Startup Ideas and Validation

Startup IDEAS and VALIDATION

Every startup begins with an idea

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 with ideas

And picking a good one through validation

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

1. Inspiration 2. Knowledge 3. Environment 4. Problem 5. Market 6. MVP Outline

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 insight. They grow and evolve.

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 see multiple discovery

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

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.

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

Then get away from work.

Einstein had his best ideas during violin breaks.

Some people get ideas in the shower. I get mine on walks.

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 narrowing the problem space

“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

Where there is pain, there is opportunity

“This is stupid, there must be a better way” – Mahmoud Al-Qudsi

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

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 post- mortems of 100+ failed startups

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?

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.

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

If you ask people what coffee they like, most would say, “a dark, rich, hearty roast.”

But what most people actually like is milky, weak coffee.

“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? ”

The famous question from Sequoia Capital: Why now?

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

Example: Webvan vs Instacart.

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: 1. Research competitors 2. Use ad-targeting tools 3. Find a community 4. Do some good-old research

Competitors are a form of validation too.

Tools to research competitors: 1. Web analytics Quantcast, Moz, Comscore, Alexa, SimilarWeb 2. Mobile analytics App Annie, Apptopia, Xyo, Apptweak 3. Social analytics Fanpage Karma, SpyFu, Google Trends, Twitonomy 4. Funding CrunchBase, AngelList, Owler, Kickstarter

Use ad-targeting tools to explore market demographics

Ad-targeting tools: 1. Google Keyword Planner 2. Facebook Ads 3. LinkedIn Ads 4. Twitter Ads

There may already be a community for your product

Community tools: 1. Meetup.com 2. Lanyrd 3. Subreddits 4. Quora topics 5. LinkedIn Groups

Research tools: 1. Newspapers, books, journals 2. Government reports, SEC filings 3. Google 4. Google Trends 5. World Bank Data 6. AYTM Surveys 7. Nielson Research

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

Naïve 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

References & image credits, part 2 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