How to come up with a business idea
I go to a lot of meetups here in the Bay area and one of the questions that I hear quite often is “How to come up with a business idea?”. It happens really often when you go to a meetup where most people have full time jobs, but want to start their own business some day.
If you try to google it, you will find a lot of articles about that, like this one, but in my opinion most of them don’t offer a really good advice, because they are written by journalists, not entrepreneurs.
During my college years at Babson I took an ‘Entrepreneurship’ class and one of the requirements was to come up with my own business idea. I used the approach, similar to what’s described in these articles and my idea was selected as one of the top ideas during the course. I was really excited and even started to think that I could create a real company around this idea.
Then one day I came to professor Bob Caspe, described my idea to him and asked him what he thought.
BC: “Why do you want to know what I think about your idea?”
Me: “Well, you’re an experienced entrepreneur and professor here at Babson, I thought you could provide some good feedback on that.”
BC: “You know, it does not matter what I think about your idea. It does not matter what other professors here think about your idea. It does not even matter what you, your mom or your best friend think about your idea. What matters is that what your customers think about that and whether they are willing to buy your product. How did you come up with this idea?”
Me: “Well, one day I was browsing the Internet, looking for a video game. Came to the website that was selling this game, but there were no user reviews. I went to Amazon to check the reviews and ended up buying from there. That’s when I realized that smaller websites really need product reviews in order to keep the customers on their websites and thought that I could solve this problem for them.”
BC: “It’s a really bad way to come up with an idea. Although, I doesn’t mean that the idea itself is bad.”
Me: “Well, how else can I come up with a good idea?”
BC: “Watch my webinar and come back again if you have any questions”.
Yes, he had a pretty rough approach to teaching, so all of his students either hated or loved him. I decided to give it a shot and watch his webinar. Looking back, I think that this quick meeting with Bob and his webinar were more valuable to me than my entire MBA degree.
If you’re familiar with Datanyze and understand its business model – you will understand how much influence this approach had on me personally.
I don’t think Bob’s approach is the only way to come up with a good idea, but this approach will definitely increase your chances for success. It’s a well known fact that 95% of new businesses fail. In my opinion, most of them fail because they try to create something that nobody will ever pay money for. Want to come up with a good business idea? Invert your process: Start with finding your ideal customer first, figure out the best way to charge them, create a prototype, iterate, and finally make sure it’s repeatable.