
How to find startup ideas that make money - sushi
http://www.paraschopra.com/blog/entrepreneurship/how-to-find-startup-ideas-that-make-money.htm?src=hn
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6ren
Just a note on (b): ease-of-use can also disrupt an industry, by making it
accessible to people with less skill/time. It's not that it becomes less
tedious use for existing users, but a step-function, that it becomes
_possible_ to use for non-users.

[The reason this (and low-cost) are potentially disruptive is because they
target non-consumption: people who aren't customers of incumbents, and so
acquiring them doesn't provoke a competitive response, while you grow strong
enough (e.g. improve product performance/features) to potentially defeat those
incumbents. The same effect also makes it easier to get started.]

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patio11
This is a _huge_ factor in uptake of SaaS at smaller firms. Project management
software existed before Basecamp, for example, but Basecamp is one of the
first packages which put it within the reach of e.g. firms with size 1 ~ 10.
It is quantitatively and qualitatively a different experience than the bespoke
consultingware monster PM solutions that e.g. a division of Toyota might use,
but Basecamp customers can still have LTVs in the four figures very easily.

That is a very nice place to be as a startup -- you can potentially acquire
and service customers at a place in the solution space where competitor's cost
structures make it impossible to enter. (e.g. if a large competitor needs a
sales rep or custom programming, forget it, $2k of LTV is impossible for them
to address -- but break that into $50 ~ $80 per month and it is within the
authority of a single decisionmaker at the client firm in response to a low-
or no-touch sales process.)

Also, when the competition is non-consumption, sometimes your value
proposition can get just _amazing_ , because the delta in experience on even a
minimally featured software solution versus paper or "we'll just deal without"
is substantial. (I've got a client who says AR practically pays for his
mortgage. He's, understandably, quite happy.)

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earl
AR?

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svmegatron
AR is patio11's new project: <http://appointmentreminder.org>

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kristofferR
I really like the strategy layed out in MJ Demarco's Millionaire Fastlane. A
lucrative startup idea should have five things:

Need - There has to be a need for what you're delivering. Don't blindly do
what you love or are passionate about, do what the market requests. The market
doesn't care at all about what you love, they care how you can solve their
needs.

Entry - It shouldn't be easy to start the business/to step in the market. If
it's to easy to get into the market, it's probably way harder to succeed in
that market. There's a reason why it's almost impossible for blogs to earn
serious money, it's simply too easy to start one. Everyone can start one. If
everyone can start up a clone of your business, it's not likely to succeed.
However, if it takes some real work/investment to startup your business, it's
probably a better business.

Control - You must be in control over your own business success. If somebody
else can shut down your business, you're not in control. If your business is
relying on API access or affiliate income from somebody else, it's not a very
substainable business.

Scale - The business must be able to scale to the masses. If you're running a
sandwitch cart, it doesn't matter how good your sandwitches are. You can't
suddently sell 100 000 sandwitches in a day in your neighboorhood. However, if
you're selling access to something online the whole world is your market and
it doesn't cost you much more to sell 10000 subscriptions than it does to sell
10.

Time - The business success needs to be seperated from your time. If the
business can't grow seperated from your time , it's not really a business.
It's just a job you have created yourself. This doesn't mean that you
shouldn't spend a lot of your time on your business, it just means that what
your business earn shouldn't be connected to how much time you spend running
it.

Read the book, it's really good (71 five stars/1 four stars/0 three-two-one
stars). [http://www.amazon.com/Millionaire-Fastlane-Crack-Wealth-
Life...](http://www.amazon.com/Millionaire-Fastlane-Crack-Wealth-
Lifetime/dp/0984358102)

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vaksel
I don't think you need scale...there are plenty of successful companies with
few clients, that make a ton of money because they are charging $100K/mo for
their services.

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timmaah
But you give up a certain amount of "Control".

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noelsequeira
I'm extremely grateful to entrepreneurs like Paras who've been in the trenches
(and stumbled several times, only to pick themselves up and dust themselves
off each time), lay their cards on the table and share tidbits of actionable
insight (Non-esoteric, actionable insight being the operative words here).

