“I want to start a company, but I haven’t found a great idea.”

I hear this a lot. Even among entrepreneurs who have started companies, many of them focus on the novelty of the idea. Which is understandable, especially within the 140 character attention span we now live in.

Able to be summarized into elevator sized pitches, the misplaced emphasis on the idea results in entrepreneurs spending too many hours rewriting a handful of words, hoping people will ‘get it.’ Wanting the listener to acknowledge the huge potential, its easy to get paralyzed trying to justify why their idea is smarter than the next.

This is the wrong way to think about it.

The reality is that initial ideas are often irrelevant. Like clay being sculpted on a spinning wheel, it takes a lot of trying, learning, and adjusting to turn initial instincts into a masterpiece. It can even require starting over along the way, until you really understand the potential of what you are building.

As @benhorowitz reminds us, “the trouble with innovation is that truly innovative ideas often look like bad ideas at the time.“

So how do you generate an ‘idea’ that is strong enough to start a company?

Forget About Your Idea
The hardest part is to begin with an unbiased opinion. Starting this process with a pre determined idea shuts out your ability to really understand the essence of the problem. It becomes so personal that you can’t separate the true opportunity from your own desire to be right.

Being stuck to an idea results in mistakes like these…

• Your customer research is tainted with questions like, “would you use a service that does blah.” A yes makes you feel good, but doesn’t actually help you understand the customer’s problem.

• Your pricing is based on asking people if they would pay X for your imaginary product. A question that doesn’t truly gets answered until people pay you money.

• You raise too much money before your product sticks. Investor interest doesn’t necessarily mean customers will love what you build.

• You brand your company ‘the product’, wanting to make no mistake that people will know what your service does. Except when you have to change your product you then realize the name you spent months driving awareness for now has nothing to do with the final direction of the company.

Start With The Problem
Ultimately you want to understand the problem better than anyone else. Having a distinct advantage in customer understanding, enables you to deliver a solution that no one else would conclude. Peter Thiel calls this developing a secret.

There are a variety of ways to discover an interesting problem. Personally I first list what I’m passionate about and second explore problems within these passions. Starting with a pen and paper, I start building lists.

1.What Are You Passionate About?
These can be activities (i.e. being active), experiences (i.e. listening to music), tools (i.e. cameras), efficiencies (i.e. ways to save time). utilities (i.e. clothing), interactions (i.e. meeting new people), or even consumables (i.e. food). I find there are about 5-6 areas everyone is super passionate about and if they pick a problem to solve in one of these arenas they will be significantly more motivated.

The last list I personally built…
* enabling people to start their own business
* music
* staying active
* photography
* traveling
* local food experiences

Moment began from my passion for taking pictures.

2.A Day In The Life
A second way is to walking through your day, listing out all the things you do, where you do them, and what tools you use. If you want to solve a problem that every one has, likely the problem will be associated with one of these key parts of your life. As you build a list you can start brainstorming things that frustrate you, that you find broken, or that you would love to make better within each of these areas.

Map The Customer Journey
Picking one item from the list, you can start to explore the problems through the entire journey. Thinking about what happens before, during, and after you begin to identify interesting problems to solve.

As an example, my wife and I are passionate about traveling. We have found that discovering new places brings us closer together. Always trying to find local, off the beaten path locations, we have spent a lot of time in other countries.

Mapping out our typical travel experience, I list out the interactions before we travel, while we travel, and what happens afterwards. Starting with a longer list I’d reduce our travel routine down…
* Discover: finding new, inspiring places to visit.
* Travel: from coordinating to experiencing adventures.
* Remember: enabling us and loved ones to remember the trip.

Starting with ‘how’ we accomplish these tasks today, I can begin to find dozens of interesting problems to solve. Thinking about what is broken, frustrating, or a poor experience, I start sketching out potential solutions. This cycle can continue for weeks until I have a concentric circle that represents what I would build before, during, and after. And within that framework will be an initial problem that I believe I can solve better than anyone.

If I was to build a startup in the travel space it would probably be around enabling travelers with better tools to discover local, authentic experiences. Getting people excited about the vision of ‘enabling’, is a much easier than trying to convince everyone why my travel idea and its key features, are genius enough to join.

Frequency vs Pain
If you are building consumer based products I use a matrix that compares the frequency people have this problem (daily to never) against the type of pain (physical to emotional) that customers feel. The more frequent the problem occurs, the more important your product will become.

Here is how I break down the quadrants:
* Upper Left: a physical pain that doesn’t happen very often – i.e. a heart attack.
* Upper Right: a physical pain that happens daily – i.e. taking insulin.
* Lower Left: an emotional pain that doesn’t happen often – i.e. buying a car.
* Lower Right: an emotional pain that happens often – i.e. too many emails.

Most of the products that startups build fall into the bottom half of this quadrant. These solutions provide emotional and/or mental benefit to the customers.

Personal travel would fall in the lower left quadrant. Although personal traveling makes people happy, it happens so infrequently that its hard to build a sustainable business. Unless you focus on business travelers, the average person is lucky to take a handful of trips in a year.

Find A Passionate Niche
I’m a big believer in finding a passionate niche that you can own. Even though investors will want to know when your idea is mass market, it’s important to build creditability with an avid user base. Creating 1,000 true fans is really hard and if you try to move past this group too early, your company has the risk of becoming irrelevant.

Just look at…
* Apple with creatives.
* Sportscenter with tis 24 hour sports fans.
* GrabCad with engineers.
* Firefox with the open source community.
* Twitter with the tech community.
* Instagram with photographers.

These companies anchored their brand and initial products within a passionate group of users, which were obsessed with using their product on a daily basis.

Look For A Wave
How big can this be, is the first question that investors will ask you. Even more important than team, hitting a market with avid customers at the right time is critical.

As Marc Andreesen says, “You can obviously screw up a great market — and that has been done, and not infrequently — but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most.”

But trying to predict how big your company is going to be, especially early on, is a self actualizing process. Searching google for random market numbers doesn’t actually give you confidence that you have hit the opportunity at the right time. Instead I believe what Chris Dixon wrote a few years ago about sizing the market based on a narrative.

Being in front of a rising wave is the right place to be.

The action camera market is a great example. When Contour and GoPro started there was no wave behind action video. Myspace was just beginning, YouTube didn’t exists, and consumers weren’t carrying computers in their pockets. The initial market was reserved for adrenaline junkies who were willing to strap a lens on their helmet and spend countless hours downloading their footage on expensive computers.

All of that changed with the arrival of social media. The need to prove status, likes, and audience size created a tidal wave of demand for designated cameras that could capture the most amazing adventures. The more interesting the content, the more popular the users could become. Without social, it’s questionable if GoPro would be the $B company that it is today.

Examples of other waves…
* Stance Socks: differentiating ourselves continues to drive shopping decisions.
* Beats by Dre: the continued growth in mobile music and the subsequent need for better consumption tools.
* Box: the once in a lifetime shift in how people work.
* Instagram: the 1.2B consumers with cameras in their pockets need a place to share their pictures.

Start With Projects
It’s very hard to sit down and come up with a world changing, job quitting idea. The journey to what you ultimately build is an organic path that shapes over time. Even the tools to understand the customer, their needs, and the right market are merely guides. Ultimately you learn the most when you put a product in someone’s hands.

If you have a day job, start working on side projects with people you like. And if you don’t have friends who want to work on side projects, attend a Startup Weekend and meet dozens of people that share your same passion to build.

At some point this journey will lead you to an interesting problem that aligns your passion with a need that millions of people share. Focus on the problem, not the idea.

*Image Credit: Ramunas Geciauskas via Creative Commons.