Frameworks to find an idea

Erik Torenberg's ideas to the ideation process

• Find problems that matter
• Pic something boring but big
• Search for the founder market fit (find an idea that fits to your own skills, expertise and relationships)

“Look for the intersection of what you’re good at, what you enjoy, and where you can create value for the world. In my experience, if you don’t find something at the intersection of those three, it’s hard to really have an impact.” – Sam Altman

• Leverage enabling technologies (keep technologies in mind that are not fully exploited yet)
• Satisfy a human desire
• Unlock new supply

Charlie Munger vs. Naval Ravikant

• C. Munger: prefers not to lose money and invests in companies that don't change much
• N. Ravikant: invests in many startups that are trying to change a lot, you only need one to be successful to gain a high return
• —> Both ways can work
• Learning for the founder perspective: ideas that change a lot may fail with a higher probability but can lead to more success; ideas that don't change a lot lead to lower returns but are more probable to be successful

How can I come up with a good idea? (figuratively speaking)

1. Live in the future
2. Notice something important
3. Come back to the present
4. bring early true believers also in the future

"Don't look for market with space in the present" —> chances are that a lot of people tried that

What defines a good startup?

—> high quality + high scale

• —> high quality + high scale
• e.g. Netflix, Google, Amazon
• high scale, low quality: McDonalds
• low scale, high quality: Ritz Carlton

Team / Network / Market

by Naval Ravikant

Fundament

• Team

“The ONLY motivation that I’ve seen work for people over a long period of time is enjoyment in what they’re doing and an intense belief that it matters. And, ideally liking the people they go to work with every day.” – Sam Altman

• Market (find a problem that is hard to solve in a big market)

Network

• Invest in advisors
• Power shift from VCs to Startups (makes it easier to build a network)

Trust but Verify

• For VCs: Liquidation Preference and Anti-Dilution
• Startups: advocate

Teams in the startup environment need to be like Jazz Musicians

(start at 11.32 min)

Multiplying by Zero Effect

• if one component is really bad, you will not be successful
• e.g. you're doing the work you really love, earn a lot of money, but the manager is mean - you're not happy
• Learning: identify them and try to improve these components early

Work smart, not hard

• —> early also means when you're young:

“Being young, unknown, and poor, that’s actually a great gift in terms of the amount of risk you can take” – Sam Altman

"You need to work smart and build some sort of leverage" - Eric Jorgenson

by Naval Ravikant and Eric Jorgenson

“Most of the founders that I’ve spent a lot of time with that have gone on to be successful spent a very long time on their idea when a lot of other people would have given up” – Sam Altman

Find the insights that only you have / Specific Knowledge

• Also see: "founder market fit" in the chapter frameworks on this page

“Then, go meet people to work with, go learn as much about that field as you can, and have the courage to actually take a risk and focus on it and go do something there. It’s okay if you fail.” – Sam Altman

• If you have proprietary insights about the future, 100% commitment to the idea will lead you to a successful startup
• Every good founder can answer the question, why now is the perfect time for your startup / your idea
• Learning: use the knowledge you have about the future, that no one other has

Productize yourself!

Inflection Points - Assessing your idea

• Technology Inflections: When a technology just gets good enough to for a specific business solution, it's a good condition to take this technology into consideration
• Adoption Inflections: When enough people use a device that can enable a specific new solution, it's a good indication, that this idea may be adopted successfully

4 Growth Gears - Assessing your idea

• Acquisition
• Engagement: whether or not users keep using the product
• Monetization: making money from an engaged user
• Enlistment: getting users to spread the word about your idea —> Organic Growth)

“Each of these four gears—acquisition, engagement, monetization, and enlistment—turn as a set of flywheels that are integrated together. All the gears rotate at the speed of the slowest gear. You’re not only trying to make the gears go faster; you’re trying to make the slowest gear no longer be the slowest.” – Mike Maples