I think this extends PG's classic words, " _Make something people want_ " to
something that sounds like:

 _Make something people want that

1) they're ready to pay for / you can monetize

2) is in an expanding / sufficiently large market

3) has precedents / incumbents that validate the need

4) you're sufficiently well leveraged to execute on

5) you and your team are passionate about_

While there will always be outliers / exceptions to the rule, I'm convinced
this is an excellent heuristic to filter the several hundreds of ideas that
course through the average entrepeneur's mind in any given year.

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k00k
After reading this, I've spent the past 2 hours perusing the Inc. 5000 list
that he links to. <http://www.inc.com/inc5000/list/>

There are some mind-blowing/boggling entries there, like:
<http://www.inc.com/inc5000/profile/chasing-fireflies>

Take some time browsing through, you're sure to find something you'll be
scratching your noggin over.

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tuhin
Great perspective from Paras in the article. No doubts the way his business
has grown is actually a story of how determination and simplicity in an
established industry can lead to great businesses.

However, using a blanket statement to characterise the potential of a startup
might not be the best way forward. From what the author says, it would be
impossible to see Twitter, Foursquare, Square ever be born. I for one would
not be happy if they did not exist.

Just because one has never seen an idea getting successful might not always
mean it is impossible. It often means no one has tried hard enough. I know the
pragmatists would thrash me by saying the contrary.

The truth is that there are many ways to go about founding a company. One is
to actually set off to found one because to you the joy of founding and
working for yourself while solving a real pain is what is of prime importance.
The idea or the sector you are in might not be the closest thing to your
heart. (Though it must not be too distant too). This is the way that Paras
speaks of and for most of the folks it is great.

Another way is to just work on something that solves a real problem for you.
It might be just a simple app that tells you all the cool places in a city
maybe just your city but something that you want to do and feel there is a
real need for. A point to be noted is that by now you have not thought of how
it will make money or how the server bills will be paid. Well do not worry you
are not the first person to go this way nor the last one.

The other route is to just come up with a crazy idea that everyone who hears
has just one thing to say: "Why won't I use this with that or why do I need
that". Don't worry if others cannot see what you clearly see. In such a case
the final product is already in your head and you can see hundreds of uses for
this. Every day you refine it in your head till the reality and vision of the
product converge. Chances are that if you actually stayed around to see them
converge then you have something going on for you. Either you actually believe
in the product and it is a great product that the world did not see the need
for till they started using it OR you were just being delusional. I would say
the chances of being delusional if you stuck around till a final MVP are not
very high.

Each of the above 3 paths are for different types of people. So before you
follow any advise as a rulebook, step back and do some soul searching. You
already know what way to go for.

~~~
paraschopra
Yep, correct. My approach is not the only approach. The reason I documented is
because I wanted a manual for doing a startup from scratch if I had to do it.

I usually get goosebumps thinking what I would be working on if I had to start
today! Now I am relieved that I have a blog post to read whenever I need to do
it.

~~~
sammville
I am also going to use this as a manual. I use the market-first approach for
any app i want to build while i wait for the "EUREKA" moment when the great
idea strikes and by then i would have money to build it.

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koko775
This, to me, boils down to "triangulate, differentiate, execute better, and
compete", in fewer words. Or even more concisely, "be realistic".

I don't think this is invalid, but at the same time, it seems like it's
suggesting that, rather than searching for a need you want solved and framing
it in terms of a realistic goal and whittling it down to a compelling product,
you should be identifying someone else's need and building _that_ product.

A fun idea without a plan may need some serious thought and modifications to
make it a compelling product, but I think that perhaps a compelling idea with
no fun is pretty difficult to _make_ fun.

Perhaps my core philosophical objection can be summarized in contrast to this:

> Any sufficiently big market will give you tons of interesting ideas. Why do
> you need to come up one of your own?

I don't think this is a market-driven approach, in the sense that the market
is merely setting the context, and it's still interest-driven, and you're
still searching (and hopefully coming up with) ideas you find interesting.
Just identifying exploitable needs isn't necessarily going to expose something
you're going to enjoy.

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barefoot
This is a very subtle distinction.

