Smart Startups summary

It’s early 2012 – and Josh Hix and Nick Taranto are clocking in upwards of 60 hours a week trying to identify their first big business idea. They spend long days and nights pouring over spreadsheets, interviewing potential customers, and analyzing market sizes. Finally, after rejecting more than twenty ideas, they decide to pursue Plated, a meal kit delivery service. Within three years, the company will hit $100 million in revenue.

Josh and Nick’s path is, according to the authors, the embodiment of how smart startups are formed. Over the past decade, the authors identified two distinct patterns that lead founders towards successful entrepreneurship. And it’s not what you might expect. In fact, neither involve sudden flashes of inspiration – that’s only how startups are depicted in Hollywood.

The first of these patterns involves deliberate ideation. This group makes up about half of the founders that Harvard identified, Josh and Nick included. In this group, potential founders start off with no idea in mind, instead embarking on deliberate, methodical searches and analysis. Throughout the process, they evaluate various concepts against specific criteria, and often set timelines for when they’ll decide on one idea. 

Let’s now meet Morgan Hermand-Waiche – he personified deliberate ideation all the way back in 2010. Similar to Josh and Nick, he was also a Harvard graduate in search of an idea. But he went at it alone, and ended up creating a list of 100 potential ideas. But it was lingerie that he went with in the end. Lingerie had initially entered his list at number 37 after his girlfriend complained about the high prices of established brands like Victoria’s Secret. He decided to pursue it after realizing that the $15 billion US lingerie market wasn’t making progress at resolving inefficiencies in its retail model. So, in 2011, he launched Adore Me – and by 2016, the company was generating more than $100 million dollars in revenue every year.

So, that’s deliberate ideation. But what about the second pattern the authors encountered? Meet organic ideation. Organic ideation involves founders whose ideas grew out of their own experiences over longer periods of time. In most cases, the ideas start small – but then grow ever clearer as they repeatedly come across the same problem.

One such problem was felt over and over again by Anthemos Georgiades. Between 2006 and 2011, he moved apartments a whopping seven times. And the same pain points accompanied wherever he went. He slowly came to realize that while finding apartments online was easy, actually nailing down the lease itself was far from smooth, involving countless viewings, mountains of paper applications, and seemingly endless days of waiting for responses. These frustrations finally morphed into Zumper, a platform where renters can sign leases online, no paper required.

It’s probably clear that both of these entrepreneurial approaches can yield impressive results. But it doesn’t matter how good your idea is if no one is willing to pay for it. That’s where the work of validation begins, which we’ll explore next.