Where Startup Ideas Come From

A Playbook for Generating Business Ideas

By Mike Fishbein
mfishbein.com/amazon
Table of Contents
Introduction

Section 1: Introduction to Starting a Business

Chapter 1: What is a Business?

Chapter 2: Why Start a Business?

Section 2: How to Get Business Ideas

Chapter 3: 2 Things You Need to Generate Business Ideas and Execute

Chapter 4: Scratch Your Own Itch

Chapter 5: Ask Your Customers

Chapter 6: Meet Known Needs

Chapter 7: Do What’s Working

Chapter 8: 46 Business Ideas

Section 3: How to Start a Business

Chapter 9: The First Step to Take After Coming Up With a Business Idea

Chapter 10: What is Customer Development and Why Should

Entrepreneurs Practice It?

Chapter 11: Is Your Idea Worth Pursuing?

Case Study: How I Started 3 Businesses in 3 Months

Key Takeaways and Additional Startup Resources
Introduction
Most startups fail. But with the right approach to developing new business
ideas, many of those failures could be avoided. At the core of every
successful business is a product or service that people want. This book
includes four methodologies that focus on learning what customers really
want before building a product or trying to validate it.

These four methodologies were developed by studying what thousands of

the most successful businesses in history have in common. In this book you
will see how these four methodologies apply to the world’s most successful
and innovative companies like Netflix, Airbnb, Uber, Kraft, Salesforce,
Facebook, Instagram, Skype, Twitter, and more.

Software is eating the world...and disrupting nearly every major industry in

its path. Software development and customer acquisition are getting
cheaper and easier...and there has never been so many people using the
Internet on their computers and mobile phones. There has never been a
better time to start a business!

Entrepreneurship can provide you with financial freedom, the ability to

monetize your passion, and the ability to provide meaningful value to
society.

In today’s uncertain economy, starting a business is not just an exciting

thing to do; it may be essential for safety and security. Stop waiting for that
elusive “stroke of genius”! Instead of waiting for business ideas to come to
you, go find them. After reading this book, “coming up with startup ideas”
will no longer be preventing you from starting a business. It has never been
cheaper or easier to start a business. Learn from the success of some of the
most innovative ideas in history and start your own business today!

You don’t need an MBA, a business plan, venture capital funding, or

exceptional creativity to get a great business idea.
An entrepreneur’s job is to serve his or her customers by solving a problem
or delivering value. In a free market, entrepreneurs who don’t serve
customers fail. To execute, an entrepreneur must identify customer demands
and how to meet them. Name one successful company that doesn’t offer a
product or service that people want. Many of the best startup ideas come
from solving problems or inefficient processes that customers have an
urgent need to solve. The four methodologies in this book optimize for
obtaining customer insights about problems and demands.

This book draws from lessons from top innovators like Eric Ries (Author of
The Lean Startup), Steve Blank (Author of Four Steps to The Epiphany and
The Startup Owner’s Manual), Chris Dixon (Partner at Andreessen
Horowitz), Paul Graham (Founder of Y-Combinator), Dave McClure
(Founder of 500 Startups), James Altucher (Author of Choose Yourself),
Steve Jobs (Founder of Apple), and more.

The 20th century startup strategy was to (1) generate an idea, (2) build a
product, and (3) see if it has market demand. The Lean Startup taught us to
(1) generate an idea, (2) see if it has market demand, and (3) build a product
if it does have demand. In this book, I propose to (1) generate an idea based
on what market demand data you have or can get quickly, and (2) iteratively
develop the product to ensure it meets demand.

Congratulations on taking this step towards starting a business. I hope that

you will apply what you learn and achieve your goals.
About the Author

Mike Fishbein is an entrepreneur in New York City, author of multiple

books on entrepreneurship, and has advised both startups and Fortune 500
companies on new business innovation.

Mike is the Founder of stpcollege.com, an education technology company

in New York City. With over 2,000 enrolled students, stpcollege.com's
online courses help entrepreneurs start and grow their companies.

Prior to stpcollege.com, Mike was a founding team member of Casual

Corp, a venture studio and corporate innovation firm founded by an
accomplished serial entrepreneur. While at Casual Corp, Mike served as a
lead product manager in incubating and launching three new consumer
technology products. In addition, Mike advised some of the world's largest
companies on new product innovation.

Mike's expertise lies in customer development, Lean product strategy, and

customer acquisition. His writings on startup marketing and strategy have
been published in The Huffington Post, Entrepreneur, and more.
Mike has been starting companies since he was a teenager, and serves as a
resource and advisor to startups in New York City and abroad. You can
learn more about Mike via his personal blog, mfishbein.com or on Twitter.

Mike is the author of several other books, including:

1. “Customer Development for Entrepreneurs: How to Test Startup Ideas

and Build Products People Love”

2. “Business Networking: How to Build an Awesome Professional

Network”

3. “Growth Hacking with Content Marketing: How to Increase Website

Traffic”

4. “The Ultimate Guide to Blogging: How to Start a Blog, Promote Your

Blog, and Make Money Blogging”
Section 1: Introduction to Starting a
Business
Before we can understand how to get business ideas, we must first
understand what a business idea is, and what a business is. Similarly, an
architect must understand the purpose of a building before he or she can
design it.

The first section of this book defines what a business is, what makes a good
business idea, the reasons why you might want to start a business, and
more. This sections explains that different businesses have different
characteristics and different entrepreneurs have different goals and abilities.

After understanding the concepts discussed in this section, the

methodologies for generating business ideas discussed in section two will
be more intuitive. You will also be better-equipped to qualify your ideas and
consider which ideas you want to pursue.
Chapter 1: What is a Business?
Definition of a Business
The Wikipedia definition of a business is as follows: “A business, also
known as an enterprise or a firm, is an organization involved in the trade of
goods, services, or both to consumers.”

The term “trade,” as used in the definition above, can be defined as “an
exchange of value.” Two or more parties partake in an exchange of value.
The exchange is made by choice by both parties. The exchange is always
mutually agreed to. It is illegal (and immoral) to take someone’s money,
goods, or services, without their consent.

People choose to partake in a trade because they believe they will derive
value from it. For example, you might pay for a ticket to see a concert
because you believe the concert will be entertaining and make you happy.
Similarly, someone might sell their old books that they have already read
because they believe the books, which have less value to them than they
once did, could have greater value to someone else. The monetary gain
from the sale could then be applied to acquiring something of greater value
to the person.

The bookseller has no obligation to give away their books. The concert goer
has no obligation to pay for the concert ticket.

A trade can be an exchange of goods, services, currency, or some

combination. Below are several examples of a “trade” that illustrate the
variety of possibilities:

● Jim cleans Joe’s room in exchange for Joe completing Jim’s math
homework.
● Jim pays Joe $50 to complete his math homework.
● Joe pays Jim $40 in exchange for a vacuum cleaner.
● Joe pays Jim $100 to give him a vacuum cleaner and clean his
room.
● Jim cleans Joe’s room in exchange for Joe giving Jim a pencil.
Because all transactions in a free society are voluntary, the role of an
entrepreneur is to provide a good or service that is of value to people and
that people want to exchange for.

To profit, the good or service must be worth more to people than it costs the
entrepreneur to produce.

Key Takeaways

The crucial components of the definition of a business:

● Trade or exchange of value
● Two or more parties
● Voluntary
● Goods, services, and/or currency can be exchanged.
Business Idea Critical Ingredients

a. Meets Demand

If no one wants the product or service that a business is offering, they will
not use it or pay for it. Even if a product is free, people might not use it.
You can not force people to use or pay for your product. Name one
successful company that doesn’t offer a product or service that people want.
The government is the only entity that is permitted to force people to pay
for their services.

Entrepreneurs that supply goods or services that are not in demand fail
because they will not receive any goods or services in exchange. No one
would voluntarily engage in a transaction with someone offering something
they don’t want.

b. Solves a Problem

Often times the products and services that are of most value to people are
the products and services that solve problems they have. Problems can be
defined as processes that are uncomfortable or challenging.
“Uncomfortable” and “challenging” are of course subject to opinion.

When a customer has a “strong pain,” they may be more motivated to

alleviate it than something that is just “slightly uncomfortable.” Per
Maslow's hierarchy of needs, people often strive to solve basic needs such
as food and shelter before striving for needs like self-actualization.

For example, if someone has the flu, they may be more motivated to buy
medicine than to buy a nice leather jacket. In other words, people are often
more motivated to buy “need-to-haves” than “nice-to-haves.” If someone’s
job is to clean, and their compensation is based on their ability to clean,
they would probably be more motivated to buy something that will help
them clean than something that wouldn’t help them clean.
c. Customers, Users and/or Partners

Per the definition of business stated above, there must be a trade or

exchange of value between two or more people. In order for a business to
earn revenue, it must serve one or more sets of customers.

The customers will vary depending on the business. For example, Facebook
has users that do not pay to use Facebook, but it sells advertisements to
brands. A marketplace such as Airbnb connects housing owners with
housing renters and collects a fee. Many companies, such as Dropbox, build
a product and get paid buy one group of customers. Other companies, such
as magazines, sell their product to readers, but also sell advertisements to
brands.

There many different ways that companies can make money and many
different ways companies can partner. For the purposes of this book, just
understand that a business idea must serve one or more people.

d. Revenue

The goal of most businesses is to earn a profit. A business does not just
have customers, users and/or partners as described above; it must receive
currency from one of these entities. The amount people are willing to pay is
typically directly proportional to the amount of value it provides to them.
As discussed above, the business could provide a product or service to a
given customer without charging them or earning revenue, but it would
need to find a way to make money either from a different customer, such as
an advertiser, or at a later date (for example, a “freemium” business model).
Different Types of Business
Businesses can have a variety of different characteristics. Different types of
businesses have different operational needs, risk profiles, cash flow profiles,
advantages, and disadvantages.

There are small businesses, physical product businesses, software product

businesses, service businesses, offline businesses, online businesses, and
businesses that are a combination of the above.

Businesses can have different ways of acquiring customers. Businesses can

have different ways of making money.

The type of business idea you pursue should depend on your goals. Goals,
business profiles, and deciding which businesses to pursue will be discussed
in more detail later in this book.
Chapter 2: Why Start a Business?
People decide to start companies for many different reasons. There are
many different benefits of being an entrepreneur. Different types of
business have different benefits.

Below are all the reasons I can think of to start a business. Not all of these
benefits apply to every business. Some benefits apply to some types of
businesses and not others. You should consider what benefits are most
important to you when deciding what kind of business idea to pursue.
27 Reasons to Start a Business

1. Independence and flexible work schedule

Being an entrepreneur can provide some lifestyle flexibility. You don’t have
a boss telling you when, where, or how to work, or what to work on. If
independence is what you desire, you might start a lifestyle business or
consultancy. A venture-backed startup with bold ambitions won’t provide
you with much independence because you’ll be working so much and
because you’ll have accountability with co-founders and investors. Lifestyle
businesses or consultancies won’t grow to be huge, but they often don’t
have to require much time commitment, and provide flexibility.

2. Help people and society

Businesses can provide huge advances to society and the products and
services they provide can help people tremendously. Some people want to
solve an important problem, such as educating people, providing people
with clean drinking water, or providing more sustainable energy sources.

Some entrepreneurs may be motivated to help people by creating jobs.

According to Business Insider, Walmart employs about two million people.
It would be illegal for Walmart to force people to work; employees have
chosen to be employed by Walmart. The wages Walmart employees earn
can be used to raise their kids, or buy things that make them happy such as
food, a home, or a ticket to a concert.

Other entrepreneurs may be motivated to simply solve a problem, and help

a given customer or customer segment. Sticking with the Walmart example
- the company provides goods to its customers that they have demand for.
Customers buy the goods because they have value for them.

Furthermore, Walmart is able to supply many of these goods at lower prices

than other places people would be forced to buy these goods from if
Walmart did not exist. So not only is Walmart providing people with goods
that they want; they are also able to save them money. The money people
save can be used to buy other goods and services that will make them
happier and/or help them make more money.

3. Make money

Some people start companies because they want to make a ton of money.
Starting a business can certainly be a great opportunity to make money.
Your business can help you make money by providing you with profits
and/or a lump sum if you sell the equity you have in the business.

4. Enjoy your work

Some people want to work on stuff they enjoy (e.g., customers, industry,
responsibility, etc.). The right business to start for this, of course, depends
on the kind of work you enjoy.

The same way an employee would choose a profession that they enjoy
doing, an entrepreneur could start a business that will entail work that they
enjoy doing. For example, if an employee enjoys teaching he could get a
job at a school. If an entrepreneur enjoyed sales, he or she could start a
business that acquires customers through sales.

5. You could lose your job

Jobs may not be as safe as you think. A few of the bad things about jobs are
(as provided by best selling author and entrepreneur James Altucher):

● “Your income has been going down versus inflation,

● The trend is that you are about to get fired and you are in denial
about that,
● You can’t build wealth at the job (expenses, taxes, exploitation,
etc.),
 ● You’re trapped all day long with these people (your forced
“friends”) who are backstabbing you,
● You have to kiss ass to your boss,
● You aren’t allowed to build other income streams in most cases,
● And many more.”

Because of the risk of losing your job, you may want to start a business on
the side so that you are prepared if it happens, or so that you can quit your
job and escape the risk of losing your job.

6. Learn new skills

As an entrepreneur you have to wear many different hats – sales, recruiting,

accounting, etc. Inevitably you will end up learning more about random
skills such as SEO or furnishing an office than you would at a regular job.

7. Gain new life experiences

As an entrepreneur, you can experience new things such as being a leader,

getting rejected, working your ass off, success, uncertainty, risk, and more.
New experiences are fun and they help you develop as a person.

8. Getting rejected is good for you

Getting rejected sucks. But it makes you stronger and less afraid of it
happening again. As a result, you can push yourself and accomplish more in
business and in any aspect of life than you could have before. You can be
better equipped to handle any adversities that may come your way in the
future.

9. Change the world

Solving a big problem and/or serving a large population can have a big
impact on the world. For example, Elon Musk’s company, Hyperloop, aims
to change transportation. Airbnb is changing real estate and hospitality.

10. Build something you want to use

As an entrepreneur you can solve a problem you have, or supply something

you have demand for. You may have experienced a problem you want
solved so badly that you take action to solve it, like waiting in line at the
DMV. You might want a particular product so badly that you decide to start
a company so that you can supply it.

11. Lead

Leadership is a great skill to develop for both personal and professional

reasons. Some people find it fun to lead. In starting a business, you will
have to display some leadership, especially if you will be hiring people or
working with partners.

12. Be creative

Starting and growing a company requires a lot of creative thought. Some

people enjoy being creative and may use their business as a creative outlet.
Entrepreneurship requires creative skills like copywriting, design,
marketing, strategy, design, product management, and user experience.

13. Think strategically

Running a business requires a lot of strategic thought. it’s like playing a

game of chess, but more risky. Some people like that sort of thing. I do.

14. Earn passive income

Making even $200 per month is great if it doesn’t cost a lot of time or
money. You could still have time to work a full-time job. If you build up
enough automated income you could travel the world while getting paid.
You can learn more about the benefits of passive income later in this book.

15. You can’t get a job

This may not be the best reason to start a company, but still, it’s a reason.
The reality is, jobs aren’t as easy to come by as they once were. Now,
competition for jobs is more fierce than ever, as a significantly higher
percentage of the population has a college degree, and the economy’s not in
the best shape it’s ever been in.

16. Get stronger

The hard work, stress, and risk tolerance that entrepreneurship requires
makes you stronger. Succeeding makes you stronger, too. It gives you
confidence and, of course, money, which can be used to make yourself even
stronger and more happy.

17. Be in control of your time

As an entrepreneur, you have some control over how you spend your time.
To be successful you will probably have to do some things you don’t want
to, or do things on a certain schedule. But at least you have some choice.
Want to go in late on Monday? Want to work from your beach house?
Those are possibilities.

18. Be in control of your thoughts

As an entrepreneur, you have some control over what you work on. What
you work on, of course, affects what you think about.

19. Be in control of your future

At a job, you’re dependent on the company’s health, your boss, and more.
As an entrepreneur, you’re still dependent on some outside factors, but in
many respects you have more control.

20. Don’t have a boss – you’re the boss

You’re not being told what to do, except maybe by your customers or
investors, but not always. And it’s your choice to listen.

21. Create for yourself instead of someone else

Selling your own products or services instead of someone else’s could

potentially be more rewarding monetarily. A company hires an employee
because they believe it will be profitable to do so. It will be profitable to do
so if the employee helps the company earn more money than the company
pays the employee.

22. It’s fun

Marketing, strategy, sales, building products, figuring out how to solve

problems - many people find these activities enjoyable and fun.

23. Build something

Instead of following a process or being a cog in a wheel, you’re creating

something and writing the process. Working at a big company often means
completing tasks that are given to you by your employer. As an
entrepreneur, you need to figure out what work needs to get done, and play
a large part in making it happen.

24. Meet awesome people

As an entrepreneur, you will probably interact with customers, investors,
other entrepreneurs, employees, partners, etc. Perhaps these people could
become friends, future spouses, or just be fun to talk with.

25. Retire early

If you make a lot of money early you may be able to retire early. Hard to
do, but still. Most jobs are more stable but have less upside.

26. It’s hard

Being challenged is a good thing. The challenge can make you stronger for
other aspects of life.

