Developing new startup ideas

If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it. Be the opposite of secretive. Create a Google spreadsheet where you list every idea you can think, even really half-baked ones. Include ideas you hear about (make sure you keep track of who had which idea so you can credit them/include them later).

Then take the spreadsheet and show it to every smart person you can get a meeting with and walk through each idea. Talk to VCs, entrepreneurs, potential customers, and people working at big companies in relevant industries. You’ll be surprised how much you’ll learn. The odds that someone will hear an idea and go start a competitor are close to zero. The odds you’ll learn which ideas are good and bad and how to improve them are very high.

Every conversation will contain some signal and some noise. Separating the two is tricky. Here are some broad rules of thumb I’ve developed for how to filter feedback based to the profession of the person giving it to you.

1) Employees at relevant big companies. These people are great at providing facts (“Google has 100 people working on that problem”) but their judgment about the quality of startup ideas is generally bad. They tend to have goggles on that makes them think every good idea in their industry is already being built within their company. For example, every security industry person I talked to thought SiteAdvisor was a bad idea. (If it wasn’t, they think, someone at McAfee or Symantec company would have already built it!)

2) VCs. VCs are good at telling you about similar companies in the past and present and critiquing your idea in an “MBA-like” way: will it scale? what are the economics? what is the best marketing strategy? I would listen to them on these topics but pretty much ignore whether they think your idea is good or bad.

3) Potential customers. If your product is B2B, remember you’ll be selling to that person 2-3 years from now and by then the world and their priorities will likely have radically changed. If your product is B2C, it’s interesting to hear how regular consumers think about your product but often they really need to use it fully built and in the proper context to really judge it.

4) Entrepreneurs. This is the one group I listen to without a filter.

Even though I have no intention of starting a new company for a long time (if ever), I still keep my idea spreadsheet and update it periodically. Some of the ideas I wrote down a few years ago are now companies started by other people (some successful, some not). A few I had the chance to invest in. It’s interesting to compare my notes and ratings of each idea with how those companies have actually performed. I also keep a list of “on the beach” ideas in case I have time in between startups. These are mostly non-profit ideas. I don’t know if I’ll ever get to those but they are particularly fun to think about.

* Thanks to James Cham for inspiring & contributing ideas to this post!

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higgs

I love bouncing ideas off of people outside of the “tech bubble” to see which ideas they get and which ones they don't (whether it's an idea of mine or just some new service I'm trying out). I like the raw honest truth they give…usually it's quick and less thought out but I like seeing what clicks instantly and what doesn't (and then figuring out why…).
http://www.chriskurdziel.com/ Chris Kurdziel

Chris,

Great post. I think a lot of entrepreneurs out there (especially first-timers) can become preoccupied with the idea of “getting the idea completely right” before any work is actually done. Creating a spreadsheet like this and seeking feedback seems to be the first step in taking the ideas and making them a reality. I'd be curious as to whether one could put an set of criteria around when an idea is “ready” to graduate from merely a line item in a spreadsheet to something real. Perhaps that is where the DNA of the entrepreneur simply takes over and ideas become action.

http://www.cdixon.org chris dixon

When is an idea ready- I think it's probably instinct. I think you can also do a kind of filter approach where you start taking a couple of ideas more seriously and eventually hope to take 1 seriously but still for the first few months consider it “on probation.”

davidkpark

As someone who embraces open source economics, you should throw your ideas up on a Wiki and let the crowd comment, refine and improve the idea. Think of it as an open source version of Intellectual Venture started by Myhrvold – http://bit.ly/iUqD.

http://orgvolve.com/ orgvolve

I totally agree, that's exactly what you can do on Orgvolve. At the end execution and vision are going to be the determining factors of how far ideas go. Having the community build a business from the ground up is definitely very important . Some will want to execute the idea, others will just want to use the product or service, etc. Being totally open about it will just align people's interests much better.
jcs

Putting theory into practice, feel free to add your idea and leave feedback on the others…

http://spreadsheets.google.com/ccc?key=tOGIddn3…

http://www.gawrilla.com pruett

it's surprising how many entrepreneurs embrace “the stealth approach”. this is some really tremendous advice for many entrepreneurs to embrace. i wrote about being an “open entrepeneur” in a post that touches on some similar points:
http://www.gawrilla.com/2009/02/27/become-open-…
http://kyle.mathews2000.com/blog Kyle Mathews

Where's the link then to your google spreadsheet

Completely agree though. I find it odd how secretive most people are about their ideas.

http://www.cdixon.org chris dixon

Actually avery fair questions. There's open and then there is *open*. Putting it out publicly makes the risk/reward a lot less attractive. There are probably 2 people in the world inclined/able/willing to copy your ideas. Showing ideas to people individually you can probably avoid them and also get maximum feedback.

shafqat

While I agree completely with your thesis, this response makes the whole thing a wash in my opinion. Do you really think someone reading your blog is going to steal your idea, build a product, execute and deliver? I'd say the chances are almost non-existent.

