NO AI WAS USED IN WRITING THIS I have been working on this post for over a year, it's all my own content, nothing from a model. I'll leave a screenshot showing the markdown files with dates in the comments.

Hello my name's Troy. I'm a serial founder who's been either a founder or founding employee at 9 startups with the total valuation of said startups north of $1bn. My current startup that I co-founded is currently at $5m in ARR and growing rapidly. I used to be a teacher and have been really itching to write and what I've learned over the last decade and a half of being in the startup space.

Mods, I'm happy to verify above if needed.

I browse this and other similar subreddits often and see a lot of similar questions pop up. The problem is the vast majority of the members in these communities are either trying to sell something or don't know what they're talking about (respectfully <3). My hope is to shine some light on some of the most common questions I see here and give some of you motivated folks some direction. Not trying to sell you anything, i dont want your money. I just hope it's useful.

1.1 | "What kind of business should I start?"

The people who ask a variation of this question will often get blasted in the comments despite it being honestly a very good question that the vast majority of people here get totally wrong. I'll be covering exactly how I identify, research, evaluate, and finally weigh prospective business opportunities. This isn't a foolproof method but rather a high level structure for you to go through and practice. Anyone trying to sell you on a specific business idea or plan is some internet guru who's only successful venture was selling courses. There's no magic bullet, just a series of things to think about and evaluate that should lead you to better, more validated, ideas and outcomes.

Here's the high level view process we're going to chat through:

1. Evaluate your skillset
2. Identifying opportunities
3. Researching your idea
4. Categorizing opportunities
5. Testing the market
6. Committing

Even if you believe you've already completed one of these steps please take the time to read through them as I'll also be weaving in important context / things to think about that can impact the later steps.

Be Clear About What You Want

Before you even start this process it's incredibly important you know what you want.

There's a ton of different paths you can take building a business from building a small little micro-sass that kicks off passive income after a few months of work to large scale decade long venture scale businesses. Both are super viable and both can make you a ton of money.

It's totally okay to be open to multiple paths but if you have particular constraints on your life and time it's important to keep those in mind as some business opportunities might align much better with where you're at and what you want.

The Two Types of Businesses - Pain vs Enjoyment

Note: i thought about calling this pain vs pleasure but though that was suspicious.

Every single business either solves a customers pain point or provides some form of enjoyment

Pain based businesses are solving some pain point for the customer. Here's some businesses that fall into this category and what pain point they're addressing:

• Hubspot - Pain of organizing and tracking sales team performance/data
• Doordash - Pain of having to go physically pick up your food
• Marketing Consultancy - Pain of having to directly manage marketing channels / ads
• Pool service company - Pain of having to do manual labor to upkeep pool

Enjoyment based businesses provide the customer with something that gives them some form of entertainment or enjoyment. Here's some businesses that fall into that category:

• Warner Brothers - Movies
• Riot Games - Video games
• Instagram - Social media
• Outback Steakhouse - Restaurant

Despite its simplicity, This distinction is very important because although it's very possible to build a great business of either type Pain businesses are significantly easier to build and often times better businesses.

There's a few reasons why you should probably build a business focused on solving a pain point.

1. Pain will drive people to pay.
   1. If a customer is experiencing pain, each time they experience that pain will drive them towards paying for your solution.
   2. The level and consistency of that pain is directly connected to how much they're willing to pay. More pain = more $$
   3. The chance of that pain returning will drive them to become a loyal customer.
2. Enjoyment businesses have to compete with all other enjoyment businesses
   1. If you're building a video game, that video game is competing for your customers entertainment time with not just other video games but also all movies, social media, physical activities, and more.
   2. The customer has such a plethora of choices that will require your product to be incredibly appealing to be successful
3. Enjoyment businesses require more work
   1. Because of the lack of pain and need to significantly stand out, building a business that provides enjoyment typically requires a deep level of passion, hard work, and intricate knowledge of the space.

Maybe you're thinking I'm wrong and that there's hundreds of thousands of businesses that do very well providing enjoyment to the customer. You'd be right to think that, there are tons of examples of great businesses built around a enjoyment based product that have generated a great return for their founders. You can build a great one if that's the path you decide to follow. I just want to make sure it's a very conscious decision and you understand that you will be deciding to go down a more difficult path (and building a great company of any kind is already very difficult).