27. Be diversified

If you have multiple products or businesses, you’re less dependent on any

one customer, industry, job, boss, income source, etc. You could have a full-
time job and start a small business on the side. That’s a little diversification.
Diversification is a classic investment strategy designed to mitigate risk and
increase the chances of finding a winner.

Why do you want to start a business? Leave a review of this book on

Amazon and include your reasons for wanting to start a company.
Why Not Start a Business? (Here’s Why Startups

are So Hard!)

Don’t worry, this chapter is not intended to discourage you from

entrepreneurship! It’s mostly just to make you aware of the challenges so
that you know what you’re getting into. It’s also to highlight some problems
that perhaps you could find a way to solve. As discussed previously, and we
will address it again in greater detail later in this book, a solution to a
problem can make for a great business idea.

Myself and others have written previously about a thesis on how technology
is enabling a new wave of entrepreneurship and innovation. However, there
are still many challenges that people face if they want to become self-
employed, which presents opportunity for entrepreneurs and investors.
Below are some of those challenges. I think that solving for these
challenges could make for some valuable companies.

1. Sales

Starting and growing a business requires getting access to customers and

selling them a product or service. Many people HATE selling, and it can be
really hard and time-consuming. Companies that provide distribution or
access to customers, such as marketplaces, could help solve for this.

2. Skill sets

Managing a business requires skill sets and knowledge in many different

areas including human resources issues, financial management, marketing,
etc. Companies that help people hire and recruit the skill sets they don’t
have, such as oDesk, could be valuable here, as well as anything that could
help simplify or automate managerial tasks, such as what Quickbooks did
for accounting.

3. Fear

Starting a business is risky and scary. If you’re on your own and there is
failure, there is no one else to take the blame except yourself. This one is
probably hard to solve with technology, hah. But part of the fear is
financially driven. The area that’s of particular interest to me is the student
loan debt problem. People can’t afford to take the risk of uncertain income
if they have to make payments on their student loan. There’s over a trillion
dollars in student loan debt and a lot of people are affected by it, so I think
any business that can help people with their student loans could be valuable.

4. Capital

Many, but not all, businesses require startup or growth capital. I think there
could be opportunity for a fund that serves businesses that don’t aim to be
worth a billion dollars but could still be worth 25 or 50 million, and/or
throw off substantial cash flow. Definitely seems underserved – there
wouldn’t be much competition like there is in big VC. Companies like
Funding Circle are also really interesting here.

5. Product development

Technology and product development will of course be a part of any tech

enabled business. As discussed, there have already been many advances
here, but I think there’s still plenty of opportunity for improvement. I
imagine there’s a market for just about anything that could reduce the cost,
time, or learning curve of building technology.

I suspect these are some of the reasons why people don’t become self-
employed, and the challenges they face if they do. If you believe this will
be a growing market opportunity, then I think solving for the pain points
associated with it could create a ton of value.

6. Uncertainty

As an entrepreneur, you face a lot of uncertainty. There’s uncertainty about

whether or not you will be able to identify a problem or solve it. There’s
uncertainty that customers will want your product. There’s uncertainty
about how and if you will be able to acquire customers. There’s uncertainty
about whether you can supply your product at a lower cost than how much
you can sell it for, and turn a profit. And the list goes on. Not knowing what
the future holds can cause a lot of anxiety.

7. High risk

Startups are extremely risky. Most startups fail. Almost all startups fail.
There is a very high likelihood that you will fail too. You could be putting
money, time, and/or your professional reputation at risk when starting a
company.

8. Rejection

As you go about starting a company, you will inevitably face rejection. Not
every customer will want your product. Not every investor will want to
fund you. Not every potential partner or employee will accept your offer.
And the list goes on.

One of my favorite quotes of all time is, “If you aren’t getting rejected on a
daily basis, your goals aren’t ambitious enough.” This was said by Chris
Dixon, a highly successful entrepreneur and venture capitalist. I love that
philosophy.

I’ve always had ambitious goals in both my professional and personal life.
Sometimes to the point of being flat out unrealistic. Being ambitious and
taking action will inevitably lead to rejection. It’s simple math. However,
getting rejected is not a bad thing. It needs to be reframed as a good thing.

Getting rejected will thicken your skin. I’ve been rejected enough times to
not be nearly as afraid or affected by it. I almost try to take pride in getting
rejected. It means I’m pushing myself - as I should be. Trying and getting
rejected is much better than not trying at all. You can’t accomplish anything
without trying. At least when you try, you have a chance to succeed.

Getting rejected is a learning opportunity. One of the best ways to learn is

by doing. Sometimes it takes some trial and error to learn what’s best. After
getting rejected, you can take the opportunity to analyze what you’ve done
and see what went wrong and what you can improve upon.

I don’t particularly like the quote, “There is no knowledge that is not

power,” by Ralph Waldo Emerson. I prefer Napoleon Hill’s, “Knowledge is
only potential power. It becomes power only when, and if, it is organized
into definite plans of action and directed to a definite end.” Studying and
preparation are important, but at a certain point enough is enough, and it’s
time to go out and do. Taking action too soon can of course lead to failure,
but it is essential to take action eventually.

Getting rejected is not fun. It’s demeaning. But it’s a learning experience
and it makes you stronger. If you let it immobilize you, you will continue to
fail. And if you’re not getting rejected, you’re probably not pushing
yourself enough.

9. Nonconformity

Most people don’t start companies. Most people are employees, not
entrepreneurs. By even attempting to start a business you differentiate
yourself from the masses of people who work for businesses instead.

I’ve grown as a person tremendously as a result of becoming an

entrepreneur. It has affected my personal life as well. In addition, I’ve
noticed people view me differently not only because of the “label” I have as
an entrepreneur, but because of how my personality and outlook on life
have changed as a result of become an entrepreneur. Some people admire it,
others are intimidated by it, and even some look down on it. It’s led me to
become closer to some groups of people, yet becoming more isolated from
other groups of people.

The nonconformist aspect of entrepreneurship is a very complex topic that I

could probably write a book, or at least a long blog post, about. The bottom
line about this is that by starting a company, you will instantly become a
nonconformist. This has both costs and benefits.
The Truth About Work-Life Balance for
Entrepreneurs

I hear a range of perceptions about what work-life balance is like for

entrepreneurs. Some people think it’s great because you can make your own
schedule. Others think it must be awful because entrepreneurship is really,
really hard.

Most employees I know in competitive fields work a lot of hours. Some

people want to start a business so that they will have better work-life
balance.

Below are a few important points about what work-life balance is like for
entrepreneurs:

1. Different Types of Businesses Provide Different Work-Life

Balance

There are different types of businesses that have different work

requirements, and can enable different levels of free time. For example, an
information marketing business can become pretty automated, and enable
you to have a more flexible schedule. Conversely, building a billion dollar
enterprise SaaS company will probably require a lot of work. As an
entrepreneur, your work-life balance will vary depending on what your
goals are and what kind of business you are operating.
2. Being Incentivized is Highly Motivating

Entrepreneurs are incentivized on the upside and have fear of downside. If

you are successful, you receive direct compensation. If you fail, the time
and money you have invested will be lost and it could be a major setback to
your life and/or career. Both the fear and potential reward are highly
motivating.

Some people tell me they would find it hard to self-start as an entrepreneur.

I find the opposite to be true because of the incentive structure.

I actually think incentives are the biggest reasons why startups can beat big
companies. Furthermore, I think having the right incentive structures in
place is essential for just about any system or economy to function properly.

If you are a salaried employee without stock in the company and without
bonuses for performance, you would have less reason or motivation to “go
the extra mile” because you wouldn’t be compensated for the value you
create. Conversely, you would feel less of a need to create value because
your livelihood doesn’t depend on your ability to create value - your salary
is fixed and typically guaranteed even before you start creating value.

3. Flexibility Makes a Big Difference

Some businesses give you flexibility in what you work on, when you work,
and where you work. Not all businesses offer all (or any) of these
flexibilities, but having this flexibility can make a big difference in both
your work productivity and life happiness.

a. Work when you want

If you are tired, you can take a break. Ultimately, this flexibility can make
you more productive. If you want to go out on a Tuesday night, you can
sleep in on Wednesday if you plan it accordingly. Ultimately, this flexibility
can make you more happy.

If you are totally exhausted, it wouldn’t be productive to work. Conversely,

if you are feeling extremely focused and energized, it would be highly
productive to work. Similarly, if you have an important life event that you
want to attend, it’s good for your life quality to be able to take off for it if
you please.

I love being able to occasionally go out on a Tuesday night, or take a day

off for a fun event. I love being able to work when I’m feeling productive,
even if it’s a Sunday. I love being able to rest when I’m exhausted.

b. Work on what you want

You can outsource, delegate, or hire someone to do the work you don’t want
to do or are less effective at. Ultimately, this can make you more productive
and happy.

c. Work where you want

Where you choose to work can have a big impact on both your happiness
and productivity. If you’re a new parent, you could work from home as a
way to spend more time with your kids. I’m writing this chapter from
Southern France, where I’m “workationing” for the month of July. This is
the view from my “desk”:
4. When You’re Passionate About Your Work, It Feels Less
Like “Work”

When you’re passionate about your work, you have less need for breaks and
are less troubled by working. When you enjoy the people you work with,
you have less need…

If you work 8 hours per day and sleep 8 hours per day, you’re spending half
of the waking hours of your life working! If half if your love is spent in
misery, you would probably not be very happy. If you’re not passionate
about your work, as an entrepreneur or employee, your work-life balance
will feel a lot worse because you’ll have a greater need for the life part.
5. Time is Against You and Speed is Your Advantage

Speed is probably one of the biggest advantages a startup has over a large
company. By working 80 hours per week, an entrepreneur can compress
into six months what would take someone working 40 hours per week a
whole year to complete!

In the early days of a startup, before you have “product/market fit” or much
traction, you need to move fast so that you can figure out if you have a
viable business or if you need to move on before wasting too much time
and money. It’s better to fail fast than slow. And the sooner you succeed the
sooner your stress will reduce and the sooner you can start having better
work-life balance.

Time is against you because time literally is money. There’s a lot of great
technology out there that’s made it cheaper than ever to start and grow a
business. But it hasn’t gotten any cheaper to “live.” Expenses like rent,
food, etc., are as high as ever. As an entrepreneur, you have to work fast to
prevent those expenses from eating up your savings.

As an entrepreneur, there’s always something you COULD be doing. When

you have a job, you’re paid for your time. Sure, there are deadlines, etc., but
you don’t have a formal obligation to work more time.

Because you are incentivized and have ownership, it almost feels

irresponsible not to do that thing you could be doing. “What am I doing
relaxing when I haven’t yet met X milestone?” The reality is, you need to
relax in order to meet X milestone, but the incentives an entrepreneur has
make that fact difficult to deal with.

Key Takeaways
● Depends: Work-life balance as an entrepreneur will depend on
what kind of business you have and what your goals are.
● Flexibility: Even if you are working a lot, having flexibility on
when you work, where you work, and what you work on can improve
your productivity and happiness.
● Incentives: Fear of downside and direct compensation for upside
as an entrepreneur make you a lot more motivated to work.
● Most employees in competitive fields work a lot of hours
too...everything has its pros and cons.
Section 2: How to Get Business Ideas
Section one provided some fundamentals that are needed in order to
understand this section. This section, Section 2, provides four
methodologies you can use to generate business ideas. At the end of this
section, a list of several business ideas are provided to illustrate the
methodologies provided above and to give you a starting point if you want
to start a business without coming up with an idea. The final section of this
book, Section 3, provides some advice on getting started with your business
idea, a brief case study, and some additional resources for you to check out.

This section is the “meat” of this book. This is where I share my best advice
on generating new business ideas. It contains several actionable strategies
and tactics.

If you are enjoying this book so far, I would greatly appreciate if you could
post an honest review on Amazon by visiting this book’s Amazon page and
scrolling down to the reviews section.
Chapter 3: 2 Things You Need to
Generate Business Ideas and Execute
Through what I’ve seen and experienced, it seems domain expertise and
passion are two of the most crucial ingredients for coming up with startup
ideas and getting a company started.

There are opportunities everywhere…it’s just a matter of having enough

knowledge to know what problems an industry or customer segment faces,
and being passionate enough to pursue solutions.

You can have domain expertise, but if you don’t have passion, nothing will
happen. If you have enough passion, you can overcome a lack of domain
expertise. The two go hand in hand…to obtain domain expertise you
probably have to be passionate about the domain.

Here’s what I mean by domain expertise and passion and the role each of
these play in starting a company:

1. Domain Expertise

Domain expertise simply means knowing a lot about a certain area. It

means having a deep understanding of a customer segment or industry. At
Startup School, Chris Dixon said the best startup ideas come through direct
experience with technologies and/or problems.

A domain doesn’t need to be an “industry.” One could have “expertise” in

the process of finding new restaurants, and therefore know the
inefficiencies based on experience, and how to solve them.

Later in his talk at Startup School, Chris Dixon refers to the importance of
having a “secret.” This is similar to what I’ve described as domain
expertise:
“You need to know a secret — in the Peter Thiel sense: something you
believe that most other people don't believe. How do you develop a secret?
1. Know the tools better than anyone else (Dropbox — entered a very
crowded market; won because of technology)
2. Know the problems better than anyone else (Kickstarter —
founders had been in the space for 10 years)
3. Draw from unique life experience (SiteAdvisor — security
companies thought their mandate was technical problems; most of the
problems were actually social engineering problems)”

Domain experts often have existing industry and customer relationships.

For example, CMOs know other CMOs, and have worked for companies
that could be customers. Therefore, finding customers for customer
development interviews, and eventually selling/marketing to them, will be
easier.

2. Passion

Starting a company is hard. It requires long hours building products,

acquiring customers, fundraising, and more. Getting started may entail long
periods of being broke. There’s a ton of uncertainty. Having passion helps
push through all the challenges.

A startup is more than something you do from 9 to 5. It’s something you

have to fully commit yourself to. Even at the micro level of finding
customers to interview. Finding customers requires stepping out of your
comfort zone and asking for help. You will have to ask your friends, family,
and professional network for everything from sharing your stuff on Twitter
to introductions to investors.

Some people can just put their head down and execute, no matter what the
situation, especially if there’s financial upside. But it seems for many
people that it requires being truly excited about something.
You might have a great idea, but if you don’t have enough passion to even
go find a customer to interview, growing the company is probably going to
pretty daunting. With enough passion, I believe one can overcome a lack of
domain expertise. With enough passion, one can dive in and learn faster,
and be enthused enough to find customers, partners, etc.

Key Takeaways

Startup ideas don’t just appear out of thin air. Having domain expertise
and/or extreme passion can help generate ideas. To get startup ideas, think
about where you have expertise or passion. Solve your own problems, or
the problems of a group of people you’re passionate about. The
methodologies described above will be easier to use if you have domain
expertise and passion.
Chapter 4: Scratch Your Own Itch
“Scratch your own itch” is a funny way of saying, “Solve a problem you
have.” This quote from Paul Graham of Y-Combinator, one of the most
successful and prestigious incubators, highlights the strategy of solving
your own problem:

“Why is it so important to work on a problem you have? Among other

things, it ensures the problem really exists. It sounds obvious to say you
should only work on problems that exist. And yet by far the most common
mistake startups make is to solve problems no one has.” – Paul Graham, Y-
Combinator

As discussed previously in this book, the best business ideas come from
solving problems. And one of the biggest risk factors of any business is that
the business does not provide a product or service that anyone wants, or that
the product or service does not solve a problem. As Paul says “...the most
common mistake startups make is to solve problems no one has.”

By identifying a problem you have, you can, as Paul says, “ensure the
problem really exists.” It is not enough for just you to have the problem
because you can’t be your own customer, but if you can identify a problem
that one other person has, it is probably more likely that more people will
have that same problem.

1. How to Identify Your Problems

To identify what problems you have, be observant of your challenges and

unmet needs. Ask yourself questions such as the following:

● What unmet needs do you have?

● What challenges do you face throughout the day?
● What product do you wish you had that doesn’t exist yet?
● What parts of your day take more time than they should?
 ● What do you wish you could spend less time on?
● What’s the hardest part about your job?

2. Develop a Customer Persona and Validate Your Idea

Make sure you’re not the only one that has that problem or wants that
product. In order to build a profitable business, you will need to have
customers.

It is very possible that you are the only one that would want your product or
service. I have seen this before.

Do some customer development to see if other people also have the

problem you have or want that product you want. You can start by finding
people similar to you.

Let’s start with an example. Let’s say you are a student, and you realize that
it’s hard to find textbooks for your classes. So you decide to create an
online marketplace where students can buy and sell textbooks with each
other. Who else is likely to have a problem finding textbooks for classes?

There is probably a better chance that someone with a similar lifestyle and
outlook to you would want similar products than someone completely
different to you. For example, a 20-year-old white male studying at Harvard
is probably more likely to have similar needs to another 20-year-old white
male studying at Harvard than to a 60-year-old woman living in Vietnam. It
is of course possible that this would not be true, but it’s a good starting
point.

So going back to the example of the textbook marketplace, think very

specifically about who else is likely to want to use it. The following
questions will help us think through it:

Why do you want a textbook marketplace? Why is it hard for you to find
textbooks for your classes?
Do you want a textbook marketplace because it will help you find books?
Do you want a textbook marketplace because it will save you time from
searching? Is it hard for you to find textbooks because you take classes
where the books required are not widely distributed? Is it because you don’t
have a bookstore on your campus? Is it because you don’t have a lot of
time? Is it because you are lazy?