Love the fact that your telling people to share ideas and get feedback and be open, but loathe the fact that you won't eat your own dogfood. Saying it only applies when you show ideas to individuals is weak. But that's just my opinion.

http://www.cdixon.org chris dixon

so let me get this straight. because you don't think i go far enough and open up ideas on the web, therefore the whole thesis is dumb and you should be secretive about your idea?

shafqat

Whoa, I wasn't trying to be snarky, so not sure why I deserved this response.

I don't think the thesis is dumb at all. I wrote “I agree completely with your thesis.” I also wrote “Love the fact that you are telling people to be open etc.”

So I have no idea why you thought I implied it was dumb or that I supported being secretive. I wrote the exact opposite.

To be clear, I think opening up your ideas would make your thesis A LOT more powerful. Nothing better than action to reiterate the words. That's it. But by attaching caveats that I personally feel are weak, the argument loses a bit of the impact. As mentioned, it's simply my opinion that I thought you might like to hear. Again, the post was great.

http://www.cdixon.org chris dixon

ok sorry, I misread your comment.

http://www.cdixon.org chris dixon

a commenter on hackernews put it very well: posting it online is less about the risk of stealing ideas going up, but just that you get a ton of noise and very little signal. it's really useful to sit down with someone 1:1 and have an in depth discussion. having the crowd say good or bad without in depth reasons just isn't that useful. i guess if for example I could post idea to 50 people with guarantees they'd all write thoughtful responses to each idea i'd do it.

shafqat

This is a very fair point. A system to get feedback on startup ideas from a targeted subset of 'vetted' people would be pretty interesting. I guess Hacker News is a fairly good proxy for such a system – we are pretty open about our company, and get a lot of great ideas and feedback.
shafqat

In case you didn't see it, someone on HackerNews actually started a spreadsheet with startup ideas. http://spreadsheets.google.com/lv?key=tOGIddn3r…

http://www.cdixon.org chris dixon

I am not trying to be supersecretive. If people want, I'll share some of my better ideas. I just need to clean them up because they have so many cobwebs on them at this point it would be kind of embarassing.

http://charliepark.org/ Charlie Park

Mmm … I don't think opening it up completely would add to the value he gets from talking to a subset of trusted advisors. Consider posting a generic request on Twitter, or to a group e-mail, versus having a beer with someone and asking them to help you solve a problem / think through an issue.

There's a chance that someone “out there” would be able to benefit you in some new way, but I don't know that the quality of input would be very high. I imagine the signal-to-noise ratio would be a lot lower.

If there were a community built around giving good feedback, critiques, etc. of startup ideas, I could see that having some potential. But even in an environment like Hacker News (presumably established with that as one of its purposes), when people post “hey, here's my idea, can I get some feedback?”, the responses are usually pretty milquetoasty.

(Update: Seems like mechanical_fish had the same thoughts, posted at HN here.)

http://orgvolve.com/ orgvolve

Never the less, if you have no immediate resources or intention of working on your idea, why wouldn't you share it? Somebody will pick it up and society will benefit. The reward is going to be with the one that provides most value and there are hundreds of ways of executing one and the same idea. No need to recreate Google or Microsoft every day.

http://CityandOut.com/ AndreaF

I am not as structured as you are in keeping a spreadsheet of ideas but I definitely have many ideas I am not shy to share with people to get feedback. And although many of the ideas I had in the past have now been implemented that is not by the people I shared them with. So, I agree that it's unlikely someone you talk to is going to steal your business ideas.
Lately, I find myself trying to figure out how to develop my current projects without money rather than coming up with new ideas – in fact, I try and keep my brain from wandering away from my current 2-3 key things to avoid its explosion.
AM

How about giving me an invite to your Google Doc.

I will definitely give you my opinion on your ideas.

http://www.cdixon.org chris dixon

see my answer to kyle matthews' comment…

shafqat

No apology needed – things get lost in translation over text. Healthy debate is always good!

