Sharpen The Axe
Iâm at Slush this week. Itâs one of Europeâs biggest gatherings of tech founders and VCs. Somehow, the organisers convinced half of the European tech/venture scene to come to Helsinki, of all places, in November, of all times! Itâs cold âď¸
Part of my job is to trawl through the hundreds of startups that are listed on the platform to try to find the gems that could fit our investment thesis. The brutal truth is that 90% arenât even relevant: once weâve filtered for stage, sector and geography, weâre already down to a relatively small subset.
Of those that remain, itâs incredible how frequently we see the same ideas repeating over and over. Particularly in highly competitive markets like consumer social and consumer health, it feels like founders arenât doing the hard ground work of researching their ideas deeply before getting started.
I donât believe that founders shouldnât go after competitive markets: after all, competition is a proxy for market opportunity, and itâs logical (and perhaps reassuring) that other founders are excited by the same opportunity. But I do think that founders should really interrogate their ideas and markets with objectivity, intellectual honesty and humility before spending a penny on development. And most of all, please be different.
Here are a few questions to ask yourself to sharpen the axe before you spend the next 5-10 years of your life trying to chop down the tree:
- What problem am I really trying to solve? This seems obvious but itâs incredible how often founders havenât truly built a deep understanding of the problem theyâre focused on.
- What type of problem is it? I highly recommend Sequoiaâs PMF Framework to help you think through this.
- What is the universe of potential solutions to the problem? For example, the problem of expensive conference hotels could be solved by a price comparison site (Booking.com), a coupon/voucher site (Honey), a completely new type of accommodation (AirBnB), a virtual/online conference (HopIn R.I.P.), etc.
- Why is my solution type best relative to other alternatives and substitutes?
- Within my solution type, who else is building - or has ever tried to build - the same thing (anywhere in the world) and what are/were their strengths/weaknesses? (Speak to âfailedâ founders in the space and avoid the same pitfalls!)
- How is my approach fundamentally different to Direct Competitor XYZ and why is that difference meaningfully better from the point of view of (i) my user/customer; (ii) scalability; and/or (iii) economics?
- What circumstances or changes (e.g. cultural, regulatory, technological) make my idea/approach uniquely possible now?
It can be a bit of a buzzkill to take a cold shower on an idea at the very beginning, but answering these questions rigorously will make a massive difference. Donât spend years of your life toiling in the darkness on something you think is great but the world has either already seen or is not looking for. Sharpen the axe and then chop like hell.