The Four Types of Business Ideas

Correct me if I’m wrong, but all business ideas seem to originate from a finite group of categories; each having an unique trajectory to fruition. I would arbitrarily describe these categories as A, B, C and D.

Category A - Solve a known problem

A client comes to you with a problem, and you solve it in exchange for compensation. There is little to no guesswork as to whether there are paying customers or anyone who actually wants what you’re building. After building the solution, you sell it to other clients in the same niche/market who also have the same issue. These ideas might not be something you personally need or even want. Also, many of these ideas are commonly found through freelance work or by directly talking to people/engaging in a specific community. Personally, ideas of this category have been most successful for my side projects. Also, everyone seems to agree that this should be the defacto approach to starting software businesses.

Category B - Solve your own problem

You experience an annoying problem and solve it for yourself. Afterwards, you publish the solution and see if it attracts other people who are similar to you or your situation and face the same challenges. This is closely similar to Category A, except there is a small amount of guesswork to whether anyone other than yourself actually cares for this problem. There are many successful business built using this approach. I spoke with Vincent Woo on Twitter, who built his business (CoderPad) using an approach like this. There was a problem he personally faced, solved it, and sold it to other people in a similar situation.

Category C - Take a guess

This might be the most frequent category of ideas that people (including myself) tend to come up with. You essentially come up with the idea or problem out of nowhere and build a solution. You might not even need or care about the problem yourself, but rather you’re hoping that other people do. You are essentially forming a hypothesis and using an MVP (minimal viable product) to test whether your hypothesis is correct. “I think people might like this, it could be useful,” are often the phrases that I personally use. There is a large amount of guesswork with these ideas, and you probably don’t want to spend too many resources on these.

Category D - COPY! COPY! COPY!

In this case, you essentially just copy an existing idea and iterate upon it. There is no guesswork because you already know there is a paying market for it. All you gotta do is execute it better, and publish. There will always be a Lyft to every Uber, or a Vimeo to every YouTube. Competing ideas can exists and often do well, provided the space isn’t too crowded.

Final Thoughts

All of these inferences have been made through personal research and experimentation of various side projects, so take my opinion with a grain of salt. Still, I think you could find many ideas that fit into one of these categories.

See also