Finding Profitable Startup Ideas • Hacker News Board

Re: Finding Profitable Startup Ideas

#11

Post by csallen » Sat, Jan 27, 2018, 7:41 PM UTC

brucephillips wrote: post #3

The author doesn't describe the most reliable indicator of new opportunity, which is economic change. Change can come in the form of shifting demographics, new tech, or new product adoption. These are the events that increase demand or decrease cost for a new product opportunity. They should be where you direct your attention.

This is somewhat covered in the "Industry Growth Rates" section:

> At any given time, there are dozens of industries operating within new and underserved markets that are experiencing rapid growth… This almost always represents a possible entrepreneurial opportunity.

His strategy might benefit from incorporating some of the things you mentioned — shifting demographics, new tech, etc.

Then again, one of the most common entrepreneurial mistakes is to develop a solution and go looking for a problem. That rarely works out, because most new tech doesn't have any business applications. It doesn't fit into the market.

So there's something to be said for a market-based approach, where you look for new things that people are actually paying for by examining high-growth industries, rather than simply looking at new tech.

Re: Finding Profitable Startup Ideas

#12

Post by bronlund » Sat, Jan 27, 2018, 7:58 PM UTC

Finding a good idea is the easy part.

Re: Finding Profitable Startup Ideas

#13

Post by kozikow » Sat, Jan 27, 2018, 8:03 PM UTC

lettergram wrote: post #10

It's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of…

Maybe the logic is another way around? Companies that have a clear product-market fit and generate enough revenue to self-fund and don't have competition closely behind their backs have much less reason to raise.

Maybe you are mistaking "They were so successful, so they didn't need to raise" with "they didn't raise, so they were successful".

Re: Finding Profitable Startup Ideas

#14

Post by lettergram » Sat, Jan 27, 2018, 8:12 PM UTC

kozikow wrote: post #13

lettergram wrote: post #10

It's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of…

Maybe the logic is another way around? Companies that have a clear product-market fit and generate enough revenue to self-fund and don't have competition closely behind their backs have much less reason to raise. Maybe you are mistaking "They were so successful, so they didn't need to raise" with "they didn't raise, so they were successful".

No doubt that may be true, but if a company doesn't have a clear market fit, how will more cash solve that? It just extends the opportunity to find such fit.

I don't doubt that investment money thrown at the correct product can spur it along. However, I believe most investors are looking for long shots, or returns better than the stock market. To obtain those type of gains, they will invest in the companies that can go boom or bust.

In contrast, the company that doesn't take money is incentivized to simply not go bust (even if it grows more slowly). They have to be cautious, keep their customers and grow. It's a requirement.

That being said, I don't disagree with you. Perhaps, I'm completely wrong in gneral, but from my circle of friends that appears to be the case.

Re: Finding Profitable Startup Ideas

#15

Post by borplk » Sat, Jan 27, 2018, 8:13 PM UTC

FLUX-YOU wrote: post #4

Are there research firms that do ground work research, focus groups, talk to people on the street, build real professional networks to extract "problem stories" for ideas, and do competition research to the same level that e.g. short sellers might? Are these just normal market research firms, and are there boutique firms that have low-volume, high value clients?

Can anyone give a decent concrete real example of "extracting problem stories"?

I see this line of thinking repeated a lot but haven't seen any realistic examples that could lead to a viable small businesses.

There are obvious ones that you don't need anyone telling you nowadays.

Like "I need a good customer support software.". You don't need someone telling you that to know that you can make customer support software and make money with it. It's an existing category with lots of money and competition in it.

Chances are anything you want to make already fits inside an existing "category".

In that case it's not that useful to know the problem exists. The hard part is competing with hundreds of existing companies that have multiple years of experience advantage over you.

Or you may get specific individual complaints and requests.

Either it's such a specific odd thing that the solution for it is going to be "use google docs, dropbox, Excel, etc...".

Or it is "missing features" from other stuff like "Zendesk is ok but it doesn't do ...".

I just don't quite see the "light bulb moment" of this "talk to people and hear their problems" narrative.

Problems fit into broad categories like file sharing, website creation, collaboration, productivity tools, word processing, entertainment, and so on.

Whatever you do is going to fall under a category/industry amongst a bunch of other companies. Then it's a matter of competition and incremental improvement and everything that comes with it.

I can't imagine what sort of "surprising" problem description one might hear from people that could give you new substantial knowledge about something you didn't already know.

