 Good morning everyone and thank you for joining me. So early bright and early in Helsinki Just start off. I'm Alice Pentink. Thank you to the hosts for a very kind introduction But I would love to know who you are. So can you give me a hands up if you are a founder? Okay, good excellent shout out to the founders hands up if you're an investor Okay, a couple of investors you can always spot the investors. I was at Heathrow Airport yesterday and it was very clear In security who the investors were and hands up if you're thinking about being a founder one day Okay, these are my people these are my people and this talk is specifically designed for you So as I was saying I found a co-entrepreneur first and also me and my co-founder last year wrote a book called how to be a Founder and in this we talk a lot about ideation and where ideas come from. I Think the word idea is actually pretty unhelpful because Google is an idea stripers an idea But also you probably had an idea in the shower yesterday These are all ideas, but they are obviously at totally different ends of the spectrum So even talking about ideas. I think sometimes can be unhelpful What we're going to go through today is how do you develop a unique idea? How do you validate a problem that is different differentiated to everything else that's out there? I I've been investor for a long time a founder and investor for a long time and I've worked across Seven different geographies across three different continents I'm always amazed at when I do investment committee and I might do one in Bangalore Followed by one in Paris followed by one in New York. You hear the same ideas again and again So when you're a founder one of the things you've got to assume is that whatever you're building somebody else is trying to build it, too So what we're going to go through today is how can you give yourself some green space? How can you find an idea? How can you develop an idea that no one else is working on? So just a little bit of context on entrepreneur first. So I founded entrepreneur first now ten years ago It's pretty much what I've dedicated my career and life to for the last ten years and we are a talent investor We invest in the very very earlier stage We invest in individuals before they have a company often before they have a team and often before they have an idea When we get people to apply to EF we don't ask them for an idea What we found is that when we ask people for an idea You can have incredible people who are super smart very talented wonderfully skilled But their ideas suck and we found we were making a bunch of really bad selection decisions because we were saying this person seems great But have you seen their idea? This is crazy and not good crazy So we're very very curious in that we believe in talent We believe in founders, but we also believe ideation is a process It's something that you can learn it's something that you can get better at We're lucky to be backed by some of the world's best founders and investors And I believe I've got the best job in the world because I spend a huge amount of my time with people before they've been Started a company and get spent a huge amount of my time with some of the best founders and investors in the world And my job is to work out how this group can become more like this group So what is an idea? What are the the kind of key concepts that we're going to talk about today is secrets? And how can you as a founder find a secret now? This is a Concept that comes from Peter teal. What valuable company is nobody building every correct answer is necessarily a secret So why does he say this? He says this because he doesn't believe in competition He's pushing founders to find spaces that aren't crowded and this is the problem with problem-based ideation I'm sure many people when you say where do I find an idea? How do I find an idea? People say think about a problem you've experienced The challenge is that problem is typically a problem that many other people have experienced think about food delivery and ride hailing holidays Dating man, I've had so many dating ideas in my time It's very very hard to have a truly differentiated idea and what that means is you're going to have a huge amount of competition from day one So what we encourage our founders to do is to find a secret as of today We're going to be talking about how to find that secret So what counts as a secret? Many of the world's best ideas are founded on secrets that are non-obvious They are Controversial and they're often laughable If you think about something like Airbnb the idea that you could get Strangers to stay in another stranger's house and pay them for it willingly Seem totally crazy at the time Reed Hoffman is on our board and one of our early investors and he was one of the first investors in Airbnb and his partners told him He was crazy to make that investment because nobody would be so crazy as to do that If I think about one of the companies in our portfolio with a company called tractable Which is one of the largest computer vision companies in the world now. They start attractable in 2013 the secret that tractable was founded on was that Humans was that computers would become as good as humans in visual classification Now now that seems totally obvious ten years later, but at the time it was a real secret and again, they were ridiculed Seen as a bit naive and they struggled to raise their first round so When I speak to founders about early ideation Instead of thinking about it as the moment where you have the idea We think about it instead as a process of finding the idea and this is one of my favorite quotes about ideation Even though it has absolutely nothing to do with startups This is a quote from Michelangelo one of the world's greatest artists and he says, you know Every block of stone has a statue inside it and your job as the artist is to chip away chip away chip away at the layers To find that the angel David whatever it may be inside and as a founder, that's what you have to do as well The other way I think about it is as an onion layers of an onion that need to be unpeeled so that you can get to the secret in the middle typically the layers for that onion is Stuff known by people and outside the founders face and this is often where I find lots of founders stop weirdly We get founders that come to to us at EF and and they begin pitching ideas where it's like There is a massive problem in healthcare People are dying because of X That's not a secret everyone knows that The next level in in your onion is telling me things that If I was in the space, I would probably know so sometimes as an outsider you can be like wow Yeah, that sounds really cool, but the minute that you talk to somebody