I came to know Mike Sonders through Blog Mastermind, after he joined my program to learn how to use a blog as part of his marketing mix. Mike recently launched a brand new start-up and asked if I would tell my readers about it. I responded with a suggestion that instead he tell us how he came up with his business idea and explain his start-up story.
Mike’s business is called Lootist, a site where you can discover the best products by hobby or interest with guidance from real-life specialists. Now here’s Mike explaining how his idea turned into a business…
I’ve met two types of entrepreneurs. There are those who have always known that they wanted to start a company, but they just needed to find the right idea, and then there are the people who stumble upon an idea compelling enough to convince them to start a business. I happen to fall in the latter group.
Based on my experience, one type of entrepreneur is not preferable or superior to the other. Chances for success are much more dependent upon the quality of the idea, a little bit of luck, and a lot of spot-on execution.
A good business idea (or a bad one) can come from anywhere: the classifieds sections of magazines like Entrepreneur, trends in industry-related or mainstream news, or the recognition of some “pain” in your day-to-day life, whether it’s at your job, at play, or at home. Many pains have a remedy (that you can monetize) if you’re resourceful and creative enough.
In mid-2006, a couple of months after graduating with my MBA, I needed to buy a gift for my then-roommate for his birthday. He was (and is) a DJ, and I wanted to get him something really cool that he’d appreciate and enjoy… but I didn’t know the first thing about DJs or the stuff that they use.
Web sites like Amazon and Epinions weren’t much of a help. They’re very useful when you know what you’re buying, but all I knew was for whom (an amateur DJ) I was looking to buy. Since I do everything online, I wanted a Web site that would help me find a great gift for someone with a particular interest or hobby.
And that’s how a pain in my everyday life sprouted an idea. Through my frustrations as an average online consumer, I had identified a genuine market need which I thought I could address.
I’d argue that there’s no bad source of ideas, just bad ideas. For instance, if the market you’re considering is saturated with competitors, and your idea isn’t significantly differentiated, then you probably have a not-great idea on your hands. But that’s not necessarily a sign to give up; it’s a cue to ask yourself whether another, better idea can address the pain you’re trying to solve.
Initially, I envisioned a site where users would tag product reviews with keywords describing a hobby or interest. For example, users might tag a camera lens or a tripod with “photography.” That way, a visitor could search by hobby or interest and find a variety of products related to that topic.
As I conducted a competitive analysis, however, I discovered several product review sites already taking a very similar approach.
After the blush of excitement over my idea, realizing that others had already produced products resembling the one I had in mind was incredibly disheartening. In fact, I almost let the whole thing drop right then… but my mind wouldn’t let go of the idea, which wasn’t quite done germinating.
I’m not the only entrepreneur that will tell you that your original idea will invariably evolve, sometimes into something only vaguely resembling its past self. In my case, the market for my original product idea was saturated with competition, but I still didn’t think anyone was effectively filling the original market need that I had identified.
As I thought more about my birthday gift challenge, I realized, “Wouldn’t it be great if I knew another DJ, whom I could ask about the cool DJ brands, the best products for beginners, the best place to shop for DJ equipment, etc.” A search for a Web site offering that type of service turned up nothing. I found plenty of Web sites with product reviews and deals, but not one site where I could easily solicit the advice of a product-niche expert. That was when I decided I had an idea novel and compelling enough to launch a business.
I hadn’t planned it this way, but once I decided to launch a company, I didn’t face many of the hurdles that discourage some others from taking the entrepreneurial plunge. By the time I graduated with my MBA in 2006, I hadn’t found my perfect job yet. With no job, I didn’t have to give up a steady paycheck. I also didn’t have any dependents counting on me for support. Thanks to my MBA and my background in managing technology projects, I had an appropriate set of skills, contacts, and experience for starting an internet company. Further, at thirty years old I was relatively young, and lived next to Silicon Valley, a veritable stockpile of resources for Web startups. Finally, I estimated I had just enough money in cash and savings to develop a prototype product.
When a business first starts out, it’s a very exciting time of creation and promise. You name the business (I settled on “Lootist”, a combination of “loot” and “specialist”), design your prototype, incorporate, and start hiring your team. Lots of how and why questions develop as you plan your business product and strategy, and you get to enjoy creativity and problem-solving at its finest as you address these questions.
For example, I had to ask myself how Lootist could appeal to hobbyists, enthusiasts, and other specialists to share their unique knowledge and insights. Part of the answer came from learning how to attract and serve niche bloggers, which is how I found Yaro.
Yaro and his blogging course brought me to my next point. Launching your first business is a crash-course in entrepreneurship (no matter who you are), but you don’t have to learn everything the hard way. You can effectively arm yourself by surrounding yourself with great (read: creative, hard-working, smart, and resourceful) people, by reading a lot, and by constantly talking about your idea with anyone who will listen.
I can’t emphasize this point enough: having the right people on your team is critical to success. They naturally increase the creativity and innovation of any business. This comes in handy whether you need to effectively manage the inevitable snags that every business hits, or you’re planning for useful and clever new features.
Early in Lootist’s initial design cycle, I thought that the collective experience of my designer and me would be enough to produce a highly-intuitive Web site. Unfortunately, not. It took a lot of iterating and user-testing to get to the attractive and easy-to-use product we have today. Hiring an actual usability expert early in the design process would have saved at least a couple of months in the design process.
These days, as I’m working on growing Lootist, I find that more than ever I need talented, capable people around me. In fact, I’ve been considering taking on a business partner. Sure, I’ve seen partnerships that created more friction than productivity thanks to differing ideas and expectations, but I’ve also seen partners who create a powerful synergy by complementing each others’ strengths. There’s a lot to be said for someone who can keep you motivated, creative, and supported when you’re a startup CEO working out of your home office.
One thing I‘m glad I’ve done since I had the idea for Lootist a little over a year ago has been to talk to people about my idea and my business. A lot. Other entrepreneurs ahead of me on the learning curve have guided me through everything from incorporation to financing. Friends have helped me see the idea from new and useful perspectives.
Within reason, take every opportunity to talk people about your business. Even when someone doesn’t have anything to teach you, per se, a conversation usually sparks a new idea, or important question, or useful answer. I make it a point to have business lunches or go to networking events at least once a week to keep my perspective fresh.
Don’t be too uptight about keeping your idea a secret. While you should take steps to protect your intellectual property, the fact is, even if you have an idea that no one has thought of before (which isn’t likely), getting from ‘idea’ to ‘product’ is a daunting process. That’s why you always hear that success is at least ninety percent execution. Many people don’t have the motivation, skills, experience, knowledge, or reckless abandon to properly execute an idea.
If you are one of those intrepid entrepreneurial folks, then it’s time to brush up on all of the other topics with which entrepreneurs must concern themselves: incorporation, competition, forecasting, financing, marketing, promotion… the list goes on. Entrepreneurship provides you with no shortage of things to do… or ways to have fun, be creative, meet fantastic people, get exposed to interesting ideas, and have deep satisfaction with your work.