You might realize it’s hard for you to find the textbook for your
“Psychology 719” class because you have been too busy to spend much
time looking. You could then think about what it is about you that causes
you to be busy. Are you too busy because you are taking hard classes? Are
you too busy because you are working a job when you aren’t in classes?
Why do you want to save time?

Let’s say you narrow yourself down to realizing that what makes you want
your textbook marketplace so badly is that you are a law major, which has a
heavier workload than most other majors, at Harvard, which has a heavier
workload than most schools. And you want to save time so that you can
spend more time watching sports on TV.

So who else is likely to be busy and want to spend more time watching
sports? People just like you! People studying law at Harvard who like
watching sports. Go talk to those people, conduct a customer development
interview, and generally see if they have similar problems to you and want
what you want.

3. Scaling Efficiently and Mitigating Risk

Ideally, after you identify a few people that have the problem and/or want
the product, you can start going to more and more people and finding
different types of people that also want the product.

Facebook started just on Harvard’s campus. Then it went to other college

campuses. Then it went across the world to all kinds of different people.
So think about what other schools have law programs, what other schools
have heavy workloads, what other programs at Harvard have heavy
workloads, or what other programs at other schools have heavy workloads.

Again, go talk to those people, conduct a customer development interview,

and generally see if they have similar problems to you and want what you
want.

There is a risk that only a few people that are just like you want your
business idea, but it’s a far greater risk that no one else wants your business
idea.

It’s a lot more expensive and time-consuming to test your idea on one
hundred million people than it is to test your idea on ten people.

I have included a lot more advice on this topic of testing your ideas,
customer development, etc., later in this book. I also wrote an entire book
on customer development called “Customer Development for
Entrepreneurs.” It is essentially a tactical guide to Lean Startup principles.
Check it out here.

Key Takeaways

One of the biggest risks a startup business faces is solving a problem no one
has. By solving a problem you have, you mitigate the risk that no one else
has the problem. It’s also easier to learn about the problems that you have
than it is to learn about the problems others have.

Make sure that you are not the only one who has the problem you want to
solve or who wants the product or service you want. After identifying a
problem you have, create a customer persona and conduct some customer
development interviews to test your idea in a time- and capital-efficient
way.
Chapter 5: Ask Your Customers

“The way to get startup ideas is not to try to think of startup ideas. It’s to
look for problems…”

“Why do so many founders build things no one wants? Because they begin
by trying to think of startup ideas.”
– Paul Graham, Y-Combinator

These quotes from Paul Graham illustrate the importance of looking for
problems rather than looking for “startup ideas.” As discussed previously in
this book, solutions to problems can make for some of the best business
ideas. The first quote suggests that it’s best to focus your time and energy
on looking for problems rather than just looking for ideas.

It’s great to come up with ideas, but if they will not help you start a
business, and if starting a business is your goal, it may not be as productive
as finding problems. An idea may or may not be a solution to a problem. A
problem will bring you much closer to a business idea than a random idea.

The methodology discussed in this chapter is designed to focus on

identifying problems. It starts by picking a customer segment you want to
serve. This chapter includes guidance on how and why to choose a
customer segment. The next step is to conduct customer development
interviews with the customer segment to identify what problems they have
and what solutions (business ideas) would be of value to them.
1. Choose a Customer Segment
If you don’t know of a problem worth solving, a great way to start is by
picking a customer segment you want to serve. People have many ways of
coming up with startup ideas. It’s often better to pick the customer you want
to serve and figure out what problems they have than to come up with a
solution and then figure out who needs it. Starting with a customer segment
has both strategic and personal advantages.

Why Start with a Customer Segment

Here’s how starting with a customer segment can be helpful:

a. Gain Deeper Insights

By focusing your customer development activities on a certain customer

segment, you can gain deeper insights. Your initial idea might be wrong, but
if you follow the customer development process correctly, you should be
able to learn about what their problems really are and what solutions would
be of value to them. Your time will not be lost if you focus on figuring out
how you can help a given customer segment rather than just on validating
your product.

b. Save Time

Building relationships to test startup ideas can be harder than coming up

with ideas. Customer development can be a long process. Cycling through
solutions ideas is faster than finding customers and meeting new people.
Switching ideas is much easier when you’re talking to the same people over
and over again. Asking someone to answer a quick question through email
or to take a quick call is a lot easier than trying to meet them in the first
place.
c. Increase Satisfaction

Customer development takes a long time, and building a successful

business can take a really long time. In managing a company, you’ll
inevitably be spending a lot of time with those customers. If you don’t like
the customers that you’re spending a lot of time with, you’re probably not
going to be very happy. Conversely, if you enjoy it, you will probably feel
more impassioned and energized. Being more impassioned and energized
can lead to higher productivity and effectiveness. It can help you push
through those inevitable roadblocks.

How to Choose a Customer Segment

Below is some advice on selecting a customer segment you want to serve.

Per above, it’s often highly effective to first start with a customer segment
you want to serve. Here are a few things to think about when evaluating
which segment to serve:

a. Relationships and Access

If you have existing relationships, or at least easy access to your customers,

finding people for customer development interviews will be a lot easier.
When the time is right, customer acquisition will also be a lot easier. If you
don’t have access to the customer segment you want to serve, starting and
building your business will take longer because you’re going to have to get
access first.

b. Passion

As discussed above, the more you enjoy spending time with your customer
segment, the more enjoyment your business will be. I also believe having
more passion for what you’re doing will make you more successful.
c. Propensity to Buy

Some customer segments are less likely to adopt new technologies than
others. In a business to business situation, some industries are more likely
than others to adopt new technologies. Some customer segments have
greater budgets than others. Some customer segments take longer to decide
and actually purchase than others, which can mean longer sales cycles.

d. Market Size

If your goal is to build a massive company, you’ll want to be in a large

market. Consider what your growth goals are to help decide which
customer segment to serve. Serving a very niche customer segment might
not lead to as large of a business as serving a large customer segment.
Examples of large customer segments include small businesses, college
students, and parents. Examples of small customer segments include people
who own yachts, convenience store owners in a particular town or small
suburb, and 100+ year-old men.
2. Identify Problems and Unmet Demands
Once you’ve identified a customer segment you want to serve, the next step
is to identify problems and unmet demands. To identify problems and
unmet demands, you can conduct customer development interviews.

By asking the right questions and listening effectively, you can learn about
customer pain points and generate startup ideas to solve those problems.
Focus on asking open-ended questions that get the customers talking about
their problems as much as possible.

It’s best to conduct customer development interviews in-person. In-person

will enable you to get a sense of their emotions (such as how strongly they
are affected by the problem), give you the opportunity to ask follow-up
questions to learn more, and help you build a relationship with the potential
customer.

Customer Development Questions

Examples of questions you can ask to get customers to tell you about their
problems include:

● What are the top 3 challenges you face in your job?

● What are some unmet needs you have?

● What’s the hardest part about being a [customer segment you’re

serving]?

● What tasks take up the most time during your day?

● What product or service do you wish you had that doesn’t exist
yet?
 ● What could be done to improve your experience as a [customer
segment you’re serving]?

● What’s the hardest part of your day?

● What are the three most important things to you as a [customer

segment you’re serving]?

● What responsibilities do you have that you wish you didn’t have
to tend to?

Be Observant

Look and listen for people complaining and taking action to solve their own
problems or meet their own demands.

a. Complaints

One way to learn about problems worth solving is simply to be observant to

what people complain about. Wiley Cerilli, Founder of SinglePlatform,
used this technique to get the startup idea for SinglePlatform, a company he
later sold for $100 million. I wrote a full case study of how he used
customer development to start and grow the company on my Huffington
Post blog. In short, small business owners were complaining about having
to manage all of their business information across several different
publishing platforms. When he heard so many complaints he knew that they
had a real problem, and therefore there was an opportunity. Next, he used
customer development to shape and validate a solution to the problem.

b. Self Producing

You can also look for solutions that people are “hacking together”
themselves. If they’ve taken the effort to make something themselves, such
as a spreadsheet, it’s a sign that it’s an important problem for them.
If someone hasn’t take any action to solve a given problem that they have, it
might be an indication that it’s either not a major problem, or that they don’t
have any interest or motivation to solve it.

Key Takeaways

To avoid ideas that don’t solve problems, identify problems and unmet
demands. You don’t need to start with an idea to start a business. Starting
without an idea can actually have some advantages over starting with an
idea because you might be less glued to an idea you have and more open to
learning about what people actually want.

With the right customer development tactics, you can learn what problems
people have and how you can solve them. Starting with a customer segment
can be a highly effective way to start a business. Customer development is
commonly used to test startup ideas, but it can also be used to generate
startup ideas.
Chapter 6: Meet Known Needs
There are some things nearly everyone wants. There are some things that
are essential to most people.

These are needs that don’t need to be validated. We know that people need
them. We know this because basic math or biology would prove that it’s
true, or because people have already made efforts to solve these needs.

By starting with a known need, we significantly reduce the risk of a new

business offering. There is still a risk that the solution will not be wanted by
customers -- the solution will still need to be validated. The next chapter,
“Do What’s Working,” will cover the topic of using validated solutions to
solve new or different problems. However, starting with one unknown is
less risky than starting with two unknowns.

In my opinion, the best startup ideas are obvious. They are massive
improvements to pre-existing and widespread problems. Some of the most
successful companies of today provide products that have existed in
different forms for generations. Problems that people have been paying to
solve since the beginning of time. They are simply solving them with
solutions that are significantly more valuable. I will provide examples of
companies that are “meeting known needs” throughout this chapter.

“Great companies do 1 [or more] of 3 things: Get you laid, get you paid,
[or] get you made.” – Dave McClure, 500 Startups

This quote from esteemed investor and entrepreneur, Dave McClure, while
somewhat vulgar, alludes to his preference for companies that solve basic
needs (paid, made, or laid). Below are a list of essential, and/or validated
human needs, and companies that solve them. In some cases, you can see
that companies have been solving these needs for decades, and earning
massive amounts of money in doing so, but the solutions have massively
improved over time.
Examples of Known Needs

1. Make Money or Save Money

● Salesforce - Salesforce helps salespeople organize and manage

their pipeline of leads so that they can more effectively close those
deals.
● Commercial/retail banks - Banks offer savings accounts to clients.
Savings accounts provide clients with interest on their cash that
would otherwise not be earning interest.
● Airbnb - For the supply side (homeowners), Airbnb provides a
way to earn money for excess capacity by renting it out. For the
demand side (renters), Airbnb provides a cheaper solution to the most
common alternative, hotels.
● Schools - Schools provide students with a way to learn and get
credentialed so that they can be awarded higher wages by employers.
● Wealthfront - Wealthfront provides wealth management services
to people so that they can earn a return on their capital.
● Casinos - Give people the opportunity to make money.

2. Eating

Eating is a need not just because it tastes good, but because it is essential to
survive. I have no idea how much people across the world spend on food,
and it is not important to know the exact numbers, but I know that it is an
extremely high number. In other words, it is more than just biology and
logic that tell us that people need to eat; it is the action that people take
daily to solve the need.

There are many processes that go into eating. Today, the process of eating is
much easier because all the processes that go into eating can be paid for at
fairly low prices. Now, in most populated areas, you can easily find a
restaurant that will provide you with a fully cooked meal within minutes.
One of the earliest solutions to the “eating” need was probably a spear for
hunting and gathering. Selling spears made for a great business, because
hunting and gathering was one of the most essential components of the need
to eat. An alternative solution might be to teach someone how to make a
spear. A much more valuable solution to the eating problem might be to sell
the food you hunt and gather. Selling food would eliminate the process of
learning how to make a spear, making a spear, and hunting. The process of
eating could be further simplified by selling prepared food instead of raw
food. This eliminates the need to cook the food.

Examples of businesses that help with the process of eating include farms
(previously: hunters), transportation/logistics companies, chefs, grocery
stores, restaurants, and more. One of the more recent major innovations in
food is Soylent, a powdered food that makes it easier for people to consume
the nutrients they need.

3. Save Time

To many, time is as valuable as money. So many of the best products in

history provide value to people by saving them time. Providing a product
that reduces the time that a given task takes will probably be valuable to
people, especially if they are in any way limited by time, and/or have
enough money to be able to trade their money for more time. A few
examples of many:

● Vacuum cleaners
● Cars
● Prepared food
● Buffer (social media management)
● Zirtual (virtual assistants)
● Employees (without employees the founder[s] would have to do
all the work themselves)

4. Self Image and Power

People have a desire to be liked, respected, and presented in a good light to
their peers. It’s probably an evolutionary trait. I imagine if you did not fit in
with your peers during tribal life that you would be excommunicated from
your tribe, which would give you a very low likelihood of survival.

As technology and society have advanced such that survival is quite easy,
needs have become more ambitious. Now people have a desire for power
and admiration from others. Below are some examples of products and
companies that satisfy the need to improve self image.

● Twitter - the amount of followers you have

● College - the credential you get when you graduate
● Klout - quantifies your level of “influence” on the Internet
● Facebook - people collect friends, share photos (selfies), and brag
about their accomplishments
● Personal trainers - help people look better, and therefore feel more
confident
● Self-help books and seminars (for example, Tony Robbins) - help
people avoid unhappiness and be more happy

5. Relationships and Reproduction

Almost everyone wants to have kids. In fact, it’s almost “taboo” not to want
kids. In order to have kids, you need a partner of the opposite sex. Most
people also like having sex. This also requires a partner. Sex and
reproduction are natural desires based on our biology as humans. This can
be scientifically proven as well as validated based on the effort and money
people spend trying to improve their chances of finding a mate. The
following examples would fall into Dave McClure’s “laid” category.

● Cars - look “cool” and display wealth

● Clothes - Look attractive, and in some cases display wealth
● Tinder and other online dating sites - find mates
● Gyms and personal trainers - look more attractive
 ● Bars - many people go to bars and spend up to ten times more for
a drink than they would at a store, mostly for the opportunity to meet
a mate

6. Entertainment

People like to have fun. People like an escape from their daily stress. Like
other examples in this chapter, the desire for entertainment can be proven
by studying biology and validated by looking at how much money people
spend on entertainment.

Entrepreneurs have been successful in providing entertainment for

generations. Shakespeare is probably within the top 1% of most well-known
and respected people in the history of the world. Now, we have Netflix,
which has made it cheaper than ever before to be entertained in such a way.

Below are a few examples of some very large products and businesses that
solve the need for entertainment.

● Movies
● Video games
● Music
● Zynga
● Gambling
● Television
● VHX
● DVD
● Theater
● Board games
● Netflix

7. Security and Safety

People like to feel safe and secure. This is evidenced by the success of the
products and businesses listed below.
 ● Insurance
● Warranties
● Locks
● Guns and weapons
● Karate classes
● Gyms
● Financial advisors
● Bodyguards
● Bike helmets

8. Transportation

People have been moving from “point A” to “point B” since the beginning
of time. The process of getting from point A to point B can potentially take
a lot of time, money and/or effort. To solve these problems, entrepreneurs
have created solutions such as horseback riding, the wheel, trains, Uber, and
self-driving cars.

There are many multi billion-dollar ideas and companies that help people
get from point A to point B. Below is a brief progression of some of the
innovations in transportation.

● Horses
● The wheel
● Rickshaw
● Cars
● Busses
● Trains
● Electric cars
● Uber - taking advantage of new technology to solve old problems.
It wasn’t possible for this service to be provided before. But now that
everyone is walking around with small computers in their pockets
(smart phones), it is.
● Self-driving cars
9. Shelter

People need shelter in order to be protected from weather and to have

privacy. There are businesses that have made money assisting people with
several components of housing and providing a variety of alternative
solutions. Early forms of shelter included teepees and cabins. Now we have
prestigious penthouse suites and mansions.

Examples of products and businesses that help meet the need for housing:

● Building materials
● Construction
● Housing brokerage
● Houses
● Hotels
● Home repair providers
● Home Depot
● Architects
● Trailers
● Tents

Airbnb is one of the most significant recent innovations in shelter. Airbnb

takes advantage of the widespread use of the Internet to communicate and
build trust. Prior to the Internet it would have been too hard to find someone
with an extra room, or for someone with an extra room to find someone to
rent it.

10. Communication

Humans have a natural desire and need to connect with other human beings.
Communication is a major component of the relationship-building and
connection process. Communication is also essential for people to do
business (make money). There has been a tremendous amount of innovation
in communication over the years, and several companies have profited
tremendously from developing it.

● Pen and paper

● Paper mail - via horse, car, and then plane...and potentially soon to
be drones.
● Telephone
● Mobile phone - Gordon Gekko style
● Email - I personally consider email to be one of the greatest
innovations within the past fifty years or so. It has massively
improved the way business can operate. It’s used by almost everyone
in the world.
● Smartphone
● Skype - another one of the most valuable innovations in recent
decades. Skype makes it free to communicate by live video and audio
with anyone in the world.
● Snapchat and Yo! - Products like Snapchat and Yo! tap into
different means by which people prefer to communicate -- photos in
the case of Snapchat and binary in the case of Yo!

Business to Business Applications

There are a few customer development questions you could ask people to
help you understand the essential needs of a company or someone working
at a company:

● How do you measure your success?

● What are your primarily responsibilities as [position]?
● What are your goals over the next 1-3 years?
● What are your three biggest priorities right now?

