How To Come Up With A Business Idea

How To Come Up With Business Ideas

Copy What Works

“Everything is up for grabs. If you don’t find something worth stealing today, you might find it worth stealing tomorrow or a month or a year from now.”

– Austin Kleon, Steal Like an Artist

This comes first because I don’t want you thinking you need some magically original idea to start a successful business.

Few successful businesses sprouted from a truly original idea.

Google wasn’t the first search engine and Facebook wasn’t the first social network.

What business ideas do you already see working well for other people?

Look here:

• 70+ legit ways to make money online
• 40+ creative ways people make money online
• Find opportunities on Fiverr
• Products on Product Hunt
• Products by Indie Hackers
• Business success stories on Starter Story

Can you do something similar?

Start Small

Warren Buffett had a net worth of $76 billion last I checked.

But Warren started small: his first business was delivering newspapers in his hometown.

So before you go trying to start the next billion dollar business, test out a $100 idea.

Then a $1000 idea.

Start small and work your way up.

Catch a Wave

“The market you’re in will determine most of your growth.”

– Sahil Lavingia

In 1994, Jeff Bezos was working at a hedge fund when he read that internet usage had grown 2300% in one year.

That incredible statistic prompted Jeff to start Amazon.com, which eventually made him the richest man in the world.

Catching that early wave was a big key to Amazon’s success.

My favorite way to spot new waves is a subscription to Trends…

These services also help:

• Exploding Topics
• Glimpse
• Google Trends
• Trends.vc

Focus on the Problem

“It doesn’t make any sense to make a key and then run around looking for a lock to open. The only productive solution is to find a lock and then fashion a key.”

– Seth Godin, This Is Marketing

A trap many entrepreneurs fall into: building a product nobody wants.

To avoid this, first focus on finding a painful problem that people will pay to have solved.

Actually, don’t just find the problem – define it.

In the words of Jean-Louis Rawlence…

“A well defined problem offers up its own solution.”

Find the Pain

The more painful the problem, the more people will pay you to solve it.

How do you find painful problems?

One way is via Kernal, a website that lists and ranks problems people would like to see solved.

For example:

Extract the Pain

Better than looking for problems online: talk to real people one-on-one and find out what pains they’re dealing with.

Dane Maxwell calls this process “idea extraction”…

“Don’t come up with your own ideas. Stop. Now. Just extract them from the market.”

– Dane Maxwell

Dane includes a 5 Question Framework for idea extraction in his book:

• What is your most consistent and present problem with [insert topic]
• How do you go about solving this problem?
• What happens if you don’t solve it?
• What is your dream solution to this problem?
• Would that be worth paying for, if so, how much?

This video from LIFFFT also has some great tips for idea extraction:

Become a Concierge

Brandon Gaille writes:

“In a world where time is a premium commodity, the ability to have someone run casual errands can be an investment that is well worth the price that is paid. This is where the concierge business model comes into play. A concierge isn’t just something that hotels and other service organizations provide. Many small business owners are offering their services to people who want to spend quality time with family and friends when they have it instead of grocery shopping, doing laundry, and other mundane chores.”

What concierge services could you start offering today?

Can you find someone who’ll pay you to:

• Set up a website?
• Teach them English?
• Manage their social media?
• Do something else?

Those might seem like simple ideas, but sometimes that’s all you need to start a successful business.

“If somebody is doing something that is useful to the rest of society, I think that’s a good thing. It doesn’t have to change the world.”

– Elon Musk

Piggyback

Michael Schneider’s private label product is a phone wallet that sells well on Amazon…

• Michael Schneider

• Co-founder of Gecko Travel Tech

• $88,000 monthly e-commerce revenue

Michael has piggybacked on Amazon’s domination of ecommerce by selling his product via their store, where millions of customers are shopping daily.

Others have found success piggybacking on the success of eBay, Fiverr, and other marketplace businesses.

Think about the businesses you see thriving right now.

Is there an opportunity to piggyback on their success?

