By: Stephen M. Sweid
Based on research in the market and in many countries, I tried to figure out the exact mechanism by which startup ideas are created. Aim is to facilitate and expedite this process for would-be entrepreneurs. Is it mainly a matter of brainstorming effort or are external factors at play?
1. Research performed and its purpose
I carried out very recently in April and May 2019 a worldwide internet research covering some 140 successful startup businesses, (i.e. as founded by entrepreneurs and usually with a novel approach), in a wide range of sizes, ages, industries, products, services, and geographic locations on the globe. They are not only tech startups. Some of the companies were also part of incubators and accelerators.
Main purpose of the research was to ascertain how entrepreneurs got their startup ideas, i.e. how the idea was born and inspired the entrepreneur to establish a startup, i.e. the founding story. More specifically whether it is a pure brain activity like reflection, brainstorming, inspiration and the AHA moment, or more like the traditional consequential process of circumstances, events, and coincidences on the ground, i.e. one thing leads to another, that prompt the creation of the idea.
I wanted to pinpoint the exact mechanism that triggers the inspiration of the startup idea, to find the pattern if any, and to establish some characteristics.
This issue can be significant to would-be-entrepreneurs, i.e. to facilitate the process of finding the successful startup idea.
Research methodology including composition of the research sample is found in the appendix. I have researched over 400 undertakings but in many cases the startup story did not include how the startup idea was inspired. In the research sample of 140 businesses under consideration the story for inspiration was very well documented through interviews and videos etc.
2. Main finding: Prevailing pattern of the consequential process!
I was very surprised to discover that in 95% of the cases, the consistent mechanism for the inspiration of the startup idea was consequential, i.e. actual events and factors on the ground precede and trigger the creation of the startup idea.
Such events can be a one-off, or a sequence of two or three steps, including coincidences and sudden experiences. It can be that the entrepreneur suddenly stumbles onto something. It can be called a twist of events, and one thing leads to another. It can feel like suddenly things fit together prompting the creation of the startup. Factors can include people. It is more like the evolution of things on the ground that leads to the creation of the successful startup rather than a mere mental quest. It is more like a natural progression of things. It appears like a combination of things triggers the takeoff of the successful startup. It seems luck has a big influence in this idea forming phase too. It can be designated as the luck-factor.
There is very little of the pure “spur of the moment” thing, and indeed in only 5% of the cases the startup idea was created spontaneously, i.e. through mere reflection and brainstorming, and trying to figure out business sense e.g. through coffee shop visits, thinking and discussions. Creating the startup idea is seldom a pure brain effort.
In consideration of the big diversity in the research sample with random selection, and the consistency of outcome throughout, this finding can be generalized and considered as the prevailing pattern in successful startups (and possibly in all startups, but I have not probed startups that failed). Very useful lessons can be learned.
I was surprised because I did expect a much bigger share of such new entrepreneurial projects to originate from the whim of the moment, including brainstorming, given the growing popularity of creative thinking and innovation in recent decades.
When I come to think of it, I was prompted by the same prevailing pattern to conduct this research work I am reporting here. One thing led to another. It was a story. It was not like the idea to do this research just sparked in my head. It took a while and events for the idea to float in my mind.
There are other findings and characteristics which are equally relevant. These are outlined below.
2.1. Details of the consequential process found and other useful findings
Each startup has its own story of how things got started but all stories boil down to the following typical examples of the identified pattern triggered on the ground: (Please note that percentage figures given are only meant to provide a feel of the scale involved and not to be considered a statistics figure. It should be noted too that the following different cases can overlap, including the percentages).
Something is missing in the market: In many cases a gap in the market (something is missing) is discovered through some event or short-term or long-term personal experience, and in some cases through research, and this leads to the birth of the startup idea and its takeoff to address such a gap.
This applies to 32% of the cases I researched. This gap is in most cases found in an industry belonging to the domain of expertise and experience of the entrepreneur(s). It can be you are looking for something in the market and you cannot find it, and hence you identify a gap.
Opportunity: Some people saw specifically an opportunity to go into some industry because it is promising or similar, or some opportunity arose, and they grab it. This applies to 5% of the cases, not to do with finding a gap in the market as mentioned above, or with the other triggers. Like Jeff Bezos saw an opportunity to go into ecommerce a while ago and established Amazon selling only books first.
Personal experience of some event(s): Startup ideas are also often triggered by the personal experience of some event and even coincidence on the ground or even a series of events. This might lead to the identification of a gap in the market or other opportunities. This applies to 26% of the cases.
Domain expertise: Quite a good proportion of the startups get launched in the domain of expertise of the entrepreneur, or indeed in areas where he or she has demonstrated strong points. This applies to 38% of the cases. This would speak for natural progression or evolution.
