4 - Deciding What To Start: The Framework
Having covered my decisions of whether to start and when to start a new startup, I’m now moving onto how I decided what that startup would be. Here’s the framework I used.
What Type of Business to Start
All businesses were founded at some point, but very few are startups. Paul Graham, the Founder of Y Combinator, defines startups as businesses that are designed to be able to grow very fast. We live in a world that lionises startups with its echo chamber of exits, funding rounds and flotations. It would be easy to fall into the trap of regarding non-startups as a lower caste of business.
Everything in life involves trade offs. Starting a startup (as opposed to a non-startup) is no different. Shooting for that steep growth trajectory is indivisible from a huge time commitment and high stress. It is an implicit acceptance that achieving work-life harmony will be more challenging.
In The Founder’s Dilemmas, Noam Wasserman says that to start a startup is to optimise for getting rich vs having control. In seeking to grow fast and successfully get rich, the Founder(s) must cede control to a broader leadership team, board and investors. I interpret “rich” more broadly than just financial outcomes and include richness (or scale) of impact, experience and learning.
I got a lot from reading Wasserman’s book. I realised that I previously unwittingly optimised for control as an entrepreneur. The book helped me frame the question of what type of business I wanted to start; to see that there is no right answer to that question. Only that it must be a conscious choice.
In his article Graham uses Google and a barbershop to draw out the distinction between startups and non-startups. Having been banned from cutting my sons’ hair after what I thought were two pretty respectable efforts, my chances of successfully opening a barbershop were not good! Fortunately, doing consulting work in accounting tech gave me first hand experience of starting a non-startup. And whilst there was a really nice small business that could be built there, I was clear that it didn’t inspire me long term. The scope for impact, learning, challenge, developing a great team and culture; meant, notwithstanding its trade offs, starting a startup was the right choice for me.
Problem First
My focus then was finding a big problem that I was inspired to start a startup to address. This was 100% about finding a problem; an inadequately met need. And 0% about conceiving of a product or solution; an idea for something that could be sold to build a business. This was really important for three reasons:
Sustenance
Service
Success
Sustenance because startups are marathons not sprints. If all goes well, this is going to be 10+ years of my life. So much will change in that time. But core human needs seldom do. I needed to find one that I was inspired to meet. I re-read The Monk And The Riddle by Randy Komiser, which is all about creating a life that inspires you whilst making a living. It’s also the most entertaining and informed introduction to startups and venture capital economics that I’ve ever read. He talks about how
“There must be something more (than money), a purpose that will sustain you when things look bleakest. Something worthy of the immense time and energy you will spend on this, even if it fails….You need something that by itself will inspire you, and others with you, to prevail, no matter what adversity arises”
Starting with the problem ensures my subsequent ideas will be in service of that problem. This has been a key learning for me. It’s so easy to plan forward from an idea rather than planning back from the customer’s problem. I might get lucky and stumble forward into a big, meaningful and enduring problem. But I might not. This wouldn’t be a huge issue were it not for the fact that my ego can get attached to ideas, which could lead and keep me down a dead end. In contrast, my ego can’t get attached to customer problems as they inherently belong to other people. By 100% starting with and obsessing about the problem, I’ve found it so much easier to pick up, put down and refine my ideas based on feedback. I see with new clarity what Jeff Bezos meant when he talked about being stubborn on the vision but flexible on the details.
Success, quite simply, because emotions are contagious. If I’m not passionate about solving this problem, how can I expect other team members to be? How can I expect customers to get excited about the solutions we come up with? There’s a positive correlation between passion for the problem being solved and likelihood of making a dent in it. As Dr Seuss put it so brilliantly in the Lorax:
“Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not”
My Framework
I used a two-part process for considering different problem spaces. I took inspiration from reading the fantastic Essentialism - The Disciplined Pursuit of Less by Greg McKeown. He has the following three question approach:
What am I deeply inspired by?
What am I particularly talented at?
What meets a significant need in the world?
A core premise in Essentialism is that we fill our lives with the good at the expense of the great. McKeown applies the concept of net promoter score (NPS) to our life choices so we can make sure we seize the elite opportunity 9s and 10s vs the good but not great 7s and 8s. He has a process for doing this that I used as the second stage of problem space consideration. That is to set out the three minimum criteria a problem space would need to meet in order to be good (i.e a 7 or 8). And then to set out a further three ideal criteria to be great (i.e. a 9 or 10).
My minimum criteria reflected the three questions above:
A worthy problem that I am inspired by, has personal meaning for me and really gets under my skin. One that will provide me with the ability to work with high integrity people as team and customers (and suppliers if it’s a marketplace)
That I can compelling answer “why me?”. What about my skills and experience makes me particularly well placed to address this problem successfully?
That it is a huge opportunity. One which a £1bn+ company could be built in addressing it successfully. That I could confidently pitch to elite venture capitalists (not to say I will). That has opportunities for a material amount of some combination of proprietary tech, network effects and economies of scale (a way of thinking about startup opportunities I took from Zero To One)
My ideal criteria were then:
That addressing this problem offers the opportunity to attract the very best in the world at what they do as team members. People who I’d be inspired to work with and learn from. Who in turn would be inspired at the opportunity this offered for personal expression
The opportunity to delight customers in delivering the solution. I took a lot of inspiration from reading Delivering Happiness by Tony Hsieh here
That Jess, my wife, is excited by it and interested in talking about it. This is such an underrated point. As an entrepreneur, you have so many things about your startup it is useful to talk about. It makes such a difference if your partner is intrinsically interested in what your startup does, as opposed to just being willing to talk about it
In the coming posts I’ll set out the different problem spaces I considered in applying this framework, how I went about validating my chosen problem space, choosing the initial customer pain to address and conceiving of the initial product offering. Thanks for reading and stay tuned!