1.2 | Evaluating Your Skillset

Any entrepreneur who's worth their salt when asked...

What kind of business should I start?

will answer...

I don't know.

This is because there are thousands of fantastic possible businesses that we could recommend, which business you specifically should pursue is directly coupled to your individual skillset. That's why our first step is to have a brutally honest self evaluation of the good, the bad, and the ugly.

Self Skillset Evaluation

Here's a quick exercise that you should go through. Lets list out all the skills you have that are relevant at this stage and bucket them like a self skill "tier list". Don't get too granular but try to be as accurate as possible. Knowing your weak / strong points will be incredibly valuable in far more than just picking what business to start.

Here's a quick template to use:

• Good
  • Skill A
  • Skill B
• Acceptable
  • Skill C
• Bad
  • Skill D

Good: These are skills you think someone would pay you to do, even if it's at a relatively junior level. Acceptable: These are skills that you can do and with practice could get to a place where you could do them professionally. Bad: You suck at this and/or have not done much of it.

And here's a list of skills that are important for founders that you should evaluate (feel free to add your own):

• Sales
• Graphic Design
• Product Design
• Content Creation / Creative
• Marketing (hard skills like using ad platforms, seo, etc)
• Public Speaking
• Technical Literacy (low code tools like zapier, site builders, etc)
• Programming
• Finance
• Operational Efficiency (creating processes, organizing information, etc)
• Leadership

Depending on where you're at in your career this list will change overtime so it's worth re-evaluating every so-often. For example, here's what my list looked like back when I founded my first company 15 years ago.

• Good
  • Programming
  • Technical Literacy
  • Public Speaking
  • Leadership
• Acceptable
  • Content Creation
  • Product Design
  • Graphic Design
• Bad
  • Sales
  • Marketing
  • Finance
  • Operational Efficiency

If I was to evaluate myself again today, this list would look drastically different.

The "Business Idea" Venn Diagram

I have a dope graphic for this but can't upload it so i'll put it in the comments (if allowed).

This "business idea" venn diagram holds the answer to "what kind of business should I start?". Your likelihood of success is directly tied to the percentage of key skills that a given business needs that you are already competent at. For example, let's chat through a few possible businesses that Troy from 15 years ago could have started and evaluate where they'd fall on this diagram...

SAAS for search engine optimization Key Skills:

• Sales
• Marketing (knowledge specifically)
• Product Design
• Programming

Although there's clearly a market for SEO tooling and SAAS is a fantastic model, old Troy (and frankly current Troy) should not be the person to build this company. Some of the most important skills were my weakest areas meaning I'd be fighting a huge uphill battle. If I found a co-founder who was a great sales person with good marketing knowledge we may be able to make something work.

Game Server Hosting Service Key Skills:

• Programming
• Technical Literacy
• Product Design

Now this seems much more aligned with the skillset I outlined above.

1.3 | Identifying Opportunity

There are hundreds of thousands of possible businesses you could start. Here's how I identify which ones are worth chasing.

We'll talk about the general process from a high level, then dive into a few examples.

Note: In this and upcoming sections I'm going to ask you to rate stuff on a scale from 1-5. Those exact values you set don't really matter. We're not going to be plugging them into some mathematical formula to output the best business for you. The reason for those ratings is to force you to think about/ask yourself specific questions which will then help make it clear what opportunities are worth chasing.

Chase The Pain

As we discussed in 1.1, pain businesses are generally the best to start. They're also generally the easiest to find opportunities within. If you have truly no ideas for a business. Start thinking about your life, day job, and the lives of those close to you. What are some points of pain or frustration that you and/or your loved ones experience consistently?

Those pain points will become our business opportunities.

Ideally, you want most of these to be pain points you yourself experience. Although you can certainly find opportunities through others they'll require a larger investment in research and you likely won't feel as convicted that what you're building solves the problem. If you're building something that you yourself would use than you start off with one data point that you have product market fit.

I have a permanent living document where I write any possible pain points for further evaluation. The goal should be exclusively to document each pain point. You don't want to start to get into possible solutions just yet as that may muddy the context for your future self. Your first goal should be to get a decent sized and fairly diverse set of pain points to look at. Then it's important to rate those pain points on a scale of 1-5 on just how much they suck to deal with as well as how often they occur.

