Reading time – 7 minutes
TLDR – Offer something that people will need, and make it easy for them to fall in love with it.
The best business ideas to launch are the ones that you yourself need. And the key word here is need, because need implies utility not value. When something is intrinsically useful, it makes money whereas something valuable doesn’t necessarily do. Utility is quantifiable across the board whereas value is subjective. You can even take it left, with regard to your purchases: a Citroën is just as useful as a Mercedes because the only thing you ask from a car is to take you from point A to B, but in terms of value Mercedes >> Citroen.
As a matter of fact, a product is really a solution to a problem. People buy paper toilet because life would be pretty shitty otherwise. Likewise, we came up with pens and pencils because we needed to write on paper. We chose to write on paper instead of a rock because paper is more transportable.
Ultimately though, the only thing that can validate a start-up idea is the market. If you are pushing something that is not necessarily useful but you have people lining up around the corner waiting for you to drop, then you should definitely go ahead with your idea. But if you are looking for a template to make a safer, more educated bet then make sure your product solves a need.
Finally here’s the rubric I came up with it to evaluate a product after reading Blue Ocean Strategy & Peter Thiel’s Notes on start-ups.
1/ What problem is being addressed?
2/ What are the most fundamental truths about the problem?
3/ Are those all the right axioms? Are they relevant?
4/ What conclusion follows the above?
5/ How is the problem presently handled?
Don’t forget all the alternatives to the product. Alternatives include products or services that have different functions and forms but the same purpose. For example, if I want to spend a night out, a restaurant and theater serve the same purpose. What are the alternative industries to your industry? Why do customers trade across them? Focus on the key factors that lead buyers to trade across alternative industries and eliminate or reduce everything else.
6/ Think of all your non-customers.
The first tier of noncustomers are buyers who minimally purchase an industry’s offering out of necessity but are mentally noncustomers of the industry. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself.
The second tier of noncustomers is people who refuse to use your industry’s offerings. These are buyers who have seen your industry’s offerings as an option to fulfill their needs but have voted against them.
The third tier of noncustomers is the farthest away from an industry’s existing customers. Typically, these unexplored noncustomers have not been targeted or thought of as potential customers by any player in the industry. That’s because their needs and the business opportunities associated with them have somehow always been assumed to belong to other markets
What are the key reasons first-tier noncustomers want to jump ship and leave your industry? Look for the commonalities across their responses. Focus on these, and not on the differences between them.
What are the key reasons second-tier noncustomers refuse to use the products or services of your industry? Look for the commonalities across their responses. Focus on these, and not on their differences.
How can I get the third-tier noncustomers on-board?
Desegment buyers and unleash untapped demand.
7/ How can we recruit them manually?
8/ How can we offer them an insanely great experience?
Can we bundle offers? Mercedes, BMW, and Jaguar focus on outcompeting one another in the luxury car segment as economy car makers focus on excelling over one another in their strategic group. What are the strategic groups in your industry? Why do customers trade up for the higher group, and why do they trade down for the lower one?
There is a chain of “buyers” who are directly or indirectly involved in the buying decision. The purchasers who pay for the product or service may differ from the actual users, and in some cases there are important influencers as well. What is the chain of buyers in your industry? Which buyer group does your industry typically focus on? If you shifted the buyer group of your industry, how could you unlock new utility?
What is the context in which your product or service is used? What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a complementary product or service offering?
9/ What are the adoption hurdles in rolling out the idea?