people.
If you can do that successfully on a consistent basis, you won’t ever need to worry about the shocks and disruptions that are increasingly a feature of modern life.
Image © Julian Kilsby – Fotolia.com