There are also a few needs that almost every business has. For example,
clients, revenue, profitability, etc.
Twitter Needs

To illustrate the application of meeting known needs in a business to

business setting, let’s consider the needs of a Twitter marketing manager.
Based on my experience, if you talked to a Twitter marketing manager
about their key metrics, objectives, and needs, they would probably respond
with at least one of the below:

● Get more traffic from Twitter to the company website. To get

more Twitter followers, one might want to:
○ Follow more and more relevant people
○ Favorite or engage with tweets from potential customers
● Build the company brand and engage with potential customers
○ Unfollow people who don’t follow back - image/social
proof

If these were the Twitter marketing manager's key objectives, or the metrics
by which his or her performance is evaluated, then technology that could
help them achieve these objectives would probably be valuable. In fact,
there are several companies that provide products that help social media
managers achieve the above objectives.

If your technology helps the marketing manager with a non-essential need,

such as consuming more content, crafting better tweets, etc., your product
could be very valuable to Twitter users and marketing managers.

Non-Essential Problems

Something might be a problem to someone, but if they don’t have an

incentive to solve it, they probably won’t be motivated to use or pay for a
solution. For example, it’s hard to dig holes in the backyard, but as the
customer’s compensation or self actualization isn’t tied to their ability to
dig holes, a solution for digging holes probably won’t be valuable.
The Importance of Domain Expertise

Domain expertise can help you understand what the essential needs are of
people within your domain. For example, if you have been a lawyer for
thirty years, you might be more conscious of what problems you, and
therefore other lawyers, face. If you have been a Chief Technology Officer
(CTO) at a Fortune 500 company, you might have a better idea of what
CTOs at Fortune 500 companies care about than someone who has not been
a CTO. If you have been a private banker for ten years, you would probably
know more about the needs of private banking clients than someone who
has not been a private banker.

Lack of domain expertise or a professional network can be overcome by

enough passion and hard work to learn what a given customer segment’s
needs are. Chapter 5 on interviewing customers covers how to do this.

Hard Problems

It’s not enough for people to have a need. It must also be hard for people to
satisfy the need. To build a successful business, you’ll need to provide a
product or service that makes it easier for people to satisfy a given need, or
is better in some way than other options people have for satisfying the need.

Connecting with other people and forming friendships is a biological need.

However, I have seen several startups attempt to satisfy this need without
success. I suspect the reason they have not been successful is because there
aren’t many people that find it hard to find friends. In other words, it is a
need, but most people are able to satisfy it by meeting people in ways such
as school or work. The one company seems to be quite successful in
satisfying this need is meetup.com.

Alternative Solutions
Some successful companies provide different solutions to validated needs.
For example, there are multiple companies that solve the need for food, but
with different solutions. Everyone needs to eat, but people prefer to do so in
different ways. As a result there are successful companies that provide sit-in
restaurants, take-out restaurants, grocery stores, prepared delivery, and more
recently, delivered ingredients for pre-organized meals. There is Chinese
food, barbecue food, Mexican food, and more.

Providing an alternative solution could be applied as competing on a

different competitive axis, bundling or unbundling, The next chapter will
cover using validated solutions to solve problems.

Service Automation

Some companies have been highly successful simply by automating a

process that was previously done manually by humans. Here are a few of
many companies and products providing such solutions:

● Quickbooks for accounting

● Assembly line for factory workers
● Cars for horseback riding
● AxialMarket and Angellist for investment brokerage
● Codecademy for teaching
● Vacuum cleaners for manually cleaning
● Lighters, matches, and stoves for fire
● Light bulbs for candles and matches
● Faucets for wells (water is an essential need)
● Motorized fans for hand fans
● Wealthfront and Betterment for personal financial management
● Rocket Lawyer for law
● Wordpress for software development

Key Takeaways
As you can see from all the above examples, some of the most successful
companies in history started by meeting known needs. They didn’t have
wildly new ideas. They just had highly innovative solutions to pre-existing
problems. To mitigate the risk of building a solution that nobody wants,
start by solving a problem that you know someone has.

As society and technology evolves, I suspect basic needs will be sufficiently

solved, but people will have more ambitious needs. For example, it’s fairly
easy to find food right now, so people can spend more time worrying about
luxuries such as making more money, entertainment, dating, etc.
Chapter 7: Do What’s Working
“At a time when so many Internet entrepreneurs are running around Silicon
Valley trying to do something no one else has ever done, [Evan] Williams
believes that the real trick is to find something that’s tried and true” –
Wired quoting Twitter Co-founder, Evan Williams

Anything you do to determine what customers want is a form of customer

development. Most people think of customer development as in-person
interviews or product experiments. I think of it as anything you do in order
to gain insights about what people want. Analyzing what they are buying is
a way to learn about what they want.

If people are spending their time or money on a given product or service, it

is an indication that the product or service provides something that they
want.

“Do what’s working” means supplying, or testing, something you know

people want. It could mean (1) providing the validated solution to the same
problem (replicating), (2) supplying a validated solution for one problem to
a different problem, or (3) providing a variation of a validated solution to
the same problem (differentiating).

By supplying something that has at least some validated demand, you

increase your chances of meeting a market demand. By starting with
something with validated market demand, you decrease your customer
discovery time and can get to customer validation faster. The following
chapter describes each of the three variants of “doing what’s working”
mentioned in the previous paragraph.
All or in Part

To generate a new business idea that meets customer demand, you can “do”
all or part of “what’s working.” “All” would mean directly competing with
an existing company. “Part” would mean differentiating the product, target
market, or business model. Following is a deeper analysis of each these
strategies with examples of successful companies cited to provide
illustration.
1. Same Problem, Same Solution (Replicate)
“Same problem, same solution” is just a complicated way of saying,
compete directly with an existing company that has traction, hah.
Companies that enter existing markets have been termed “second movers.”

The reason you might want to be a second mover is because if you know
that the company is selling its product, it is probably something that people
want. All else equal, I would rather bet on a product that people have
bought or used previously than one that people have never seen.

Some of the most successful companies in history could be qualified as

second movers, including Facebook, Google, Wal-Mart, and several
publicly traded banks and financial services companies.

There are advantages and disadvantages to competing directly with an

existing company. The remainder of this section covers advantages and
disadvantages of solving the same problem that another successful company
is solving by supplying the same solution.

Second Mover Advantages

There are a number of advantages that come with “doing what’s working.”
The “second mover advantage” is the advantage a company gets from
following others into a market or mimicking an existing product.

Being a “first mover” (entering a new market, solving a new problem, or

providing an entirely different solution) is often attractive to entrepreneurs
and investors because of the upside potential and ability to capture and
sustain market share. However, being the first to market with a wildly
innovative idea is also risky. You don’t know (1) if customers will view
your product as valuable, (2) if it’s something that customers can/will buy,
(3) how to acquire customers, and potentially (4) if it’s even a problem
worth solving in the first place, or if anyone even has the problem.
Below are four advantages to being a second mover. Second mover
disadvantages are covered at the end of this section.

a. Customer Validation

From an existing company or competitor, you can learn what customers

want. Seeing that an existing company (your competitor) is selling products
shows that there are people who want to buy the products. Building
something people want is a theme of this book. Building something people
want is at the very core of any business. All of the strategies discussed in
this book optimize building something people want.

A competitor with traction provides some validation that some group of

people has the hypothesized problem, and that those people view the
solution as valuable. Therefore, you reduce the risk that no one wants your
proposed product. I would rather bet that a group of people would be
willing to buy “Product A” if I knew that there were people that have
already bought “Product A“, than a “Product B” that no one has ever seen
before, let alone used or paid for. You can be more confident that you are
supplying something that customers have demand for.

b. Product Management and Marketing

A company launches their product to a market, and if they’re smart, they

will be testing and optimizing the product based on user interaction data.
For example, they might adjust the copywriting on their landing page to see
which will yield the highest conversion rates. The company will then stick
to using the copywriting that converts best. There are many other
components of a product or website that companies will test and iterate on.

By analyzing the product and marketing of a company that is already in the

market, you can learn about what works best. This saves testing and
optimization time, and helps you build a product that more closely meets
customer needs. Other examples of product management features include
CTAs, user onboarding flows, copywriting, highlighted value propositions,
marketing conversion funnels, specific product features, and more.

Just because it’s working for the other company does not guarantee that it
will work for you, but it is probably more likely to work for you than
something else that has never been validated.

c. Customer Acquisition

Through some research, you can often learn about how companies acquire
customers. Figuring out how to acquire customers in a repeatable and
profitable way often requires testing multiple channels, which costs time
and money. Analyzing how the first mover acquires customers can guide
your strategy. You can also learn from their sales messaging and
copywriting. This can help you avoid running multiple marketing channel
experiments, which can save you time and money, and skip to focusing on
the channels that work.

You may not be able to tell what channels the first mover has tried and
found to be unprofitable or unsuccessful. It’s also possible that the company
has not had a chance to try a given marketing channel that you think might
work. You don’t need to let a first mover guide your entire strategy, but it
can at least be a guide.

d. Procurement

If it’s a new market, the marketing and sales your competitor does may help
to educate customers of the value of your products and actually expand the
market. This would be especially valuable if it’s a market where customers
would buy more than one product. In a market where customers have high
loyalty to an existing and inferior solution, the first mover may do the
heavy lifting of getting customers to start thinking about switching.

An example of this might be online education. It seems people still don’t

see it as a socially acceptable option, or, prior to a few years ago, didn’t
even know it was an option. As more companies enter the online education
market, and launch marketing campaigns, more people become aware that
online education exists. As more people start using online education, it
becomes more socially acceptable to pursue education online.

This procurement process could take years. Being a first mover would
require you to wait through this procurement, which costs money. By being
a second mover, after the procurement process has started to take hold, you
can save time and money. A dollar today is worth more than a dollar
tomorrow.

Second Mover Disadvantages

Being a second mover is not all roses. It’s certainly not a guarantor of
success. The biggest disadvantage of being a second mover is probably
competition. The following explains how competition can be harmful and
why it may not be as negative as the risk of building something no one
wants.

Competition

Competition could limit your growth potential or profitability. Per basic

economics, when supply increases (and assuming demand stays equal), the
price lowers. When a company is not able to charge as much for its product,
its profitability decreases. In addition, if there are multiple companies
competing for the same customers, it’s possible that each company will
only be able to capture a smaller portion of the market and never be able to
capture all, or a significant portion, of the market.

The risk of competition is not as great as the risk of building something no

one wants. I would be more willing to tolerate the pain of a small amount of
competition than I would be willing to tolerate the risk of building
something no one wants.
There are two different kinds of competition: (1) companies that solve a
similar problem with a different solution, and (2) companies that solve the
same problem with the same solution. I would be much more concerned
with the second bucket than the first bucket.

If there aren’t examples of any companies solving a problem (and of

customers using that solution), I would be concerned. There is almost
certainly some reason why no one is solving it. Conversely, if there are
existing solutions that customers are paying for that are massively inferior
to my solution, I would be very excited. For example, WordPress competes
with expensive developers who build websites from scratch. WordPress is a
superior solution because it drastically reduces the cost of building a
website.
2. Different Problem, Same Solution
“Different problem, same solution” means taking a product that some group
of customers wants in order to solve some problem, and supplying it to a
different group of customers, or to solve a different problem. The examples
described below will help you understand what that means in practice, and
how you can apply this strategy when coming up with your next big idea.

Different Markets

Different customer markets have different needs. For example, the needs of
people living in Austin, Texas, are different to the needs of people living in
Antarctica as it pertains to controlling indoor temperatures. Many
companies have become successful through providing a product that people
want to solve a different problem, or to a different customer segment.
Below are two examples.

a. Supermarkets

There are probably hundreds, if not thousands, of different grocery store

companies. What the success of many of these companies validates is that
people want to walk into a physical store, pick out their groceries, pay for
them, and take them home.

Different supermarket companies serve different customer segments. For

example, Whole Foods serves people who like organic food because they
think it won’t make them fat. Walmart serves people who find low cost to
be the most valuable aspect of shopping. Another grocery store company
might serve certain ethnicities by providing more relevant food options.
And the list goes on.

b. Online Dating
While online dating is still in its relative infancy, several online dating
companies have a lot of customers and are, by most definitions,
“successful.” The success of these companies validates that people want to
use the Internet to find their next boyfriend, girlfriend, husband, wife,
and/or “friend with benefits.”

Several companies have taken the online dating product that has been
supplied by some of the most successful online dating companies, such as
Match, and differentiated it to meet the needs of different customer
segments. JDate is online dating for Jewish people. Christian Mingle is
online dating for Christian people. Tinder is online dating based on physical
location. Grinder is online dating for gay people. And the list goes on.

User Experience

a. “Reddit for X”

Product Hunt applies the user interface of HackerNews and Reddit, two
very successful news aggregation services, to the problem of discovering
new products. The problem of discovering new products is currently being
solved by media companies like TechCrunch and Engadget. So not only did
Product Hunt apply a validated solution to a different problem, the different
problem had also been validated.

While Product Hunt is still an early stage startup, the company has been
achieving tremendous growth and was recently accepted into Y-
Combinator, one of the most prestigious incubators in the world. Y-
Combinator was founded by Paul Graham, who I have quoted in this book.

b. “Tinder for X”

Tinder is a popular mobile dating app. Tinder solves the “known need” of
relationships. One of Tinder’s primary differentiators is its interface. The
interface allows users to swipe right or left on their mobile phone to
indicate that they are interested or disinterested in a given person’s profile.
The interface makes using the app and searching for mates very easy, and
kind of addictive.

Seeing that the Tinder user interface has been validated as a solution to
online dating, many companies have applied it to different problems. Doing
a search on Product Hunt (!!) for “Tinder for” there is a long list of “Tinder
for X” companies. Examples include Tinder for professional networking,
Tinder for content, Tinder for jobs, and, of course, Tinder for Product Hunt.

Business Model

Here are four examples of business models that after achieving success
solving one problem were successfully applied to different problems.

a. “Netflix for X”

Netflix is an entertainment company. Similar to movie theaters, cable

companies, and what’s left of physical retail movie rental stores, Netflix
supplies movies and TV shows. What’s different about Netflix is their
business model. Instead of charging on a per movie basis, similar to the
aforementioned companies, Netflix charges a monthly subscription fee and
gives their customers unlimited access to movies.

This may seem like a somewhat risky value proposition to some people. For
example, if you only watched one movie every few months, it might not be
worth it to pay a fee every month. However, Netflix has grown into a very
successful public company, thus validating that people want to pay a
monthly subscription fee for unlimited access to movies and TV shows.
Netflix took the risk of testing this business model - you don’t have to!

Several companies are now applying the Netflix business model to solve
different problems. For example, Amazon recently announced the launch of
Kindle Unlimited, which gives customers access to an unlimited number of
Kindle books for a monthly subscription fee. Similar to the movie business,
customers previously had to buy each Kindle book.

Skillfeed offers customers unlimited access to the educational video courses

on its platform in exchange for a monthly subscription fee. This was a
problem that was previously solved by Udemy through a pay per course
business model.

What this means for you as an entrepreneur is that you might find success
in supplying your product(s) using a “Netflix,” or subscription based,
business model. Seeing companies like Netflix become successful with this
business model validates that customers want it. Supplying something
where there is some data to prove that customers want it may be more likely
to be wanted than something without data to prove that customers want it.

b. “Airbnb for X”

Airbnb is an online marketplace where people can rent out spare rooms in
their house or apartment to travelers. Renters use it as a cheaper alternative
to a hotel.

This business model is actually “disrupting” several major industries.

What’s so disruptive about this business model is that it allows individuals
to supply a service that was previously only supplied by big hotel
companies. The result is a massive increase in the supply of places to rent.
Per basic economics, this drastically lowers the price of the product or
service.

The Internet has made it possible for people to connect to rent rooms.
Before the Internet and Airbnb, it was more difficult to find someone to rent
out their room. You almost had to go to a hotel. Airbnb has also created a
quality assurance system that allows the two sides of the marketplace to rate
each other and insure that the respective parties are worthy of doing
business with. This quality assurance service has been provided by the
government. Airbnb makes that service unnecessary.
There are several other examples where the high cost structures,
intermediaries, and/or regulations are no longer needed. Where suppliers
were previously required to go through an expensive and profit-reducing
employer or intermediary in order to get access to demand, but can now use
a low cost online marketplace. Entrepreneurs are beginning to apply this
peer to peer business model to other industries. Here are three examples:

● Udemy connects teachers and students, replacing high cost brick

and mortar schools.
● Lyft connects drivers and ride seekers, replacing taxi dispatchers
who keep a large share of the drivers’ earnings in exchange for a
service that can now be provided for Lyft at very little cost via it’s
mobile app.
● Amazon Kindle Direct Publishing allows authors to publish books
directly on to the Amazon platform without having to go through
selective and high priced publishers.

How can this can be applied to your next venture? Think of something that
is only being supplied by companies with high cost structures, that can now
be provided by a greater population. It used to cost a lot to be a journalist
because it costs so much to print a newspaper, but now people can write
online. Twitter took advantage of this redundancy, enabling anyone with a
message to be heard.
3. Same Problem, Similar Solution (Differentiate)
“Differentiating” means solving the same problem for the same or a slightly
different customer segment as an existing company with traction, except
with a slightly different solution. In other words, it means competing with
an existing company on a new or different competitive axis. It means
providing a certain competitive axis, or product value proposition, better
than existing companies. The customers could be the same as those of the
existing company, or slightly different. Depending on the product, the
customer could use your product in addition to, or instead of, the existing
company’s product.