Picks and Shovels

California’s first ever millionaire was a guy named Samuel Brannan.

He made his fortune during the mid-century gold rush, not by finding gold, but by selling picks and shovels to prospectors. Levi Strauss also made a killing around that time, selling tents and blue jeans.

21st century equivalent: in 2017 Coinbase was making $2.7 million per day, not by trading cryptocurrencies, but by providing a platform that allowed other people to trade cryptocurrencies.

• What’s the next gold rush? 
• What will those prospectors need?
• Could you sell it to them?

Same Same But Different

Can you copy someone else’s idea and put your own spin on it?

You could target a different niche, operate in a different country, tweak some of the features, etc.

Famous example of this:

• LinkedIn = Facebook for professionals
• VK = Facebook for Russia
• Grab = Uber for Southeast Asia
• Discord = Slack for gamers
• Glassdoor = TripAdvisor for jobs

Same Same But Better

Paul Graham writes:

“Look at something people are trying to do, and figure out how to do it in a way that doesn’t suck.”

The classic example is Google.

There were other search engines before Google came along, but they all kinda sucked. Google found a better way to rank web pages and became the undisputed champ.

Do you see any products or services that suck?

Could you do the same thing but better?

Scratch Your Itch

Jack Dorsey was scratching his own itch when he co-founded Twitter…

Another good example of this is CD Baby, which eventually sold for $22 million.

Words from founder Derek Sivers:

CD Baby was not meant to be a business, it was really just my band’s website where I built a online shopping cart to sell my CD.

Then some of my musician friends in New York City said “whoa dude, can you sell my CD through that thing?”, and I said “yeah sure!” I was just doing it as a favor to friends.

A trick from Paul Graham to help uncover your itches:

Take yourself out of the picture. Instead of asking “what problem should I solve?” ask “what problem do I wish someone else would solve for me?”

Keep a Diary

Ryan Hoover writes:

Write a detailed diary of everything you do in a typical day and identify things that could be improved. It could be something important (e.g. what tasks to prioritize in your day) or relatively small (e.g. deciding whether to bike or take an Uber to work).

Every now and then, look back through your diary and see if the same idea keeps popping up, or a common theme.

Keep a Spark File

Similar to keeping a diary.

Steven Johnson writes:

For the past eight years or so I’ve been maintaining a single document where I keep all my hunches: ideas for articles, speeches, software features, startups, ways of framing a chapter I know I’m going to write, even whole books. I now keep it as a Google document so I can update it from wherever I happen to be. There’s no organizing principle to it, no taxonomy–just a chronological list of semi-random ideas that I’ve managed to capture before I forgot them.

Occasionally reading back over what you wrote is important here too.

Steven recommends doing so every 3-4 months.

Turn Inside Out

Basecamp is a project management software that apparently does $25 million ARR.

According to founder Jason Fried, it was first built for internal use so his team could better manage projects in their web design firm…

Then our clients started asking us what software we were using to run these projects. Turns out they wanted to use it for their own in-house projects!

Hey, maybe we’ve got a product here! So we polished it up, priced it fairly, and put it on the market.

Have you built a tool or system to make your own life easier?

Could you polish it up, price it fairly, and put it on the market?

Alternatively, what kinds of tools are being used inside big companies that there might be a mass market for?

Just Have Fun

Othmane E writes:

Just get creative and pick some crazy idea that you think would be very fun to play with. Most silly apps ( of which many are profitable ) have started this way.

No business model, no plans to monetize, and no expectations. Just build something you genuinely think would be cool to have. Even better, build something you and your friends would find very cool. You may find out later on that a lot of other people find it very cool as well.

A good example of this is Potato Parcel…

The company was started as a joke, giving people a way to send a potato through the mail with a custom message written on it.

Potato Parcel ended up earning as much as $25k/month and received a $50k investment from Kevin O’Leary on Shark Tank.

Smart People’s Weekend Projects

Chris Dixon writes:

Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.

It’s a good bet these present-day hobbies will seed future industries. What the smartest people do on the weekends is what everyone else will do during the week in ten years.