The More Niche The Better

Something that may be counterintuitive about those pain-points is that you ideally want to try to target things that are more niche. A lot of entrepreneurs will incorrectly try to target opportunities that have massive reach. It's a logical conclusion to come to, after all, many of the worlds biggest and most valuable businesses have built products that appeal to the masses. However, going down this path especially early on is a surefire way to fail.

Here's why building a business around a niche pain point is so great:

1. The more niche you get the less likely you'll run into competitors that have true product-market fit.
2. It's easier to charge more when something is tailor built for an underserved group of people.
3. Getting direct feedback, especially early on, becomes significantly easier.
4. It's easier to leverage growth loops within niches.
5. Expanding your appeal outside a niche is easier than trying to adapt a product to multiple niches upfront.

I really do not believe there's such a thing as a opportunity that's too niche. It's true that there's a spectrum here, and some opportunities that are very niche may not be worth chasing. We'll get into how to evaluate these opportunities below but do not shy away from a potential opportunity just because you think it only applies to a relatively small group of people. If the pain there is significant, it very well may be worth pursuing.

Go through your prior list and add another "niche" rating to the pain points on a scale from 1-5 where 5 is very niche. Depending on how close you are to the problem you might not know this conclusively, give your best guess for now and in the next section we'll talk through doing further research before we fully evaluate.

After that you'll have a list that has enough context to move to the next section.

Working Through It

Let's work through the flow together, We'll use this list in all future session so you can see how we turn these pain points into business opportunities and then evaluate them to decide which one is the best to pursue. I'll start with identifying a few pain points.

• Scheduling specialist doctor appointments.
• Setting up browser residential proxies for scraping.
• Booking high demand restaurants / experiences in other countries prior to a trip.
• Getting better at climbing

Next lets rank the level & frequency of pain for each of those out of 5. Again, the exact numbers matter a lot less than the context that they reveal.

• Scheduling specialist doctor appointments.
  • Pain: 3 | Relatively time-consuming, can be very frustrating.
  • Frequency: 2 | Recurring problem but generally infrequent
• Setting up browser residential proxies for scraping.
  • Pain: 5 | Huge time sink, especially if you've never done it before.
  • Frequency: 1 | Infrequent, once you do it once next time it's a lot easier.
• Booking high demand restaurants / experiences in other countries prior to a trip.
  • Pain: 3 | Requires staying up late in off hours, language issues can cause missed reservations
  • Frequency: 3 | Recurring but tied to an individuals trip frequency
• Getting better at climbing
  • Pain: 2 | Plateauing in progress is frustrating
  • Frequency: 4 | Happens more and more as you improve

Finally, let's add a niche rating to each of them (higher == more niche).

• Scheduling specialist doctor appointments.
  • Niche: 1 | Pretty much everyone needs to schedule specialists at one point
• Setting up browser residential proxies for scraping.
  • Niche: 5 | Very niche, for developers looking to do a specific type of work.
• Booking high demand restaurants / experiences in other countries prior to a trip.
  • Niche: 3 | Distinct group but fairly sizable
• Getting better at climbing
  • Niche: 2 | Not everyone but a very large group of people climb.

This is a fantastic baseline for us to get started with. Next up we'll talk about researching these opportunities to understand the market size, current solutions, and possible differentiators.

1.4 | Researching Prospective Opportunities

This phase is where we can start really digging into our opportunities and start filtering out ones that don't meet what we're looking for. We'll go over what questions you're looking to answer and what those answers mean. As we do so I'll walk through an example using one of our identified opportunities from above.

The example we're going to be using is this opportunity:

Booking high demand restaurants / experiences in other countries prior to a trip.

A Brief Warning on Over Researching

Research is incredibly important for deciding what business you want to start. However, it's incredibly easy to fall into a permanent research & planning phase without ever putting the rubber to the road. I know tons of people who want to become entrepreneurs and start their own business and the "research and planning" phase is where the vast majority of them get stuck and never push past. It's important to go into this phase with a clear intention to start building once some of your assumptions about a space are validated.

My recommendation would be to time box your research to 10 hours for any opportunity.

What is the Competition?

