In my role as an early stage VC, I often get asked by aspiring founders for my reactions to, and feedback on, their startup ideas. This article is borne out of the learnings from those interactions, and is written to be helpful to any aspiring founder, who is figuring out their startup idea.
For founders who are in the process of honing in on their startup idea, it is worth noting that there are broadly four routes to arriving at the startup idea. These are personal pain, personal experience, prospecting, and finally opportunism. Let us look at these one by one.
Personal Pain
The first route is through personal pain, i.e., when the problem or problem space that you wish to work in is determined by a personal pain or problem that you have experienced, and for which you wish to see a solution. Some examples:
- Garrett Camp came up with Uber, after paying $800 for hiring a car to take him and his friends around on New Year’s Eve 2007.
- Edith Harbaugh founded feature and release management software LaunchDarkly, after she saw every company she worked at struggle to stage releases of software to its users, and felt there should be software that helps companies do it better.
- Deepinder Goyal launched FoodieBay (now Zomato), after he saw how folks in Bain’s Gurgaon office had to await their turn to see a set of menus and order (circa 2008); he scanned and put it on an intranet. Then he added more menus, and then expanded it outside Zomato as Foodiebay.
Personal experience
The second route is through what I call personal experience, i.e., where the idea evolves from, or is triggered by what you have experienced in the course of your work or personal life. For instance you have worked in an insurance company, and in the course of that you see that there is an opportunity to improve some process (say cashless claims) and decide to start up there. Some examples:
- Brian Armstrong was at Airbnb and he saw the challenges of money transfer to hosts across the 190 countries they were operating in. When he saw the Bitcoin whitepaper on Hacker News, he saw that crypto could help in enabling greater financial participation in the global economy, leading him to start Coinbase.
- Mathilde Collin and Laurent Person started Front, after their past experiences. Mathilde seeing the importance of email as the premier work tool, and wanting to make it better, and Laurent, wanting to create a lightweight customer support tool. Their ideas converged into a shared inbox tool for customer support and service use cases in Front.
- Girish Mathrubootham had been building on-premise helpdesk systems since 2004 at Zoho. He came across an article in Hacker News about Zendesk increasing its prices, and read a comment that there could be an opportunity to create an affordably priced helpdesk competitor. That inspired him to launch Freshdesk (now Freshworks)
Prospecting
The third route is arriving at the problem to work on through a long (or occasionally short) process of prospecting – evaluating different industries, talking to different people (other founders, VCs, experts), looking at hot sectors, brainstorming and whiteboarding with cofounders, etc., to arrive at a problem space that looks meaningful from a market size perspective, and one that personally excites the cofounders.
- Christina Cacioppo of Vanta, arrived at SOC2 compliance as a productized service, through a long process of brainstorming, ideating, and rejecting (one of the rejected ideas was a voice assistant for lab workers).
- Marco Zappacosta and his co-founders brainstormed on weekly phone calls, and bounced potential ideas off each other, to arrive at Thumbtack, a marketplace enabling anyone to access home improvement and professional services.
- Deep Kalra, experienced the power of the internet (this was late ‘99 or early 2000) after getting a higher price online while selling his wife’s car, and explored ideas around online broking and online travel and chose the latter. This became MakeMyTrip.
Opportunism
The fourth and final way is via opportunism, where you see a potential opportunity to replicate what exists in another market / geography, e.g., doing a X of India. This is likely how Flipkart, Ola, Dealshare etc., started. The founders of Flipkart were working in Amazon’s offshore development centre in Bangalore, and decided to create an ecommerce platform for India. In the case of Ola, there is the much quoted story of cofounder Bhavish Aggarwal, having a poor taxi experience while travelling from Bangalore to Bandipur, which gave him the idea for a taxi cab company. It could be personal pain but I feel it was likely semi-opportunistic as Uber, Lyft (then Zymride) were funded and operational by then. The founders of Dealshare were inspired to create the PDD of India.
Clarifications
When I posted a tweet about these four routes I got a bunch of questions / comments citing methods which fall outside these four routes. Two of them are worth sharing here, with my clarifying responses to them below:
- @ntkris – “There’s another bucket that doesn’t neatly fit into any of those: “Mission”. For example, I’m really passionate about solving pollution problems etc. Not really a personal pain but something you are passionate about for society at large.”