People coming together: Some important happening on the ground and which precedes the kickoff of the startup idea is for people to come together, usually of similar background. This can be 2 entrepreneurs, 3 or even more. This applies to 19% of cases. Like a group of people come together and they already have some vision, and then they do a startup together. As an example, Youtube, or the three founders were from Paypal. Sometimes the team finds the gap in the market by going through some experience together. Or they might be working for the same company and decide to emulate in another country. Or two people find something very difficult and decide to tackle it with a startup
Own use first: It is quite often that people start working on some solution for their own use only and then discover more people are interested in such a solution, and hence the startup idea is triggered. This applies to 17% of cases, which is quite substantial.
Hobby and passion: For many the startup idea is sparked by a hobby of theirs, i.e. some 5% of cases. For some the idea is sparked by some inherent strong passion (8% of cases).
Emulation: Besides the domain expertise quite several startups are triggered by emulating others, i.e. some 8% of the cases. For example, through a coincidence you start working for a company, and you find it very appealing, and then you are fired.
Customers ask you to solve a problem: In a few instances customers ask you to solve some problem and you oblige and then the startup idea shines after knowing many more people are interested. This applies to 3% of the cases.
Academic research: In different cases the research project at the university progresses into a startup idea and project in a natural way, indeed when it comes to technology startups. This applied to 2% of the cases covered.
Experimenting: Some people like experimenting and they find the startup idea based on the outcome of their experiments. This applies to 5% of cases.
Being laid off: Quite often people decide to go for a startup after being laid off.
Market research: In some rare cases some entrepreneurs carry out research in the market to find the opportunities.
Strong drive to go for startup: What I found quite striking is the fact that in most cases people had the strong drive to go for a startup in them long before it does happen. The drive is always there, but they might be waiting for the right opportunity to arise or for other people to join forces.
In brief, there can be one event on the ground that acts as trigger, but there might be a sequence of two events or more, including coincidences. One thing leads to another. Some events might be of a long term nature too. It can be designated as the luck factor.
2.2. Some deductions and conclusions
More of the brainstorming type is possible: Although the rate of startup ideas being generated through reflection, creative thinking and brainstorming is only some 5% of the cases, hence minimal, it should be in principle possible to increase this share appreciably when done the proper way. There are nowadays many more resources to pinpoint market opportunities and even problems to be solved. AI will definitely boost such endeavors in the future. This is like the fact that a large percentage of startups fail within three years of takeoff, possibly some 80% or greater. The thrust everywhere is to decrease this percentage. We would like the percentage of people getting startup ideas through focused thinking to increase
Finding a startup idea is not a straightforward: One of the main lessons learned from this research exercise is that finding the startup idea for a successful business is not a straightforward matter.
One might have to wait for things to happen on the ground to be on the right track for success.
It should be noted that this research was carried out covering successful undertakings. There is no assurance that the same pattern applies to startups that failed.
Maybe it is one reason for being successful?: Since success is system, i.e. a combination of things and not one thing or another, it might be that the linkage to realities, such as events and coincidences as discovered, brings together some key elements of success right at the takeoff of the startup, hence boosting its success chances. For instance, two people with a vision come together being very strong in a specific domain, and they discover through some coincidence and experience a gap in the market. Hence many of the ingredient of success are already there.
As mentioned earlier same pattern did apply to my research project which I am reporting here. It was not inspired spontaneously. A series of events and factors were at play for a while until the spark took place.
3. Some recommendations to would-be-entrepreneurs
Not to be frustrated if you are not getting your startup idea: The whole purpose of the research work I carried out is to help would-be-entrepreneurs find the right startup idea and get on the track to success that much quicker. First and most important lesson from this research is not to be frustrated if you have not yet stumbled upon a good startup idea. Not to despair if you are not getting this AHA moment, since this is NOT the norm when it comes to successful enterprises You need to be more patient and possibly push their luck. Some recommendations are given below.
Pushing your luck: This process is not straightforward and not like you get the idea when you want. It is not only in the brain. It is more like an evolution process on the ground. Things usually need to happen on the ground like a trigger. Given you have the strong drive to be entrepreneurial, they will occur one day. Nevertheless, as in everything else in life you can push your luck. You can improve the odds for such useful events and coincidences to take place. You can push your luck usually by embracing more courage, e.g. by pushing your limits. With bursts of courage and adventure things start happening and everything is possible.
Much more engagement with your environment and with people: Since it is all about things taking place in the environment you need to boost your motion there. Get out a lot. You need to interact in a bigger way with life, i.e. the environment, like your domain or industry. People are opportunities, hence you need to meet more relevant people and talk to them, to strengthen your networks, like also to attend exhibitions and conferences. The more people you meet the more information you get and the more opportunities you have. Try and open your ears and eyes to sense problems and opportunities in the market. Listen to your customers and their issues if you want brilliant ideas. How can the problems be solved? What is missing in your domain (Gaps)? You should engage a lot in research work for this purpose. Furthermore, be very open to try out new things, new approaches, to get cracking on some new solution or prototype. Such extra efforts will definitely boost your chances. Being in your domain of expertise and strong points will surely improve your chances to get to this moment.
Relying on your luck on the ground does not exclude the use of brainstorming to get to this super startup idea. The combination of both approaches is best.