Your first question whenever you identify a possible opportunity is to look for other businesses in the space and see how they are addressing is. Many new entrepreneurs will take finding competition as a red flag for the space. However, it's quite the opposite.

You want to find competition.

If you're researching a space and find no other businesses solving that or a similar problem then you're very likely in a space that won't work. The reason for this is that it's pretty rare to have a truly new idea. Meaning someone else has probably also tried to build what you're thinking and failed because no one will pay for it, it's not possible, or some other reason. To be clear, the competition doesn't need to be exactly like what you're thinking of but you do want to find companies that solve the same underlying issue.

Sometimes you may actually stumble upon an opportunity that's truly new and will work. This is fairly rare but if you find yourself in this situation you could be on a gold mine where you get to sell into a vacuum without any direct competition. If you are unable to find any competition I'd recommend confirming that at least one of these are true before pressing forwards. If none of them are, it's very likely the space won't work.

• You're solving a problem based on a brand-new technology
  • If this is the case you should be able to find tangential products that have solved similar problems.
• You're in an extremely niche space
  • If this is the case, research similar products in related niches.

What you're looking for

What we're looking for when doing research is companies in the space that are solving the same pain point we've identified. The purpose of this is to give us some validation of the space as well as use our competitors products as learning resources. Many of the challenges you will face by starting a company are the same that your competitors have and using them as inspiration will help you skip those challenges and give you key insights on how you can stand out amongst them.

Here's the questions you want to find answers to when viewing competitors:

1. What's their pricing strategy?
   1. We want to understand what the market is currently paying for.
   2. We also want to know how they charge?
      1. When do they ask for payment? Is it subscription based or 1 time purchase?
2. What's their current size & how did they grow?
   1. number of employees is an easy to find gague of size
   2. do they have investor backing or are they bootstrapped?
3. How do they solve the pain point?
4. How are they framing their solution?
   1. what phrasing do they use on their landing page?
   2. what differentiators are they calling out?
   3. how open are they about price?
      1. this can give you an idea of how price sensitive a space is

Example walkthrough

Booking high demand restaurants / experiences in other countries prior to a trip.

For our example, I was able to identify some low tech "travel agencies" that do the bookings by hand as well as a marketplace site for p2p selling of reservations. Here's what I learned...

What's their pricing strategy?

The agencies charge a flat fee dependent on the reservation and the difficulty to get it. For example, Something that's in high demand might be $100 while something that's easier to get might be $10. The marketplace company charges a ~25% fee to the seller of the reservation. So if they sell a $100 reservation the marketplace takes $25.

What's their current size & how did they grow?

The "agencies" i saw were small facebook groups with seemingly single business owners. The marketplace company has some public numbers around volume to attract sellers. They currently claim to have processed ~$12m in transactions over the last 12 months.

All players in the space are bootstrapped and grew organically.

How do they solve the pain point?

Provide either a "book for me" option or reservation "swapping" (this may not be an option depending on the establishments policies)

How are they framing their solution?

They're speaking straight towards the difficulty of acquiring specific reservations. Such as "Can't get a reservation at XYZ in new york?"

Where are the Customers?

The next thing we need to understand about our opportunities are where we can actually find customers. This is important for understanding how a difficult it is to get your solution out there as well as it being a key component for you evaluating an opportunity against your skill-set.

Here's what we need to answer:

1. Who are our customers?
   1. This should hopefully be largely answered by our niche evaluation
2. Where can we find them?
   1. where do they spend time both online & offline?
   2. If i asked you to find just 1 potential customer for the product online, how long would it take?

Those two questions give us important context to answer one of our first critical questions which is...

Example Walkthrough

Booking high demand restaurants / experiences in other countries prior to a trip.

Who are our customers?

Leisure & business travelers

Where can we find them?

Google search (SEO) for reservations, travel social media influencers, travel platforms / forms / subreddits.

Marketing or Sales Company?

When you're building a business there's two ways to reliably reach customers. Those are Marketing and Sales.

Basically every startup is either a Marketing or a Sales company early on. It's very rare that a company needs significant investment in both early on. It's very likely that only one of these channels will be very effective for you early on.

