How I came up with a business idea

Number one reason I hear from people who say they want to start a business but haven’t got around to it yet? I don’t have an idea.

In my humble opinion, that’s a rather lousy excuse. Generating ideas is a skill that can be trained.

Saying that a business rests on one good initial idea is like saying that you win a marathon by taking the first leap really far. In reality, you’ll need to have hundreds of ideas and make thousands of decisions. You can’t wait for divine inspiration. Instead, define and follow a systematic process for generating and evaluating business ideas.

In this post I will describe the process I went through: from having no ideas, through having dozens, testing three, and finally committing to one, all in under a month.

Generating ideas

If you want to start a business and don’t have an idea, the first task is to find an idea.

When I met Chris on Indie Hackers, we immediately hit it off. We didn’t have any ideas. What we did have were similar goals and complementary skills. We decided to brainstorm ideas over the following week, then come together and discuss them. But how the hell do I brainstorm business ideas?

As a software engineer, my automatic reaction when faced with uncertainty is to ask the internet for help. So I was looking at Google results for “how to find business ideas” faster than Trump could say “election fraud”.

I landed on this page. The following points resonated with me:

Scratch your own itch: Create a solution for something that you find really annoying or painful in your life.

Look at the internal processes of the company you are working for (Human Resources, Finance & Accounting, Marketing, Management, Sales, etc.): What are processes that could be made more efficient? How could they be improved with the use of technology?

Analyze Trends

Think of businesses and industries that you would have an unfair advantage in. This could be based on extensive industry experience, knowledge, skills or network. How could you use this advantage to build a business?

Thinking about these points, I sat down and started writing down ideas. Here are some that I later discarded:

  • Website for neighborhood communities to share tools
  • Tools for fostering radical transparency during remote work
  • Tool for managing paid Telegram channels
  • Paid online community for achieving a specific goal, à la ship30for30.com
  • App for doing exercises from Design Your Life
  • App or physical product for reducing caffeine intake, maybe like weancaffeine.com but targeted for Europe

We decided to focus on the following, which we were most excited about and thought had the greatest potential. All related to remote work because we both experienced firsthand how challenging it can be:

  1. Marketplace for virtual team-building experiences
  2. Online community like Gather but for indie hackers and freelancers
  3. Microsoft Teams app for helping remote teams bond

We agreed to spend the following few weeks evaluating these ideas in parallel, and then select the most promising one.

Testing ideas

For the marketplace, we found dozens of Facebook and LinkedIn groups related to virtual events and posted this:

We were hoping to talk to people who are in charge of finding events for their companies (like HR managers). However, all the responses we got were from vendors who offer virtual events. Nonetheless, we set up calls with several of them. We were amazed at their kindness and helpfulness and learned a lot about the industry and its problems. One of the calls was with the owner of a multi-million dollar events company that’s part of a global industry group, so we were astonished and grateful that he was willing to spend his time talking to us.

Ultimately, we decided not to pursue this idea for several reasons. Firstly, it would be a marketing-heavy endeavor. Building the website with listings would be relatively easy, but getting vendors to list on it and (more importantly) buyers to visit and use it would be a huge challenge. Our skills and advantages lie in technology rather than marketing, so it’s not a good fit for us.

Secondly, monetization would be non-obvious and would likely require significant traffic. Lastly, after the pandemic ends there will be a steep decline in remote working and the demand for virtual events.

The second idea was an online community for independent developers and freelancers. The pain point is that working without a team is challenging because you lack social connection, a sense of belonging, and accountability. We binned this because there was little response to our posts, and because building a community requires animation and content creation that didn’t seem like something we’d enjoy long-term.

Finally, the idea we went with. I spotted an opportunity in Microsoft Teams. Teams is a collaboration app, a direct competitor to Slack launched in 2016. By 2019, it overtook Slack in the number of users, due to superior distribution and Microsoft’s deep pockets. Like Slack, Teams has an app store but it’s much less vibrant and developed. My assumption is that Teams is seen as less hip, because it targets enterprises, because of inferior user experience, and because it’s Microsoft, so startups as less likely to use, be familiar with, and target this platform. Which means less competition.

The idea was to build a Teams app inspired by an existing and popular Slack app, for which there’s no good alternative on Teams. We picked a certain app that helps remote teams bond by matching people randomly for weekly chats and stimulates group discussions with engaging prompts, among other features. Of course, the intention is not to plagiarise it, but to build a unique solution and brand based on the same problem, in a market that they are not present in. We’ll use the random matching feature to get our foot in the door with users, then adjust course based on their feedback and needs.

This approach has several benefits. Firstly, the problem is pre-validated. If people are paying for this solution on Slack, there’s a good chance they would do it on Teams. Secondly, building an app or plugin on a platform makes sales and discoverability significantly easier, especially if the app store is small. Finally, by minimizing the cost of validation and development we leave more time to focus on marketing, sales, customer support (all the business stuff), and learning the whole development life cycle. These are things we’re doing for the first time in our lives, so picking a simple and relatively safe idea is a good sandbox for learning.

So we went for it.

Committing to an idea

And now we’re building. We began by starting to use Teams ourselves and reading their documentation to find out how it works and how to develop apps for it. We’re currently designing the user experience and building the prototype, and hope to launch on the app store in around 2 months.

We also built a landing page, shared it online, and already have a list of dozens of emails. This further proves that there is demand for what we’re building and keeps us motivated.

Here’s the back-of-the-envelope business plan. Our target monthly recurring profit (revenue after costs, mainly cloud services) is $6000. After taxes, that leaves me and Chris with around $2000 each, which is enough to cover our living expenses. At that point, we’ll know that it’s a viable business and we can commit to growing it further.

If we charge $50 per month in subscription fees, we need 120 clients to get $6000 in revenue. I can’t say what the expenses will be, so let’s just round it up to 150 clients. We haven’t decided the pricing strategy yet, but even several hundred clients does not seem unachievable. Among tens of millions of Teams users, we should be able to convince at least some of the value of our product.

Only time will tell if our assumptions were valid and if we can pull it off. I fully expect to have some fuck-ups.

But even if this project fails, I’ll still have learned valuable skills and I’m confident I can easily generate new ideas to try. Lack of ideas is not an excuse, it’s a problem to be solved.

1870cookie-checkHow I came up with a business idea

Leave a Reply

Your email address will not be published. Required fields are marked *