Examples of competitive axes which you could compete on, which I’ve
included in the following section, are product, privacy, price, and
unbundling. I’ve provided examples of companies that have applied this
strategy.

a. Product/User Experience - iPad

Steve Jobs, Founder of Apple, is widely considered one of the best product
visionaries of all time. Apple’s iPad was one example of many extremely
successful products that Jobs helped pioneer. The “do what’s working”
methodology applies to the product development of the iPad.

Apple’s iPad is a variation of two existing products that had validated

customer demand. The iPad is a handheld portable computer. It is larger
than the iPod and iPhone, but smaller than laptops like the Powerbook.

Compared to other potential products, the iPad was a lower risk venture
because of the validation that the iPod and Powerbook had achieved. The
success of the iPod and Powerbook indicated that there was demand for
portable computers, both small and large.
How to apply product differentiation to your next venture? Analyze one or
more successful products within a category. What aspect of the product
might customers want to be differentiated?

b. Privacy - DuckDuckGo

DuckDuckGo is a search engine. They compete almost directly with search

engine titans like Google, Yahoo, and Microsoft. DuckDuckGo competes
with these highly successful companies on the basis of privacy.

Google and others have validated that people see their solution (search
engine) as a viable solution to their needs.

By providing a very similar solution to the one that Google and others have
validated, DuckDuckGo reduced the risk of building something that no one
wants. There is a risk that the competitive axis that they compete on,
privacy, is not of value to customers. But compared to a product with no
previous validation of any kind, that risk is almost certainly lower.

Privacy may even be considered a “known need,” as defined in the previous

chapter. People have been paying for items that provide privacy, such as
clothes and private property, for a very long time.

DuckDuckGo is still a young company. However, especially after the recent

publicity over the NSA’s spying, people seem to be finding privacy over
their personal data more and more valuable. DuckDuckGo is backed by
some of the world's most successful venture capital investors.

How to apply differentiation on the basis of privacy to your next venture?

What other online products put people’s personal data at risk? Could you
create a similar product, but compete on the basis of privacy? Perhaps a
private social network would be valuable to people.

c. Price - Robinhood
A third business model aspect that companies can differentiate on is price.
In practice, this could mean supplying something with a high price and
providing it for less or for free. In order to find the business, the company
would have to either find a different way to make money, or raise a bunch
of venture capital.

Examples of companies that differentiate on price are JetBlue, Ryan Air,

Scottrade, and Robinhood. Robinhood is an interesting case so I’ll explain
that company in more detail.

Robinhood is a commission-free, retail stock brokerage. Customers can use

Robinhood to buy and sell stocks and receive the best possible trade
execution.

Stock brokerage has been supplied to date primarily by big financial

institutions, and often at high prices. It was only recently that discount
brokers such as E*TRADE and Scottrade entered the market and started
supplying brokerage at as low as about $7 per transaction. Many of these
financial institutions are very large and profitable. They are some of the
biggest companies in the world.

Robinhood has replicated the service that these companies provide. They
are a “second mover.” More literally, they are a tenth or twentieth mover.
Robinhood differentiates their offering through the business model aspect
of price. The company provides transactions for free.

Robinhood is using venture capital to fund the company. According to

Crunchbase, Robinhood is funded by Andreessen Horowitz and a few other
of the most respected and successful venture capital firms in the world.
According to Robinhood’s website, “Robinhood will offer margin trading as
well as API access, which will allow partnered developers to build
applications in conjunction with Robinhood. Robinhood will also receive
remuneration for providing trade volume in certain markets. In the future,
we plan to offer premium services for active investors.”
How to apply pricing differentiation to your next venture? Think of a
product or service that people pay for. If you provided this product or
service for free or extremely cheap, how else could you make money?

d. Unbundle

It used to be very expensive to package and bring a product to market, so

products were bundled. To buy one product or service you usually had to
buy it with several others. However, technology has made it more efficient
to package and deliver individual products.

By unbundling, the offerings can be improved because producers are

completely focused on that specific offering. The products may be more
specialized, lower in price, or a better value.

By supplying a product, service, or value proposition that was previously

provided within a bundled offering with validated demand, you reduce the
risk of building something no one wants. If the bundled offering has
traction, there is some data to support the argument that the product,
service, or value proposition has market demand.

Instagram unbundled the photo sharing component of Facebook, and was

later acquired by Facebook for $1 billion! Online education companies like
Udemy and Skillfeed unbundle the learning component of education.
Fedora has unbundled the software component of Udemy for instructors.

Below are a few examples of other industries that are unbundling or are ripe
for unbundling:

● News/media – We used to buy one newspaper and get world,

local, sports, etc. Now it’s all from different sources.
● Banking – Entrepreneurs are picking off offerings of large
institutions and offering them as network-based business models, or
differentiating them in some way. For example, Lending Club for
 peer-to-peer consumer lending, and Robinhood for stock brokerage
(as discussed above).
● Education – Large institutions have been bundling things like
physical location, professors, libraries, networking with other
students, learning, etc. Each of the many value propositions that
college offers could be offered as discrete products or services. In
many cases, these value propositions are already being offered in
unbundled offerings.

How to apply unbundling to your next venture? What products or services

do you buy for more than one reason? What products that you use have
more than one value proposition or benefit? What product or service could
you supply that would cover just one of those value propositions?
Conclusion to Chapter 7

Consider Your Goals

As with the other methodologies in this book, consider your goals when
considering if this approach is right for you. Here are a few key
considerations:

● Money/Risk - If your main goal is to make money and/or reduce

the risk of losing money, I think “doing what’s working” is a great
strategy.
● Creativity - If the opportunity to be creative and build something
new is, to you, one of the most appealing aspects of starting a
company, this might not be your best strategy. Doing what’s working
reduces the need for creative thinking by identifying previously
validated solutions.
● Upside - Because doing what’s working generally involves
competing directly or indirectly with an existing company, there is
some risk that there is limited upside because it would be harder to
capture the entire market. However, (1) even if you develop a
completely new solution, there is risk that new companies will enter
the market and make it harder for you to capture market share, and (2)
you may not need to capture the entire market to build a large
business.

Key Takeaways

● You don’t need a wildly new or unique business idea in order to

build a successful business. As you can see from the above examples,
some of the most successful companies in history have had some
element of replication.
● Being a “second mover” has some major advantages over being a
first mover.
● Consider your goals to determine whether it’s right for you to use
a “do what’s working” business idea.
● “Doing what’s working” mitigates the risk of building something
no one wants. If another company is getting traction with a given
product or service, it’s an indication that people want it.
● To put this methodology into practice, pick any startup you see
getting traction. If you are passionate about the problem they’re
solving and the customers they’re serving, feel it has the potential to
meet your goals, and have the skills and assets to be able to compete,
you could start a similar company.
Chapter 8: 46 Business Ideas
In this chapter, I will give you a few business ideas (that you are free to
steal!). This chapter is intended to: (1) give you some business ideas that
you can start right away, so that you don’t even need to go through the
process of coming up with an idea, and (2) illustrate how some of the
systems from this book can be applied. I hope that the illustration can help
you do it yourself.

I have grouped the ideas into three categories: (1) small business ideas, (2)
online, from home, and passive income business ideas, and (3) high growth,
large market, scalable business ideas. I will explain what each of these
categories means in its respective sub-heading.

Remember, consider what your goals are and what you are capable of doing
when deciding if any of these ideas are right for you to pursue.
16 Small Business Ideas
Small business ideas can be defined as ideas that are not “scalable.” They
don’t have the potential to grow at rapid speed and may not ever be larger
than a few million dollar per year business. If they were ever to grow to be
much larger than a few million dollars per year, it would likely take several
years, and profit margins would not increase over time because they are
dependent on human labor. Most of these small business ideas may be even
smaller than a few million dollars per year.

Small businesses are great for people who want freedom from a job, are
passionate about the work that the small business entails, take pride in being
self-sufficient, and/or don’t have the skills or capital to start something
larger. Some of these can be started and maintained while still working
another job or with another business.

Below is a list of small business ideas.

1. Store Front

You could buy some retail space and open a store. You could sell products
you make yourself or products you purchase from other manufacturers. You
could also possibly buy an existing store and operate it yourself. Store
fronts include grocery stores, delis, coffee shops, laundromats, dry cleaners,
barbers, massage parlors, pizza shops, salons, plant stores, antique stores,
convenience stores, electronics stores, record stores, Internet cafes, and
more.

Stores provide a valuable service to local populations by supplying them

with goods they need. In addition, most store fronts require outside
employees. Creating jobs is an honorable contribution to a local economy.

Many stores have high costs because of the physical space and physical
goods. One benefit of store fronts is that little or no advanced (difficult to
find) skill sets are required to manage them. Therefore, you could hire
people to do just about everything that needs to be done at the store, freeing
yourself to enjoy the profit and your time as you please.

2. Bar and/or Restaurant

Bars and restaurants fall into the “meet known needs” category. We know
that people like to eat and drink because they have been doing so for a very
long time, and because there are many bars and restaurants that are making
a profit.

One great benefit of owning a bar or restaurant is that your work

environment would be quite fun. If you enjoy spending time in bars or
restaurants you might be more likely to enjoy owning one.

To start a bar or restaurant you will need the real estate, restaurant
equipment and furnishings, some staff, and, in most places, a liquor license
if you plan to serve alcohol.

3. Business Consulting

In order to have a consulting business, you will need an in-demand skill set.
Most potential clients will want you to have some relevant credentials or
accomplishments if they are going to hire you.

You could consult for entrepreneurs, startups, small businesses, medium-

sized businesses, or large companies. You could consult on marketing,
product management, sales, recruiting, human resources, strategy, finance,
or just about any other business function.

One of the biggest challenges that many business consultants face is finding
clients. To find clients you will likely need to have a strong professional
network, a good marketing or sales strategy, and/or a good plan for
expanding your professional network. Check out my book, How to Build an
Awesome Professional Network, for actionable advice on meeting new
people, building relationships, and getting more referrals through the people
you know.

4. Wholesaling

Wholesaling is when you buy a good in large quantities and sell it in

smaller quantities. This can be a profitable business as when you buy in
wholesale you typically get a lower price than you get when buying a small
quantity. For example, if you buy a 24-pack of beer it is usually cheaper on
a per-beer basis than buying one beer or a six pack.

Therefore, you could start a wholesaling business by buying a 24-pack of

beer for, say, $24 (or $1 per beer), and then selling each beer for $2 or four
packs of 6 for $10 each. If you sold each beer for $2, your total revenue for
selling 24 beers would be $48. You bought the 24-pack for $24, so you
would have earned a profit of $24.

Some of the first businesses I started were wholesaling businesses. For

example, I bought large quantities of vending machine items and then sold
them in smaller quantities on ebay.

Wholesaling businesses require some startup costs. You will probably need
money for buying the large quantity. However, it’s possible that you could
take payment from retailer purchases before making the wholesale
purchase.

5. Physical Labor

Physical labor businesses include carpentry, locksmithing, landscaping,

plumbing, painting, roof and gutter cleaning, snow blowing, leaf raking,
and more.

I started a lawn mowing business one summer. I just printed out a bunch of
flyers offering to mow people’s lawns with my phone number, and then put
them in mailboxes all over my neighborhood. People started calling me
asking to pay me to mow their lawns.

To start a physical labor business, you need the equipment required for each
service (for example, a lawn mowing business would require a lawn
mower), and some customers. You could hire people to do the labor for or
with you, or you could do it yourself.

Physical labor businesses would probably be great for someone who likes to
be outside, likes to be active, doesn’t have enough money or desire to get a
formal education, or doesn’t want to work in an office.

6. Business Services

There are many processes that businesses commonly outsource to third-

party companies or freelancers instead of hiring someone full-time.
Examples of services that businesses commonly outsource are accounting
and legal. You could start a business that provides the services that
businesses want to outsource. A business services company would be
appealing because it’s an opportunity to help entrepreneurs. It could also
provide a flexible schedule because you could take on clients as you please.
You could end all your client engagements, go on a long vacation, and then
come back and take on new clients or resume the old ones.

7. Life Coach

According to Wikipedia, “Life coaching draws upon a variety of tools and

techniques from other disciplines aimed at self-development such as
sociology, behavioral science, psychology, and organizational theory with
an aim towards supporting people to develop self-awareness of habits and
identify and achieve personal goals.

“Coaches do not deal in psychological counseling, hypnosis, dream

analysis, psychic phenomenon (intuitives, tarot, psychic readings), or other
avenues of providing guidance. Coaches are not 'guides' who reveal how
one should live their life, but rather professionals trained to facilitate
methods of personal development (i.e., partner with a client to uncover
limiting habits of thinking and acting, clarify what is meaningful, frame
goals, and design action steps) in the creation of a meaningful life.”

If you have expertise and relevant experience, people may trust you to give
them advice on their life. You could charge by the hour and meet people in
person or via phone or Skype. If you only work with clients via Skype, you
could run your business from anywhere in the world.

8. Wedding Planner

Planning a wedding takes a lot of time and effort. Many people don’t have
that time. Planning a wedding also requires some design and style. Many
people don’t have good taste in design and style.

A wedding planning business would fit into the “meet known needs”
methodology because it helps people save time, and the “do what’s
working” category because there are many existing wedding planning
providers that people pay for.

To start a wedding planning business you would probably need skills in

project management, communication, and design, as well as the ability to
acquire clients.

9. Travel Agent

Similar to planning a wedding, planning a vacation requires a lot of time

researching and coordinating. Some people don’t have the time to research
and coordinate or find it difficult or annoying to coordinate and research.

To solve the time and difficulty problem for travelers, you could start a
travel agency. You would help people plan their vacations. If you are
passionate about traveling, this might be a fun business to run.
10. Personal Trainer

Personal trainers help people get in shape.

It’s an honorable job because you’re helping people get healthier and be
happier. Personal trainers solve the known needs of looking good, being
happy, and even finding dates.

11. Financial Planner

Many people work as financial planners for big banks like Goldman Sachs.
They could start their own financial planning business, providing nearly the
same services. Working for a company, you earn less than you would if you
were on your own because the company takes a percentage of the revenue.

Financial planners help people manage their money. Many people don’t
understand personal finance or investment, and don’t have the time and/or
skills to learn, so they need help.

12. Tutoring

In my opinion, one of the best ways to learn something is to get

personalized, one on one, in-person instruction. Young students who are
struggling in a given class will often hire a tutor to help them work through
their challenges. I’ve heard of a couple online marketplaces that connect
tutors and people looking for a tutors, which would make it easier for you to
get clients if you started a tutoring business. You could also get tutoring
clients by posting on Craigslist, posting flyers on school campuses, and
getting referrals through your professional network.

13. Executive Recruiting

Executive recruiting businesses connect companies that are hiring to

candidates. For companies that are hiring, finding qualified candidates is
challenging and time-consuming. Executive recruiting companies almost
always get paid by the company that is hiring. The recruiting company can
charge the client a monthly retainer or a finder’s fee if they hire an
employee that the recruiter referred. The finder’s fee can potentially be
really large, especially if it is based on the hire’s salary and that salary is
very high.

Executive recruiting would be a fun business to start if you enjoy

communication and a fast-paced work environment. To be effective at
recruiting, you will probably want strong interpersonal skills, sales skills,
and a strong professional network that can refer you to clients and
candidates.

One challenge of the recruiting business is that it can take a long time to
actually connect a client to a candidate and have them get hired. It’s
actually pretty hard to do in practice. So you could potentially go a long
time without closing a deal.

One benefit of recruiting is that your compensation is based on the amount

of hours you work. So you could potentially close a lot of deals in a short
period of time and then take time off for a while. Or you could close a deal
every once in a while without working a ton of hours.

I’ve thought about starting an executive recruiting business that I would

operate passively. I wouldn’t spend too much time chasing new clients or
candidates, I would mostly just sign with companies I already know and
refer candidates I already know. It’s something I already do for free, so I
would just have to get a contract made and start charging for it.

14. Agent, Connector, Broker

An agent makes money by connecting two parties, usually so that they can
engage in some kind of monetary transaction. They usually get paid a
percentage of the transaction value from one party.
Examples of transactions that one could broker include connecting a real
estate buyer or renter to a real estate owner, connecting a company looking
for acquisitions to a company they can acquire, or connecting a company
raising money to an investor.

Some people are hard to find. It requires a strong network (knowing a lot of
people), and/or being able to do a lot of research.

15. Artist

An artist makes money by creating a piece of art and selling it. Types of art
include sculptures, pottery, paintings, and more.

16. Nutritionist

Similar to personal trainers, nutritionists help people get and stay healthy.
Instead of helping with exercise the way personal trainers do, they help with
nutrition. Nutritionists advise their clients on what to eat, given their health
and fitness goals. To start a business as a nutritionist, you would need
expertise in nutrition and the ability to acquire clients.
Online Business Ideas
This section is about business ideas that you can start from home or
anywhere in the world, because they are mostly operated online. Many of
these businesses don’t require previous skills, knowledge or experience.
Most don’t require any startup costs. Most can be operated from anywhere
in the world. Many can be done part-time or while operating another
business or full-time job.

These online business ideas are great if you want to work from home, you
want to work from anywhere in the world, you just want a little extra cash
without quitting your job, you want to have an automated or “passive”
income source that will provide you with earnings while you sleep, travel,
or work, or if you want to diversify your revenue streams in case you lose
your job.