Here's some indicators the opportunity needs a Marketing company:

• Easily target-able audience
• Lower cost product / low average deal size
• Simple self setup for the user
• No contracts necessary
• Likely selling to individuals

Here's some indicators the opportunity needs a Sales company:

• High cost product / high deal size
• Complex setup process
• Contract or volume commitments
• Likely selling to businesses

This should be our first big filter for our opportunities. If you find that the opportunity warrants a sales business but you expect the price for the product to be extremely low, then that is a huge indicator that it may be a bad business to pursue as you'd have a hard time making a functioning sales team if you can't afford to pay the sales team any commission.

Like everything, This isn't a perfect science. There's some totally viable businesses for example, that are marketing companies but have an expensive product. The goal of these questions are to make sure you're thinking about the right things.

Example Walkthrough

Booking high demand restaurants / experiences in other countries prior to a trip.

Given what we've learned it's clear that this would be a marketing company.

• Low cost product
• Easily target-able audience
• Selling to individuals

How Big is the Market?

In 1.3 we spent some time giving our opportunities "Niche" scores. This is an important factor for determining how big your potential market size is for a given opportunity, but it's far from the entire puzzle. We're going to talk through how to evaluate the rough total addressable market size and then from there see how much revenue you could reasonably capture. To do that we'll use TAM, SAM, SOM.

TAM SAM SOM

Tamsamsom

First off lets talk about what TAM SAM SOM even means...

TAM: Total Addressable Market - Maximum possible market

SAM: Serviceable Addressable Market - Segment of market reachable

SOM: Serviceable Obtainable Market - Portion of market easily captured

We're not going to do a full evaluation. You can spend a lot of time on this really diving in and doing research to get an accurate TAM/SAM/SOM but that would not be worth the effort at this stage. We'll talk about doing a full evaluation more in the getting investment section.

For now, we're going to do a really simple version. Specifically focusing on the SAM & SOM. Now that you've done some research on the space we can estimate the rough opportunity size. To do so we need some of the numbers you sourced from prior research. Those being:

• Rough number of people in your space
• Rough number of people in need of your solution
  • This is different than total size of a space. Not everyone in a space will experience the same pain point.
  • If you cant find some data, feel free to make some assumptions.
• How much you think you can charge
  • If it's a physical good this should be your take after the cost of the good
• Frequency of purchases x year
  • Number of times someone would pay for your solution a year. If this is a subscription then the value is 12.

Now we can do some simple math to get our SAM & SOM. TAM = # of people in space * charge amount * charge frequency SAM = # of people in need * charge amount * charge frequency SOM = SAM * .1 (10% of SAM)

If you need to make any assumptions it's always best to anchor on the lower end. The number doesn't need to be super precise. It's just to give us a general size of the space.

Example Walkthrough

Booking high demand restaurants / experiences in other countries prior to a trip.

# of people in space Here's how we'll estimate this market. Let's start with the TAM by getting the total count of international travelers globally. This fluctuates but it's usually around ~40m.

# of people in need Now we need to get an idea of how many of those travelers need to book high demand experiences. There's not a ton of data on this so I'll have to use some anecdotes from people I know. Out of my friends that have traveled recently ~10% have booked high demand experiences. This is a small and bias data set and I'd wager that the real number is very likely lower than that given my friends groups preferences. I'll adjust it slightly down and put it at 6%.

how much we can charge As for how much we can charge it's easy to find data on this using competitors. There's a decent range, but we'll anchor in the middle at $50 / order.

purchase frequency Although there may be repeat orders or multiple orders / trip, it's hard to know the exact frequency so we'll index low and set this to 1.

That gives us...

TAM - $2bn SAM - $120m SOM - $12m

One of the competitors I researched had some yearly volume numbers public and they do ~12m a year in volume so my rough estimates ended up pretty close to reality.

Now that you've researched your potential opportunities we're ready to make some decisions. In the next section we'll talk about how to compare these and pick winners.

1.5 | Categorizing Opportunities

Now that we've done a self evaluation, idea generation, and research we're ready to boil all of that down to an easy to consume list for you to see everything at a glance.

We're going to create a list of all of our opportunities and then have 3 additional columns for the following values:

• Timeline To Ship
• Opportunity Size
• Confidence

You can build this list wherever you want but something like Google Sheets works great.

