ouple of days ago I received a call from a friend who was asking for advice on how to start a Food & Beverage company. My first thought was to tell him to think twice before entering this saturated market; however, I didn’t want to crush his dreams. I noticed a high level of excitement from his voice which reminded me of myself 3 years ago when the only thing I saw was starting a business. Indeed, if I were to start over again I would definitely focus on answering these three questions.
1. Does my idea fit within a Red or Blue Ocean?
The first time I heard of Blue Ocean vs. Red Ocean strategy from Mike Rothenberg, founder of Rothenberg Ventures, I was blown away by its focus on the future. Red Ocean is a blood bath market where 95% of the businesses are today. Companies are competing against each other by creating better processes or products. It’s very hard to differentiate in a Red Ocean because everybody knows what’s going on. Whereas in a Blue Ocean everybody can win because it’s a new market. To get to Blue Ocean, you have to be in the cutting edge of technology and be an explorer of innovation. Mike’s team only focus on investing in drone, electronic currencies, and Virtual Reality companies that are consider the blue oceans of today and red oceans of tomorrow. Now, ask yourself this question: do you want your business to be in blue or red ocean?
2. Does my idea fit within the “need” or “want” category?
Jeff Seibert, Senior Director of Twitter, started two companies throughout his entrepreneurial journey Increo Solutions in 2007 and Crashlythics in 2011. Increo Solutions provided a platform where people shared their ideas and receive real time feedback. Crashlythics provided a program that helped developers detect app crash lines and identified the top bugs which needed more attention. Crashlythics, which is in the category of “need”, took off from word of mouth and within months he had 1000+ users not including those on the waiting list. Whereas with Increo, which is in the category of “want”, he was begging freelancers to use the platform and paying marketers in order to drive users. Freelancers could send emails of their ideas to their clients and receive feedback, so they could go about their day with using Increo. Developers needed a program to help them identify the top bugs which made Crashlythics grew faster than normal. The two companies had a contrary trajectory of growth and you can see the difference between a pure need versus a nice to have product. Now, ask yourself this question: would you want your product to be in the category of “need” or “want”?
3. Am I the older fish in the water?
I came across an interesting commencement speech by David Foster and it goes by: two little fish swimming down the stream and they came across an older fish who said good morning boys how’s the water, one of the little fish looked at the other one saying what the hell is water. We are all too busy looking for the next big idea but we fail to identify the problems surrounding us. This speech does speak to the heart of creativity. Instead of focusing on searching for the next big idea, it’s time to see ourselves as the older fish in the water and identify the problems associated with our day to day activities. Not only that we’ll see the water but we’ll also see things we didn’t even know to look for. So ask yourself this question: are you the older fish or the little fish in the water?
In conclusion, answering these questions at the beginning of our entrepreneurial journey can help identify those breakthrough ideas. Imaging having a product within the blue ocean market, or a product that most of us need, or a product that solve a problem within our day to day activities.