FWIW, I also agree with the thesis going around amongst us entrepreneurs that you're killing it on the blog. So well done – it's a great resource.
http://twitter.com/sayemislam sayemislam

Great post, Chris – thanks

I recently read “The Map of Innovation”, by Kevin O'Connor, and it touches on this process of developing ideas as well: http://bit.ly/9PIBeP
akharris

Chris,

There's an interesting dichotomy between your comment that “The odds that someone will hear an idea and go start a competitor are close to zero,” and the rapidity with which copycat products pop up once an idea has proven successful. I definitely agree that the more input you get for an idea, the better your idea becomes, but I think you need to vary your disclosure based on how much you trust the people you talk to. As your idea gets closer to goodness (and actual marketability), it would make sense that the level of trust you require to openly discuss the idea increases. That seems to synch up with your not wanting to put the idea out for everyone to see because of the way it alters the risk/reward.
jackrusher

“Stealth mode” is a kind of security through obscurity. Post-launch companies make a similar mistake when they try to hide every morsel of IP by forbidding engineers from contributing changes back to open source projects, attending conferences and publishing papers, thus foregoing one of the best recruiting tools in the world. It all stems from a misunderstanding of where a company's competitive advantage lies: in the future brilliance of the team, not the artifacts they created in the past.
http://uniquevisitor.net Jeff Pester

I have an idea, it's called FlockFeeder. It's a Twitter utility that allows publishers (account holders) to post tweets by content category/other and gives followers the ability to follow only those category(ies) of tweets they're interested in from that particular publisher. Similar to an opt-in email service with multiple available subject matter. Who's in? http://www.twitter.com/flockfeeder / http://www.flockfeeder.com

http://how2startup.com/ Roy Rodenstein

Hi Jeff, there are some services that show tweets by category on the web, and others that give you an email digest of the people you follow, but not many services that combine the two in the way you describe. I think it's a worthwhile idea, and could be a way for Normals to dip a toe into the Twitter stream… “See what the latest on Twitter is about… Art, Sports, Celebrities”

Not sure if it's a company but could be, and interesting in any case.

http://uniquevisitor.net Jeff Pester

Roy, To clarify; Not talking about showing tweets by category across multiple accounts/sources – talking about individual Twitter accounts containing multiple feeds which can be subscribed to in any combination, some of which can be highly customizable.

Also, the email digest you refer to is a completely different product that we intend to introduce shortly under a different Twitter name and URL.

We have the architecture nearly completed for both. We're also working on a couple applications oriented around “repackaging realtime” for normals. If anyone's interested in learning more about any of these initiatives you can ping me at jeff at uniquevisitor dot net.

http://www.saurabharora.name/ Saurabh Arora

Wouldn't yahoo pipes able to take the RSS of tweets and filter as per category?

http://uniquevisitor.net Jeff Pester

Hi Saurabh; Some version of that would work for static and/or canned content, but not for truly customized content.

http://www.saurabharora.name/ Saurabh Arora

Hmm… Is it something like following multiple lists? Something like flockfeeder.com/twitter_username/category e.g. flockfeeder.com/nytimes/economics+world-news that let's reader subscribe to nytimes/economics and nytimes/world-news

http://uniquevisitor.net Jeff Pester

No, FlockFeeder is a back-end tool that Twitter account holders (publishers) use to deliver customized content. It can be used for existing lists but there are already several workarounds for that use case. This is much more follower-centric and creates/delivers considerable value for those publishers that have content that can truly be customized to individual followers.

jonathan_wallace

I heartily agree. So many people tell me that I shouldn't talk so openly about my ideas but almost every conversation I've had with startup ideas has provided valuable feedbac,.
http://www.abhayspace.com/ Abhay Vardhan

Great post Chris! Sometimes I think of some ideas which while may be profitable are probably not sustainable enough to build a business around. Any thoughts about how to evaluate if a certain idea is even worth bringing up in discussions?
abla

Good points. I have felt the same and came up with pretty similar filters – especially on the MBA part, since I am finishing my MBA at a major school and what I usually get back when discussing ideas is former or future consultants trying to explain me why that idea is not going to work.
I guess the answer is to be really honest with yourself about the merits and flaws of your ideas and, most important, keep pushing hard to create something!
The world needs more entrepreneurs, not consultants or investment bankers.

http://www.cdixon.org chris dixon

“The world needs more entrepreneurs, not consultants or investment bankers.”
YES!
Chris

I'm currently finishing my MBA as well and I'v had similar experiences. Getting an MBA is like two+ years of convincing that startups are generally pointless, and we should all work at General Mills

aaronfranklin

Good stuff. LazyMeter began as a stealth operation. But as I started opening up, I realized the idea grew leaps and bounds – the gains from these conversations are much greater than the risk. And you can say a lot about an idea without whiteboarding specifics of implementation.