3.1. Recommendations as how to make brainstorming work better for you to generate a good startup idea
Although only some 5% of the companies in the research work relied on refection and brainstorming to crack the right startup idea, it should be in principle much more feasible to use this method. It is advisable to combine creative thinking and research in the market for this purpose. Creative thoughts need to be connected to reality too, especially for tracking problems, gaps and opportunities etc.
Ample tips are given in this related article: Tips to Achieve an Innovative and Differentiated Startup Project.
4. Research methodology
Selection of businesses was made by random. One main criterion in the selection was to have a successful startup. I sought variety in the selection:
Size, revenue: Startup can be small up to one million dollar income, or can be in the 100 million range, or even in billion dollars such as the case for Amazon.
Age of startup varied from 3 years up to 20 years. Average is some 7 years old.
Diversity in industries: A wide spectrum of industries was covered, traditional and tech, products and services.
Geographic diversity: I targeted startups in different countries and cities specifically. Startups were chosen from many continents and countries, West East North South, to assure a worldwide and representative coverage. Many are operating globally.
A representative sample: In consideration of the overwhelming feature of the consequential process it can be expected that the research sample of 140 startups is quite representative despite its relatively small size, especially considering the big diversity of parameters in the sample. There are many lessons to be learned
4.1. Composition of the research sample
Names of startups in alphabetical order (list includes most names except for a handful where the story was available but not the names, mainly for smaller businesses).
Adafruit industries / Adele Dejak / ahsay / Air bNB / Al Etizan / Alibaba / Amazon / amos / Angry birds / Aromatic Blessings / aurora / Ball and Buck / Bed Bug Barrier / Bello Creations / Biocol Hygiene / bird / Blueyerobotics / Bobby Yarn / Border Collies in Action / Bubble Babez Bath Co. / Buzzbird / Cath Kidstone / Careem / Celebration Ashes / cerealkillercafe / cherrypicks / Clear car rental / coach.me / ComposiMold Re-usable Mold Making Materials / Cycle hoop / Darker than black / Direct sitters / Diva international / Dixie Belle Paint / Dubaruba / eargo / Ethical Apparel Africa / FazINOVA. / flipkart / freighthub / Generic / Good Dog Beds / google / Grace Wedding Supplies / gruntwork.io / hawadawa / Hero care packages / Hexa Foods / Housing.co.in / ideaforge / iinnovatemag / Instagram / intelino / Ipsy / JobJar / Kanui / KIIP / Kinexon industries / klooh / Kogi truck / Kona / Kurgo / Linkedin / Lofelt / Lynda / MAD (make a difference) / mailchimp / Masmoo3 / Mate / medineering / Mobly / Missouri Medical Supplies / Mitte / Mu sigma / Nic & Luc Jam / nuventura / Ola cabs / Palo Alto Software / Pillo health / Pinterest / Playnote / Qualtrics / Rap genius / redbus / reddit / Right Legs / Rootwork / Rose Mira / rotimatic / Rubrik / RXBAR / semalytix / Sengital / Shiny Paint / shopify / shutterstock / sirplus / Skyscanner / Smart Shopping / Snap chat / spanx / startzplay / StoreYourBoard / Sunday Coupon Inserts / tapio / Taylor Street Favors / The Access Organization / The Bearded Bastard / The Good Stuff Botanicals / The Hundert / The muse / Time 4 sleep / touchnote / Twitter / Udemy / Ultimate.ai / upwork / Vets to go / vivy / whatsapp / youtube / wazoku / WOLOX /
4.2. Nationalities: Countries covered, and number of startups looked at in each
USA (75), Canada (5), Brazil (3), Argentina (2), UK (8) , Germany (14), Denmark (1), Norway (1) Austria (1) UAE (3), Jordan (4), India (11), China (1), Hong Kong (6), Japan (1), Australia (1) (, Angola (1), Kenya (1), Nigeria (1), Ghana (1), Namibia (1), Uganda (1), South Africa (2).
Note: It was easier to find stories in the USA, but also most famous global are based in the USA
4.3. Sources of information
I used google search such as ”successful startups in Boston”, or ”stories of successful startups” etc. There are startup blogs specializing in reporting stories of startups. Some startup blogs report even how startup ideas were inspired and the stories leading to this point. I often visited the website of the specific startup to see the story in the website if any. Stories are mainly in print form, but I looked at videos as well. I viewed the documented stories carefully.
There was a handful of stories too for smaller outfits but with no names of the companies.
Author’s full name: Dr. Stephen M. Sweid
About the author
Dr. Stephen Sweid is a seasoned business and management consultant, strategist, researcher, trainer and coach for quantum leap strategy, innovation, start-ups, and SMEs. He has over 20 years consulting experience on the international scene: Europe, USA, Middle East and Far East, covering a wide spectrum of industries and technologies. He has involved as expert in technical assistance projects of international organizations, such as UNDP, UNIDO, World Bank, European Commission. He was also involved in many projects with NGOs, e.g. for boosting entrepreneurship and innovation. He is currently active in the UK and UAE.
Email: [email protected]
Featured image courtesy of the author.