Now list out each of your opportunities then we can begin assigning values. Here's what each of the values means:

Timeline To Ship

Possible values: - < 1 Month - 1 - 3 Months - 3+ Months - Ongoing

What this is asking is how long until you have some finished version of a lean version of a product that would capture the opportunity. It doesn't need to be perfect and the idea isn't to never work on it ever again. The main thing you're trying to gauge here is how easily can you stand something up.

These timelines are very driven by your own individual skillset. If you want to build a SAAS but have never written a line of code and have never used a low code tool before than this timeline is going to be a longer than it'd be for a tenured engineer for example.

NOTE: If a lot of our opportunities have a 3+ month timeline to ship... You're very likely not thinking lean enough. It is quite rare to actually need to develop something for that long before proving it out.

Opportunity Size

Possible values: - Low (< 500k) - Mid (< 1m) - Large (< 10m) - Venture

This should be driven by your SOM that you calculated in 1.4.

Anything that's larger than $10m in SOM we'll label as "Venture" opportunity size. That means we're starting to get into the space of opportunities that Venture Capital firms could be interested in investing in (tons of nuance here, we'll get into this in way more detail in later sections).

Confidence

Possible values: - Low (< 10%) - Fair (10% < 50%) - Likely (50% < 80%) - High (>80%)

This value should be driven by a combination of your research of the space and your own ability to execute on it (your skillset).

The percentages are meant to evaluate how likely you think you can make something that generates ANY money at all.

This is why opportunities that solve pain points you experience is such a great starting point. If you would buy the product you're thinking of making then your confidence score here should be high.

Choosing A Winner

So now that you've got your list it's time to pick what opportunity you'd like to pursue.

This is where you really come into play. I don't have a formula on what combination of traits makes an opportunity a winner. That's extremely dependent on you and what you want. Your goal now is to use the context you've gathered about these opportunities to make the best decision for you.

Although I don't have any silver bullet formula here's some things to think about...

As timeline to ship decreases, need for high confidence also decreases.

If you're able to crank out a lean version of a product very quickly you don't necessarily need to be extremely confident it'll work. If you can prove out the concept in just a few weeks, it can be totally worth the risk to try a lower confidence opportunity.

Bigger scale does not equal better space

There are a lot of reasons to not want to target massive spaces. You'll have more competition with more resources. Making it a lot harder to really stand out. Depending on your goals it might be better to build a business in a more niche space with a smaller opportunity size.

Not to say venture scale opportunities aren't worth chasing, they are of course. However, I'd recommend a very high confidence before diving in.

1.6 | Testing The Market

At this point you should have an idea of the opportunity you want to pursue. Now we'll build the leanest possible solution and then test the market. The goal of this is to get ten paying customers. Once you've done that you should feel very convicted that this is an opportunity worth chasing and you'll critically have a decent sized user group to talk to and learn about their needs / use cases for your product.

What you're trying to learn

I want to be very clear with what this is for and what indicators you want to really look for. I'll list them out plain and simple for you to easily reference then explain some more detailed thoughts.

1. Were my assumptions / research about the opportunity correct?
2. Can I get customers?
3. What do customers want?

Let's dive into each of these a little bit so i can paint some additional color on what you should look to answer.

Were my assumptions / research about the opportunity correct?

In the prior sections we discussed different techniques to evaluate and research opportunities. It's important you're able to confirm as much of this as possible. This is extremely valuable not just because the information itself is useful for this specific opportunity but also because it'll give you confidence or insights on how to adjust your research and evaluation techniques for the future.

Can I get customers?

The exact number is relatively arbitrary and dependent on what you're building. Ten is probably right for most opportunities. However, this is very up to the exact product you're building. Some products don't really have "paying" customers but rather generate revenue from advertisements or other means. The most important thing is to be intentional about what concerns you're trying to validate.

The purpose of this is to get people in your target market to pay for the solution you're providing. Your ability to find these customers and how difficult it is to get them bought in on what you're making are key indicators for if you should commit to a space. If you have to talk to one hundred people who are in your target market before anyone is even remotely interested... it's a good sign you are not in an opportunity you should chase or your current approach is very wrong.

What do customers want?

In order to test the market you're going to have to make some initial assumptions of what kind of product or solution you should offer to address an opportunity. A good chunk assumptions will likely be very wrong. The feedback on what's good and bad about your ideas for your solution is critically important. You might find that the bulk of the problems you're trying to address are already solved quite well by an existing solution, and you'll need to drastically adjust your approach or drop the opportunity all together.

