Ask HN: How did you get your product idea?
18 comments
A couple of my companies were based on solving problems that I personally had and that I wanted to see solved. That's supposed to be the gold standard of idea generation in entrepreneurship - solving a problem you've experienced PERSONALLY. Interestingly, the two companies that were my "solve your own itch" startups are also by far the smallest (in revenue and impact) of the companies I have founded. All of my other ideas - including the most successful ones - were not solving my own problems, but were trying to make an existing business or industry into the way I would want it to be in an ideal world, even though I have no personal interest or stake in them. So, basically trying to solve problems for others while wearing rose-colored glasses. This tends to happen one of three ways:
1. I see an existing company and say, "Those guys are idiots...I can do that better." (So, naivete and overconfidence FTW.)
2. I see an opportunity to combine elements of multiple industries into a new offering (or bring an approach from one industry to another) in an attempt to make something closer to "the way I think things SHOULD be."
3. MOST commonly, I apply a specific set of rules and methods to try to make a business or industry into the mold of "the way I think things SHOULD be" because I think it could be profitable for me to do so. ALL industries are screwed up in some way...and I have arrived at a set of 'tools' that I use over and over in an attempt to build a better company within individual industries. Some of the 'tools' are tangible things, but many are just applying a new perspective or philosophy. I've found a set of these that I can apply to any business, and I've internalized them to a degree that I can scan for new opportunities and apply them without thinking. I wrote some of them down for a few of my employees, and one guy said they reminded him of Roger Von Oech's Creative Whack Pack but with a more practical business focus. I don't know if that is the case, I just think of them as universal lenses and I try looking at things with them in various combinations until everything seems to fit. There's the famous A. Kay quote about a new perspective being worth 80 IQ points...well, I need all the help I can get, so I built a toolbox of "new perspectives" that I can use as needed. Systemizing it has led to my most successful ideas.
Once I've come up with a basic business model, I have to take the rose-colored glasses (and other lenses) off and be brutal to determine whether or not the project would actually work and whether or not it is worth the time/money/energy to do it. Less fun, but very necessary.
1. I see an existing company and say, "Those guys are idiots...I can do that better." (So, naivete and overconfidence FTW.)
2. I see an opportunity to combine elements of multiple industries into a new offering (or bring an approach from one industry to another) in an attempt to make something closer to "the way I think things SHOULD be."
3. MOST commonly, I apply a specific set of rules and methods to try to make a business or industry into the mold of "the way I think things SHOULD be" because I think it could be profitable for me to do so. ALL industries are screwed up in some way...and I have arrived at a set of 'tools' that I use over and over in an attempt to build a better company within individual industries. Some of the 'tools' are tangible things, but many are just applying a new perspective or philosophy. I've found a set of these that I can apply to any business, and I've internalized them to a degree that I can scan for new opportunities and apply them without thinking. I wrote some of them down for a few of my employees, and one guy said they reminded him of Roger Von Oech's Creative Whack Pack but with a more practical business focus. I don't know if that is the case, I just think of them as universal lenses and I try looking at things with them in various combinations until everything seems to fit. There's the famous A. Kay quote about a new perspective being worth 80 IQ points...well, I need all the help I can get, so I built a toolbox of "new perspectives" that I can use as needed. Systemizing it has led to my most successful ideas.
Once I've come up with a basic business model, I have to take the rose-colored glasses (and other lenses) off and be brutal to determine whether or not the project would actually work and whether or not it is worth the time/money/energy to do it. Less fun, but very necessary.
can you elaborate more on a particular business?
Sure. The example I've discussed most recently on HN is the real estate brokerage, and that one would probably be the easiest to explain. (I also don't want to give away the special sauce recipes for some of my other ventures. The real estate brokerage is probably our least original business in the overall scheme of things.) I have no personal pain points with real estate, but real estate is a huge, screwed-up industry...so there is enormous opportunity. I just looked for points of differentiation that would get the business closer to "the way things should be" from a consumer perspective.