- My response to this is that this is indeed personal pain, of a kind. A mission to solve something does emerge from a deep personal pain of a kind, even if it is not easily apparent.
- @sandeepssrin – “Serendipity. You play with something and suddenly it becomes a startup.”
- My response: Serendipity happens when you have been playing with something for a while. You would play with something for a while if you are obsessed with a problem (personal pain), or it arises naturally in the course of your work, and you are wrestling with some enhancements to the work (personal experience).
- @astharattan and @suchetkm both asked how different personal and personal experience are from each other and how to distinguish them
- I absolutely loved @prasanna_says‘ reply: “they know the customer vs they are the customer I presume”
- I absolutely loved @prasanna_says‘ reply: “they know the customer vs they are the customer I presume”
Pivots
Another way to arrive at your present idea or problem space is through a pivot; that is, by starting with one of the above four approaches, and when hit with a roadblock or chances of imminent failure, explore an alternative idea based on what you have learnt in the course of the journey thus far. Sometimes it is taking the most popular feature, which may have been a sidebar feature and not the main offering, and turning it into a product. This is Stewart Butterfield shutting down Glitch, a game they were working on, and taking the internal tool they had built to “organise file exchanges among their development team” into Slack. Sometimes it is understanding that the product you have built for a certain market could be relevant for other markets. This is Nextdoor, where Sarah Leary and her team initially built Fanbase, an online community for sports enthusiasts. When Fanbase struggled to grow, they leveraged the community elements of the product, to pivot into a hyperlocal community and social networking app which they named Nextdoor. Sometimes, it is seeing that the biggest users of your product are using it to meet their unmet needs, and pivoting your product to meet their needs. This is Meesho, which did it twice, first moving from serving neighbour stores to serve individual resellers, and then again pivoting away from resellers to service individual buyers.
How did Indian Unicorns start? Which routes did they pick?
Let us wrap this by looking at how Indian unicorns arrived at their startup idea. I got a list of all the unicorns that have resulted thus far (basis Tracxn database) and looked at their origin stories.
- Link to the Unicorn dbase, the route by which they came up with the idea, and brief description of their origin story
- Supportings for the above
Thanks to the interwebs, and perplexity, here is how the unicorn count stacks up by origin. About half the unicorns come via personal experience. The next largest is via prospecting.
| Routes | Count | Share |
| Opportunistic | 9 | 8% |
| Personal Experience | 57 | 48% |
| Personal Pain | 17 | 14% |
| Prospecting | 36 | 30% |
| 119 | 100% |
Now, a look at B2B and B2C Unicorns, and seeing if there is a marked difference from the above.
Not much of a difference for B2B Unicorns. Note that there are no opportunistic B2B unicorns in India!
| Routes | B2B Unicorns | Share |
| Opportunistic | 0 | 0% |
| Personal Experience | 26 | 58% |
| Personal Pain | 6 | 13% |
| Prospecting | 13 | 29% |
| 45 | 100% |
Much the same for B2C unicorns, with one difference: the share of personal experience has come down, and the share of opportunistic routes has gone up.
| Routes | B2C Unicorns | Share |
| Opportunistic | 9 | 12% |
| Personal Experience | 31 | 42% |
| Personal Pain | 11 | 15% |
| Prospecting | 23 | 31% |
| 74 | 100% |
Do I have a bias for a specific route?
Well, I do, but not sure if other VCs have one. In my case, I prefer Pivot > Personal Pain > Personal Experience > Prospecting > Opportunistic. The reason Pivot comes on top is that the founders have been through one round of iteration and market feedback, and hopefully have been pulled in the right direction. Next is personal pain because if it is something that deeply matters to you, and you are scratching your itch, then it is likely that you are going to stick with it for longer, even in hard times. Opportunism comes lowest for the same reason that personal pain comes here. I believe that you don’t necessarily identify with the problem, and are trying to take advantage of a hot space or funding mood, instead of doing something that you are passionate about. This bias alone is not enough to decide one way or the other, but rather gets weighted in the final decision.
Feedback
Happy to get reactions to this, and hear your startup’s origin stories. Which route do they come under? Also, if you are a unicorn founder and I have got your origin story wrong, let me know and I will be happy to correct it.