in the space. I like yeah known problem The next level in is knowing stuff that other founders in the space know That's still not sufficient because then you're just competing So you have to go one stage further and really get to the core of what your secret is which is something that no one else knows So let me take you through an example. Let me see if I can get the clicker to behave. There we go Think back seven years ago seven years ago had two amazing founders Jacob and Lawrence join EF they didn't know each other they started working together and Jacob was passionate about antimicrobial resistance the World Health Organization had said that Over-prescription of antibiotics was causing this massive and challenge within health and how do we stop it? This is the first layer They spent three years trying to solve this problem and as they dug into this problem more They realized that actually there are a bunch of multifaceted reasons why doctors couldn't stop prescribing antibiotics It only started working when they began to spend more and more time observing doctors and actually Understanding the challenges that doctors were experiencing day-in day-out They then realized that it was a communication problem It wasn't about antimicrobial resistance the thing that was holding back health outcomes was that doctors and patients couldn't effectively communicate But a bunch of other founders knew that in the space It wasn't until they realized that it was as simple as doctors couldn't send SMS text messages to their patients to remind them to take their pills to help them book an appointment to tell them come in for a repeat prescription whatever it may be Accurates went from three years of sort of you know in the wilderness as founders often find themselves to being in every single Primary care practice in the UK within 18 months One of the fastest growing health tech companies So they accurate Scott there through three things they use that edge They relentlessly spoke to customers and they created a behavior explosion So we're gonna go through each of those three things so you can understand how to get as quickly to the core of the onion You're gonna think I'm obsessed by by onions by the end of this So use your edge. This is a key EF concept and it's something that we talk about a lot in how to be a founder Your edge is your personal competitive advantage in solving a problem Compared to other founders and it comes back to this idea of whatever you're building whatever the idea you have Someone else probably has it too. So how can you make sure you have an advantage? Your edge is important as well because it's a constraint if you look at any of the research on creativity and Idea generation constraints actually increase both for quantity and quality of ideas that are produced Sometimes when you're a new stage founder You know you could work on anything if you take the problem-based approach You have millions of problems every day that could be could be solved So how are you meant to know which one to solve by using your edge? It gives you a starting point and it gives you a starting point that you already know something about This is Barney Barney joined entrepreneur first after having worked at Wonga for a year Wonga was a big FinTech startup in London in the 2010s When he was at Wonga, he realized that The the world of FinTech was very much set up to serve an older demographic and not Millennials and Gen Z He used his edge which was sufficient experience in FinTech. He only had a year. This is not about deep experience He used his sufficient experience as a starting point for his idea, which was Clio Clio is now the fastest growing FinTech app that Europe has ever seen and is making making 80 million dollars a year Some of the best secrets from the most unusual secrets come from combining two people's edges Entrepreneurs first were massive believers in co-founders. I've had an amazing co-founder for the last decade or so And people come to EF to find a carefully screened carefully selected co-founder That could help turbo charge their business One of the things that people often underrate about a co-founder is that your co-founder will help dictate the quality of the idea that you produce So they're not just about increased productivity They're not just about having you know an emotional support system So you get a beer at the end of the day. It's about generating a better idea and it often comes When two edges combine that's where you get the magic This is James and Sasha they've built an amazing company called Unitary James had a background in computer science. He had a PhD in machine learning and then had worked at Metta he'd been a content moderator for a long time and That was his edge, you know, he'd seen how difficult content moderation and keeping harmful content out of social media platforms was Sasha did her PhD with Steve Hawking on black hole theory They were really interesting combination because they were able to come up with technology that no one else was able to do by Combining their edges and generating a secret that was based on technology They were able to beat off some of the much more developed and experienced content moderation software to win major contracts with big social media firms that I can't name that you would know or An alternative example here. You've got Xena and John Xena and John created synantic Synantic creates the world's most emotionally realistic voices Some of you may have seen them in the press recently because they helped Val Kilmer get his voice back for the top-ground film Again, this is a really interesting combination of backgrounds where you've got John who had a PhD in Machine learning and then you have Xena who'd been working with autistic children for the last decade All throughout being a teenager. She'd been working with autistic children And she was able to use her knowledge about voices Expression and combine that with John's PhD Synantic was bought by Spotify for a very large sum of money about a year ago So if that's your edge and using your edge as the starting point, what next? Relentlessly speak to customers and if there's something that founders always Undervalue and always don't do enough of it's this bit because it's hard and sometimes it's pretty frustrating To be honest the pushback. I always hear oh And this is how you get into the into the heart of the onion the pushback. I always hear is Well, Henry Ford says that if he'd gone to his customers and asked do you want a car? They would have said no I want a faster horse Henry Ford. You're doing your customer development wrong You are not asking the customer for the solution you are trying to find out the secret that the customer holds You can't