One of the main problems is the incentive structure in real estate, and that's one of the first things I look at in any industry. I like performance-based incentive structures whenever possible. (And we tried a true performance-based incentive scheme first, but it confused too many customers.) Real estate agents, on the other hand, are almost always paid a percentage of a property's sale price - a commission. So all agents are rewarded if you pay more for your home, even when they are theoretically supposed to be helping you BUY a home for less. Our firm instead does everything for an hourly fee, like an accountant or attorney, but with a maximum cap on what the consumer pays - so there is no incentive for us to entice anyone into spending more on a home. We usually save customers at least $1000 in 'commissions' over what the 'discount' and online brokerages like Redfin and ZipRealty charge. And we don't artificially limit consumer choice to protect our pocketbooks (most discount/rebating/online brokerages will not help you buy short sales, for example, because they are more work and the transactions take longer. Many of these brokerages will also not help you buy a house for under $200K because their minimum commission would not be met, etc. We help you buy the best home for you. Period.) Agents are usually paid way too much for what they do, but sometimes they are underpaid for what they do. Consumers should pay for what they use, and no more. That is fair to both parties. VERY few existing full-service brokerages charge hourly fees. Less than 1%. Anything other than commissions is uncommon except for (limited service) flat-fee MLS listing agencies. That is a point of differentiation for us, but it's not enough.
Another issue in the industry is the principle of agency. This would take some time to explain, but basically consumers are often UNKNOWINGLY represented by agents that have no fiduciary duty to them (and/or agents that have other biasing factors that might affect the transaction outcome.) It's like Little Red Riding Hood having the Big Bad Wolf as an agent, while thinking that it's her Grandma. We represent buyers exclusively. Less than 1% of brokerages in the US are exclusive buyer agencies. That, coupled with the fee-based compensation, puts us above all but a few agencies in the country. But we need more differentiation, so we have to drive further into the "way things SHOULD be."
So we use technology that even some of the largest brokerages in the US don't have. We have a Microsoft Surface-like device that helps clients find their new homes. We have an augmented reality app that helps them find their new homes. We commissioned a traffic study ($50K+) for our area and we layer that onto our maps so that people could see actual commute times. We've hired outside consulting firms to audit local schools, etc. etc.
Another issue in the industry is the degree of education and training agents have. We require our agents to get certain industry certifications in buyer's agency and negotiation, etc. Less than 1-3% of agents in the US have each of these certifications...and very few agents have all of them. Another point of differentiation.
Most agents are concerned about how much money they can make off of you, first and foremost. As a consumer, that sucks. So we focused on how to make the experience better. We have full-time, trained financial planners that will work with you on deciding if you should even buy a home at all...or if it makes more sense for you to rent. You meet with them first, of course, and that first meeting is free. (We're probably one of the only real estate brokerages in the US that turns people away and tells them they shouldn't buy a home.) The same financial planners will help you figure out the best way for you to use the 'extra' money we would've been paid in commission that we refund to you. Would paying off bills be best? Investing it? A mortgage buy-down? Closing costs? Some combination of these? We help you figure out what is the smartest course of action. We also have trained credit counselors to help people fix certain credit problems so they can get better mortgage rates and/or qualify to start with. We have attorneys on retainer to help with certain issues. Most things are included within our fees. We have an in-house lending department that will help you get the best mortgage for you. Period. If you go with another lender for some reason, we'll help you analyze their offer to make sure there aren't any junk fees or hidden gotchas. We have free classes on this sort of thing, as well. We have a negotiated discount with a title company, so our clients pay less than most for their title insurance. Etc. Etc.
We focus on providing a superior customer experience. We act in the consumer's best interest, even if it means we lose money on a specific transaction. And we do make less PER TRANSACTION than our competitors, but the LIFETIME value of our customers is much higher because they stick with us. By the time they're done, they want to use us for everything they can. Which is cool, because we own a bunch of other businesses (asset management,etc.) I've even had a customer try to pay me more at closing because he felt guilty about taking advantage of me.
In taking off our rose-colored glasses, we had to be very particular about what type of client we could serve profitably. They had to be tech-savvy and they had to be qualified to buy within a certain time frame, for example. So we pre-qualify like crazy. The free financial planning is primarily for our customers, but it also helps us not waste time on people who shouldn't be buying, can't buy, or that would be unpleasant to deal with. Even people we turn away tend to send us referrals, so we don't hurt too many feelings. We essentially have a marketing budget of zero. Right now, we have a waiting list of clients because we can't ramp up fast enough to serve them while still maintaining quality standards. Did this example help any?