Who are the smartest people you know of?

How are they spending their weekends?

How Teens Communicate

Avichal Garg writes:

Understand how teens communicate — Figure out where teenagers are spending their time to see what the communication products of the next decade may be. Teens are unencumbered and very creative, so seek to understand the motivations instead of judge.

Watch for Market Inflections

“Any time you can think of something that is possible this year and wasn’t possible last year, you should pay attention. You may have the seed of a great startup idea.”

– Sam Altman

According to Charles Ngo, market inflections “are key events which lead to significant changes.”

Those significant changes can lead to significant business opportunities.

Charles lists 6 types of inflections:

• Accessibility Inflection
  What new thing do people have access to now, or what will they have access to soon? Widespread access to the internet created many business opportunities. Likewise when everyone suddenly had a computer in their pocket.
• Societal Shift Inflection
  What’s becoming more or less of a social norm? For example, only housewives used to work from home; now many people do. What business opportunities has this opened up?
• Platform Inflection
  Platforms like YouTube and Facebook are big businesses in themselves, but they also provide an ecosystem for other businesses. What’s the next big platform? What kind of business would thrive there?
• Technology Inflection
  Think of things like GPS tracking, cryptocurrency, augmented reality, drones, etc. What’s the next big technology inflection? What opportunities will it unlock?
• Rules and Regulations Inflection
  9/11 changed many rules and regulations related to travel, creating new business opportunities. Same with the legalisation of cannabis. What’s next?
• Influencer Inflection
  There are influencers in every niche. Who are they and what are they saying, wearing, promoting? Whatever they do, thousands or millions are likely to emulate.

Look for Market (In)efficiencies

“If markets are efficient, then all information is already incorporated into prices, and so there is no way to ‘beat’ the market because there are no undervalued or overvalued securities available.”

– Investopedia

Business Insider refers to market inefficiencies as the lifeblood of entrepreneurs.

There weren’t many people working as web designers in the 1990’s, and clients back then had no idea how much a website should cost. It was an inefficient market, and many web designers took advantage by charging high prices for simple projects.

Nowadays it’s hard to charge $5000 for a basic site when a client can easily find someone in a developing country to build something similar for $50.

The increased market efficiency has made things worse for web designers, but better for people seeking web design services. Meaning it’s possible to benefit from both efficient and inefficient markets, depending on your business.

Five examples of market inefficiencies via Kevin Johnston:

• Bargain Prices
  What goods or services might be undervalued right now?
• Inflated Prices
  What goods or services might be overvalued right now?
• Monopoly
  Where can you establish a monopoly? Or where might you be able to topple one?
• Unclear Property Rights
  Johnston gives the example of the music industry, where customers feel entitled to download and share music for free. What opportunities come from that?
• Public Goods
  “The government tends to subsidize or pay for public goods.” Businesses that serve the government often have just one customer, thus creating a market inefficiency.

What (in)efficiencies do you see in the market?

How can you take advantage of them?

Idea Sex

“Everybody uses a laptop and a smartphone. And a question has arisen lately: is there room for a third category of device in the middle? Something that’s between a laptop and a smartphone.”

That was Steve Jobs introducing the iPad in 2010.

Apple went on to sell more than 400 million iPads over the next eight years, proving that there was indeed room for a laptop-smartphone lovechild.

What products / services / technologies / business models could you combine to create something new?

David Skok shares a framework that might help.

Think how you might combine two or more of these elements:

(Hat tip to James Altucher for the title of this concept.)

Use Your Existing Skills

“It’s also important to think about what you’re well-suited for. This is hard to do with pure introspection; ideally you can ask a mentor or some people you’ve worked with what you’re particularly good at.”

– Sam Altman

What are you already good at or well-suited for?

Could you build a business around that?

Explore New Distribution Channels

Tori Dunlap jumped on TikTok when it was still fresh and earned $60,000 in 6 weeks.

She writes:

“In terms of followers, it took me 3 days to do on TikTok what it took me 3 years to do on Instagram.”

