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Finding Profitable Startup Ideas
- judge2020 9y agoCached version: https://webcache.googleusercontent.com/search?q=cache:46fLVnigoRYJ:https://capitalandgrowth.org/articles/770/how-to-find-profitable-business-ideas.html+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:46fLVn...
- brucephillips 9y agoThe author doesn't describe the most reliable indicator of new opportunity, which is economic change. Change can come in the form of shifting demographics, new tech, or new product adoption. These are the events that increase demand or decrease cost for a new product opportunity. They should be where you direct your attention.
- thomk 9y agoI'd like to hear more about this. Is this a proven system, your personal theory or a little of both?
- brucephillips 9y agoIt's my own deductive theory. An opportunity is a profitable product, meaning demand is higher than cost. Most opportunities are new opportunities, due to market efficiency. So something must have occurred recently to increase demand or decrease cost.
- BatFastard 9y agoSo are there no new markets? Is everything just a more efficient way of doing things? I would say Microsoft found a new market, so did Facebook and Google. Amazon is efficiency, so is Uber, and Tesla. So there are new markets.
- brucephillips 9y agoI'm not sure what point of mine you're arguing. I agree that new markets exist.
- config_yml 9y agoAren’t those covered in Blue Oceans?
- brucephillips 9y agoWhat do you mean?
- NicoJuicy 9y agoBlue ocean = unicorn business. The billion dollar companies that search funding
- mindcrime 9y agoBlue ocean = unicorn business. It's been a while since I read the book, but I don't think that's quite right. A market can be a "blue ocean" but be too small to support a billion dollar business. And you can certainly build a billion dollar business in a red ocean, if you just execute better than everybody else. Now if one was to say "assuming sufficient size, it's easier to make a billion dollar company in a blue ocean market" then I think that would absolutely be true.
- brucephillips 9y agoBlue ocean does not equal unicorn. That's a mistake the author makes. Blue ocean, by definition, is just an open market. That market can be big or small.
- baxtr 9y agoGreat point. Reminds of a very good book. If you haven’t read “Good strategy, bad strategy” by R. rumpelt, you definitely should: Out of the myriad shifts and adjustments that occur each year, some are clues to the presence of a substantial wave of change and, once assembled into a pattern, point to the fundamental forces at work. The evidence lies in plain sight, waiting for you to read its deeper meanings.
- chubot 9y agoYup, PG wrote an essay on this: "How To Be an Expert in a Changing World". http://www.paulgraham.com/ecw.html http://www.paulgraham.com/ecw.html When experts are wrong, it's often because they're experts on an earlier version of the world. I absolutely believe there IS a "static world fallacy", and it gets particularly acute as you get older (and I'm not young). A couple really obvious examples are say Apple's App Store, or Google AdWords. Huge companies have been built on those drastic changes in the environment. If you understood those things early, you had a tremendous advantage. AdWords was tremendously effective when it first came out. I know a number of people who built single-person companies on top of it. Beware of hindsight bias: it's easy to think that those things were "obviously big", but there were plenty of other things going on at the time that you could have directed your attention toward.
- csallen 9y agoThis is somewhat covered in the "Industry Growth Rates" section: > At any given time, there are dozens of industries operating within new and underserved markets that are experiencing rapid growth… This almost always represents a possible entrepreneurial opportunity. His strategy might benefit from incorporating some of the things you mentioned — shifting demographics, new tech, etc. Then again, one of the most common entrepreneurial mistakes is to develop a solution and go looking for a problem. That rarely works out, because most new tech doesn't have any business applications. It doesn't fit into the market. So there's something to be said for a market-based approach, where you look for new things that people are actually paying for by examining high-growth industries, rather than simply looking at new tech.
- slinger 9y ago> At any given time, there are dozens of industries operating within new and underserved markets that are experiencing rapid growth IMO finding a market that is rapid growing is the most difficult part. It seems that I can never find a good idea worth pursuing.
- brucephillips 9y agoWhat do you mean "worth pursuing"? Do you mean that you can't find an idea worth investigating further? Or do you mean that you can't find an idea that survives a month of concentrated market research? The latter is reasonable. The former isn't. You should be able to come up with lots of ideas worth following up on. Let's play a game. Someone give me a product category, and I'll list ideas that are at least worth more research.
- Zalastax 9y agoFurniture is a category or products I have so many problems with (with a viewpoint from Sweden)... I'll let you write some ideas and then chime in with the problems I have seen.
