If you are seeking a startup idea, here are my first six favourite approaches for you to generate that next billion-dollar idea.
Idea Approach 1: Dis-intermediation
– What is intermediation? It is the middleman, agent, or third party between a transaction. They charge a fee and jack up the price to make a profit. This idea is to eliminate the need for a third party between a transaction.
– If Xiaomi were to rely on a reseller but not via online sales, the price wouldn’t be that cheap either.
– Organisations used to pay headhunters a high fee to find relevant talent with required skill sets. Now LinkedIn has significantly reduced the business size of headhunting firms.
– Before Uber, taxi drivers were unable to drive their own car and were required to pay a fee to a licensed taxi operator to get their certified car. Uber has dis-intermediated the need for taxi drivers to pay that fee, and now they can become an UberX driver with their own car.
– In Malaysia: iMoney.my and RinggitPlus.com will soon eliminate the need for local banks to hire more credit card salespeople. (Idea giveaway: There are so many unit trust agents and insurance agents out there. What if you could build a compelling platform that convinces the consumer to buy directly with the insurance company without paying commission to an agent?)
Idea giveaway: The speedy transfer and low or close to zero transaction rate of Bitcoin allows user to do cross border transfers faster and cheaper. It will soon make a big impact on Western Union and MoneyGram, who both charge a fee. If you could make the user experience good, people would start adopting your system to transfer money via Bitcoin back to their home city. That’s your opportunity to dis-intermediate both Western Union and MoneyGram.
Idea Approach 2: Curing Pain
Refer to http://www.forbes.com/sites/georgedeeb/2014/07/24/is-your-startup-building-a-vitamin-or-a-painkiller/.
– If you could choose to pursue something, choose an idea that is a painkiller instead of a vitamin. It has to cure the pain and not just be a “nice to have” value to the consumer.
– The common questions to help cure the pain are the followings: Is it better, is it significantly cheaper, is it faster, is it easier?
– What is better? Storing and transferring files over a USB thumb drive is a pain and the worst is it often goes missing. Dropbox cured the pain for this.
– What is significantly cheaper? Business owners used to pay a huge fee to freelancers or programmers to develop an E-commerce storefront. Shopify allows businesses to pay about 100x less to achieve the same purpose.
– What is faster? Instead of hiring five staff to do a repeated job that is slow, CloudFactory and Mechanical Turk distribute the repeated tasks to more than 10 people and very often, this works five times faster. skyscanner.com was my favourite; if it didn’t exist, I would open multiple tabs to check a flight price. It indeed has saved a lot of my time.
– What is easier? Evernote built a lot of awesome features to make you store all your notes in one place. Ticketing sales were hard to keep track of in messy excel or other forms, so Eventbrite saved the day, allowing event organisers to make it easier.
Idea Approach 3: Commission-based Model
– If you could build a platform that could increase the sales for others, they would be willing to pay you a fixed fee or commission. Companies that are spending marketing dollars to acquire a customer can spend some time to get the deal. There’s cost involved for every transaction. If your idea could bring them sales and eliminate the need for spending huge marketing dollars, they would pay for it.
– Marketplace: Marketplaces spend a huge amount of marketing dollars to acquire users who will stay with the Marketplace. Marketplaces generally have a high volume of visitors and hence, it make senses for companies to give out commission to the Marketplace in return for lower marketing dollars spent.
– zaarly.com collects a 10% commission fee by getting jobs for local service providers.
Idea giveaway: What if, in the future, companies no longer need to hire so many permanent sale forces and even ordinary people can be their sales people? I came across this startup that is yet to launch: https://www.commissioncrowd.com/.
Idea Approach 4: Under-utilised Inventory
– Inventory in this context means the things which have the potential to generate income. It could include services like taxis. The idea is to find out what are the inventory items in this world that are under-utilised and aggregate them into one platform.
– Have an extra seat in your car? Why not share it? See: Lyft
– Have extra space in your office? Why not share it? See: sharedesk
– Have extra room in your house? Why not share it? See: AirBnb
– Have extra money that you’re able to lend out? Why not lend to people in need? See: LendingClub
– Have free time after 9-5pm? Why not do some work for others? See: CrowdFlower, Mechanical Tucks
– Want to share your moment or photos? Why not post in a place where people are? See: Facebook, Youtube, Instagram, Pinterest
So, now you should look around and identify what are the inventory items that are under-utilised. Although there can only be so many Airbnb’s or Uber’s for anything, keep looking for the ones that have great demand and supply.
Idea Approach 5: Targeting Millennials
– Most of the startup ideas are targeting Generation XYZ, so it’s a crowded and competitive market. Why not set your target on solving a different set of problems — creating solutions specifically for the Millennial generation?
– The Millennial’s lifestyle is easily shaped by technology. Hence, let’s think out loud — what do you think their future lifestyle will be?
– What are the differences in the Millennial lifestyle compared to our generation? Think deeply about their life stage cycles, daily activities, spending preferences, and job preferences.
– I would guess they have high spending power, and they always want everything while also wanting to save big bucks.
– Yet, Millennials are also very competitive among their generation in every aspect. It could be in terms of jobs and home purchases.
Idea Approach 6: Connecting the people with the platform
Let’s identify what platforms are lacking globally and build them.
– Connecting friends to keep in touch with each other: Facebook
– Connecting professionals to extend business relationships: Linkedin
– Connecting shoppers to buy things from businesses: Ebay, Rakuten, Alibaba
– Connecting private drivers with consumers: Uber
– Connecting service providers with customers: Zaarly
– Connecting teachers/trainers with learners: Udemy, Lynda
– Connecting wedding related services to couples: theknot
– Connecting home renovation related services to homeowners: houzz
– Connecting content writers with readers: Medium, Tumblr
What is lacking in the market? Identify it and launch it!
Idea giveaway: Connecting financial planners, unit trust consultants, insurance agents, and investment product consultants with people.
I will stop here with these six approaches first and do stay tuned for my upcoming post for the rest of the approaches.
Disclaimer: I’m a business developer at speedrent.com. I haven’t launched a successful business yet but am just a humble guy who always loves to pitch random ideas in pitching competitions (and win some). I love to help people bounce ideas off and generate awesome business models for their ideas. Email me at email@example.com if you need my help on your pitch, getting your idea more solid, and generating a business model for it.