What’s an up-and-coming distribution channel that you can leverage?

Or could help others leverage it and build a business around that?

Find Business Ideas on Reddit

You can stumble across a business idea on subreddits like…

• r/Futurology
• r/gadgets
• r/lifehacks
• r/shutupandtakemymoney
• r/technology
• r/DIY

Better yet: find subreddits covering topics you’re interested in and find inspiration there.

Don’t worry about coming up with a completely original idea.

Can you improve upon what you see, put your own twist on it, or provide a complimentary product or service?

• Bonus tip: use this free Reddit keyword research tool to see what topics are being talked about most in your favorite subreddits.

Fastest Growing Subreddits

SubredditStats.com shows you the fastest growing communities on Reddit.

What products or services might those communities pay for?

Democratize Information

Rich Barton founded three companies each worth over a billion dollars:

• Expedia
• Zillow
• Glassdoor

Kevin Kwok writes that Barton built all three companies using the same playbook:

“Glassdoor revealed how employees really felt about companies. Zillow shed light on what any house was worth. Expedia let people see the prices and availability of flights and hotels without talking to an agent. These were knowable things that people have always talked about with each other.

[…] Rich Barton took these whispered conversations and made them public for everyone to see. Afterwards, everyone wondered why they were ever private.”

What whispered conversations could you make public?

And how might you monetize that information?

Bundle

The other day I was browsing Amazon for a foam roller and saw this bundle offer…

The company simply bundled a foam roller together with some complementary products, and went on to make thousands of sales.

Are there existing products that you could bundle together and sell?

This can also work for services.

For example, you could probably charge more for your copywriting service if you bundle it together with landing page setup.

Unbundle

This graphic via Andreessen Horowitz shows how Craigslist was “unbundled” into many successful businesses…

Unbundling basically means taking a slice of a bigger business and making it a standalone thing.

Sometimes the slice can end up being worth more than the business that inspired it.

For example, before Airbnb came along, people were using Craigslist to do essentially the same thing. Airbnb even promoted their listings on Craigslist to gain traction in the early days.

And yet Airbnb ended up becoming a much bigger business than Craigslist. 

Think of an existing mega-business…

• Facebook
• Google
• Amazon
• Reddit
• Etc.

Can you take a feature of one of those and make it a standalone business?

Invert

“Take the core strength of a company and flip it on its head to see what a product experience may be if you did the opposite, e.g. Snapchat was based on ephemerality and Facebook based on permanence of identity, or Southwest was based on a point-to-point model with only one type of plane whereas other airlines use a hub and spoke model with multiple types of planes.”

– Avichal Garg

Think of a successful business and invert it.

What would that look like?

Let Ideas Evolve

“Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes.”

– Chris Dixon

Plenty of famous companies started as one thing before finding their groove.

For example:

• YouTube began as a dating site
• Flickr started as a chatroom for an online game
• Nintendo started out selling playing cards
• Taco Bell started as a hot dog stand
• Samsung used to export noodles and dried fish

The lesson here is that your business idea doesn’t need to be perfect to get started. It will likely evolve into something different as you try it out and learn more about the market.

Embrace Bad Ideas

“The problem is that you can’t have good ideas unless you’re willing to generate a lot of bad ones.”

– Seth Godin, Fear of bad ideas

A popular copywriting trick is to write out 20 versions of a headline before deciding on one.

Most of those headlines will suck, but one or two will probably be good.

Tell Everyone

Forget NDA’s.

You’ve more to gain than lose by telling everyone your ideas.

“The best ideas sound bad but are in fact good. So you don’t need to be too secretive with your idea—if it’s actually a good idea, it likely won’t sound like it’s worth stealing.

Even if it does sound like it’s worth stealing, there are at least a thousand times more people that have good ideas than people who are willing to do the kind of work it takes to turn a great idea into a great company. And if you tell people what you’re doing, they might help.”

– Sam Altman, Startup Playbook

Peep Shows

Some big businesses are basically peep shows.