Re: Finding Profitable Startup Ideas

#16

Post by katzgrau » Sat, Jan 27, 2018, 8:27 PM UTC

kozikow wrote: post #13

lettergram wrote: post #10

It's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of…

Maybe the logic is another way around? Companies that have a clear product-market fit and generate enough revenue to self-fund and don't have competition closely behind their backs have much less reason to raise. Maybe you are mistaking "They were so successful, so they didn't need to raise" with "they didn't raise, so they were successful".

As a fairly successful bootstrapper, I'd say that it's more likely that taking money generally leads to a "runway" in that you need to be profitable or raise another round by the end of that runway. Many don't succeed in either of those efforts because they tend to take on heavy expenses too early, where a bootstrapper is much more thrifty and mindful of cash flow.

In the early days of my company, I applied to YCombinator, was a 2x Techstars finalist, and pitched Fred Wilson at USV's office. Rejected by everyone - but honestly, if I'd taken their money I probably would have mismanaged it and brought the company to an early end.

Re: Finding Profitable Startup Ideas

#17

Post by boulos » Sat, Jan 27, 2018, 8:37 PM UTC

lettergram wrote: post #10

It's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of…

How long did your “non-funded” friends put into it before it could pay their own expenses? Unless it was really fast, it’s probably more accurate to call it self-funded or bootstrapped and then compare numbers.

I’m not disagreeing that bootstrapping can often be the better path, but it’s also not credibly available to everyone. What percentage of folks can work for a year without pay? In my experience it’s fairly “U-shaped”: people just out of school (minimal expenses) and people who don’t need money anymore. People in the middle rarely are up for burning through their savings for an idea.

Re: Finding Profitable Startup Ideas

#18

Post by BatFastard » Sat, Jan 27, 2018, 8:40 PM UTC

brucephillips wrote: post #6

thomk wrote: post #5

Earlier quoted context omitted.

I'd like to hear more about this. Is this a proven system, your personal theory or a little of both?

It's my own deductive theory. An opportunity is a profitable product, meaning demand is higher than cost. Most opportunities are new opportunities, due to market efficiency. So something must have occurred recently to increase demand or decrease cost.

So are there no new markets? Is everything just a more efficient way of doing things?

I would say Microsoft found a new market, so did Facebook and Google. Amazon is efficiency, so is Uber, and Tesla.

So there are new markets.

Re: Finding Profitable Startup Ideas

#19

Post by ericd » Sat, Jan 27, 2018, 9:00 PM UTC

boulos wrote: post #17

lettergram wrote: post #10

It's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of…

How long did your “non-funded” friends put into it before it could pay their own expenses? Unless it was really fast, it’s probably more accurate to call it self-funded or bootstrapped and then compare numbers. I’m not disagreeing that bootstrapping can often be the better path, but it’s also not credibly available to everyone. What percentage of folks can work for a year without pay? In my experience it’s fairly “U-…

Self funding amounts and seed funding amounts are generally at least an order of magnitude different, sometimes two. It doesn't really make sense to draw an equivalency between them.

For example, I started my company with 20k of savings. It's not uncommon for seed rounds to be in the 2M and up range now.

Re: Finding Profitable Startup Ideas

#20

Post by john_moscow » Sat, Jan 27, 2018, 9:05 PM UTC

boulos wrote: post #17

lettergram wrote: post #10

It's interesting that of the many friends I have who started companies (10 - 12), only two of them didn't receive funding. Both businesses built from scratch and now have a revenue somewhere in the neighborhood of $1m a year after two years. That's honestly pretty good IMO. The other eight or so friends who started companies accepted some form of money. Of those, only two are still in existance. The survival rate of…

How long did your “non-funded” friends put into it before it could pay their own expenses? Unless it was really fast, it’s probably more accurate to call it self-funded or bootstrapped and then compare numbers. I’m not disagreeing that bootstrapping can often be the better path, but it’s also not credibly available to everyone. What percentage of folks can work for a year without pay? In my experience it’s fairly “U-…

It depends how good are you at planning your time/money and what your goals in life are. People in tech tend to make ~2x the median wage, so if you set a goal of scaling down your lifestyle to save enough cash for a personal safety net, it's totally doable. It also doesn't have to be that - you can do consulting in parallel, or find a part-time remote job or whatever.

It's just a totally orthogonal skill set to fundraising. If you're charismatic and can sound confident talking about trendy topics, sooner or later you'll find someone willing to write you a check even if you are crap at planning and delivering.