- brucephillips 9y ago
- FLUX-YOU 9y agoAre there research firms that do ground work research, focus groups, talk to people on the street, build real professional networks to extract "problem stories" for ideas, and do competition research to the same level that e.g. short sellers might? Are these just normal market research firms, and are there boutique firms that have low-volume, high value clients?
- borplk 9y agoCan anyone give a decent concrete real example of "extracting problem stories"? I see this line of thinking repeated a lot but haven't seen any realistic examples that could lead to a viable small businesses. There are obvious ones that you don't need anyone telling you nowadays. Like "I need a good customer support software.". You don't need someone telling you that to know that you can make customer support software and make money with it. It's an existing category with lots of money and competition in it. Chances are anything you want to make already fits inside an existing "category". In that case it's not that useful to know the problem exists. The hard part is competing with hundreds of existing companies that have multiple years of experience advantage over you. Or you may get specific individual complaints and requests. Either it's such a specific odd thing that the solution for it is going to be "use google docs, dropbox, Excel, etc...". Or it is "missing features" from other stuff like "Zendesk is ok but it doesn't do ...". I just don't quite see the "light bulb moment" of this "talk to people and hear their problems" narrative. Problems fit into broad categories like file sharing, website creation, collaboration, productivity tools, word processing, entertainment, and so on. Whatever you do is going to fall under a category/industry amongst a bunch of other companies. Then it's a matter of competition and incremental improvement and everything that comes with it. I can't imagine what sort of "surprising" problem description one might hear from people that could give you new substantial knowledge about something you didn't already know.
- FLUX-YOU 9y agoFor me, it's been "file sharing and productivity tools but inter-operate with these other products by exchanging data and also do single sign on for our domain so we don't have to remember another password". Others have been "we need this particular view of information with sorting/searching/etc, but involves a non-standard, weird API or requires straight SQL. Also add some buttons to send it to another service and automate other actions. Also make a mobile app for it". These basically amount to custom dashboards with specific modules for each service. For well-known solutions that have some way to let you run arbitrary code to do these extensions, your small business essentially works a consultant firm writing custom code. All of these boil down to a story of trying to save time/money while avoiding hiring full-time developers, and I've also heard some compliance requirements mainly in conflict-of-interest-disclosure solved by software as well (usually resulting in some document sent up the chain or to the legal dept).
- lettergram 9y agoIt's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of the other guys are 2/2, the survival rate of the funded startups to-date is 2/(8-10) or <25%. I think part of that is simple because the people who didn't have funding didn't have a choice. It was survive or die. It reminds me of probably the wisest words I've read regarding startups: > Startups rarely die in mid keystroke. So keep typing! - How Not to Die by Paul Graham[1] The point is, focusing on something practical that doesn't need funding is like the easiest way to succeed and also find real problems. I've accidentially stumbled on solutions to problems other people have had and often those are the greatest little apps that can make you a steady income. [1] http://www.paulgraham.com/die.html http://www.paulgraham.com/die.html
- ajeet_dhaliwal 9y agoI’m currently reading ‘Blue Ocean Strategy’, the book where these red and blue ocean terms come from and I feel like what he’s describing sort of is blue ocean strategy even though he says it’s not, the Chipotle example is for sure.
- comstock 9y agoThe last sentence really stuck home to me (edited for clarity): While these Red Ocean ideas may not result in creating multibillion dollar companies they do offer opportunity that can lead to riches and personal autonomy. It’s sad that we live in a world where the goal of personal autonomy is so lofty. We have an over abundance of resources in the West. And yet having the freedom to work on useful things under our own direction is rare. It’s a shame that having “autonomy” is such a difficult goal to obtain.
- brucephillips 9y agoYou're underestimating how expensive that goal is. Providing every adult with basic income so that they can pursue their dreams would bankrupt the country.
- comstock 9y agoI’m not really talking about providing a basic income. What I’m saying is the barrier to having “personal autonomy” in a society where providing the essentials of life has to a high degree already been automated, is too high.
- brucephillips 9y agoHow would we provide the essentials of life other than through basic income or a similar welfare program?
- comstock 9y agoWork for a year then take two years off? Or retire earlier? Again, I didn’t say that people wouldn’t work at all. I said that the barrier to obtaining a personal autonomy is too high in a society where providing the essentials of life has been largely automated. We keep people working by making it had to survive otherwise (high rents that don’t represent the maintainence/construction costs etc).
