The Issue of Ideation Consolidation

Introducing efficiency into processes is, rightfully, usually seen as a pure plus. This isn’t news. But the other side of this coin is that the systemization of processes also makes them more predictable and less creative. I find that this is often the case with the ideation and validation processes founders go through.

Specifically in Israel, there are two factors that made the ideation & validation processes more systemized in the past half a decade. The first one is the emergence of a new class of unicorns which is, fortunately, a lot more accessible to founders in their ideation processes than any other form of a target market has ever been in the past. The other factor is the tendency of more and more VCs to approach teams in earlier stages, already assisting in the ideation phase.

The wonderful upside of this phenomenon is that founders have a larger and more accessible audience to work with in the earliest stages. The downside, I believe, is that it often minimizes the range of potential directions founders choose to pursue. For example, if founders repeatedly approach the same set of unicorn VPs, it’s no surprise that they often end up hearing about the same set of problems. We, as VCs, are also responsible for this consolidation phenomenon (due to good intentions, but still). We provide advice aimed at avoiding past mistakes and therefore are often driven by what’s worked in the past at the expense of what may work in the future. This contributes to a deficiency in new directions.

These two factors are more ecosystem-specific, even if they are somewhat global to an extent. There is a third, macro factor, we're all familiar with and which has more to do with fashion. Every now and then there will come a macro trend (e.g. web3 in 2021) whose hype will drive many founders towards it. This has always been the case (not only with startups, but in any entrepreneurial culture - music, films, etc.), but that is unavoidable (and has clear benefits to us all as well).

Finding problems worth pursuing outside the mainstream flow at any given point is obviously easier said than done, but I believe it’s worth the extra effort and time it takes. Aside from the clear advantages stemming from the competitive edge you get, there is also a certain fatigue investors have from hearing the same problems being pitched time and time again. Avoiding this fatigue has a surprisingly strong effect.

Aside from the clear advantages stemming from the competitive edge you get, there is also a certain fatigue investors have from hearing the same problems being pitched time and time again. Avoiding this fatigue has a surprisingly strong effect.

There is a wide variety of ways founders can take to overcome this consolidation issue and originate ideas in different directions. For example, mixing up your target ideation/validation audience with personas from other geographies (again, easier said than done, but it’s a part of the entrepreneurial challenge) is one approach. Mixing up business types (adding more traditional mid-market customers in addition to unicorns) is another. Speaking with founders who are at the forefront of your problem space is also usually a successful recipe for diversifying the ideation process.

Lastly, getting a better understanding of the inner dynamics of your target market (e.g. understanding the business from the accounting perspective - what is driving their margins, what is holding back higher profitability, etc.) and speaking with low-to-mid level management instead of only approaching the executive level, could also introduce some more color into the process.

All in all, the landscape as it is currently shaped is a much better ideation playground than it has been a decade ago and that's something to celebrate. But as with any other process, a certain amount of mindfulness towards its limitations is highly important.

The Evolution of Use Cases

A few years back, it used to be the case where VCs would be all about the grand vision of a startup. Then, a “correction” was made and VCs started paying much more attention to the first product offering and its relevance to the target persona, adopting a more Product Management oriented outlook. Finally, we reached the current (healthier) situation where the emphasis is on both - the short term goal alongside the long term one. Let’s call the former - the foot in the door (FITD) use case and the latter - the grand vision.

Founders often find it challenging to target both goals at the same time, often focusing on one while letting go of the other. This makes all the sense in the world, for several reasons -

1. They don’t always align perfectly, at least not at first. It could be that the grand vision involves additional buyers/users from other departments or that there is a giant leap (too big for some) between the two in the middle of the journey.

2. It could be that a later use case may turn the FITD use case obsolete.

3. There are frequently too many unknowns about one of the two (especially the grand vision, which makes sense).

4. Technical founders occasionally create a company out of a specific pain they themselves felt, which is basically the FITD use case, and don’t necessarily have the broader plan panned out just yet.

While all these reasons are completely legitimate, my belief is that you should always have at least some idea regarding the two, so that there’s a clear path from the FITD use case and into more advanced ones. As Eisenhower once said, “plans are worthless but planning is everything”. It’s important to continuously strengthen the planning muscle, even in increased uncertainty. But just as importantly (or even more so), all stakeholders involved should be able to let go of a plan if new counter evidence presents itself.

As Eisenhower once said, “plans are worthless but planning is everything”. It’s important to continuously strengthen the planning muscle, even in increased uncertainty. But just as importantly (or even more so), all stakeholders involved should be able to let go of a plan if new counter evidence presents itself.

Having said that, it’s not just the planning muscle that’s important to exercise. It’s also very much about clarity. One FITD use case can lead to multiple grand visions. As such, it would be hard to rally investors or employees around a clear direction without a defined path leading from the FITD use case to the grand vision.

Lastly, while having these two components (at least temporarily - until further evidence is discovered) crystalized is important, another important exercise is creating a use case evolution slide/doc. This is basically the gradual progression from the FITD use case into later use cases and with that showing the evolution of the product vis-a-vis the target market. At the very beginning this might be very hard to predict and definitely to follow through. But as mentioned, it’s the planning and crystallization of the direction that is important here, not the execution itself (at least not yet).

How to Identify the Right Problem to Solve?

Ideation processes are tricky. They’re somewhat amorphic in their nature (you can try and model them, but only to a degree), they often take (much?) longer than the founding team expects and the most frustrating thing about them - it’s not entirely obvious when you should end them. In other words, the actual criteria you need to cross can be very tricky to nail down. How can you identify that a certain problem that arose during persona interviews justifies doubling down on? Spoiler - urgency and land ACVs are definitely key, but not the whole picture.

We all know that problems startups choose to target change (or evolve) throughout their journey. So betting on a specific problem, while sensible, is probably not enough. Betting on a problem space rather, might be a better choice. A problem space is essentially a set of several problems within a target market, and it is something worth considering when you’re at the finalization of an ideation process. But then it begs the question - what are the makings of the right problem space for you specifically?

Pivotability is one aspect of a problem space worth paying attention to. The ability to pivot organically to adjacent problems/use cases within a problem space is an important aspect of the target space you choose. A high level of pivotability stems from the founders’ ability to navigate within a space, the potential of an MVP (minimal viable product) to translate its value (at least to a degree) to adjacent use cases and whether there is a wide enough range of problems within a problem space.

A high level of pivotability stems from the founders’ ability to navigate within a space, the potential of an MVP (minimal viable product) to translate its value (at least to a degree) to adjacent use cases and whether there is a wide enough range of problems within a problem space.

Founders’ chemistry with a potential target persona is also an essential aspect of a potential target problem space and a goal of the ideation process. Most tech solutions require a degree of market education so that buyers are persuaded to, well, buy. The sheer value of your product is not necessarily enough to fully support that persuasion process (unfortunate, but true). It is on the founders to inspire, convince and create urgency within the buyer persona (at least at the beginning of the journey, when founder-based sales are still the dominant sales process). And that requires chemistry.

Domain expertise is the third component in this triangle of optimization. While not a must and definitely something that can be developed (with the right foundations), domain expertise supports the other two components. Navigating through a problem space (e.g. pivotability) and inspiring potential buyers (e.g. chemistry) are both matters which (obviously) greatly benefit from a deep understanding of the space.

The story of the ideation process is nuanced and complex. It is not just about finding an urgent problem. Looking at problem spaces and judging them according to pivotability, chemistry and expertise can help crystallize whether an opportunity is worth pursuing and should give you conviction that you’re targeting the right problem space.