As you're vetting ideas, talking to as many people as possible is a must. If you're going to dedicate years of your life and possibly your life savings, you better make sure it's your big idea. T.A. McCann of Gist gave me the best advice when I asked him if I should quit my job at Microsoft. “Don't quit, at least until everyone you speak to thinks it's a good idea”. And it needs to be more than an idea – it needs to be a business.

For anyone that hasn't read “Stealth Startups Get Over Yourselves”, it's highly recommended:
http://techcrunch.com/2009/12/19/stealth-startu…
http://www.markbower.com Mark Bower

Chris,
I am curious about what columns you have in your spreadsheet. Would you tell us?

http://www.cdixon.org chris dixon

It's very rudimentary. Idea, notes, rating from 1-5. I also group ideas according to themes (make shopping easier, machine learning for recommendations, etc).

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http://how2startup.com/ Roy Rodenstein

Chris, good breakdown of how each category of feedback-givers is likely biased/should be framed.

On the topic of stealth, I think you and Dharmesh (in his older post you've linked to) hit on a lot of the reasons, but I feel especially for first-time founders there are some simpler ones based in pscyhology/sociology:

- Secrets are fun and exciting
It feels good to feel like you know something others don't, and make them ask for you to reveal your secret. It makes you interesting and gets you attention.
Weird, silly? Perhaps, but it's human nature.

- People just “know” they're right
Until you have tried and failed as an entrepreneur, you don't realize how easy it is to be wrong by 90- or 120-degrees, nor that being wrong by even 20-degrees can kill your company. People may often feel they are 100% right or at most 2% off and they'll figure that out, but chances are you are off by much more.

- Wait till they see it
Even if they get some feedback, it's still easy to discount it because -as you accurately say- consumers often don't really know how they feel about something until they use a pretty real version. So it's easy to devote yourself to the heads-down work of building it and hope/assume people will like it when it's done.

These are just a few reasons, I will talk a bit more in an upcoming post at my new blog.

http://www.cdixon.org chris dixon

Yes, good points. People really need to get over these things and go out and talk about their ideas. It's all about execution anyways.

http://keithbnowak.com/ Keith B. Nowak

Networking and gathering as much feedback as possible before going forward with a new idea is such an important lesson and one I learned the hard way. It seems to obvious but at least for me I was so eager to get moving on what I thought was an awesome idea that I didn't do nearly enough research and socializing of the idea up front. If I had I certainly would have started in a much better position.

I think this is what is so cool about Y Combinator, TechStars, etc. They not only give you great mentors, capital, and contacts but also let you connect with other entrepreneurs at a similar stage who can provide helpful feedback and insights.

http://twitter.com/curtism Curtis Miller

We do something similar at Flatterline, but use a writeboard to capture and expand upon the ideas.

Many tech entrepreneurs I encounter seem to miss the 4 groups you mention and instead share and explore their ideas amongst other technical people. Then they seem to get bogged down in the technical details of the idea.

Do you have any suggestions on good places to find quality people with which to have 1-on-1 conversations? For example, I try to attend events like OpenCoffee, Startup Drinks and Startup Weekend when I can.
http://www.venona.com/rdl/ Ryan Lackey

I love doing this (although I actually built out more than a google spreadsheet — I keep a wiki and then link to mockups of the applications, any research, business plans, etc.)

I think publishing ideas as an unknown might be risky, but if I met someone like Chris Dixon and saw he had a similar startup idea to something I've thought about, or just something I thought was amazing, I think the “go off and do it alone” thing is very unlikely — for a person who is a known quantity, it would make a lot more sense to try to collaborate in some way. The guy who comes up with an idea is obviously sold on it, and so is in a great position to invest, pitch it to others, or find some other way to participate.

Worst case, you become known as the person who came up with the great idea for startup B, while working on startup A — that is a whole lot better than keeping the idea locked up and unexecuted.
gane5h

Chris, have you written about this earlier? I remember taking that advice to heart and pitched about 50 people at a recent meetup. The feedback I got was phenomenal. I also requested people to ask me atleast one tough question at the end of my pitch. Some sample feedback I got:

* a one-sentence description of the product,
* do not answer a question with another question, etc.

Thanks.
http://twitter.com/awilensky awilensky

I have found, that the more emphatically someone exclaims, “that is the stupidest idea I have ever heard”, and particularly if the umlaut is over the words “stupidest” and “ever”, and as an added sauce, if they bend forward a little when pronouncing the verdict, then you have a winner.

http://www.cdixon.org chris dixon

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http://twitter.com/symcmatt Matt Conover

“If it wasn’t, they think, someone at McAfee or Symantec company would have already built it” — that assumption itself is the reason people were wrong about SiteAdvisor. The big companies I've worked at only organically develop product *features* but rarely develop new products organically.