- jopsen 9y ago
- bronlund 9y agoFinding a good idea is the easy part.
- enraged_camel 9y agoI used to think so as well, but over the years, I've realized that execution is the easy part, at least for me. Finding good ideas, as in ideas that can lead to profitable businesses, is difficult because it requires deep domain expertise.
- throwaway0255 9y agoYeah I used to think so too. Now I just think it's a thing people like to say to emphasize how difficult and important execution is. But execution mattering doesn't mean ideas are easy. Ideas are really, really hard. Good ideas are the result of an extraordinary feat of luck, an extraordinary feat of outworking everyone around you to get very deep domain expertise, or a combination of both.
- AznHisoka 9y agoI’m so glad so many more people are disagreeing with the truism “ideas are cheap”. Everytime people say that, I have to roll my eyes. Like really? execution is hard but easier as its operating within known boundaries and restrictions.
- throwaway_yaron 9y agoI guess different people really ARE good at different things ;) I am not gonna say great ideas are easy - but if u r a tech lead, you should have domain insights, and several high potential product/idea. But just deciding on what to focus is difficult. Cold calling is difficult. Pitching to complete strangers. Starting to buy leads, faking it - all these do not come naturally to many people. Also - i have to point out that i met some people which could have been a good match. But when the opening line is "50%-50% share before we start" - that is also a difficult bump to get over.
- imtringued 9y ago
- lubujackson 9y agoI have issue with the "Blue/Red Ocean" concept. Google is supposedly a Blue Ocean idea. Really? Sure, their approach was novel but the search market was already saturated by Alta Vista, Lycos, Yahoo, etc. You could say the same about Facebook with the competition of Friendster and MySpace. In both cases they took a new angle that let them expand well beyond the existing market, but the market did exist and was already developed. I would say that most "Blue Ocean" ideas seem to be more like "Red Ocean, with potential upside".
- eli 9y agoNobody else was doing AdWords
- georgiecasey 9y agowhich was stolen from bill gross and goto. google's innovation was a wayyy better mousetrap. i remember the first time using it in 1999, those 10 blue links were like a new, far superior version of the internet
- zpatel 9y agooverture?
- baxtr 9y agoI think of it in terms of: do customers already know that they want/need it - alternativly phrased - does is it solve a current customer need/painpoint? Taking that into account, google is indeed rather a red ocean idea. Whereas, the iPhone was a Blue Ocean product. The original iPhone was a bad phone to make calls with, it didn’t know MMS and no App Store. Many would prefer a Blackberry back then for serious stuff. But, is was magical enough to create a new market through its appeal.
- paulie_a 9y agoStep 1-1000: Find customers You are a sales person. Not a developer
- fogzen 9y agoThere are plenty of profitable business ideas but you can’t get capital for them because they aren’t going to be billion dollar ventures with 10x returns. The problem with entrepreneurship in America is lack of micro financing and support for starting small business - not lack of ideas or lack of people. How many more entrepreneurs and businesses could we create if financing was focused on capitalizing new business instead of only seeking the largest profit for the sake of enriching banks and already wealthy investors.
- gfodor 9y agoWhat you're referring to here are boring old commerical loans. Of course you're never going to get a bank to lend you money unless they can be sure you will repay the principal. If you're throwing money at risky ventures where you may lose your investment entirely it seems reasonable to expect a large amount of upside.
- fogzen 9y agoThat’s my point... the financial system is built to reward the wealthy and does not focus on creating new entrepeneurs. Commercial loans aren’t provided for startups. Only the SBA engages in that and you have to prove you don’t have personal funds and/or be a minority to get them (I know I’ve tried.)
- danieltillett 9y agoHow do you prove you are a minority?
- fogzen 9y agoReally depends on the specific loan program, but in general the majority of owners or employees must be black, Asian, Hispanic, or Native American. Not sure about the process of proving that though. There are loan programs for woman-owned businesses as well. http://www.mwbe.com/cert/certification.htm http://www.mwbe.com/cert/certification.htm
- kostarelo 9y agoIt looks like the article is not complete. There are still comments in there for missing citations. > To find out which industries are experiencing rapid growth, its often useful to look at secondary research sources. Three great secondary resources to gauge industry growth are IBIS Industry Reports, Dunn & Bradstreet and SageWorks [insert links for all three] > Richard White, in The Entrepreneur’s Manual, [insert link to resource] creating a decision tree that divides life by time and experiences exactly in half. For example, White recommends a person initially divide life between work and leisure.