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.