New startups business ideas

If you are a serial entrepreneur starting to look for an idea for your next startup, you are likely to want a way to stimulate your brain to come up with as many good ideas as possible. This blog post outlines a framework that is designed to fire up your best creative thinking modes, triggering the creation of new ideas.

The idea for this framework came to me when I realized that all of my early startups had been triggered by the following ingredients: an unmet customer need (or pain), and some disruptive new technology that had allowed that pain to be solved in a new way.

Think about many of the great startups we know and love, and you will recognize this pattern:

Two of my own startup ideas were driven by spotting an unmet need and recognizing that there was new technology that solve those needs. My other two startups were driven the other way round: recognizing that there was an important technology disruption, and then looking for what customer pain I could now solve.

The Framework evolves: New Business Models

In early 2004, I invested in JBoss, a company who disrupted the two leading players in the Java Application Server space, IBM and BEA. They did this by giving away their software completely free of charge, and making money by selling a low cost subscription that included things like support. JBoss was highly successful with this new business model, and shot to a $65m run rate in just two and a half years.

When I looked at what had been the disruption that had allowed them to succeed, I realized it wasn’t new technology like we had seen with previous startups, but rather a new business model. So the framework needed to evolve:

There are many other examples of businesses that have recently succeeded using new business models to disrupt existing players. These include:

• Groupon: Group buying to drive significant discounts. (Also represents a new customer acquisition model for local businesses).
• Zynga: Leveraging the Facebook platform as a way to acquire customers virally (extremely fast and free)
• Gilt Groupe: Flash sales of overstock clothing
• Salesforce.com: the SaaS business model, making it easier for customers to buy and implement. (This also did depend on a new technology appearing: the wide availability of broadband internet connections.)
• Angry Birds: Apple’s App Store as a new low cost way of acquiring customers
• 99Designs: crowdsourcing as a way to provide design services

A final twist: Consumers become the biggest customers for technology

Since the crash of 2000/2001, an interesting change happened in the tech startup world: consumers became the biggest buyers and users of technology. This has created some of the biggest startup successes, including Facebook, Zynga, Groupon, Apple, Gilt Groupe, etc.

Although one of the drivers for why consumers buy technology is solving unmet needs (pain) in their lives, there is also another very important driver: entertainment, (or pleasure). So to make the framework complete, we should also consider entertainment as an alternative to unmet customer need (pain).