Choosing the idea is only the second step

I've made the mistake of choosing the wrong ideas for building a startup about twenty times, and made the same mistake over and over again so that you don't have to. A friend asked me for how I picked ideas, this was the response I gave.

Most people start a startup journey picking an idea. Therein, lies the mistake. The first step should not be to pick the idea, but the audience you want to build for.

What's wrong with picking an idea

Blinkers

When you start with a problem, you're continuously trying to validate your idea. It's frustrating to realize that your audience wouldn't buy your product. When faced with such a situation, I've seen founders make one of the two mistakes - believe their customers are dumb to not buy this product, or believe they themselves are dumb to identify a product that might really sell. The correct response is not to question the humans involved in the transaction, but the material of the transaction itself - the product, the idea. It's like horse blinkers, you are trying to look for validation from your customers more than the business you're trying to build. The right response, as you might have guessed, is to quickly change the idea and iterate.

When I was building Socionity, the audience was youtubers. Socionity was creator tools for youtubers to monetize their audience. I didn't care about them enough to understand why when they said they don't want to buy my product. My natural reaction was to believe they were dumb to not monetize their audience using our product. I didn't get to the bottom of the real reason why they didn't buy my product - my product wasn't solving for their most important problems. Infact, till date I don't know what a youtuber's top problems are. I didn't have the motivation to find out.

"But is that giving up? I've been taught all my life to never give up! I won't give up!". Well, there are some times you must give up. Pivoting is healthy in the early days.

But what about my customers?

Andy Grove said this the best in his book Only The Paranoid Survive. Intel was in the memory business. They had big customers. Like real big, making hundreds of millions of dollars a year. They were nervous about letting their customers know that they are moving from the memory business to the microchip business. They were greeted with a "yawn" from their customers. Primarily because their customers already saw it coming. If you're in the wrong business, your customers would know before you do. They'd know if you're not committed to them. They'd know when you're not getting to the bottom of their problem. They'd almost be expecting this.

If Andy Grove can pivot Intel, you can pivot your startup with three users.

First time lucky

It is very very unlikely that your first idea really works out. Infact, I've never seen that happen. You have to build to not only to solve a problem, but you also build to figure out the real problem. When you are building for an audience you care about, you are likely to take their feedback very seriously. If they're not buying your product like hot cakes, you'd want to know why. Your general curiousity will get you to the answer you seek - the right product for this audience. Almost always, you'll never get lucky in the first product you build.

We eventually pivoted Socionity from youtubers as the target audience to developers teaching/learning crypto and web3. Very soon we realized we were in the right business - our tutorials were better than any other tutorial out there. But interestingly, we pivoted the product away from helping creators making educational content to just a making a great tutorial. Because, we knew that the developers cared about a great tutorial. Since we were now in service of developers, that is all we cared about too. So, eventually we just shut down all our creator tools that we built for the youtubers and just built a static wiki like tutorial. Tens of thousands of developers still use these tutorials to learn and contribute to improve it every day. Was it the business that made a billion dollars? No. Did it set us up to understand the developer's problems better - for sure.

Start with the target audience

Don't start with an idea, start with what is an audience you care the most about.

Yourself

It is best if you yourself or one of the cofounders is an archetype user themself. I think this conventional wisdom is correct. If one of the founders is a target user, you can make intuitive bets. It removes the guesswork from the early days. Either the founder has the problem or doesn't. If the founder is not an archetype user, it's hard to discern what is the real problem for that audience base.

Knowing your audience is really important. If a founder is an archetype user, they'll know other users like them. They'll also understand the mindset of the user. They can just ask themselves or their friends and get to the bottom of why the user isn't using the product.

My friends' company Jar is a great example. Jar helps Indians buy digital gold in one tap. Many Indian founders default to the mistake of building for the audience in tier 2 and tier 3 towns. That's a billion users, the opportunity looks huge. I've made that mistake myself. So much so, I've tried to sell a product that lets users transact in Bitcoin. I grew up in Mumbai, I had no clue what it is like to live in a tier 3 town. I thought their biggest problem was to transact in Bitcoin. I was wrong. Founders of Jar are archetype tier 3 towners. They themselves, their family and all their childhood friends are archetype users. They were quickly able to identify that the users wanted to buy gold on tap of a button at the correct "auspicious hour". I couldn't have guessed that was their problem. Polar opposite to what I thought their problem would be - or rather wished their problem would be.

Iterating

It's just easier to iterate. You keep asking the users you have how you can solve their problems better. They'll tell you. You just follow what users say. You'll not err in believing they're dumb, because that would imply your gang and thereby you are dumb. There is no way I would ever attribute the word dumb to a developer. I'm protected by ego in making that mistake.

At Reclaim Protocol, we serve developer-entrepreuners. Like me. Reclaim Protocol is an pseudonymous identity management solution for developers to build apps that lets users stay pseudonymous. The catch was, to integrate with Reclaim Protocol, the app needs to ask the user to install the Reclaim Wallet app. That's how we initially designed it. So when the users said they don't want their users to have to install another app - the Reclaim Wallet - just because they integrated Reclaim Protocol, I could immediately sympathise. I demo'd to seven founders over 48 hours. I got the same feedback again and again. In hindsight this was obvious, I just needed to hear it said aloud. But when I did hear it, me and my cofounder (also a dev) discussed this and within 20 minutes we decided to evaluate an SDK that developers can integrate into their own app instead of asking users to install a new app. Within 4 hours, we tested and affirmed that it is possible to build the said SDK within a couple weeks. We spec'd it out and put it in motion. Not once did I think these developers are stupid.

Conclusion

First choose the audience you care about. Deep care only comes from being that kind of a user yourself or being very close (family or cofounder) to one. Once you choose the audience, then choose the idea you want to work on. You first need founder-market fit, before you have product-market fit.