Work.com blog

Menu
View more presentations from Rypple.

Since we’ve been involved with a successful start-up before, people often call us for advice and insight on starting a new company. We’re humbled by the requests and happy to share our experiences. But we realize that we keep getting the same questions. So, we’re going to start sharing answers to common questions and sharing tips that we have found worked for us. You mileage may vary so take this advice with a shaker of salt!

One of the most common questions we hear is: “I want to be an entrepreneur. How do I know I’ve come up with a great idea?”

The short answer is: you don’t. It’s incredibly hard early on to determine if your idea is great. Just about the only sure thing is that your idea will shift and morph as you move through the customer discovery process to find product/market fit.

For this reason, we strongly advise that early on you do not write a business plan.

Why? Business plans are exercises in convincing other people that you have a great idea. You lock yourself in a room, surf the web for stats to explain how big the market is, analyze competitors, and dream up how great your product/service is going to be. Along the way, you end up convincing yourself that you’ve got it all figured it out. This is a dangerous delusion. You have not figured it out… yet. You have simply searched for and found confirming evidence that supports your best guesses.

Instead of spending time trying to convince yourself and others that you have a great idea, we suggest the opposite: You should look for disconfirming evidence that the choice to start this business is a good one. That’s right - try to convince yourself that your idea is bad. If you can’t, your idea might be good. We loosely borrowed this approach from Roger Martin’Strategic Choice-Structuring Approach (PDF) in his book, The Responsibility Virus. Roger’s approach focuses on making hard strategic decision, and there is no tougher decision than: “do I/we risk my/our time, reputation, treasure and sanity on a crazy idea for a start-up?”.

Why try to prove yourself wrong? So that you don’t waste your time. You want to cycle through bad ideas quickly, refine your approach, and iterate your way to the great idea. Getting drunk on your own kool-aid too early is a big waste of time and resources.

Here’s what we did in the very early exploratory stages – and what we suggest you do.

  1. Create a general filter. Narrow down what you’re passionate about and interested in and what kind of business you hope to have. In our case, we knew we wanted: SaaS, low professional services, consumer-ized, freemium, focused on a large demographic shift. Run your ideas through your filter. If they don’t match up pretty well, decide if you want to continue exploring.
  2. Do general research. Once you have an idea you like, spend only a few quick days doing general research. We’ll write more about this later, but the best research is talking to real people who know something about the problem you hope to solve.
  3. Agree/decide on the 4-5 things that must be true for your idea to be awesome. This is the important part. For example, you might have a great idea to build personal jet-packs. If you were going to choose to start this business a few things must be true. For example:
    • People would want these (I would, btw!)
    • You could get regulatory approval
    • You have access to the technical know-how to design & build them
    • You could manufacture them at a price point a large market would bear
  4. Arrange these things that must be true in order of easiest to disprove to hardest. In this case the list might look this:
    • You have access to the technical know-how to design & build them
    • You could get regulatory approval
    • People would want these
    • You could manufacture them at a price-point a large market would bear
  5. Try to disprove your first point. Spend time skeptically examining whether you can convince yourself that this fact is not true. In this case, don’t dream about the rocket-scientists you could, maybe, someday hire. Instead, ask pragmatically if you actually have the skills to design and build a rocket pack or know anyone who could. If you don’t, you have disproven a key fact. Therefore, stop searching. Iterate. Move onto another, different idea. But don’t spend the next 5 months building a giant plan for your rocket-pack business, while ignoring the fact that you don’t believe you know how to build it!

The point here is to get agreement about shared facts, and then systematically, and with least possible effort/time disprove them. If you can’t disprove a fact, trying as hard as you can, move forward. If you can’t prove yourself wrong, you might just be onto something!

I’d love to hear what you think about this approach. Please comment/critique/complain in the comments below!

About

Daniel Debow is a co-CEO of Rypple. Daniel was one of the founders and the VP of Corporate Development and Marketing for Workbrain, an enterprise software company. He holds a JD and an MBA from the University of Toronto and an LLM in Law, Science & Technology from Stanford University. He's a huge music fan, plays the bass (badly), and spends far too much time online. He lives in Toronto with his wife and son.