A few days ago I came across this article from Indiehackers (a really cool site!) called “How to Come Up with Profitable Online Business Ideas”. It’s basically a giant list of folks that built something describing their process, which I guess is helpful to some degree, but ultimately feels like it misses the mark.
It opens with:
Interested in building a startup, or starting your own small business to make money on the side? Learn by example from dozens of entrepreneurs who share how they came up with great business ideas.
Immediately we’re missing the mark here – almost all of the quoted entrepreneurs with substantial revenue never sat down and said “What should I build? I have no idea!”. Breaking down the data, I calculated there were 15 entrepreneurs with little or no “domain expertise” (e.g. they sat down and said “What should I do?” or had an “Eureka!” moment) and 17 with substantial domain expertise (worked in the industry for a while that spawned the idea, etc.).
Breaking down the data, we see:
|Domain Expertise?||Average Rev||Min||Max||StDev|
This is not a particularly scientific analysis but it does illustrate the point – if you’re sitting around going “What should I build?” you’re setting yourself up for failure. The pain should be obvious if you have expertise in a field.
Matt’s Oversimplified “How to Come up with Profitable Business Ideas” Algorithm
- Be embedded in the industry for a while
- Make lots of connections, build credibility
- Build SaaS app to solve key pain point you experienced in #1
- Sell to the folks you know from #2
- For bonus points/de-risking: find 30 potential customers (from #2) and reach out to them and validate this idea (Jobs-to-be-Done). Get a handful of them to commit, even verbally, to buy this when you’ve got an MVP built.
- Clearly this is not the only way to be successful, but “I have a random idea lemme build it” is a great way to be not successful ↩
- Succeed = your business that makes enough revenue to support you and a reasonable lifestyle, equating (and/or eventually surpassing) what you would typically make at a W2 gig, from a diversity of customers and not trading your personal time for money. ↩