I analysed a lot of startups and found out that there are several concrete ways to come up with startup ideas. So, I put together 7 practices you can use to find your own profitable startup idea. This is not an exhaustive list, so you might very well find ideas using totally different approaches. Let’s begin:
ONE. Develop an expertise: for many famous companies out there, great ideas came when founders were really good at something. Very often they were simple side projects that were aimed at solving personal or niche problems or even just for fun. Being an expert in a certain field and feeling that there is something to be filled there can lead to great discoveries.
A good example is Hotmail, the developers Sabeer Bhatia and Jack Smith were working in Apple and wanted to communicate with each other about their business ideas but they didn’t want to do it through their work email, so their bosses couldn’t read them. They also couldn’t access their personal emails because their companies firewall blocked access to them. That’s when they started to program a web based email service that can be accessed from anywhere in the world and not linked to any internet service provider. So, Hotmail was born.
TWO. Observe interactions: if you feel that you are not a nerd or an expert in a certain field you need not worry too much. You can also observe your surroundings. A good example of a startup that was born this way is Tinder. The founders Justin Mateen and Sean Rad knew each other since childhood and even studied entrepreneurship together. Rad observed how difficult it was to approach a girl when you don’t know her, especially when you are shy. Wouldn’t it be better if you knew she wanted to be approached? Is there somewhere to break the ice? Tinder was born on 2012 based on this sort of reasoning.
THREE. Monitor future trends: monitoring future trends is another way to find great opportunities.
Don’t start struggling in a dying industry, instead get yourself up-to-date in growing industries and the most important global trends. These trends could be as diverse as the increasing urbanisation of our planet, its growing population, increased longevity, Blockchain technology, VR tech, and many more. Example of companies in this category is Steemit, Tesla with its electric eco-friendly cars, Google, etc.
FOUR. Spot inefficiencies: try to spot inefficiencies like outdated business practices and terrible customer service. That’s how it is in well-established industries where there is too little competition to stimulate innovation. For example cable industries in the USA, like Comcast or Time Warner Cable used to compete for a city instead of competing for customers. That was something established by law. When a city was awarded a cable operator people had no choice but to use it. So, there was no need to improve customer service because it was impossible to switch to another provider. Instead the cable companies focused on their own business processes first and customers came second. When streaming options like Netflix came by, people started to cut the cords of their cables and these companies started to witness massive losses of viewership.
FIVE. Get Rid of Middlemen: another way to spot ideas is to observe industries which have a lot of middlemen. Don’t get me wrong it’s not about making others lose their jobs but sometimes industries just become overwhelmed with middlemen and get more inefficient in the process. The customer ends up paying the bill. Very often, technology can solve the problem by creating a unique go-to place for specific types of products and services. The travel industry for example got disrupted quite a lot with technology over the past few years. Online providers have taken many physical travel agencies out of business. Instead of going to a travel agent, people can book hotels, flights, cars, cruisers, restaurant tables and so many other travel services online. Today, the online travel agency Expedia which was born out of a division of Microsoft has actually become one of the largest online travel companes in the world. And it’s growing fast, thanks to many acquisitions such as the one of Orbitz which makes Expedia one of the largest travel agencies in the USA.
SIX. Copy and Improve: what about copycats? In business copying and improving successful business models is a norm. There’s nothing to be ashamed of. Disruptive ideas are rare and it is very likely to get inspired by an idea and execute it better. Rocket Internet is based on this practice. Improving copied business models is a business model of its own. Rocket Internet has copied many famous internet startups including Ebay, Facebook, Twitter, Airbnb, GROUPON and Birchbox. When GROUPON was launched in the USA, Rocket created its own clone CityDeal in Germany. It started growing tremendously in Europe and GROUPON had to buy it out to keep its poll position. One of the 3 founders, Oliver Samwer is a firm believer of what Thomas Edison said, “Genius is just 1% inspiration and 99% perspiration”. It’s not about who had the innovative idea first but who executed it better and became market leader faster.
SEVEN. Find your Passion: even if you’re not an astronaut there are surely things you’re passionate about. Living after the motto “love what you do and do what you love” is not just random words. On the entrepreneurial rollercoaster you will have many setbacks, moments where you had to get back up and you’ll need a lot of motivation for that. A great example is Pinterest. Its founder Ben Silbermann was a passionate collector in his childhood. He collected everything and anything - stamps, insects, books, etc. For him collecting such things said a lot about who you are. So, he decided to mix his passion of collecting with the possibilities of technology. He joined forces with his friend Paul Sciarra who was also an avid collector. Together they created Pinterest to bring the collecting experience online and help connect people who had a common interest.
In summary, spotting problems and opportunities are ways great business ideas are born. What are you waiting for?