At least for publicly traded companies, there are incentives to buy a product with a one-time capital expense than develop it internally with ongoing operational expenses. I think the other reason is that it's nicer to let the startups prove a market and then buy the market leader rather than take the risk.

http://www.cdixon.org chris dixon

Yes, totally agree.

allisongalbraith

Great ideas – really useful for someone thinking of starting their own business
Allison
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Diogenes

The best way to vet a B2C idea is to simply build it. There's nothing like “in the wild” feedback to tell you if you've got something or not. Sort of like viruses that work or don't.
http://keithbnowak.com/ Keith B. Nowak

Just echoing what others have already said but I agree with your filters. It takes a particular way of looking at things to abstractly think about a new idea and evaluate its potential. Perhaps this is another reason why philosophers make formidable entrepreneurs – http://bit.ly/aD3Yaj (via @samidh)
http://sparklewise.com/ Tommy

Completely agree with this point. Also, meeting regularly with a small group of like-minded people to talk about ideas and implementation is very valuable. I wrote a blog post about my experience there: http://sparklewise.com/?p=312
A peer group can help you discuss ideas and bring you forward, as long as you don't take criticism too seriously.
http://g-a-i-a.org jazzmann91

I really appreciate your direct and honest way of sharing. You're insights are of great use to me. I'm curious what you think of this idea: a social game for debate. Would that idea be on your list? I'm new to product design, but I think I'm onto something. I'm working on a prezi to show the design to select people to get advice on it. Would you be interested in giving a rookie toymaker some feedback?

Thanks for writing!
theflyingchange

For me, this was one of your best posts, Chris. Thanks for sharing. I agree with you that too many people think the idea is important. The idea is a starting point and, as you've pointed out, execution is the crucial differentiating factor.

You might say, however, that the lower the barrier-to-entry the more you might evaluate how open you want to be.

For example, people are loathe to talk about script ideas in Hollywood and perhaps it's because a good treatment (which isn't even a script) might still get studio funding. So sharing a great movie idea seems frowned upon in LA, at least based on CW.

At any rate, good stuff. Totally agree with you.
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http://johngannonblog.com/ John Gannon

This seems like a (new) logical 1st step to Customer Development Process, coming before Customer Discovery. What you outline here allows an entrepreneur to make an educated guess about what might be worth the effort of a cycle or two of Customer Discovery.
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http://www.yanivnizan.com/ Yaniv Nizan

Very good point about overcoming the fear of your idea being stolen. You may find a related viewpoint in this post. http://www.yanivnizan.com/2009/08/signing-nda-w…. I also liked how you broke it down to categories and the value in each one.
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DJ777

When in 1998 I designed my first e-book looks like, the technology wasn't so far lets say; graphics, processors, memories, storages. Today mr Jobs is waving his Ipad with proud. I still do not see features which consumers still need to solve some problems of reading electronically and espacialy one of the big issue securing e-books. Writers and publishers are concerning about piracy.

I've started somewhere in 2000 keeping a PPP of all my ideas running and running in my head sometimes 4 o'Clock in the morning walking in my house like a ghost thinking and writing.

If you have idea's, start talking with families and friends, collegues. Pitch your idea on a marketing way. Do ask if they would buy or use such a product if it is available. Ask them to ask their network of ten peoples and so on.

If you have more Idea's start developing the easiest one. With my films/books and tech Idea's I have started since last year to work on my childrenbook Idea from 2000. I will publish it by my self in series and a animationfilm. I talk lot with people arround about the story, I let basicschool teachers tell the story to kids and get feedback from other writers. It's almost 10 years I was concerning someone would steal my Idea. But if you do not go out telling it to your targetgroup you won't ever know if your idea will succeed.

The Netherlands
Dammann

“The odds that someone will hear an idea and go start a competitor are close to zero.”

While I agree with the majority of your piece, I am going to have to respectfully disagree on this statement. I have seen this kind of thing happen time and time again. Generally, it will depend on the sector involved, but without any exclusionary protection, why take the chance?
http://twitter.com/taskbender TaskBender

“For example, every security industry person I talked to thought SiteAdvisor was a bad idea. (If it wasn’t, they think, someone at McAfee or Symantec company would have already built it!)”

— Completely true. I faced several situations like these.
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http://www.mustexist.com/ Alex Sherstinsky

Intelligent and inspiring. As other posts — a pleasure to read.
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Chris Dixon