Part 1: Finding Your Starting Point
Innovation doesn't start with a perfect idea; it begins with an actionable hunch. This section helps you reframe your initial concept and define a problem that is truly worth solving.
Start with a Hunch, Not an "Idea"
A Hunch is a flexible starting point.
- Naïveté: Focuses on something others deem impossible.
- Tangibility: An unimpressive but real starting point you can act on.
- Focus without Narrow Thinking: Targets a real problem, not a predefined product.
Making Your Problem Tangible
Before seeking a solution, a problem must be clearly defined. Test your problem against these three criteria:
1. Is it Recognizable?
If solved, what new thing could people do? Describe the "after" state.
2. Is it Verifiable?
How would you know it works? What specific numbers would change?
3. Can you Imagine Multiple Solutions?
Brainstorm at least 3 different ways the problem *could* be solved.
Part 2: Who Are You Solving It For?
If you target "everyone," you will connect with no one. The key is to find a specific group of people who are desperate for your solution and focus all your energy on winning them over first.
Finding Your Beachhead Market
Follow this 3-step process to move from a broad idea to a focused target.
- Brainstorm Widely: List 10-12 potential customer segments without judgment.
- Narrow Down: Analyze your top segments. Who has the money, a compelling reason to buy now, and is accessible to you?
- Select One Beachhead: Choose the single best market segment and focus all your resources on dominating it before expanding.
Creating Your Persona
A persona is a detailed, semi-fictional profile of your ideal customer based on real research, not an average. It builds empathy and focuses your team.
✓ Demographics & Story: Who are they?
✓ Motivations & Fears: What drives them?
✓ Watering Holes: Where do they hang out?
✓ Priorities: What's most important to them right now?
Part 3: What Is Your Solution Worth?
Avoid vague promises. To win customers, you must identify their most significant pain points and clearly articulate the concrete, measurable value your solution provides.
Identifying Customer Pain Points
A good pain point is real, painful, and widely felt. Focus on solving pain, not just adding features. Common types include:
- Tangible/Physical: Skill deficits, security risks.
- Economic: High costs, low ROI, lost revenue.
- Emotional: Fear, stress, frustration.
- Logistical: Complex processes, inefficient delivery.
Quantifying Your Value Proposition (QVP)
Show the measurable difference between the "As-Is" state and the "Possible State" with your solution.
"As-Is": 16 weeks to develop
vs.
"Possible State": 8 weeks to develop
QVP: A 50% Reduction in Time
Part 4: How Will You Make Money?
A great product isn't enough. You need a sustainable business model to capture a portion of the value you create. This is governed by two critical metrics.
Understanding LTV
The Lifetime Value of a customer is the total **profit** your business makes from an average customer.
LTV = (Avg. Revenue Per Customer × Gross Margin) / Churn Rate
Understanding CoCA
The Cost of Customer Acquisition is the total sales and marketing cost to acquire one new customer.
CoCA = Sales & Marketing Costs / New Customers Acquired
The Golden Rule: LTV vs. CoCA
A viable business requires that the Lifetime Value (LTV) of a customer is at least 3 times the Cost of Customer Acquisition (CoCA).
Part 5: Proving It All
Don't build in a vacuum. Systematically de-risk your assumptions through customer feedback at every stage, culminating in a product that people will actually pay for.
Journey from Sketch to Product
Iterate through increasingly realistic versions of your product, gathering feedback at each step to avoid building something nobody wants.
1. High-Level Spec: A simple drawing or brochure.
2. Low-Fidelity Mockup: Basic wireframes and sketches.
3. High-Fidelity Mockup: Looks real, but isn't functional.
4. Minimum Viable Business Product (MVBP): A real, paid-for product.
The Minimum Viable Business Product (MVBP)
The "B" is critical. It's the simplest thing you can build that proves you have a business, not just a product. It must meet three criteria:
- The customer gets Value from it.
- The customer Pays for it.
- The customer provides Feedback.
You can even use a "Concierge MVBP" where you manually perform the service behind the scenes to test the idea with minimal investment.
Part 6: Leading the Way
As a founder, your most important job is to build the culture and the team. Effective leadership starts with yourself and creating an environment where great people can thrive.
Building a High-Performance Team
Use the Performance vs. Culture Fit matrix to build your team. Click a quadrant to learn more.
🧛 Vampires
(High Perf / Low Fit)
🎸 Rockstars
(High Perf / High Fit)
🧟 Zombies
(Low Perf / Low Fit)
🐶 Puppies
(Low Perf / High Fit)
Select a quadrant to see the strategy.
The Secret to Leadership is You
Great leadership begins with self-leadership. Adopting a Growth Mindset is non-negotiable for founders navigating the adversity of building a company.
Fixed Mindset
- Believes talent is innate
- Avoids challenges
- Blames others for mistakes
Growth Mindset
- Believes skills are built
- Embraces challenges
- Learns from deficiencies