You say "...it's suggesting that rather than searching for a need you want
solved and framing it in terms of a realistic goal and whittling it down to a
compelling product, you should be identifying someone else's need and building
that product."

But "framing it in terms of a realistic goal" and "whittling it down to a
compelling product" both sound like code to me for "making something that
other people want / need".

One key part of customer development is that creating a new market (for
something that you exclusively need) is extremely expensive. You have to
educate your customers on why they need your product and push against a
massive amount of resistance.

I think it's pragmatic then to accept that working with an existing market in
some shape or form is inevitable. So, why not embrace it? I think that's the
market-driven approach.

You can still come up with novel and fun ideas that you own, but ground them
in an existing market that you've researched.

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swombat
Great article (which I reposted on swombat.com). One comment I'd have is that
the "growing" characteristic is very important! I followed this approach for
my first startup, and thought it would be a walk in the park. However, the
industry we started in (audio on the web) was tanking in 2007 and that was one
of the important issues amongst the many problems we hit...

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paraschopra
Interesting. So you are saying you picked a growing industry and it tanked?

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swombat
No, quite the opposite! We picked an industry that was making money for
others, and which we were interested in, and it turned out to be a fast-
shrinking industry (who wants to pay for audio broadcasting products when they
can get YouTube videos for free!) and at was one of the numerous reasons why
the product didn't work out. There were others for sure, but this was a factor
too.

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Swizec
_> a lot of things in life that appeal us but we’ve got no chance (for geeks:
most obvious example is dating a hot lady!)_

I resent that! It's downright mean and untrue.

But anyhow, the whole article smells a lot like a concept I developed a few
months ago that ideas are a process. You start doing something and on the way
you get better ideas as you gain a better understanding of the problem. Just
sitting on your arse will never get you a killer idea. Never.

~~~
Vmabuza
to add to that i would also say that if you dont put yourself out there,go out
meet people and the ideas(in the context of this post) will flow.Sitting at
the office or at home waiting ideas to flow wont help one bit.

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Vmabuza
So in short.Instead of trying to invent the wheel just invent tires. I like
this approach,but its very tempting for us young entreprenuers to Invent
(idea) .

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swah
Cool Idea will just have to wait until Money Idea can support its
development...

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Vmabuza
Sometimes one hopes to that some fool(the last one) will fall for the cool
idea and buy it while you know very well its not going to make a single dime.

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nadam
This advice aligns with my current views so much that I wish I could send back
this advice in time to my younger self.

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vaksel
the best way is to find an industry where people are already making a ton of
money, and carving a piece of that.

Inventing the wheel is a recipe for disaster...because not only do you have to
convince them to buy from you...but you also need to convince them to buy the
thing in the first place.

~~~
conorgil145
If everyone took that point of view, then no new industries would ever get
started. It may be much more risky, but sometimes if you can "invent the
wheel" and execute extremely well, then you have the potential to make a lot
of money even before any competitors enter the industry that you have created.

~~~
vaksel
take the risk after you get your first 10 million

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zacharyvoase
Startup ideas don't make money.

Startups make money.

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Turny
+10 Couldn’t agree more! Paras, you’re speaking my mind. Just followed up with
a post here: <http://bit.ly/hToZoZ>.

Thanks for sharing.

-Alex

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grigy
Agree with the points of article, but one question remains open. Who's going
to make the innovative products then?

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paraschopra
People who don't agree with my point of view! I am sure a large % of people
are willing to take risk and make innovative products.

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imwilsonxu
Idea doesn't make money, delivery makes. Just like looking at the finishing
line doesn't make you win, you have to run and run fast.

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ankneo
Really good info.. Can surely be a one stop link to get some insight into
starting up a Startup.. Cool Paras..

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3pt14159
I posted this on his site, for those that may have missed it.

 _Hey, just a small quibble, but there are no companies on that list growing
1000% per year for 3 years. 10^3 equals 1000, or 100,000% after 3 years of
compounding growth.

That said, great post and nice data find._

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donnyg107
I think this was posted a few days ago, but it has led to a mildly interesting
discussion so I have no issue with it.

