Create Business Ideas
The Builder as a Creator of Ideas
The management of a venture builder is comprised of professionals experienced in the creation and management of companies. This expertise is a fundamental value for the startups within a venture builder's portfolio, as it aids in making informed decisions.
However, the role of management extends beyond mere guidance; it plays a critical part in the genesis of the idea itself. Identifying and selecting good opportunities is a complex task, requiring years of experience, encompassing both failures and successes, to develop an intuition for recognizing the patterns of success in a business idea.
Many ideas that appear interesting on paper may not be viable in practice. Some are interesting and viable but not feasible without substantial funding. Then, there are the truly good ideas: those that are interesting, viable, and feasible. The builder's management, with its wealth of market and technological knowledge, has the capability to evaluate the viability and feasibility of an idea without needing to execute it.
It's crucial to understand that when an idea is genuinely good, it often attracts numerous teams working on it simultaneously. Innovation is incremental, and often many eyes are set on the same horizon. As a result, the market sees hundreds of teams developing the same concept, competing against each other. Usually, only one or two teams emerge successfully. This highlights that execution is more critical than the idea itself; otherwise, every team working on every good idea would find success. However, this presupposes that the teams have started with a solid idea.
In essence, if a team hasn't identified a strong product-market fit or a large, viable market, their chances of success are slim, regardless of the team's capabilities. They would need to pivot to find success. Therefore, one of the essential activities of a venture builder is to create and refine business ideas. It's important to define what a business idea is and what it is not. A good business idea is not just a concept; it must be a viable, feasible plan with a clear path to success.
What is a Business Idea?
The phrase "Ideas are worthless" is often repeated, and it holds a kernel of truth. Ideas are abundant, and almost everyone thinks theirs are good, leading to the belief that the idea itself is of little value. It's the execution that truly makes a difference.
Contrary to this, in a venture builder context, starting with a business idea that is interesting, viable, and feasible is crucial. It's far more beneficial than pursuing a bad idea that isn't feasible or viable. So, what exactly is the value of an idea? It largely depends on what we define as an 'idea'. For an idea to be considered a 'business idea' within a venture builder, it must at least include:
- A business model, defined by elements like value proposition, revenue sources, cost structure, market segment identification, key resources, and activities.
- The market size, which gauges the potential reach of the idea.
- The knowledge necessary for development or production.
Without these elements, an idea cannot be considered a 'business idea', especially not in a serious entrepreneurial environment.
The Rare Truths
The creation of business ideas is a logical process, grounded in rational principles where experience is a deciding factor. The viability and feasibility of an idea are what make it good. In a way, we can consider good ideas as based on truths - empirically verifiable facts, whereas bad ideas are based on falsehoods - concepts that turn out to be incorrect.
There's a personal factor to consider, which we might call 'creativity' or 'inspiration'. Even with the same information, some people can discern better truths than others. As Peter Thiel suggests, there are 'obvious truths', widely accepted and believed by everyone. But then there are 'rare truths', which are more valuable economically. These rare truths are hard to find, understand, and sometimes even hard to believe.
Peter Thiel distinguishes between universally accepted truths and rare, valuable truths that are not widely recognized.
Thiel also talks about two types of rare truths: macro-truths and micro-truths. A macro-truth is a general truth that no one else has recognized. For instance, before Airbnb's success, a macro-truth was that people are willing to sleep in a stranger's house. Micro-truths, on the other hand, are specific truths that determine the quality and success of these ideas.
Thiel identifies two types of rare truths. Macro-truths are overarching truths about general behavior or preferences. Micro-truths pertain to specific factors that influence the success of an idea.
When creating business ideas, it's important to recognize that the novelty of an idea is not crucial to its success. Overcoming the misconception that ideas need to be groundbreaking or unprecedented is necessary. Effective ideas don't always have to be disruptive. In fact, being the first to pursue a business opportunity can often be a reason for failure, as there's no market context to rely on, and it can be challenging to make the market understand the need.
The Impact of Pivoting
Understanding the dynamic nature of idea generation is crucial. An idea is not a static entity that appears out of nowhere. Rather, ideas are alive, evolving as they interact with the world. When a project is launched, it's exposed to real-world feedback, leading to the birth of new ideas that can significantly shape the company's direction. The key lies in effectively listening to and managing this feedback, allowing the idea and the company to grow and adapt.
Ideas don't just emerge spontaneously; they evolve through interaction with the world. When a project is launched and begins to interact with its environment, it receives feedback. This feedback is crucial as it often leads to new ideas, helping to reshape and refine the company.
Inspiration Sources
Finding the right inspiration for innovative business ideas involves several facets. One aspect is identifying an attractive customer segment that resonates with our innovative business ideas. It's not just about the idea itself, but also about understanding who it will serve and how it will impact that segment.
Another source of inspiration can come from the experience of an entrepreneur who is deeply immersed in solving a problem. Picture an entrepreneur, almost banging their head against the wall, tirelessly mulling over the same problem in search of an innovative solution. This process often involves sitting with subject matter experts who, although not obsessed with the same ideas, share a similar motivation to find a solution. It's in these collaborative, thought-provoking sessions that innovative solutions often emerge.
In both pivoting and sourcing inspiration, there is an underlying theme of dynamic progression, adaptability, and a deep understanding of the target market and problem-solving.