How To Look at Life as an EntrepreneurBy Lluis Cañadell | Thu, 10/07/2021 - 09:06
“How do I come up with startup ideas?” This is a very common question asked by aspiring entrepreneurs. Many wrongfully believe that coming up with the right idea is like having a lightbulb come on. They think that the idea will appear in their mind the same way that the idea of gravity struck Isaac Newton when he was lying below an apple tree. Cases like this may exist but they are the exception.
Most ideas that eventually become successful startups are the result of looking at life as an entrepreneur. In that regard, here are four exercises that will help you on your path to finding that big idea.
- Get used to thought experiments
Imagine how you believe the world will look far into the future. Picture how society will evolve. For instance, I thought that the non-digitization of bookkeeping in micro merchants across Latin America was unsustainable. I imagined what could happen 10 years from now and considered three possibilities:
- Micro merchants would fail to digitize and gradually be wiped out by large retailers
- Micro merchants would evolve and eventually use laptop-based accounting software
- Micro merchants would use a simplified and free mobile-based bookkeeping tool
For each of these I questioned my assumptions and came to the conclusion that the third option was the most likely. I created Treinta, a free bookkeeping app for Latin American microbusinesses in 2020. In little over a year, close to 2 million businesses have used Treinta.
- Notice frustrations
Startups address existing needs by either businesses or consumers. These needs can be either conscious or unconscious. The idea for Airbnb seems dead obvious now but in 2008 it was crazy for most people. How can this be? What we are used to can blind us. If you traveled before 2009, you stayed at a hotel and nothing was wrong with it.
Except that some aspects of how hotels work can lead to frustration:
- Hotels are expensive
- Availability is not always guaranteed
- They do not add to your travel experience
- Are inflexible with check-in and check-out times
- Can feel too impersonal
- Often lack kitchen and living room
- Are very inconvenient for long-term stays
“But this is just how travel works!” is something that Airbnb’s founders were often told. We now know that there was a need for a different type of accommodation.
If you proactively go around the world taking notice of frustrations, this will soon become second nature for you, and could bring you to your next startup idea.
- Explore the world
We live in a globalized world in which everyone is interconnected. Many problems are common across the globe. In 1995, eBay was founded in the US and by the end of the decade it was a public company worth billions. A young Argentinian Stanford MBA student took notice and created MercadoLibre, a site that would be similar to eBay but adapted to the nuances of the Latin American market. Today, MercadoLibre is the most valuable tech company in Latin America with a market cap of over US$90 billion.
If you move around outside of your local context, you will notice products and services that are different from what you are used to. Have you ever thought to yourself, “I wish this existed in my country” while traveling?
Similarly, you can find opportunities in foreign countries. Have you ever thought, “why don’t they have X here?” Many successful startups were founded by immigrants.
Traveling and noticing differences can be a great tool to identify startup ideas in your home country and abroad.
- Focus on incumbents
Not every successful startup creates something fundamentally different from what exists in the market. Many penetrate existing industries with better products, typically with a technologically competitive advantage.
Nubank was founded less than 10 years ago in Brazil. It operates in the banking industry but was built as a tech company with superior customer service. Nubank is now the most valuable bank in the country.
Uber, Lyft, DiDi and many other ride-hailing platforms across the world disrupted the taxi industry. Robinhood has disrupted stock brokerages and Tesla has disrupted the car industry. Sometimes it may seem that century-old industries are impossible to penetrate. However, recent history has taught us that this is not the case.
Despite having vast resources, large incumbent companies in big industries are typically slow and lack flexibility. They were built for another time and often fail to adapt their talent, technology and culture. But most importantly of all, public companies are evaluated on their short-term performance. Therefore, their incentives are often not aligned with long-term success. It takes a great CEO to sacrifice short-term profit guidance for a strategic bet that will require years of investment.