Where do ideas come from?

14 Sept

When an entrepreneur and a problem love each other very much.

I have conversations with agency owners who are thinking about how they might go about the journey of creating their own product. Often there is a sense of frustration that they just haven’t stumbled across the killer idea yet. Either that, or there is some historical regret when they had an opportunity but didn’t take it.

I always talk about how we built a tool for monitoring the social networking service formerly-known as Twitter, very early on. Even though SaaS wasn’t much of a thing in 2007 or 2008, we managed to monetize it, but then just left to its own devices, expecting it to deliver passive income indefinitely. Instead of doubling down and figuring out what the users of the product were trying to do in their day-to-day and how else we could help, we just figured we’d done the hard work and now was the time to enjoy the fruits of our efforts.

Agency Super Powers

I also regularly reference this idea that agency owners have super powers, earned over years of working at the coalface. The powers give them an unfair advantage when it comes to launching a SaaS.

It’s worth remembering this and applying it to understanding where the idea for your product is going to come from. Rather than trying to pluck an idea out of thin air, lean into the advantages you have.

In my book, Productized, I talk about four types of SaaS founder. Understanding where you fit may help you focus your efforts on where you are most likely to find inspiration. I’m going to summarize them here:

1. Considered Disruptors

This group consists of agency owners who take a calculated approach to innovation. Typically, their product comes out of an understanding of a vertical market coupled with a background in product development. Pixl8 is an agency that spent years building websites for Membership Organizations and ended up creating a successful SaaS platform for that vertical called Ready Membership. They sit at the perfect intersection of knowing what product people need and how to build it for them.

If that’s where you sit, think about how far ahead you already are. If you’re looking for inspiration, you just need to talk to your customers and uncover what nuggets may be lying there. It may be that you can do something that is currently served by a more generic product, but you bring your specialism in the sector to make it better. An analogy might be that you have a specialism in hospitality and the default CRM for sales and marketing people in that sector is Hubspot, but it doesn’t quite cover everything a commercial team in hospitality needs. So you build a CRM designed specifically for the hospitality sector.

A big head-start here is that you already know how to sell to this group. You will probably have customers from day 1 for your product because you can just sell it to your existing clients.

2. Prolific Experimenters

This category could include agency owners who are constantly testing new ideas and side projects. They tend to launch multiple MVPs (Minimum Viable Products) to see what sticks. This was us.

We had no real business getting into digital signage. We’d never worked in that space. But we’d built loads of products that solved not-so-obvious technical problems, both for ourselves and our clients. The advantage here is that you don’t come with preconceived ideas. The whole digital signage industry worked on proprietary media players. They didn’t think a weedy Amazon Fire TV Stick would be up to the job. We had no idea and just went ahead anyway. Turned out, a large section of businesses wanted to use consumer-grade hardware too. The rest is history.

If this is you, then it may be more about solving gnarly, albeit boring, challenges. In fact the more boring, the better because you’ll find yourself amongst a smaller band of competitors compared to say, if you embarked upon building yet another email marketing tool.

3. Accidental Entrepreneurs

This group may not set out to become product innovators, but stumble upon a solution through their day-to-day work with clients. Often, they create internal tools or workflows to solve specific problems and then realize that these solutions have broader market potential. They evolve from agency owners to product founders somewhat unintentionally, driven by the organic success of their innovations.

Mailchimp is a great example of this. The CEO built the product mainly to save himself time when servicing his agency clients. But then he figured he could bundle it up into a self-serve tool and charge a monthly subscription instead and scale it beyond anything he could do by selling time. Basecamp is a similar story. Their clients loved the project management tool they’d built for their own agency work that they experimented by seeing if they could sell it to non-agency clients. They gave themselves a year to see if they could hit $5k in MRR and smashed it in about three months.

Unlike the first two types of founder, this is less about planning and more about serendipity. You can’t really ‘proactively’ accidentally stumble upon something. But maybe you have something that is hiding in plain sight. Maybe there is some process or bit of IP that you have created that makes your job easier when in fact it could be turned into a product and make lots of other people’s lives easier too.

4. MBA Chancers

With apologies to those with MBAs. I’m not being rude about the qualification. It’s more to illustrate that as agency founders we might think we are at a disadvantage to someone who has emerged from business school, or straight out of a high-powered job in banking. But you couldn’t be more wrong.

This group typically consists of individuals who see an opportunity in the market based on theory or research but lack the hands-on experience in the specific field they’re entering. They are more likely to approach product creation from a high-level strategic viewpoint, using frameworks and business models they’ve learned academically. However, their lack of industry-specific or domain expertise can be a limitation, as they might miss the nuanced, real-world insights that come from working directly with clients or solving particular pain points over time.

If this is you, it’s going to be a tougher ride. But of course there are some notable examples of people starting hugely successful businesses straight out of college without any sector or product-building experience. Bill Gates and Mark Zuckerberg have both done pretty well. But I suspect they had other qualities that gave them their advantage.

David Hart