crowdsource an idea you can't crowdsource a product from a group of people what you need to do instead is Build intuition about what the answer should be what the product should be One of my least favorite things is when a founder says to me in my survey 70% of people say this is a massive problem and 90% of people say that they would pay $15 to solve it bullshit If it's in a survey, it doesn't count If you've done a survey, you've missed the point of customer development This is not about building an argument about why you're right customer development is about truly understanding how somebody thinks Feels relates to a particular problem. So the very best people do customer development through speaking There's an amazing book on this. It is definitely the kind of best-in-class book called the mum test Has anyone read the mum test? Excellent got some mum test fans And what I love that Rob Fitzpatrick says about this is that instead of thinking about customer development as a You know a business moment where you're you know, you're writing things down and ticking boxes Customer development should be like when a friend comes to you and says I've just broken up with my partner I'm gutted and you go wow that sucks. Tell me everything. How does it feel? What do you think what are going to be the next steps? What could you do instead? This is how you do customer development well by really understanding how somebody experiences a problem and then Beginning to get ideas about how you might be able to fix it. This is Rafi and Nittish Rafi and Nittish were on entrepreneur first many years ago and and they are building something called genie AI. I bumped into Rafi recently at a dinner and Asked him how things were going. He was super excited. He said we've reached product market fit and we're beginning to see and a massive inflection in adoption that we can barely keep up with Product market fit is always one of those things that and people say How do I know if I've got product market fit and the answer which is one of those unhelpful answers is you know When you've got it if you think you might have product fit product market fit, you don't have it You know you've got product market fit because the product is flying off the metaphorical shelves way Faster than you can you can cope with I said Rafi. How did you get there? What did you do was there like an aha moment where it all came together and he said no It was tiny incremental nudges to improve the product every week every month for the last five years One of the things he did think is super impressive and the very best founders do is that every Friday He had spent five hours doing customer development every Friday He would have meetings with different customers to hear how they were using the product Meetings with prospective customers to understand how they might use the product And this is how he built up that intuition. It's not about building a data set It's about you as a founder building up that intuition and this is why you can't outsource customer development It has to be something that the founder does themselves that the founder owns If you think back to that example about accurate Accuracy as well Really really understood their customer because they worked alongside them in the doctor surgeries every day for about a year Then when they got their own offices, they actually built in their office a doctor's workstation with a sort of you know national health service 1990s style computer to really understand what it would be like for their customer to use their software When we talk to founders about Customers One of the pieces of advice we often give is that you need to love your customer and founders always say yeah Yeah, no, we love our customer. We love our customer sometimes I think what founders mean is I think this customer could make me lots of money. So I love them Being a founder is a resilience game Being a founder takes a long long time to succeed I've been doing this for 10 years and I feel so lucky because I adore our customer I want to spend time with our customer My job is going out and meeting incredibly bright ambitious young people And talking to them about what they want to do with their lives I could do that for the rest of my life very happily The best founders want to spend time with their customer So think carefully about who you choose to be your customer because you're going to be spending a lot of time with them One of our internal mantras at EF is strong beliefs weekly held It's really hard to get to the core of the onion. It's really hard to get to a secret and often what we see people do is They sort of have many things that they believe And particularly if you've got an a co-founding team you can see people having slightly different beliefs What we see the best founders do and what we encourage our founders to do Is to commit to a strong belief that is weekly held. What does that mean? It means putting a line in the sand today about what you think your secret might be What you think the problem might be and what you think the solution might be And understanding that there's probably all wrong and it probably is Unfortunately all wrong, but that's because ideas don't come out fully formed They are a process that you go through of getting better developing and iterating The weekly held bit is about getting that input from your customers No one has the answer. No one has the right answer The only way to understand what is the right answer is to get whatever you're doing out there speak to people and get that feedback Often in the early days of founding a company I'll be doing an advisory session with two founders And one saying we should go this way and one saying we should go this way and they're really butting heads on it Basically, they're both right and they're both wrong. Who knows? They just need to pick one direction not both directions and begin getting it out there in front of customers A very common mistake that we see people make is when they try to keep everyone happy in their founding team By saying like cool. We'll just simultaneously test everything That is not a strong belief we weekly held that is splitting your time across too many things and not focusing The final point is create a behavior explosion And this is often where some of the most exciting companies in the world come from The quintessential example here is uber. So I think most of you probably would have heard the example that if you look at the Original market size for mini cabs in san francisco uber totally blew that out of the water They created a new market. They augmented the existing market And if as an investor you had discounted uber because the market wouldn't be big enough Then you'd completely misunderstood