Friday, July 12, 2019

How to come up with creative ideas: Build tools that mine gold rather than mining gold yourself

[Note: I recently started sharing my scribbles on How to come up with creative ideas. To reiterate, my idea in sharing these is to look back at this list for my own inspiration and for those who are interested.]

(Editing in progress, this a draft blog post)

I was recently reading this book The Launch Pad: Inside Y Combinator, Silicon Valley's Most Exclusive School for Startups and found the below mention interesting. Here's sharing the mention as is from the book:
They took heart from "Selling Pickaxes During a Gold Rush," a blog post published a couple of months earlier, in February, by Chris Dixon, a seed investor who was based in New York City but well known and respected in Silicon Valley. During the California gold rush, some of the most successful business people—like Levi Strauss—didn't mine for gold themselves but did well selling supplies to those who did. Today, Dixon argues, entrepreneurs who use the latest technology face a similar choice they can sell to consumers-what Dixon calls "mining for gold"-or they can sell the software tools that other developers would use to create the consumer product that is, "selling pickaxes." Dixon mentioned that Y-Combinator's most successful "exit" to date was Heroku, the company that sold cloud-related services to other software companies, the dig!
 I hadn't heard of California Gold Rush story before I read this book and learned a bit more about this phase in history from wikipedia. As wikipedia states:
The California Gold Rush (1848–1855) began on January 24, 1848, when gold was found by James W. Marshall at Sutter's Mill in Coloma, California.[1] The news of gold brought approximately 300,000 people to California from the rest of the United States and abroad.[2] The sudden influx of gold into the money supply reinvigorated the American economy, and the sudden population increase allowed California to go rapidly to statehood.
The story concluded that more than half of gold miners eventually made modest profit. But one of the biggest gains came with the birth of Levi Strauss, who started selling denims in 1853.

I found this story extraordinary. While most people came to California to mine for Gold and get rich quick, the likes of Levi Strauss built an adjacent business by catering to the needs of Gold miners. Likewise, there were quite a few other businesses that thrived during this phase.

Like Chris Dixon mentions in his original article- "In online video, YouTube is often thought of as the big winner; however, to date, more money has been made by online video by infrastructure suppliers like Akamai."

Coming to our core topic of idea generation, this story does provide a conclusive path forward. While a lot of founders ride on technology waves and build meaningful businesses, there's a lot of scope of idea generation around the adjacent opportunities the new technology waves or businesses creates.

Quite a few examples on this:
Just a few minutes ago, I ordered a food item leveraging the services of Dunzo that provides delivery services. The rise of ecommerce providers resulted in emergence of delivery services being a separate category altogether.
The emergence of moving workloads and software to cloud gave rise to trend of continuous delivery. The tools like Jenkins fit the need to automate most of the build and release process.

When ideating about your next venture, think:
1. What technology areas or businesses are thriving around you ?
2. What do these technology areas or businesses need to survive or thrive ?
3. Can you provide the gap that you found in #2 ?

The crux of this post is Build tools that mine gold rather than mining gold yourself.

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