Joe Rogan earns millions by letting people listen in on his conversations with interesting people.

This South Korean YouTuber has earned thousands of dollars by letting people watch him study…

Even more profitable in South Korea – up to $10,000 per month – is letting people watch you eat. 

What do you do in private that people might like to see?

Sell Your Docs

Many books and courses are essentially just documentation or processes polished up and packaged as a product.

For example:

• Principles by Ray Dalio
  Dalio’s book is his list of rules for operating effectively in life and business.
• Everyone Can Build A Twitter Audience by Daniel Vassallo
  “I’ll show you how I built my Twitter audience, and how you can do it too.” (Sold $14k in one day.)
• Remote by Jason Fried and DHH
  The founders of Basecamp sold a book of essays about how they work remotely.

Do you have any processes or documentation that you could turn into a product?

How about offering to do this for other businesses or entrepreneurs?

Join a Community

If you want to start a business in a specific niche, find communities in that niche and join them.

Read everything you can, contribute, ask questions.

“When you’re in the community, you’re way more attuned to what people want. You see their struggles first-hand; you hear them talk about the desires they have for their life.”

– Justin Jackson, How do I build something people want?

Those struggles and desires may well lead you to a profitable business idea.

Explore Many Ideas

“Amateurs go with the first idea that comes into their head. Professionals realize the first idea is rarely the best idea.”

– Farnam Street, Amateurs vs Professionals

That’s why you should explore many ideas. 

Don’t get stuck on the first thing that comes to mind.

Become an Idea Machine

“Good idea generation is like a muscle that you are constantly flexing. It’s a mindset and attitude towards the problems you face everyday and your ability to effect change. While some people are innately curious and problem solvers, I still think like any muscle, this skill is something that can be exercised and improved.”

– Sachin Rekhi

James Altucher recommends writing down ten ideas every single day.

Pick a topic and flex your muscle.

They don’t even have to be business ideas.

For example:

• What are ten ways you can surprise your partner?
• What are ten old ideas you can make new?
• What are ten things you learned recently?

Get Obsessed

Paul Graham writes:

“What matters is not ideas, but the people who have them. Good people can fix bad ideas, but good ideas can’t save bad people.”

He goes on to explain what he means by good people…

“One of the best tricks I learned during our startup was a rule for deciding who to hire. Could you describe the person as an animal? It might be hard to translate that into another language, but I think everyone in the US knows what it means. It means someone who takes their work a little too seriously; someone who does what they do so well that they pass right through professional and cross over into obsessive.”

Get obsessed with business ideas, and you’ll start seeing them everywhere.

Then you’ll get obsessed with validating them.

Eventually you’ll find a juicy one, and you’ll become obsessed with that.

For example, James Dyson became obsessed with the idea of a bagless vacuum cleaner in the late 1970s. It took him fifteen years and 5000+ prototypes before he brought it to market, and several more years before it became a hit product.

It wasn’t so much an idea that brought James success, but an obsession.

Remember: Ideas are Overrated

Derek Sivers explains why…

Millionaire publisher Felix Dennis once wrote:

“Good ideas are like Nike sports shoes. They may facilitate an athlete who possesses them, but on their own they are nothing but an overpriced pair of sneakers. Specially adapted sneakers may be a good idea. But the goal is still to win, and sports shoes don’t win. Athletes do.”

Build Skills

Lastly, if you’re struggling to come up with a business idea, consider dropping the pursuit and focusing on building skills instead.

As Cal Newport writes:

“the key to work you love is not to follow your passion, but instead to get good at something rare and valuable, and then cash in the ‘career capital’ this generates”

You may not love that rare and valuable thing at first, but getting good at it can open up all sorts of great opportunities.

The catch is, you don’t always know what skills will prove valuable in the future.

Steve Jobs’ answer to this is to simply follow your curiosity.

As he said in his famous 2005 commencement speech…

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

How do you come up with business ideas?

Let me know in the comments below.

Especially if you use a method I didn’t mention above.