Finding my next bootstrapped business idea

Added on Wednesday, May 29th 2019

Most business ideas are neither objectively good nor bad. The quality of an idea for you (as a founder) depends on your goals, your skill set, and your risk tolerance.

Even the quintessential lousy idea of trying to “build the next Facebook” is not necessarily a bad idea. Someone will eventually pull it off – it just comes with an enormous amount of risk and requires one hell of a skill set.

So given a list of potential ideas, how should one go about picking The One?

It turns out humans are pretty bad at comparing things. If idea X will take three months to build and has a large addressable market, is it better or worse than idea Y that will take one month to make but has a slightly smaller market? Who’s to say? It gets even trickier the more variables you consider.

There’s a better way that I first heard articulated by Jason Cohen: instead of trying to rank your ideas, run them through a set of filters to eliminate those that don’t fit.

Why am I starting a company?

Before trying to establish my filters, I need to understand why I’m doing this in the first place.

Do I want to change the world by creating innovative new products? Do I aspire to make a life-changing sum of money and retire early? Am I just tired of working for someone else?

My primary motivation is to earn a comfortable living for my family, with a bit left over to fund causes for which I have a passion. I want to achieve predictable product revenue that does not directly correlate with the number of hours I work.

I want the freedom to build products that are interesting to me as a maker. I love to strategize, design, and create. I don’t enjoy managing people. Eventually, I want the ability to take a month off of work without negatively impacting the business.

What are my growth ambitions?

It’s glamorous to imagine coming up with a bold idea, wooing investors, and hiring best-in-class people to execute on the vision. And yet, the venture capital track comes with a high degree of risk (most fail), a strong growth mandate (fast-paced, long hours), and people management.

I know I’m not interested in trying to build the next unicorn. Paul Graham wouldn’t even call what I want to do a “startup”:

A startup is a company designed to grow fast. Millions of companies are started every year in the US. Only a tiny fraction are startups. Most are service businesses — restaurants, barbershops, plumbers, and so on. These are not startups, except in a few unusual cases. A barbershop isn’t designed to grow fast. Whereas a search engine, for example, is.

Like the barbershop owner, I want a small business – only I happen to be selling software products on the internet instead of haircuts on a neighborhood corner.

Narrowing down my options

Since I want to bootstrap my next venture, the market must already exist. There should be competitors attempting to serve the market (but perhaps not doing a great job of it).

I’m relatively risk-averse, so an MVP must be shippable within a few months. It’s hard to know upfront if this is possible, but I can confidently eliminate ideas that I know will take a long time. The product must be valuable to a particular niche, even when it’s new.

The product should not be mission-critical. By mission-critical, I mean so vital that even a short period of downtime will have a significant impact on my customers’ businesses.

Making a sale shouldn’t require more than a few decision makers. A counter-example would be a product like Slack, which requires buy-in from every stakeholder in a company to adopt.

Native apps should not be a minimum requirement. These days, users have come to expect native desktop and mobile clients for specific categories of applications (communication, project management, and note-taking, to name a few). It’s hard enough building for one platform as a small operator, let alone three or four platforms.

Since I regularly invest in growing my following on Twitter and my weekly podcast, the market should overlap with my existing audience.

Knowing when to compromise

My filters look like this right now:

  • The market must already exist
  • MVP must be shippable within a few months
  • The product should not be mission-critical
  • Making a sale shouldn’t require more than a few decision makers
  • Native apps should not be a minimum requirement
  • The market should overlap with my existing audience

There is no perfect business idea, and I may have to compromise on some of these criteria – that’s okay. I expect these to evolve as I gain more clarity.

I have a handful of filters that didn’t make it on the list (at least for now). Most of these have to do with avoiding the annoying things I’ve encountered in previous businesses.

Dealing with email blacklists and spammers at Drip was exhausting. Trying not to get obliterated by Google at HitTail was frightening. One time I prototyped a lead generation tool based on the Twitter API, only to see the APIs get deprecated not long after.

It’s tempting to keep a growing list of things I will never do again, but I’m trying to resist. It sounds counterintuitive, but I may even intentionally pursue a problem I’ve tackled in the past since I already know what to expect and how to get ahead of some of the challenges.

No business exists in a vacuum. There will always be parts that keep you up at night – but hopefully not too often!