Create Business Ideas
The Builder as a Creator of Ideas
The management of a venture builder is comprised of professionals experienced in the creation and management of companies. This expertise can help the startups within a venture builder’s portfolio make informed decisions.
However, the role of management may extend beyond guidance; it can contribute to the genesis of the idea itself. Identifying and selecting opportunities is complex. Experience with both failures and successes can help a team evaluate assumptions before committing significant resources.
Many ideas that appear interesting on paper may not be viable in practice. Some are interesting and viable but not feasible without substantial funding. Then there are ideas that appear interesting, viable, and feasible. A builder’s market and technological knowledge may help evaluate these dimensions, but testing with real customers is still necessary.
When an idea appears promising, several teams may pursue similar opportunities. Innovation is often incremental, and execution affects which teams survive. This does not make the initial idea irrelevant. A weak market premise or an infeasible product can still defeat a capable team.
In essence, if a team has not identified evidence of a meaningful problem, a reachable market, and a workable solution, it may need to revise or pivot the idea. Therefore, one of the activities of a venture builder is to create and refine business ideas.
What is a Business Idea?
The phrase “ideas are worthless” is often repeated, usually to emphasize execution. In a venture builder context, however, starting with an idea that appears interesting, viable, and feasible is preferable to pursuing one that already fails basic tests.
For this book, a business idea should at least describe:
- A business model, including the proposed value, revenue sources, cost structure, customer segment, key resources, and activities
- The potential market, including who experiences the problem and how the team could reach them
- The knowledge and capabilities necessary for development or production
- The assumptions that still need testing
Without these elements, the proposal is better treated as an initial concept than as a developed business idea.
Rare Truths
The creation of business ideas combines evidence, judgment, and creativity. Viability and feasibility depend on assumptions that should be made visible and tested.
This book uses a simple distinction between obvious truths, which are widely recognized, and rare truths, which a team believes are important but underappreciated. A rare truth is not valuable merely because it is contrarian. It becomes useful only when evidence supports it and the team can build a business around it.
The framework also distinguishes between:
- A macro truth, which is a broad claim about behaviour, markets, or technology
- A micro truth, which is a narrower claim about the details that make a particular solution useful
Before Airbnb had widespread adoption, for example, a team might have proposed the macro claim that some travellers would pay to stay in another person’s home. Product details such as trust signals, host incentives, photography, search, and payments would then contain many micro claims requiring separate tests.
Novelty is not a sufficient test of a business idea. Effective ideas do not have to be unprecedented, and being first can create the additional challenge of explaining an unfamiliar category.
The Impact of Pivoting
An idea is not static. Once a project interacts with potential users, evidence can challenge its assumptions and suggest a different direction. Teams should record what they expected, what they observed, and why they changed the product, target market, or business model.
Inspiration Sources
Finding a useful business idea can begin with a customer group, a recurring problem, a technical capability, or a change in regulation or behaviour. The source matters less than the quality of the subsequent investigation.
An entrepreneur who has experienced a problem directly may know details that are invisible to an outsider. Subject-matter experts can add another perspective. Workshops between those groups can generate hypotheses, but interviews, prototypes, and observed behaviour are still needed to test them.
In both pivoting and sourcing inspiration, the practical task is the same: state the assumption clearly, identify what evidence would change your mind, and run the least expensive credible test.