Analyzing business ideas
I’ve had a lot of time to reflect on the quality of ideas after running Interact for 13 years. When I first analyzed the idea for a quiz software that helps you generate leads, I didn’t know what I know now, and thankfully it worked out okay anyways. In retrospect, there were a few key things that made the idea work. And a few more things about the idea that make it less than optimal.
Things that always exist. Things that always exist are like records of people, first written on clay, then a phone book, now LinkedIn and Facebook. And in my opinion, the things that always exist are the best ideas. For Interact, we got this one decently right. Quizzes have always existed in some form, where people test each other on their knowledge, or for their personality propensities. However, it’s a fringe concept, rather than a major concept. And that’s the negative.
Major concepts are big aspects of life. Clothing, Information, Health, Money, Housing, etc. minor concepts are fringe things, like quizzes, like travel, like restaurants. These are nice things, when the timing and attention are right. And less nice things when they are not.
Shifts in what people want. If you can capture a big thing, at a time when people are shifting what they want, that’s the absolute best type of idea. AI is perhaps the best example of this in our lifetime. People want information, and the way they want it is shifting from links on a page to conversational. ChatGPT and the like have made a business out of delivering that information in a different format. People want to make things, and it seems like AI is also going to change that. So you jump on a shift in how people want a big thing in their lives to be delivered to them.
Length of runway. Big shifts in big things tend to last decades. Google first introduced blue links in 1999, and it was 2.3 decades before ChatGPT started to change that delivery mechanism. Before that, the encyclopedia was the leading method for several decades. And so on. Big changes in big things last decades.
Big changes in small things don’t last as long. Sometimes a couple of years, sometimes longer. These are easier entry points, because their is less competition, but you also have to remain agile if you choose this route because interests shift more rapidly when you are dealing with smaller things in people’s lives. It’s a smaller part of how they function as humans, so changes can happen faster.
For Interact, we are part of a shift in a small thing, and it has gone in waves, which is common in my observations. Sometimes people want it, other times they do not. It’s not so consequential to their lives as a big thing is, so adopting or not adopting it doesn’t make as much of a difference.
My retrospective is you want to look for shifts in big things. Pay attention to what is changing in terms of how people consume or learn or spend money, and jump into that fray. It’s kind of just like waiting for low tide to grab the shells out of the waves, and once you have the shells they don’t evaporate because they represent something people want for the long haul.