The leanest possible solution...

In order to test the product you'll need to have something to sell the customer. This should not be an "MVP" in the traditional sense. You instead want the simplest possible iteration of your proposed idea to address a opportunity.

It is insanely easy to over-engineer or over-build your first iteration. You're not building your dream product. You're not building an MVP. You might not even have to build anything at all... I know quite a few people that have gotten through this phase with a simple google form and some manual work. Anything that is not directly addressing the problem you're trying to solve you should not include.

The goal here is to confirm our assumptions and analysis of the opportunity space and our idea. Giving us the confidence to go all in and truly focus on chasing the opportunity.

Finding your first customers

By this point you should have a good idea of where to source and find your customers. The most reliable way to do this is to find them in person and have a conversation with them about what you're building.

Please lean into the phase that you're in. Far too many founders try to seem like they are more professional or established than they are. They'll spend a bunch of time making an attractive landing page, professional business cards, or even swag for their pre-launch product. On paper, it might seem like presenting yourself as a professional established company would help attract customers by building trust. To be clear though, this isn't actually the case and in the vast majority of the businesses I've built or been a part of building the first few sales done by the founders are often times some of the easiest. People love transparency and love aspiring entrepreneurs. You as a founder talking directly to a potential customer is not something that is possible at large companies. Lean in to where you're at. Approach potential customers with a humble eagerness to help and understand the problems they're facing. Generally, people will want to root for you / support you.

There's no one size fits all solution for finding your first customers so instead, here's some tools to add to your tool-belt for you to implement depending on what you're trying to build...

Advisor Shares

Giving out a small advisor share package to early customers is a great way to get them on board. Especially if your target end user is a fairly prestigious group such as lawyers, doctors, or executives. You don't want this to be a significant amount of equity. Typically, 0.1-0.5% total. I usually like to frame these in total # of shares. Bigger # = Better.

This also lets you cash in on something called the Ikea effect. People love something more when they feel like they were a part of making it. Giving key customers a very small ownership stake early on gives them a huge incentive to be a fantastic source of feedback, a long term customer, and makes them very likely to roll with the punches as you figure out the kinks.

Discounts

It's very important that you still charge for what you're offering. Giving away your offering for free can significantly impact the quality of the feedback you're receiving. There's a few different kinds of discounts that can be valuable at this phase. Here's a few to consider...

• Selling At Cost: Your goal at this phase isn't to make money. A lot of the time I like to sell the service "at cost" to the customers at this phase. That means you're just breaking even with the sale. In my companies early stages, this is what we did. We simply charged the fee we'd break even on with no additional costs.
• Godfather Offer: Putting together a extremely competitive price that you can then offer long term to a client is a good way to get them bought in for the long term.
• Free Trial: Giving things away for free is not ideal but depending on your space this can be an expectation from your customers. It's important you do collect payment information and a agreed upon date to begin charging. That allows you to still get that same investment as a full paying customer as they'll be evaluating if the product is worth the money you will charge at some future date.

Know when to fold

This is very likely the most time you've invested into any of your ideas up until this point. It can be very easy to get to this phase and try to force something to work. This is made worse by how common the bullshit "never give up" mindset is in the entrepreneur community.

So I'll say it.

PLEASE GIVE UP WHEN SHIT ISN'T WORKING

You are still so early on in this process. Do not get stuck trying to sell a product the market is not accepting. Be ready to rapidly drop your ideas and assumptions about the space or even to drop the space all together and look for a different opportunity to chase.

You should "never give up" on your dream of being an entrepreneur, but you should be incredibly ready to give up on specific opportunities when your ideas are not panning out.

1.7 | Committing

Congratulations! You've gotten through the phase where the vast majority of potential businesses die. Provided you got the validation you were seeking out when testing the market it's now time to do what very well may be the hardest thing for many entrepreneurs....

You need to commit.

Once you find something that is showing you good signs you need to commit. As an entrepreneur myself, I know how hard it is to just work on one thing... case and point by me writing this shit right now instead of working on my startup. You probably have a bunch of other ideas you are excited about the potential of and are interested in exploring... But unfortunately, your limited resource is always time.

That's all folks :)