Depending on your goals, one potential downside is that most of these

business ideas are difficult or impossible to grow large enough to generate
more than a few hundred thousand dollars per year in revenue. They are
better for someone who values flexibility over material goods.

Why Passive Income is So Great

Passive income is income that is automated. You earn it without time, cost,
or effort of any kind. Many, but not all, of the business ideas below can
provide passive income. Passive, or automated, income is great for a few
reasons:

a. Additional Income

You can earn additional income while earning passive income. Because
passive income does not retire your time, you could spend time on other
opportunities, such as a full- or part-time job. It would be very difficult to
hold two full-time jobs at once, but it’s completely feasible to have multiple
passive income streams, or a job and a passive income stream.

b. Bootstrapping

When you are getting a business off the ground, you will likely have to
spend a period of time without earning income. The period before you
receive funding for your business or sufficient revenue to earn a real salary
is referred to as “bootstrapping.”

Passive income can be extremely helpful while you are bootstrapping.

Many people choose to take on consulting gigs so that they can earn enough
money to survive while they are bootstrapping. Others continue to work at a
salaried job and only work on the business part-time. Passive income can
enable you to work on the business full-time without going broke.

c. Continuous

Creating a passive income stream requires a lot of front loaded time, but it
doesn’t require a lot of, or any, continued time or maintenance. Once it’s in
place, it’s in place. It will keep providing you with income after you stop.

Most employees can’t take a month off from work while continuing to get
paid. You would have to quit your job and stop earning your salary. Passive
income streams can continue to compensate you even after you stop
working.

d. Diversify

Diversifying is a great way to mitigate risk. It’s commonly used in an

investment context to refer to making multiple investments. By
diversifying, you will be less harmfully affected by a poor performing
investment than if you were to only hold that one investment. In addition,
by making multiple investments, you may be more likely to hold one that
outperforms the rest. Similarly, a business benefits from having more than
one customer because if that one customer leaves, the whole business
would collapse.

A passive income source is a great way to diversify your revenue sources.

In today’s economy, jobs are being automated and outsourced, we have
more and more people with college degrees competing for the same jobs,
and the speed at which business is transacted and communication takes
place means companies can go from healthy to bankrupt faster than ever
before. I think it’s smart to have a passive income stream in place in case
you get fired or your company goes bankrupt.

e. Location Independent

Your passive income will continue to generate for you regardless of your
physical location. Many jobs and businesses require you to be in a physical
location with your employees and/or customers. You can earn passive
income from anywhere in the world.
5 Online Business Ideas

1. Self-Publishing

I am such a big proponent of self-publishing that I have dedicated an entire

section of this chapter to self-publishing. There is simply too much to say
about self-publishing to cover in this short format. At the end of this chapter
you can read more about self-publishing and why it’s such a great business.

2. Blogging

You can make money blogging through advertising, offering premium

content or products, or affiliate marketing. Blogging can also be a great way
to market another business idea. Blogging has been tremendously beneficial
to me personally, professionally and financially. I highly recommend it is an
easy and low cost business you can start with little time.

To learn more about blogging, check out The Ultimate Guide to Blogging.

3. Online Teaching
Create video courses on topics that you have expertise in and charge money
to watch them. Self-host your courses or distribute them on sites like
Udemy and Skillfeed. Networks like Udemy and Skillfeed are great if you
don’t have an existing audience.

The benefit of self-hosting your courses is that you can pay less in
transaction fees and therefore make more money. I use software called
Fedora to self-host my courses.

4. Affiliate Marketing

Affiliate marketing is when you market someone else’s product and collect
a mutually agreed upon percentage of the sale price. There are a number of
benefits of affiliate marketing. First, you don’t have to create the product.
Second, you can diversify. You can sell multiple products. If one is not
selling so well, you will still have the others. Third, as compared to working
full-time for a company, you can make your own schedule and work from
wherever you want.

To learn more about how you can become an affiliate partner for my
company, Startup College, and get paid for sharing links to courses, view
instructions here.

5. Investing or Day Trading

You could start trading stocks, commodities, bonds, currencies, or other

securities in order to make a profit. To have an investment business you
would need capital to invest.
16 Sites to Make Side Money
This section contains a list of sites you can use to make money online
working at home or from anywhere in the world. The below sites illustrate
the fact that you don’t need a unique idea to make money. If your goal is to
make some quick cash, have a flexible schedule, or work from the location
of your choice, the below sites might be great for you.

1. eBay

eBay can be used to sell physical assets that you own and don’t need
anymore. For example, you may have DVDs you’ve already watched, or
clothes you don’t wear anymore.

You could also use eBay to start a wholesaling business. You could buy
goods in large quantities either on eBay or another site, and then sell them
on eBay in smaller quantities at a higher price per unit than you bought
them for.

2. Airbnb

My personal experience with Airbnb has been fairly limited but I have a bit
of experience and I have learned a lot about it from others. Using Airbnb
you can rent out your apartment or house, or simply a room in your
apartment or house. Depending on the location and quality of your real
estate, you may be able to earn a substantial amount of money.

3. Fancy Hands

Fancy Hands connects virtual assistants to potential clients. You could make
money on Fancy Hands by becoming a virtual assistant.

4. Zirtual
Similar to Fancy Hands, Zirtual connects people to virtual assistants. You
could use Zirtual to find people who want to pay you to do miscellaneous
work.

5. Lyft

Lyft connects people looking for transportation to people with cars who can
provide transportation. The travelers pay the drivers for the ride. You could
become a driver on Lyft and make money for giving people rides in your
city.

6. Uber

Uber allows taxicab seekers to put in requests to be picked up from their

mobile phone. Uber then connects the cab seeker to one of their cab drivers.
You can sign up to become an Uber driver and get paid to pick people up
and drop them off. You would essentially be a cab driver, but without a real
boss.

7. Etsy

Etsy is an online marketplace for artisan home goods. Etsy enables

shoppers to buy handmade products from people all over the world. You
could become an Etsy seller and make money selling stuff you make.

8. Getaround

Getaround is an online marketplace where people can rent cars from each
other. You could make money by renting your car to other people when
you’re not using it.

9. Fiverr
Fiverr is an online marketplace where people can offer their services at $5
per unit. Examples of gigs people offer include text editing, logo design,
and data entry.

10. DogVacay

DogVacay is an online marketplace that connects people looking for dog

sitters and dog sitters. If you’re good with pets you could make money for
sitting someone’s dog while they’re on vacation.

11. Homejoy

Homejoy is an online marketplace connecting people looking for maids and

freelance maids. If you’re good at house cleaning, you could use Homejoy
to find clients and get paid for cleaning houses.

12. TeeSpring

TeeSpring is an online marketplace that enables anyone to design and sell t-

shirts online. If you have a great design for a t-shirt you could make money
by offering it on TeeSpring.

13. Vayable

Vayable is a marketplace where you can book unique travel experiences

from locals. If you know your city well and are capable of being a tour
guide, you could offer your services on Vayable.

14. Exec

Exec is an online marketplace for house cleaning services. You could use
Exec to find people that will pay to have you clean their house.
15. Artsicle

Artsicle is an online marketplace where users can buy and sell art. You
could use Artsicle to sell your own art work.

16. Contently

Contently is an online marketplace connecting writers and marketers.

Marketers use Contently to find and hire writers to produce content for
them. You could use Contently to find freelance writing gigs and get paid to
write.
Why You Should Self-Publish a Book
There are a variety of different benefits that can come from writing a book.
In the first part of this section I will explain the benefits of writing and
publishing/self-publishing a nonfiction book. In the second part of this
section I will explain the benefits of self-publishing over working with a
traditional publisher.

Benefits of Writing a Nonfiction Book

You may be interested in some or all of the below benefits of writing a

nonfiction book, depending on who you are and what your goals are. Your
writing strategy can be adapted to achieve the benefits you desire. I have
experienced most of these benefits and I cannot understate how strongly I
recommend you write and self-publish a book.

a. Market Your Business and Acquire Customers

A book can be a great marketing channel for a variety of different

businesses. By publishing a book on a topic that’s valuable to your target
audience, you will attract them to you, build a relationship with them, and
potentially get them to pay for your product or service. If you publish your
book via Kindle Direct Publishing, you can include links within your book
to your website or landing page of choice. Readers can click the links and
engage with your website as they please. If you’re writing a paperback or
hardcover book, you could include an easy to write and type website
address and instruct readers to visit your site.
b. Acquire Consulting Clients

A book is a great way to display your expertise. If you’ve written a book on

a given topic, people will assume you are an expert. Writing a book is a
great way to boost your credibility and authority. Books are the new
resumes!

When people are looking for someone with certain expertise, they may start
by searching Amazon for people who have written a book on the topic. Or,
they may find your book first and then realize they could use someone with
your expertise.

c. Get Paid Speaking Gigs

Conference organizers may need someone with expertise in a certain topic

to speak at their conference. The organizer might start their search for that
person by searching Amazon. Speaking at a conference could be paid, it
could give you exposure via the conference’s website and promotional
materials, or it could allow you to meet some awesome people at the
conference. By having a book on Amazon you increase your chances of
being found by conference organizers.

d. Get Paid for Corporate Training Workshops

Some companies will hire outside people to teach or train their employees
on specific topics. Sometimes they do it as an added benefit to their
employees. For example, they may bring in an expert on personal finance
for no reason other than to provide value to their employees. Other times,
companies will hire experts because they need their employees to have the
given expertise.

For example, a consulting company reached out to me about teaching their

employees about networking, because their employees need to be able to
network in order to bring in new business. The company found my book on
networking first, then presumably, realizing that I have deep expertise on
the topic, they reached out to me.

e. Make Money

Who doesn’t like money? There are many examples of self-published

authors making massive amounts of money from their books. Hugh Howey
has been reported to be earning $120,000 per month self-publishing on
Kindle.

What’s great about the money you earn from writing a book is that it’s
pretty “passive.” Passive means that it’s fairly automated, so you don’t need
to keep trading your time for money the way you do at a salaried job. A
passive income stream will keep paying you while you sleep or travel. Once
your book is live on Amazon it will be searchable and buyable forever. You
may want to continually market it, but you don’t need to.

f. Have a Flexible Work Schedule

You can write whenever and wherever you want! Maybe you want to travel.
Or maybe you want to have kids and be able to spend a lot of time with
them while they’re young. If you’re making your living from Kindle books
you could work at home while you raise your young kids. It’s possible that
you could have earned or be earning enough income from previously
published books that you don’t need to work anymore!

g. It’s Fun!

Some people, myself included, really enjoy the process of writing. I would
have never guessed that I would like it as much as I do. I find it relaxing
and almost meditative. I enjoy sharing my opinions on topics I’m interested
in. I enjoy being able to share my knowledge with people and help them
grow their businesses.
h. Get Press Coverage

If a blogger is writing an article about a certain topic, they may seek input
from experts on the topic. In order to find experts, they might search
Amazon for people who have written about relevant topics. I have had
people find my book and reach out to me for a quote. Other people have
written articles exclusively about my books.

i. Network and Meet New People

Your readers might reach out to you. They could become friends,
colleagues, partners, or customers. People might be motivated to meet you
and get to know you if they know you’ve written a book on a topic they’re
interested in.

j. Build Your Brand and Authority

Writing a book about an important topic establishes yourself as an authority

on that topic. It enhances your professional image. A book is to
professionals in the 2000s what a business card was in the 1990s.

k. Prove Yourself to Potential Clients

Many people prefer to hire people who have experience and

accomplishments over people who do not. It’s kind of a catch twenty-two
because you need to get hired in order to get experience. You can shortcut
that by working on your own project. What better way to prove to a
potential client that you know how to market a product than by showing
them the results you achieved marketing your book!

l. Diversify Your Revenue

Another great benefit of self-publishing books is that it can enable you to
diversify your revenue streams. It’s beneficial to be diversified because you
reduce your dependence on the outcome of one asset. For example, if you
allocated equal amounts of money into 100 stocks, and one of them falls
while the other 99 gain, you would lose less money than you would have
lost, had you only invested in the one stock that fell. If only one of the
stocks gains you would gain more than had you only owned one stock that
didn’t gain.

Just like it’s risky to have all of your wealth dependent on one asset, it’s
risky to have all of your income dependent on one source. There is a lot of
uncertainty in today’s economy. If you only have one employer and you
lose your job, all of your income is gone. If you're an entrepreneur and you
only have one client and that client goes out of business, you won’t have
any income. Businesses can fail for many different reasons, and often do.
By diversifying you reduce the risk of potential negative outcomes.

m. Organize Your Thoughts and Learn

Writing forces you to teach yourself what you don't know and to articulate
what you do know. When you begin writing a blog post, you are forced to
organize your thoughts. If there are any gaps in your knowledge of the topic
that you are writing about, you will have to learn about it. Writing out and
articulating your thoughts is a great way to internalize something you've
learned or experienced. Writing helps you become more familiar with the
topic you're writing about.

n. Improve Your Authenticity and Reduce Shyness

I believe authenticity is one of the best personality traits a person can have.
I suspect that the people you most admire and/or have the closest
relationships with are highly authentic. Furthermore, I believe that being
authentic will lead to more happiness and satisfaction with life.
Authenticity means being comfortable in your own skin and displaying
your personality proudly. It means thinking and acting the way you choose,
not the way others may want you to.

When I first started blogging, and for a long time after, I would get a big
rush from sharing my thoughts with the entire world. I was worried what
people might think. I was worried that it could be held against me. But I
was also excited to do it and about the opportunities it could create for
myself.

Expressing my thoughts and opinions to the entire world has helped me

become more authentic and less shy to share my thoughts. It has helped me
in social situations, public speaking, and managing work meetings.

o. Get Paid to Learn

If you’re anything like me you enjoy learning about new things, building
your skills, and developing yourself. Writing a book is a great way to
monetize what you’re learning. For example, I wanted to learn about how to
automate my marketing campaigns on Twitter, so I learned about a bunch of
different apps that can automate Twitter marketing and then created a video
course about them and how to use them. I’ve used similar strategies on blog
posts and portions of my books.

p. Improve Your Speaking and Communication

Writing can help with your in-person communication because by writing

you can better internalize the subject matter. It forces you to think through
how to present every detail. After writing, I feel more comfortable and
acquainted with the topic. In addition, by opening myself and sharing
publicly, I become less afraid to do so in person.

Why Self-Publish Rather Than Signing with a Publisher

So now you know of all the amazing benefits of writing a nonfiction book,
but why should you self-publish your book, as opposed to working with a
publisher? I’m a huge proponent of self-publishing. I think that the
publishing industry has and will be undergoing a lot of changes as a result
of technology and the Internet, and that self-publishing is the way of the
future. Here’s why I think that, for most people, it’s best to self-publish:

a. Time

You could spend months trying to get a publisher. And even after all those
months trying you still might not be able to get a publishing deal. In fact,
you probably won’t get one. Most people don’t. Unless you have a large
following or are highly reputable in the particular field, it will be extremely
hard to get a deal. All that time spent trying to get a publishing deal could
be spent writing and promoting your book! With self-publishing you don’t
need for someone to choose you, you can choose yourself and write and
publish whatever you want!

b. Revenue

Publishers keep a huge portion of the revenue from book sales. I’ve heard
it’s typically around 80%. By self-publishing on Amazon you keep 70% if
your book is priced between $2.99 and $9.99. That means you need to sell
significantly more books to earn the same amount of money with a
publisher.

c. Control

Publishers get control over what you write. They have length requirements
and may want you to write about some things you don’t want to write
about, or not write about some things you do want to write about. With self-
publishing you control every word of your book. You control the title, the
design, the cover, everything.
The Bottom Line on Self-Publishing

Amazon has millions and millions of active shoppers with their credit card
information already stored, and the ability to buy with just one click. Self-
publishing on Amazon is like putting an infinite number of your books in
the center of the world’s largest bookstore.

It costs very little time and zero dollars to self-publish on Amazon. It’s
incredibly easy to do.

The Internet makes it less necessary to have a high-priced broker like a

publisher. If a publisher needs you then you don’t need a publisher, and if
you need a publisher then the publisher doesn’t need you.

Learn a bit about internet marketing and do it yourself. Build your audience
and mailing list by blogging and engaging on social media. Then you won’t
need a publisher because you will already have an audience. Therefore, you
can keep 70% of the revenue instead of giving away 70% of the revenue!

To learn more about self-publishing, if you’re experiencing writer’s block,

aren’t sure what to write about, or simply want to write faster, check out
How to Write a Book in 10 Days.
9 High Growth Tech Startup Ideas
I’ve used some of the “rogue” customer development methodologies
discussed in this book to determine the starting points of the below business
ideas. I haven’t done any customer development interviews or experiments
to prove that these could actually be businesses. I’ve simply used secondary
strategies to gain customer insights to inform a general offering. The
specifics and features would need to be shaped based on primary customer
feedback. The strategies I’ve used to generate these ideas are generally
based on:

a. Solving validated needs with superior solutions by taking advantage of

new technologies. For example, Uber is solving for the basic need of
transportation but taking advantage of mobile to provide a superior solution.
You’ll notice the value propositions of most of these products are very
basic, age old, human needs.

b. Providing validated solutions to needs of new markets. This means

taking something that one market wants and providing it to another. For
example, many of the solutions needed on desktops are now needed on
mobile. Most of the business ideas below are based on serving a currently
small market that I expect to grow. While growing, the market would likely
need many solutions that are needed by other markets.