the importance of the behavior explosion that they were about to create Airbnb is another great behavior explosion Where okay, no one would have guessed that people would want to stay in other people's houses and pay them for that But even more importantly, I don't think anyone would have guessed the behavior explosion Where people then wanted these authentic experiences where if you're a gen z you kind of get ridiculed if you stay in a hotel You know real travelers stay at airbnb's and it means that airbnb has become the world's most valuable Hotel company without owning a single property. It's amazing The way the or the statement that you need to answer to create a behavior explosion is If x were easier cheaper or faster, there'd be way more demand to it and we'd be the gatekeeper So let's look at a couple of examples This is dishpatch and dishpatch is an ef company That was funded by andreason horror. It's a couple of years ago the behavior explosion that dishpatch was creating was And it was formed during the pandemic as you couldn't probably tell from the idea Was that it's really hard to get amazing fine dining at home And there's a bunch of people that for whatever reason can't leave home to get fine dining And i'm talking sort of michelin starred fine dining So wouldn't it be cool if they could get a meal kit delivered? By one of the world's best chefs that they can create at home Now that's cool, but actually the real secret was that the Way to do this and the demand and the behavior explosion that created was on the supply side So yes, there were plenty of customers that wanted this plenty of consumers that wanted this But the other side of the marketplace the chefs Who typically were constrained to delivering food within a restaurant that had a set number of seats Saw this as suddenly a really important revenue stream and so it meant that you had some of the world's best chefs And publish and publicizing this on their twitter pushing this out and creating this incredible noise for dishpatch that meant their growth just went through the roof Another example that is such it's such a clever idea. This is scarlet So in some ways it's a very very unsexy idea, but it creates the most amazing behavior explosion You may not know this but if you're building a medtech startup and you're building a software product Every time you want to release an update. It has to be approved by a notified body in the eu or the uk So this means if you're running a medtech startup Even though you should be moving like a software company You're often restricted to moving like a sort of you know a physical products company. You move very very slowly Scarlet has completely transformed the process of getting your Software updates approved. They've become a notified body and they've reduced the time for releases from months like 12 months down to five weeks The behavior explosion that they're then creating is it's now way easier way cheaper way faster to build generationally important medtech products So how do you know if you found a secret? So we've talked about the process of going through a secret We've talked about how important it is to use your edge to use that constraint How important it is to relentlessly speak to customers and how the very best secrets often create a behavior explosion But how do you know when you found it and again, is it like product market fit where you sort of know it when you see it? kind of There's a couple of questions that if you get this right you should be able to answer The first one is why is this a hair on fire problem? And for whom and we say hair on fire problem because if your hair was literally on fire You're probably not thinking about anything else. That is the problem that you want to solve When I do investment committees with startups what I often find is that many of them can't really articulate this The error mode I see is where someone says over the last four weeks was spoken to 50 different customers And the 50 different customers say x. I'm like, okay. Tell me about one customer. Okay. What was their name? What's their job title? What do they care about? How do they think about their budget? Tell me how they think about this problem What exact words did they use to describe this problem to you? Where do you think this problem sits in their stack rank of problems? It's amazing how many founders do breath and forget that the most important thing is depth The next question you should be able to answer is what is underrated about this problem by other people? Now if you're working on a true secret, it will be non-obvious It will be counter-intuitive and it will often be ridiculed To be honest, this was the early days of entrepreneur first We walked out into the london venture capital ecosystem and said we are going to find strangers And we're going to put them together and they don't even need to have ideas and we'll give them money And the venture capital ecosystem said that's crazy instead You should build a careers fair for students and we're like We're not going to do that and the reason we weren't going to do that was because we were hearing relentlessly from our customer That they wanted our product But the first three years of EF no one gave us any money It was impossible to I mean we ran on a very very tight budget for a long time because people thought the idea was stupid But the great thing was we had no competition for a very very long time So yes, it was hard to push through at times. We wondered if we were kidding ourselves But it actually became the most amazing foundation for our company Oops Oops The next point is around market size So how do you envision this becomes huge and again typically what I'll hear is this is a trillion dollar opportunity This is a multi billion dollar opportunity That's not what I want to hear What I want to hear is the story about how the market doesn't even exist yet And that the process you're going to go through is going to explode whatever market there currently is The story is more important than the time And then the final question why is no one else done this before why now what's changed what's special If you can get through and answer these questions with some really great strong beliefs weekly held You're on the path to having a secret Oops If you found this interesting and want to learn more Um, do buy a copy of how to be a fan. It's a great book a really great book One the startup book of the year last year. Um, thank you so much for listening. You've been an amazing audience I hope that some of you will consider Starting startups if you haven't already. Um, and if you do want to start a startup Do you check out entrepreneur first? We would love to hear from you. Thank you so much