One of the main problems is the incentive structure in real estate, and that's one of the first things I look at in any industry. I like performance-based incentive structures whenever possible. (And we tried a true performance-based incentive scheme first, but it confused too many customers.) Real estate agents, on the other hand, are almost always paid a percentage of a property's sale price - a commission. So all agents are rewarded if you pay more for your home, even when they are theoretically supposed to be helping you BUY a home for less. Our firm instead does everything for an hourly fee, like an accountant or attorney, but with a maximum cap on what the consumer pays - so there is no incentive for us to entice anyone into spending more on a home. We usually save customers at least $1000 in 'commissions' over what the 'discount' and online brokerages like Redfin and ZipRealty charge. And we don't artificially limit consumer choice to protect our pocketbooks (most discount/rebating/online brokerages will not help you buy short sales, for example, because they are more work and the transactions take longer. Many of these brokerages will also not help you buy a house for under $200K because their minimum commission would not be met, etc. We help you buy the best home for you. Period.) Agents are usually paid way too much for what they do, but sometimes they are underpaid for what they do. Consumers should pay for what they use, and no more. That is fair to both parties. VERY few existing full-service brokerages charge hourly fees. Less than 1%. Anything other than commissions is uncommon except for (limited service) flat-fee MLS listing agencies. That is a point of differentiation for us, but it's not enough.
Another issue in the industry is the principle of agency. This would take some time to explain, but basically consumers are often UNKNOWINGLY represented by agents that have no fiduciary duty to them (and/or agents that have other biasing factors that might affect the transaction outcome.) It's like Little Red Riding Hood having the Big Bad Wolf as an agent, while thinking that it's her Grandma. We represent buyers exclusively. Less than 1% of brokerages in the US are exclusive buyer agencies. That, coupled with the fee-based compensation, puts us above all but a few agencies in the country. But we need more differentiation, so we have to drive further into the "way things SHOULD be."
So we use technology that even some of the largest brokerages in the US don't have. We have a Microsoft Surface-like device that helps clients find their new homes. We have an augmented reality app that helps them find their new homes. We commissioned a traffic study ($50K+) for our area and we layer that onto our maps so that people could see actual commute times. We've hired outside consulting firms to audit local schools, etc. etc.
Another issue in the industry is the degree of education and training agents have. We require our agents to get certain industry certifications in buyer's agency and negotiation, etc. Less than 1-3% of agents in the US have each of these certifications...and very few agents have all of them. Another point of differentiation.
Most agents are concerned about how much money they can make off of you, first and foremost. As a consumer, that sucks. So we focused on how to make the experience better. We have full-time, trained financial planners that will work with you on deciding if you should even buy a home at all...or if it makes more sense for you to rent. You meet with them first, of course, and that first meeting is free. (We're probably one of the only real estate brokerages in the US that turns people away and tells them they shouldn't buy a home.) The same financial planners will help you figure out the best way for you to use the 'extra' money we would've been paid in commission that we refund to you. Would paying off bills be best? Investing it? A mortgage buy-down? Closing costs? Some combination of these? We help you figure out what is the smartest course of action. We also have trained credit counselors to help people fix certain credit problems so they can get better mortgage rates and/or qualify to start with. We have attorneys on retainer to help with certain issues. Most things are included within our fees. We have an in-house lending department that will help you get the best mortgage for you. Period. If you go with another lender for some reason, we'll help you analyze their offer to make sure there aren't any junk fees or hidden gotchas. We have free classes on this sort of thing, as well. We have a negotiated discount with a title company, so our clients pay less than most for their title insurance. Etc. Etc.
We focus on providing a superior customer experience. We act in the consumer's best interest, even if it means we lose money on a specific transaction. And we do make less PER TRANSACTION than our competitors, but the LIFETIME value of our customers is much higher because they stick with us. By the time they're done, they want to use us for everything they can. Which is cool, because we own a bunch of other businesses (asset management,etc.) I've even had a customer try to pay me more at closing because he felt guilty about taking advantage of me.
In taking off our rose-colored glasses, we had to be very particular about what type of client we could serve profitably. They had to be tech-savvy and they had to be qualified to buy within a certain time frame, for example. So we pre-qualify like crazy. The free financial planning is primarily for our customers, but it also helps us not waste time on people who shouldn't be buying, can't buy, or that would be unpleasant to deal with. Even people we turn away tend to send us referrals, so we don't hurt too many feelings. We essentially have a marketing budget of zero. Right now, we have a waiting list of clients because we can't ramp up fast enough to serve them while still maintaining quality standards. Did this example help any?
greatly. wow. You're my hero =P. I am seriously amazed that you can be profitable for doing so much. You're based in Chicago, right? I might have to hunt you down sometime =).
As a long-time blogger with a decent readership, I felt the need to post on a regular basis (to keep my blog active and readers happy). But coming up with stuff to blog about always proved to be a challenge. I did not want to blog about stuff that everyone else was talking about ("echo chamber" as bloggers like to call it) and I wanted to write about stuff my readers would enjoy and actually read/comment on. Coming up with unique topics is not easy.
