Startup Ideation: The Rules of the Road

“ All achievements, all earned riches, have their beginning in a idea.” – Napoleon Hill

Have you ever tried driving for a long time looking at the full panorama of everything around you? If you get dazed by a day-dream of where you're headed, you're likely to go off course. You'll miss important signs and won't be able to respond to the conditions around you.

Often times founders have a grand vision for their startup. But successful entrepreneurs hone in on a very specific solution to the problem they are addressing and master execution of that solution. They create a roadmap that allows them to focus of what is important in the near term while moving toward the grand vision that will unfold over time. Perspective, and being perceptive about where to focus is key.

This is one of the reasons the Founder Institute offers a free Startup Ideation Bootcamp to aspiring and early stage founders. Startup ideas are a dime a dozen. What differentiates an idea from a lucrative startup is execution. When founders embark on the entrepreneurial journey, knowing the rules of the road can help them avoid common mistakes that detour fledgling enterprises. As a graduate and Co-Director of the exploratory Sacramento launch, I consider the following heuristics a good guide for founders from the perspective of those who have been down that road before:

Focus, Focus, Focus

When in the process of contemplating startup ideas, what you should really be doing is not “thinking up” but “noticing.” This may come as a shock to many, but countless ideas for lucrative companies grew out of someone noticing what’s missing in the world around them.

Focus on Existing Problems

While focusing on existing problems seems like an obvious strategy, too many “wantrepreneurs” attempt to solve problems that no one actually has, and end up wasting time on creating solutions to problems that are inconsequential. One of the best sources of start up ideas is solving a problem that you've observed or experienced that is deeply important. While most people focus on the problem and complain, entrepreneurs focus on the solution and get busy executing.

Focus on Depth

A startup should strive to dig a well that’s narrow and deep rather than a ditch that’s broad and shallow. Basically, a startup’s initial offering should cater to a small group of users who not only want to use the startup’s offering, but who urgently need it. When users are centered around a resource they really need, they are more likely to adopt expanding resources down the line. But if you start too broad, competing with too many other solutions, customers are likely to evaporate.

Amazon didn't launch trying to deliver groceries by drone or offer web services and e-commerce solutions to sellers. They started with a very focused market in e-commerce - buying and selling books online. Once they mastered this experience, users trusted them as they expanding into more offerings. They built upon offerings over time.

Keep It Simple (KISS)

Adeo Ressi, the CEO of the Founder Institute, has developed his own school of thought when it comes to getting startup ideas on the right track, and his constant refrain is that founders should keep the ideation process as simple as possible. According to Adeo, the following are what you need if you want to start a company:

Idea – You need to have a coherent and compelling idea that is actionable and feasible.

Reality – If reality does not support your idea or your business being built in it, it’s not worth it. Your idea needs to exist within a clearly definable realm (i.e. market, industry, domain, etc.)

Viable Business Model – Regardless of how compelling it is, your idea needs to be able to make money.

Passion – If you are going to pursue a potential startup idea, you need to have an unconditional passion for it, as it is something you are going to deal with everyday for possibly many years.

Where the Rubber Meets The Road

To make sure that your idea get's off to a good start, consider Adeo's seven rules for startup ideas:

1. Simple ideas win and complex ones die. Your idea should consist of one company, one product, and nothing else (see Amazon reference, above). Keep in mind that every product and target has its own distribution strategy that must be employed.

2. Your idea should have one core revenue model. Whether it's a subscription model, ad-based, or otherwise, you should be able to simply describe your revenue model.

3. Clearly identify your ideal customer. Embody your hypothetical customer with quantifiable traits to better market and sell to them. You may get it wrong the first time and have to change who your customer is later, but you need to start with an archetype.

4. Build something that you can explain in 10 words or less. If someone needs to be an industry expert to understand your idea, you are limiting your market.

5. Small markets are for small businesses - Remember, any market that is worth $1 billion or less is probably not one an institutional investor would be interested in. If you think you have a scalable idea, the market should support your claim.

6. Mix in secret sauce - Expertise in your respective industry will give you valuable insights into the problem you aim to solve.

7. Be original - If you can’t build a business around a completely unique idea, build a business that’s similar to something that’s been done, find flaws in its model, and devise a way to do it better.

Launching a startup is usually a result of a inexplicable drive, but you want to start off as simple as possible to hit your stride. Once you've got the fuel and tools to be map out your runway, you can extend the wings on that flying car. Bouncing ideas off of others can help you eliminate bad ideas and solidify good ones - even if that means that disagreeing with a naysayer strengthens your convictions.

If you are embarking on a startup idea and can use some support getting up to speed, come to our Startup Ideation Bootcamp. We'll be happy to help you kick the tires.