I’ve helped 750+ startup founders. I always try to ask: “How did you come up with your idea?” Here are their answers:
First, they most commonly say: “Solve your own problems. Meaning, live on the edge of tech and see what issues you encounter. Then build a startup to solve it.” I agree, and I love that. But it’s not the whole answer you want. Where do these problems actually come from?
I’ll start by defining what a good startup idea looks like to me. It offers a meaningful benefit, such as: • A big reduction of an intense/frequent frustration • A big reduction in the cost of an expensive problem • A big increase in how entertaining/emotional a thing is
I call these 3x ideas—ideas compelling enough to overcome the friction to try ’em. Btw, some people say startups must be “10x better to succeed.” This is misleading. For an app to be 10x better, than, say, Uber, it would have to straight up teleport you to your destination.
Examples of real 3x ideas: • Dropbox/Box: Cheaply share files without coordination or friction • Instacart: Get groceries delivered—without a big cost premium • Uber: Get a cab 3x faster, in 3x more locations, and for cheaper
So, where do these 3x ideas come from? From the creation of new infrastructure—either technological or legal. I keep an eye on this. For example: 1. New technologies • Fast mobile processors • High-capacity batteries • Cryptocurrency architecture • VR
2. Changes in the law • Legalization of marijuana • Patents expiring (And 1,000 more infrastructure examples.)
When new technological/legal infrastructure emerges, startups pounce to productize the new 3x possibilities. Those possibilities fall into categories: 1. Cost reductions: • Cheaper broadband enables cloud storage (Dropbox) • Cheaper batteries enables electric cars (Tesla)
2. Better functionality: • Smartphones and 3G spawned the mobile era 3. Brand new categories: • The legalization of marijuana spawned weed stores and weed delivery apps (And more.)
As the CEO of Box wrote: “We bet on four mega-trends that would shift the power to cloud: faster internet, cheaper compute and storage, mobile, and better browsers. Even so, we underestimated the scale of each tailwind. Always bet on the mega-trends.”
So takeaway number one is that new infrastructure spawns startups. But, we’re not done. For those ideas to survive in the market, I believe you need another criterion: Cultural acceptance. Society has to be ready for you:
Here are startups that became possible through changes in societal behavior. 1. Pop culture making behaviors less cool: • Cigarettes go out of style, so we get nicotine and vaping • Heavy drinking goes out of style, so we get low-alcohol seltzers
2. Mobile apps making it more normal to trust strangers: • The rise of Uber, Airbnb, Tinder, and couchsurfing better acclimated society to trusting people they’ve only met over the Internet. This next part is important:
Notice how cultural acceptance results from (1) new media narratives and (2) the integration of technology into our lives, which changes behaviors. And note how those startup ideas were already feasible for a while, but couldn’t happen *until cultural acceptance was possible.*
Implication: Study changes in infrastructure plus shifts in cultural acceptance to identify what’s newly possible in your market. Here’s an example:
1. Uber saw that widespread smartphone adoption with accurate GPS data made it possible to replace taxis with gig workers. Cultural acceptance was needed here—because it was unorthodox to step into a stranger’s car and entrust them with your safety.
2. Hims saw that the Propecia hair loss drug’s patent was expiring, and capitalized on it by selling it via an online-first brand. Not much cultural acceptance was needed here since people were already buying the drug.
Okay, so let’s turn all this into a framework. Here’s just one way to find startup ideas. Step 1: Spot upcoming infrastructure: Subscribe to industry blogs/podcasts, try products, read congressional bills, read research, and talk to scientists and engineers.
Step 2: Determine if market entry is now possible: As you’re scanning the infrastructure, look for an emergent 3x benefit that your startup could capture.
Step 3: Explore second-order ideas too: If other startups capture a 3x idea before you do, that may be okay. First, there may be room for more than one (Uber and Lyft, Google and Bing, Microsoft Teams and Slack).
Second, when another startup captures a 3x benefit, it typically produces many downstream 2x ideas. This is a key point. For example, now that millions use 3x products like Slack, Zoom, and Uber, what tools could make them less expensive, more reliable, more collaborative?
Tons. So many downstream ideas emerge. 2x ideas may be smaller in scale but can still be huge startups. And they might be partially pre-validated.
To recap: One way to find startup ideas is to study infrastructure (3x ideas) and observe what emerges from startups that tackle that infrastructure (2x ideas).
And what if you’re already working on an idea right now? You can consider this framework to sanity check whether your *timing* is ideal: Are you going for a 3x or 2x? • If a 3x, is cultural acceptance coming soon? • If a 2x, is the 3x truly growing quickly and here to stay?
I post threads like this once per week. Follow along as I deconstruct startups and writing. See my past startup threads over here: @julian
btw this isn’t mutually exclusive with pursuing something you’re passionate about / a problem you encounter yourself. it’s just a framework for making sense of where those ideas come from
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