The idea for a user-generated content suggestion tool (as i called it back then) was born. Fast-forward a few years and you have http://Skribit.com, the startup I'm working on, with the slogan "Cure Writer's Block" :-)
In general - most of my ideas that I work on come from frustrations I have in my daily life.
The idea for a user-generated content suggestion tool (as i called it back then) was born. Fast-forward a few years and you have http://Skribit.com, the startup I'm working on, with the slogan "Cure Writer's Block" :-)
In general - most of my ideas that I work on come from frustrations I have in my daily life.
I have 10 or so large-ish problems that I encounter on a weekly (if not much more frequently) basis. I would gladly pay money for a solution to these problems, so I can only assume that others would pay money to me if I solved one of them. Bam! Idea!
The hard part is finding the time to implement said ideas.
The hard part is finding the time to implement said ideas.
Lol, I have plenty of time yet not so plenty of ideas! :P
Shout out a few ideas? I'd be glad to consider developing them. :D
Shout out a few ideas? I'd be glad to consider developing them. :D
Mine (http://agilezen.com/) was born out of the having to deal with over-complicated project management tools that were bloated with features that I didn't want to use but still had to pay for. Feeling the pain myself helped me recognize the need in the market.
I was just wondering how did you stumble upon the idea for your product? Was it born out of a problem, or?
Yes -- I needed good backups (I had seen people lose data and was having nightmares), needed them to be secure (as FreeBSD Security Officer I have sensitive information which I don't want to have released via my backups), and couldn't find any secure backup solutions available which I felt were trustworthy.
Yes -- I needed good backups (I had seen people lose data and was having nightmares), needed them to be secure (as FreeBSD Security Officer I have sensitive information which I don't want to have released via my backups), and couldn't find any secure backup solutions available which I felt were trustworthy.
[deleted]
I needed a way to advertise and discover services over the internet. I found Apple's Wide Area Bonjour (aka. DNS Service Discovery) to be a good fit except that I couldn't find a suitable DNS server to use. So I wrote one and have started work on making it available as a hosted service. If you've got a few OS X machines and you'd like to try it out head over to http://www.globalhostname.com/ and try the free beta.
No one's making the product I desire, so after years of searching and waiting I have decided to just make the darned thing myself.
I asked friends and family what problem they need solved until I got a problem that I couldn't list any software that already solves it.
So I am currently working on something, and hopefully it will pan out.
So I am currently working on something, and hopefully it will pan out.
Solving my own problem. Unfortunately though, after I've already solved it fot myself, I've been lax about polishing it for public release... Someday, maybe!
I asked a similar question recently. There have been many nice discussions about this topic. This search reveals some:
http://www.google.com/search?q=product+idea+site:http://news...
Ideas are cheap, development easy, so why aren't we ... http://news.ycombinator.com/item?id=733804
Ask HN: I want to build/sell a product. Steps? http://news.ycombinator.com/item?id=571884
Your 'Big Idea' Sucks http://news.ycombinator.com/item?id=737717
Start with a Problem, Not an Idea http://news.ycombinator.com/item?id=661440
http://news.ycombinator.com/item?id=439302 Ask HN: I have three good ideas. Help me choose idea ...
http://www.google.com/search?q=product+idea+site:http://news...
Ideas are cheap, development easy, so why aren't we ... http://news.ycombinator.com/item?id=733804
Ask HN: I want to build/sell a product. Steps? http://news.ycombinator.com/item?id=571884
Your 'Big Idea' Sucks http://news.ycombinator.com/item?id=737717
Start with a Problem, Not an Idea http://news.ycombinator.com/item?id=661440
http://news.ycombinator.com/item?id=439302 Ask HN: I have three good ideas. Help me choose idea ...
its all about identifying problems. if your product doesn't solve a problem then it won't be profitable. The bigger the problem the more money you can make.
Furthermore, you need to be on top of how technology, politics, and the legal system is changing business environments because these three factors creates opportunities that otherwise would not be possible before.
If you can make connections horizontally rather than vertically you can be a very successful entrepreneur.
Furthermore, you need to be on top of how technology, politics, and the legal system is changing business environments because these three factors creates opportunities that otherwise would not be possible before.
If you can make connections horizontally rather than vertically you can be a very successful entrepreneur.
> If you can make connections horizontally rather than vertically you can be a very successful entrepreneur.
By this you mean getting to know people outside your current industry or sector? Or do I misunderstand you?
By this you mean getting to know people outside your current industry or sector? Or do I misunderstand you?
i used my brain
I'm opening a software firm with two of my friends and was just wondering. I'd really appreciate your feedback, thanks!