You’ll also note that I don’t fear competition, and rather see that as
validation (a customer development “shortcut”), and that I’m targeting large
and/or growing markets.
Here’s my list. Feel free to steal one!

1. Goldman Sachs for Private Company Stock

People invest lots of money in public markets. The services that support
those investors include stock exchanges (NYSE), brokerage (banks and
brokerage houses), discount brokerage (Fidelity, Scottrade), research
(banks, boutique firms), managed funds (hedge funds, mutual funds, etc.),
and more.

There are many massively profitable companies in each of these sectors. I

see no reason why those same services couldn’t be provided for private
company shares investing and trading.

Companies like SecondMarket, AxialMarket, and Angellist have been

making inroads here; however, if you believe demand for private company
shares will increase, and that trading will become as liquid as public
markets, then there’s still a ton of opportunity here.

Discount brokerage seems like the most plausible opportunity, with equity
research being a close second. An ETF or mutual fund of startup shares also
seems plausible. Further customer development would be needed to
determine specific offerings.

2. FINRA for Collaborative Consumption and P2P

Marketplaces

FINRA is a “self regulatory organization” for the financial services

industry. According to Wikipedia, “A self-regulatory organization (SRO)
regulates an industry or profession. The regulatory authority could be
applied in addition to some form of government regulation, or it could fill
the vacuum of an absence of government oversight and regulation. The
ability of an SRO to exercise regulatory authority does not necessarily
derive from a grant of authority from the government.”

One of the concerns people have over p2p (peer to peer) marketplaces like
Airbnb, or even Udemy, is quality and safety control. How do you know the
person you’re buying from is qualified enough to deliver…and not an axe
murderer?

Airbnb and Uber have faced resistance from government officials, who
worry that people could be at risk of harm. A regulatory authority would
help reduce those concerns. As a result, the company would have potential
to get “mandated” by the government and become a “monopoly.” However,
I think it would be best to serve, and be paid for by, buyers in marketplaces
exclusively, so that incentives are mutually aligned and so that markets can
function properly.

Existing structures for the industries that p2p marketplaces and networks
are replacing have consumer protections and regulatory authorities. For
example, the food industry has the FDA.
I think improved quality assurance would help peer networks prosper. Many
marketplaces have some form of native review systems, but they can be
biased because the companies need to serve the needs of both sides of the
marketplace. They can also in some cases be manipulated by the supply
side.

FINRA is generating almost $1B per year in revenue to provide consumer

protection. If you believe peer networks are the future, I think this could be
a great way to ride the wave.

3. Credit Card Company for Bitcoin

People use credit cards for fiat currency, so why not also for Bitcoin? Credit
companies are huge. Bitcoin is growing and enabling credit transactions
would make it more usable.

Credit cards allow cardholders to pay for goods and services based on the
holder’s promise to pay for them. The credit card company grants a line of
credit to the cardholder from which the cardholder can borrow.

For merchants, a credit card transaction is often more secure than other
forms of payment, such as checks, because the credit card company
commits to pay the merchant regardless of whether the consumer defaults
on the credit card payment.
Prior to credit cards, each merchant had to evaluate each customer’s credit
history before extending credit. That service is now performed by the credit
card companies (who also assume the risk). In addition, credit cards can
also increase sales if the customer does not have enough cash.

Credit card companies can make money by charging interest to cardholders

or by charging merchants a transaction fee. If Bitcoin becomes more widely
adopted as a currency, then many of the solutions needed by fiat currency
holders would probably also be needed by Bitcoin holders (similar to web
—>mobile). There are probably a range of products and services that
support fiat currency holders that could also be valuable to Bitcoin holders.

4. Operating System(s) for Mobile

Everyone knows mobile usage is skyrocketing. As desktop usage

skyrocketed, a plethora of products made it more usable. I don’t see any
reason why the same products needed to use a computer and the web
wouldn’t be needed to use the mobile devices and the mobile web.

Operating systems have been hugely profitable on the web. There is

competition for both web and mobile operating systems right now, but
that’s okay, and they’re still not that great in my opinion.

A mobile first web browser is one of the first that comes to mind. An
OS/web browser that reduces the need for apps could be valuable. I don’t
have to download and store all the web apps I use; it would be nice if that
was also true for mobile apps. For example, I open my web browser and
can navigate to Twitter, Gmail, the news, etc., all at once. In addition, web
apps are more ubiquitous – I can quickly navigate between them. For
example, I can browse something on Twitter web and then bookmark it to
my web browser, but using the Twitter app, I have to open the mobile app,
open the link on my mobile browser, and then bookmark it.

It would be nice if it was as easy to use mobile apps as it is to use web apps.
Smaller products like password storage could also be valuable. It would be
interesting to do some customer development to determine if there are
others who also have needs that I do.

5. Real Money Gaming (possibly with Bitcoin)

People love gambling and gaming. They’ve been doing it for a very long
time. There are several publicly traded casinos and many successful
companies in the industry. There are several successful gaming companies
too.

Gambling and online gambling are slowly becoming “more legal.” If it

becomes legal to gamble online across the U.S., this opportunity could be
huge. You can learn more about the real money gaming market in a post I
wrote on my Huffington Post blog.

Bitcoin could make it easier to gamble online just like Silk Road made
buying drugs easier. So perhaps an online casino run on Bitcoin is the right
play.

Why I’m not pursuing it: too much regulation. I actually looked in to
getting a license and it’s a nightmare. With challenge comes reward,
though, so if I had the time and capital I would.

6. Etsy for Food and Beverage

Network-based models are replacing traditional bureaucratic models in

many industries. For example, Twitter to News, Soundcloud to Music, and
Amazon to Publishing.

The food and beverage distribution process is an extremely bureaucratic

structure with many layers, similar to the publishing industry. A network-
based model would make it easier for producers of food and beverages to
distribute, and for consumers of food to buy the food they want from niche
producers.
We know there’s demand for food (Kraft), we know people like buying
small batch (Etsy), and we know people like shopping online (Amazon), but
we don’t know if they like buying small batch food online. So this one is
risky. However, food and beverage, despite being one of the largest retail
markets, has lagged in ecommerce penetration. I’m also not sure about the
legality of buying or selling foods that aren’t approved by the government.

7. Teach Kids How to Code

If you believe “software is eating the world,” then you would believe that
there is an increasing need for software engineers. Per venture capitalist
Fred Wilson, “There are more technical jobs open than qualified candidates
to fill them. It is the one bright spot in an otherwise bleak employment
picture. We need to be investing in our engineering schools and we need to
be investing in a K-12 education that gets our children ready to go to these
schools.” Millennials may be the first generation to widely believe that this
is true. Therefore they may be more motivated to have their children learn
programming.

A lot of companies are teaching entrepreneurs and job changers how to

code. And I like those companies. However, I think there’s also an
opportunity in selling “code school” to parents for their young children.
Schools probably aren’t fast enough and don’t have enough incentive to
adapt coding programs.

Why I’m not pursuing it: Well, I might ;-). But I’ve got a lot on my plate
now and it would be a lot easier for me to do once more of my friends and
colleagues have kids…so maybe in the future.

An alternative solution to the problem of building software would be to

build a software product that makes it easier to build a software product.
There are several growing startups providing such products, and I think it’s
a great space. The biggest and most well known example of a company that
is automating the software development process is WordPress (WP Engine).
8. Search Engine Based on Reviews

Clearly there’s demand for searching the web. Google has obviously been
widely successful, Yahoo! “was?” successful, and Bing seems to be doing
OK. DuckDuckGo, a relatively new startup, competes based on privacy and
seems to be growing too. A company called Aardvark provided search
results based on “social” criteria, and got acquired by Google.

Google’s solution plugs data such as backlinks, Google +1s, etc., into an
algorithm to determine which results to display, and adds some
personalization. It’s getting complex, opinion based, may be susceptible to
biases, and search rankings can be “gamed” by marketers using tactics like
backlinking. Perhaps content consumers will get tired of the results they’re
getting from existing search engines.

This company would provide search results based on peers’ reviews/ratings

of pages. The company would therefore need to get people to start
rating/reviewing pages, which I imagine would be extremely challenging.
But harder = more upside, hopefully.

Why I’m not doing it: because Google could do it better if people really
wanted results based on reviews. Building a search engine is also highly
complex and technical.

9. FDIC for Bitcoin

Insurance and warranty markets for various products are huge. People like
reducing risk. We have insurance for other assets; why not one tailored to
the needs of Bitcoin owners (exchanges or individuals)? This is already
starting to happen but it’s still early, and I think there’s enough upside.

According to Business Insider, “One of the reasons that people trust retail
banks for storing their money is that in the United States, those institutions
are backed up by the Federal Deposit Insurance Corporation (FDIC). Even
if a bank collapses, customers can be reasonably sure that they won’t lose
their full deposit.”

Many bitcoins are stored offline for safety. The term used for this practice is
“cold storage.” I imagine there could be demand to insure bitcoin stored in
cold storage. Again, there’s demand to store many other things.
Section 3: How to Start a Business
The third and final section of this book covers some additional information
you will need in starting a business. Topics include the first steps to take
after coming up with a business idea, customer development and how to use
it to validate your ideas efficiently and effectively, how to analyze and vet
an idea, how to decide if you want to pursue it, and some marketing and
sales principles you can use to acquire customers. At the end of this chapter,
I’ve included a brief case study on how I started three businesses in three
months at the beginning of 2014.
Chapter 9: The First Step to Take After
Coming Up with a Business Idea
I’ve been looking for business ideas and starting businesses since I was a
kid. In middle school I even had a business wholesaling vending machine
goods, hah. As I grew older I began thinking of more complex, technology
driven ideas. After coming up with such ideas, the first thing I would
usually do is ask a few friends and family who I consider to be smart, and
whose opinions I appreciate.

After learning about Lean Startup methodology and customer development,

I learned that’s not actually the best thing to do after coming up with an
idea. I learned that the only opinion that matters is the customer’s.

While my friends and family may be pretty smart, and some even
entrepreneurially savvy, they don’t actually affirmatively know if people
would want what I was thinking of marketing. I learned that one of the most
important factors to consider was if it’s something that people want.

Yes, there are many other strategic and personal considerations; however, if
it’s not something people want, then no strategy or marketing angle is likely
to make it work. Conversely, if there is something that is truly of value to
customers, many of the challenges associated with building a company,
including customer acquisition, partnerships, etc., may be alleviated.

So, the first step to take after coming up with a startup idea is to talk to your
customers. Talk to, and more importantly, listen to, the customers that your
product or service would be serving to see if they like your idea. It’s a
process called customer development.

Customer development is practiced to validate that you’re solving a

problem for someone, and that they see your idea as a viable solution.
Lean Startup and customer development also give a more effective process
for coming up with ideas. It’s a process driven by meeting customer needs
and using customer development to gain insights that inform product
decisions.

The key takeaway of this section is that answers to questions about ideas
come from getting feedback from customers through structured interviews
and experiments. I go into specific tactics you can use to test ideas and
conduct customer interviews in my book and video course. In this next
section, I will give a deeper explanation about what customer development
actually is and why it’s so valuable.
Chapter 10: What is Customer
Development and Why Should
Entrepreneurs Practice It?
The following chapter explains what customer development is and how it
can help you with your business idea.
What Exactly is Customer Development?
First developed by serial entrepreneur Steve Blank, customer development
is the practice of gaining customer insights to generate, test, and optimize
ideas for products and services through interviews and structured
experiments. Customer development is used to help build products that
customers want and avoid spending time and money on products customers
don't want. It can be used to identify problems and new startup ideas, to test
ideas, and to optimize ideas and existing products.

In an age where technological advancement has made it easier than ever to

build a product, the question is no longer whether a product can be built, it's
whether or not it anyone actually wants it. Customer development helps us
learn about our potential customers. For example, what problems they have,
how they understand those problems, and what's really of value to them.
You can make some educated guesses based on experience, but actual
customer feedback may surprise you. I've been repeatedly amazed and
surprised by how often I think a product idea will be of such great demand
to a customer because of it's obvious value proposition, only to find out that
customers don't really care about the offering.

The job of an entrepreneur in a free-market economy is to relentlessly serve

customers. It's to provide more value to customers than competing or
comparable activities, and to do it in a way that generates a profit. Customer
development helps us do that effectively and efficiently.
The 3 Biggest Reasons to Practice Customer
Development
So you’ve applied some of the strategies and tactics in this book, and now
you have a business idea. You're super excited about it and you think you
will make a ton of money from it and it will change the world. You have a
vision and you want to bring it to life.

In addition, customer development is hard. Going out and talking to

customers is time-consuming and requires you to step out of your comfort
zone. You understandably don't want to be proven wrong.

Below are three of many more reasons to practice customer development.

1. Avoid spending time and money building something no one wants.

It can take a lot of time and money to build a business. Life is short and
money is kind of important, so you don't want to waste either. By doing
some customer development to test your idea, you can avoid spending a lot
of time and money on something that no one wants. You can then move on
to a higher return opportunity or improve your idea into something that
customers do want. Customer development is hard and takes a long time.
You know what takes longer and stinks more? Spending a bunch of time
and money on a business with no potential!

2. Gain insights to help you build the most valuable product possible.

Customer development can be used to optimize an idea or an existing

product. If your initial idea is not something that people want, customer
development can help you hone your idea into one that customers do want,
or find another problem that's worth solving. In my article on
SinglePlatform, the founder explained that his initial hypotheses were only
about 50% correct, but by doing customer development, he was able to
make improvements to the proposed product to a point where customers
paid him before the product was built.

3. Generate business ideas.

Customer development is commonly associated with and used to test ideas.

However, you can also use it to get new startup ideas. You can get ideas
simply by asking the right questions and listening effectively. By doing so,
you can learn what people's challenges and pain points are, and what they
need.
Chapter 11: Is Your Idea Worth
Pursuing?
I’ve talked to a lot of people (and I’ve been in the same situation myself in
the past) who have identified a startup idea, and are considering whether or
not to pursue it. Others may be considering joining an early-stage startup or
someone with just an idea (pre-traction, pre-product, etc.).

It’s common, and valuable, to evaluate an idea from a strategic and

fundamental perspective. However, in reality, a company’s success is
dependent upon a lot more than the quality of the idea.

Some people think the idea doesn’t matter at all. For example, many VCs
consider the strength of the team the most important factor for evaluating an
investment opportunity. I don’t think that the “idea” or product doesn’t
matter at all. However, I think there are a few things to consider in addition
to how great the idea is.

Different people will have different criteria depending on things like risk
tolerance, career goals, budget, etc. Below are some factors to consider
when deciding what to pursue, along with my personal criteria given my
short-term and longer-term goals.

1. Passion

How passionate are you about the customers you’re serving, the problem
you’re solving, the product you’re delivering, the market you’re operating
in, etc.?

Starting a company is hard and time-consuming. If I’m solving a problem

I’m passionate about and/or serving a customer segment I enjoy spending
time with, my overall quality of life will be higher, and I believe I will be
more successful.
In starting a company, you inevitably have to ask a lot of people for help.
For example, big things like introductions to key people, or small things
like to share your site with their friends.

I want to be in a business that I’m proud of and passionate about so I’m

motivated to hustle. Many businesses require spending a lot of time with
customers, so I’ll want to enjoy that time.

Some people can put their head down and execute no matter what,
especially if there’s financial incentive, but I think that for most people,
having passion can lead to much better execution, not to mention a much
higher quality of life overall. You’re going to be spending a lot of time
working on any startup, so it should probably be something you’re
passionate about.

It’s a bit idealistic to make all your decisions based on your passion, but it is
one important factor to consider.

2. People

The people you’re working on your startup with will have a major impact
on its likelihood for success and your overall happiness. Inevitably, as you
enter the market and you begin getting feedback from customers, your idea
will evolve. The people you’re working on it with won’t change.

A team with the skill sets, experience, and relationships to be able to

execute effectively will, of course, help tremendously. You will also be
spending a lot of time together, so having people that you share values,
ethics, goals, etc., with and generally enjoy spending time with could be
tremendously beneficial.

If things don’t work out with your team, it can be detrimental to the
company. In fact, I think disputes among co-founders are probably among
the most common reasons why startups fail. Having a great team that’s both
talented and works well together can be tremendously influential to the
success of a company.

3. Execution

Do you have the ability to execute on this opportunity? Examples of factors

that might influence your ability to execute include access to customers,
skill set required, domain expertise, relationships with partners or
teammates, etc.

For example, if it’s a b2b product (you sell to businesses), knowing sales
would be tremendously beneficial. If it’s an ecommerce company, knowing
about marketing, software development, etc., would be valuable. There are
also “soft skills” like leadership, team management, etc.

4. Relationships

Having existing relationships with necessary customers, partners, hires,

investors, etc., can save a lot of time, reduce costs, and reduce risk. Without
existing relationships the team will have to form them, which takes time,
and there is risk in being able to form them at all.

For example, if you don’t know how to code and you’ll need a technical co-
founder for the business, but you don’t know any, that’s one more roadblock
to getting your business off the ground. This doesn’t mean you shouldn’t
pursue the opportunity; it’s just important to consider how many roadblocks
you’re going to have before you go down the path.

5. Access to Customers

If I can’t get enough customer development interviews within a reasonable

period of time, then it will be that much harder and take that much longer to
get started. Conversely, if I have existing relationships with customers, or at
least easy access to them, I can get feedback on my product much easier.
When it’s time for more active sales and marketing, that will also be easier,
shorter, and cheaper with existing access to customers. For example, if
author and blogger Tim Ferriss wanted to launch a productivity-related
product, he would have an advantage because of all of his existing relevant
blog traffic and email subscribers. I’ve seen access to customers be
especially important to enterprise products. Having relationships with
decision makers helps with customer development and sales.

6. Skill Set Required

If the skill set required to execute the business plays to the strength of the
team, execution risk should be less. For example, distribution: I wouldn’t
want to start a business with a sales distribution strategy if I didn’t know
sales. Conversely, if it’s a consumer app that acquires customers through
search, a team of SEO experts could be pretty effective.

If I’m trying to solve a hard technical problem, I would want to make sure I
have incredible technical talent on board. I would be more confident in an
entrepreneur that’s started one or more ventures previously, or at least has
experience in the skill sets required to start and run the business. As an
entrepreneur, I’d want to start a business that requires skills that I have. Of
course you can learn, but that becomes one extra cost, time constraint, and
risk.

7. Ability to Validate

How confident can I be, or quickly get, that I’m pursuing a viable business?
If I can’t get ten customer development interviews within a week, and begin
to prove there’s a viable business within a few months, I don’t want to do it.
I know that massively limits my upside, but again, my goals are specific.

Does it require product development to get validation (i.e., something like

Snapchat)? Do I have to sit through ten-month sales cycles to know if it can
be sold? Those are risky paths to go down. That’s part of the reason I’ve
been interested in companies solving known and validated problems, or in
existing and validated markets (“second movers”).

8. Cash Flow

An idea’s need for outside financing and ability to generate cash flow are
important considerations for me. If a lot of money is required to start testing
the idea, either because costs are high or because it will take a while to
become cash flow positive, financing will be required either from founders
or investors. If you don’t have any existing relationships to investors, or at
least close connections, that’s another time suck and risk factor. It’s
certainly surmountable though if you have a good team, business, and
network.

Raising money, while glorified in the media, does have downsides. For
example, you can lose some control over your business and you have to
give up equity (and therefore upside). The more cash you need at the start,
when your valuation is the lowest, the more equity you will have to give up.

9. Diversification

I don’t like to have all my eggs in one basket. I don’t want my life to be
dependent on one customer or employer. I don’t want one trend, industry, or
customer group to effect everything I’m doing. It’s easy for investors to
diversify. For entrepreneurs it’s a bit harder, but possible.

10. Opportunity

The size of the market and the company’s scale are other considerations.
How much upside is there? If your goal is to build a massive company, you
will need to be in a massive market. This will largely depend on personal
goals.
11. Work

How enjoyable will the work be? How much time will it require? Quantity
and quality of work will affect your overall happiness.

Most opportunities will require significant time investments. Overall

lifestyle is an important factor to me, so I wouldn’t want to spend 100 hours
a week doing something I hate. This factor should likely be considered as a
ratio to potential upside (see above). For example, I would trade 24 hours of
awfulness for $1M, but I wouldn’t trade 10 years of 70-hour-per-week
awfulness for half a million dollars.

Key Takeaways

A company’s success is dependent upon a lot more than the quality of the
idea. The question is not just how strong is this opportunity; it’s what
opportunity can and should I pursue.

A lot of entrepreneurial advice encourages persistence, hard work, etc.: “If

you put your mind to it you can do whatever you want.” The reality is, there
are many challenges from starting to growing, and different factors that can
make an opportunity more or less likely to succeed.

It’s probably pretty rare for opportunities to meet all of these criteria
perfectly. You’ll likely have to accept what you can tolerate and go for it. If
it was perfect and easy, there would likely be a lot of others doing it, and
therefore less upside.

There are plenty of opportunities out there, it’s just a matter of choosing
which is best. Everyone’s personal criteria and factors will probably be
different depending on their goals.
Case Study: How I Started 3 Businesses
in 3 Months
Note: I wrote the following as a blog post in early 2014. It is written in
present tense, though it happened in the past. I’m sharing it here to give you
an idea of my experience and how I’ve applied some of what’s in this book.

The first three months of 2014 were a pretty crazy time for me. Before I
dive into the juicy details of how I started 3 businesses in 3 months, that are
all making money, without spending more than a couple thousand bucks
and without a technical co-founder, let me clarify something: “starting a
company” doesn’t actually mean anything.

Anyone can declare, “I’m starting a company,” or build a product or pay a

lawyer to get incorporated…or even just sell a product for more than it
costs to produce. “Starting a company” is a “vanity metric.” Revenue means
something. Profit means even more.
Although 2 of the businesses I started are profitable and the other is
profitable if you net out upfront/non-operating costs, I’m certainly not
“rich,” so this is by no means a “victory lap.”

I am making money and it is growing each month, so I’m happy with my

progress. I’m also quite diversified. I have multiple businesses, many
different customers, and one of the companies has multiple products, all of
which have made money. Compared to an employee, who is completely
dependent on one customer and one business, I’m extremely diversified. I
also took on a couple small consulting gigs…so that could technically be
considered a 4th business.

I’m proud of my progress; however, I still have a long way to go. Hopefully
this progress update is entertaining and the lessons learned I share below
are helpful to you. With that, here are the juicy details of how I did it, and
my best advice to anyone looking to start a business:
1. Find Ways to Help People
While I may theoretically be my own boss, I consider my customers my
boss. Any company that doesn’t provide a product or service that’s of value
to its customers will fail. The job of an entrepreneur in a free market is to
serve and deliver value to customers. I made an effort to relentlessly serve
customers.

How did I figure out how to serve customers?…

a. Start Small

Instead of trying to “reinvent an industry,” or “disrupt” something, I just

tried to find ways to help people. Instead of even trying to find
“product/market fit,” I aimed for “product/customer fit.” If you can’t find
10 people who want your product, what makes you think you can get a
million?

Some of the stuff I’m working on probably couldn’t grow to be massive.

I’m OK with that. That’s in line with my goals right now.

b. Customer Development, Customer Development, and

MORE Customer Development

I asked people what challenges they were facing and what products and
services they wanted. The specifics of how I did that are a little more
complicated, but that’s the gist of it.
I did A LOT of customer development interviews. I interviewed people
over the phone, over Skype, over Gchat, over text, and of course…in
person. I was a customer development machine. My life was like a three
month long Lean Startup Machine seminar.
2. Optimize for Efficiency
Time and money are an entrepreneur’s most valuable resources. I didn’t
want to waste either.

a. Do Things That Don’t Scale

I sacrificed scalability for quality and for speed to validation much of the
time. Again, I might not ever scale these businesses.The big advantage of
not trying to scale is that you can “do things that don’t scale.” You can
provide better service to each customer, you can use non-scalable customer
acquisition tactics, etc.

b. “Concierge” Minimum Viable Product

I practiced iterative product development and made use of a minimum

viable product (MVP) in order to get feedback from customers and get
market validation or invalidation quickly. Basically, what that means is I
identified what was most valuable to customers and found ways to deliver it
in an efficient manner.

One of the products solves such a problem (20+ hours of time) that the
MVP was worth $99 to people. Using a “concierge MVP” — delivering the
value as a manual service rather than an automated product — enabled me
to learn more about what I actually needed to automate and how I could
improve the experience for customers. It also ensured I wasn’t building
something no one wanted. I only “concierged” what people wanted.

c. Diversify

Some might say diversifying is a fancy term for “throwing a bunch of shit
against the wall and seeing what sticks,” or “not being persistent,
committed, or passionate enough.” I say diversifying is rational and
responsible.

Knowing that most of my experiments would fail, I juggled multiple balls at

once. Some experiments did fail. A lot of the success stories you hear are
about an entrepreneur so obsessed with a vision…you don’t hear about the
entrepreneurs who do that and fail. I took a more logical approach.

I didn’t just iteratively develop the product…I iteratively allocated my time.

Each time I got a new customer I would spend a bit more time on that
business.
3. Play to Strength
I took advantage of the skills, assets, relationships, and expertise I have. I
have my blog following, relationships with startups, skills in content
marketing, and expertise in certain processes more than others. I didn’t try
to solve a hard technology problem because I’m not technical, and I don’t
have a technical co-founder. I didn’t try to serve politicians because I don’t
know many of them. I didn’t try to help customers with sharing photos
because I don’t know a lot about sharing photos.
4. Hustle, Hustle, and More Hustle
I worked my ass off. It was not easy. I worked a lot of hours and with a lot
of intensity.
In a startup, there’s always something you COULD be doing. And time
literally is money. When you don’t have the safety net on the downside that
a regular salary provides, and when you are directly compensated for the
value you create on the upside, you get pretty motivated to work.

a. Burn the Boats

I fully committed. I started on my own at the beginning of the year. My

girlfriend moved away a couple weeks prior. I didn’t have cable at my
apartment. I have nothing to do at my apartment besides listen to podcasts.
So I just stayed at the lovely WeWork Soho and worked more.

b. Suck it Up

It was hard…I was stressed…I didn’t have much time for other aspects of
my life…I cut spending on all the stuff I like doing…

I didn’t want to work. I didn’t want to get out of bed. I didn’t want to cold
call people. But I did it anyway.

You hear the stories about how much hardship entrepreneurs go through,
and it sounds so cool and tough. Well let me tell you: It’s all true and it’s a
lot less fun when you’re the one going through it. Even after hearing all the
stories and after working at a startup, I still had no idea how hard it would
be.

My friends are at their stable jobs with their stable salaries…and their
weekends off…and I’m just working my ass off without immediate
gratification.
Instead of letting the stress cripple me, I acknowledged it, accepted it, and
chose to view it as a positive experience rather than a negative one. I
focused on the long-term outcomes rather than just the short-term hardship.
5. Ask for Help
In addition to finding ways to help customers, I also asked A LOT of people
for help. I asked people if I could interview them for customer
development, I asked people to share my stuff on Twitter, I asked people for
introductions, advice, and more.

I was shameless! Fortunately, I have a great network of people that were

willing and able to help. Dustin helped me with some data analysis.
Brandon helped me with design. Matt provided a ton of product advice.
Lots of people took time out of their day to answer customer development
questions and provide feedback. Lots of people helped me with promotion.
And the list goes on.
6. Software is Eating Software Development
I took advantage of products that make it cheaper and/or easier to build a
product, get access to customers, learn to code, and more. Here are the
products I couldn’t have done without: WordPress, Codementor, Fedora,
Godaddy (amazing customer support), Amazon, Udemy, Fiverr, and
Gumroad.

I haven’t spent much money, haven’t raised money or needed to, and I still
don’t have a technical co-founder.
What I Didn’t Do
I’ve noted some of things I did that helped me, but I think there are also
some things that I didn’t do that helped me. I didn’t:

a. Wait around for that mystical technical co-founder. Those guys and gals
are hard to find! That could have taken me 3 months on its own. Instead, I
learned a tiny bit of programming and used the products and services
described above.

b. Raise money, or try to. Fundraising can become a 40 hour-a-week job for
at least a few weeks. That’s all time that could be spent raising revenue. I
have nothing against raising money, it just wasn’t right given my situation.

c. Have a whole lot of fun :(. Haha, it was a lot of work and I definitely
sacrificed on some other aspects of my life…like my social life and even
my nutrition and fitness. I had fun doing most of the work I had to do, but I
had less fun outside of work.

d. Stay in my comfort zone. I had to ask for help. I had to sell (yes, “filthy,”
“grimy,” sales). I cut spending on stuff I love doing. I had to work more
than I wanted to. But I did it anyway.
What’s Next?
Well, I’m definitely not rich yet, hah. If I was paying myself a market rate
salary I wouldn’t even be profitable. But I’m making money and it’s
growing. And I’m well diversified.

So I’m happy with my progress and plan to continue on the “entrepreneurial

journey.” It has been an incredible experience. I’ve learned a ton and I feel
I’ve grown as a person tremendously. I really think everyone should spend
at least three months of their ~1,000 month lives trying to start a company.

So what’s next? That’s something I’m trying to figure out right now, hah.
That’s part of why I wrote this (to reflect). I’ll have to make decisions about
what opportunities are best to pursue and how to allocate my time. I may
need to look for a technical co-founder (and become yet another non-
technical founder seeking a technical co-founder). But I’ll figure it out soon
and I’ll keep you posted!

Key Takeaways

● I started 3 revenue generating companies in 3 months by finding

ways to help people and working really hard.
● I started 3 companies in 3 months without a technical co-founder
and with under $2k by optimizing for efficiency, and taking
advantage of products and services that make it cheaper and easier to
build and launch a product.
● “Starting a company” doesn’t actually mean anything. Building a
profitable and sustainable business does mean something. I’m happy
with my progress but I still have a long way to go.
Key Takeaways and Additional Startup
Resources
Thank you for reading this book. I hope you’ve enjoyed it and I hope it
helps you start a business.

I teach to learn. I plan to start another company in about a year and I will be
using these methodologies to figure out what to do.

Below are some of the items from this book that I think are most important.
Following are a few suggested resources to help you start and grow your
business.

If you’ve enjoyed this book, I would greatly appreciate if you could write
an honest review on Amazon.
Key Takeaways
Don’t let not having an idea prevent you from becoming an entrepreneur.
Use one of the four methodologies in this book (“Meet Known Needs,”
“Ask Your Customers,” “Do What’s Working,” and “Scratch Your Own
Itch”) to get your next business ideas.

There are many risks associated with building a business. But one of the
most significant risks is building a product people want. This book focuses
on methodologies to effectively and efficiently learn what people want.

To apply the “Do What’s Working” methodology to identify your next

business idea, pick a company you see that has traction (validated market
demand). If you are passionate about the problem it’s solving and the
customers it’s serving, feel it has the potential to meet your goals, and if
you have the skills and assets to be able to compete, you could start a
similar company.

Entrepreneurs have been solving “known needs,” and earning wild profits
in doing so, for generations. To apply the “Meet Known Needs” strategy to
generating your next business idea, think about what people have a deep
need for, and how you can develop a solution that is ten times better than
anything that exists today.

To apply the “Ask Your Customers” methodology to generating your next

business idea, pick a customer segment you want to serve, and conduct
customer development interviews in order to determine what their problems
are. Starting with a customer segment you want to serve and a problem they
told you they have, rather than a startup idea, reduces the risk of there being
a disconnect between what you think they want and what they actually
want.

To apply the “Scratch Your Own Itch” methodology to identify your

business idea, think about what problems you have, what unmet needs you
have, and what products you wish you had that don’t exist yet. By starting
with a problem you have, you reduce the risk of trying to solve a problem
that no one has. After identifying an idea for a product you want, make sure
other people want it too by practicing customer development.

By developing an idea that solves a problem you have, solves a problem

people told you they have, solves a problem that people have been solving
for ages, or is comparable to an existing idea that has validated demand,
you greatly improve the chances that your idea has demand.

Competition, ability to monetize, and ability to build the technology are a

few of many risks that startups face, but they are probably not as great as
the risk of building something no one wants.

The 20th century startup strategy was to (1) generate an idea, (2) build a
product, and (3) see if it has market demand. Lean Startup has taught us to
(1) generate an idea, (2) see if it has market demand, and (3) build a product
if it does have demand. In this book, I propose (1) generate an idea based on
what market demand data you have or can get quickly, and (2) iteratively
develop the product to ensure it meets demand.

To evaluate a business idea’s market potential before it has validation or

traction, consider whether it satisfies a known need or is similar to another
product or service that has been validated.

There are nearly infinite business opportunities out there for everyone.
Consider your goals when deciding which opportunities are best for you.

To avoid spending a bunch of time and money on something no one wants,

and to build products that are valuable to your customers, practice customer
development and iterative product development.
Additional Resources
Business is complex. It requires a lot of different skill sets and analyses.
Below are few other resources I think you will find valuable if you are
interested in entrepreneurship:

Customer Development for Entrepreneurs: How to Test Startup Ideas and

Build Products People Love - By testing your idea to see if people want it
before you build it or try to scale, you can avoid wasting a lot of time and
money. This book provides actionable advice on how to put Lean Startup
into practice. It answers the nitty gritty questions like how to find customers
to interview, what questions to ask, and how to gain customer insights that
will help you build products people love. Check it out on Amazon here.

The Ultimate Guide to Blogging - Blogging can make for a great marketing
channel for your startup, or a great business within itself. In this book I
share the strategies and tactics that have taken my blog from a tiny
collection of posts that no one read, to a high traffic, revenue generating
portfolio. Check it out on Amazon here.

How to Build an Awesome Professional Network - Having a strong

professional network of potential partners, customers, investors, experts and
advisors who can help you with the many challenges that you will
inevitably face in starting up, etc., can be an unbelievably valuable asset to
an entrepreneur. In this book, I share the strategies and tactics I’ve used to
meet and build relationships with venture capitalists and angel investors,
highly accomplished entrepreneurs, and Fortune 500 executives. Check it
out on Amazon here.

Growth Hacking with Content Marketing - The second hardest part of a

startup, after building something people want, is probably acquiring
customers. This book teaches you how to develop content on multiple
platforms to get access to hundreds of millions of people at almost no cost.
check it out here.

If you have any questions for me, or would like to get notified about my
upcoming books, connect with me on Twitter at
http://twitter.com/mfishbein. There you will find a link to my personal blog
where you can contact me and sign up to receive my latest blog posts by
email.

If you’ve enjoyed this book, I would greatly appreciate if you could post an
honest review on Amazon.