Being in the startup space for over a decade, I have had the pleasure of seeing firsthand many massive successes and some epic failures. I have always thought of myself as a person with persistence and motivation, essentially a great executor. I think if you were to ask the people around me what my greatest strength is, they’d all tell you some variation of “Arya is a doer; he gets things done.”

For years I have operated with the knowledge of this strength and have used it to push things forward in my professional life, sometimes for better and sometimes for the worse. The thing about being persistent is that sometimes you are able to take things much further than they warrant going.

Early on in my professional career, I was introduced to a diagram like this one:

It was scribbled on the back of a cocktail napkin at some point, and it’s stuck with me ever since. The point of this diagram is to visually demonstrate the importance of various activities we see in the startup space.

• • 1. The idea. There are many “idea people” out there, and this is because it takes very low effort to simply think up an idea. And for most people, this is where the journey ends. They come up with hundreds of frivolous ideas every year but lack the ability to take that idea and turn it into anything more. The idea segment of the line is the shortest, and this is because it is the lowest effort and (as the line would have you believe) the least important.
  • 2. The second shortest segment of the line is the initiative segment. Initiative is the rarer ability to take an idea and actually turn it into something tangible. This is certainly a less common skill as it involves turning nothing into something. The entrepreneur at this stage has to take something that only exists in the mind and bring it to life in the natural world, which is certainly no easy task.
  • 3. The longest and most difficult part of the line is the execution segment. This is the “boring” stuff, the years of “grinding” that it takes to move from startup to real business. It is the hardest and most tedious part of the job, but it is what’s needed to be a true executive.

It’s been about 12 years since I was first introduced to this concept, and I do stand by it to this day. I’d much rather have the initiative and execution skills than be an “idea person.” However, I would not totally discount the role of the idea. Notice that although the idea is the shortest segment of the line, it is also the first part of the line. None of the other parts can happen until the idea is solidified. An old Persian saying says: “If you lay the first brick crookedly, the whole wall will be crooked.”

What’s the Big Idea?

So then, what is the role of the idea? How do we pick the right idea? Is there even a “right” idea?

I would argue there is. I’ve seen entrepreneurs who work five years at one thing to take home a few million dollars, and I’ve seen the same entrepreneurs work two years to take home a billion dollars (yes, with a B).

The difference is simply only the business idea. Because at the end of the day, the actions are the same: you do research, formalize a plan, hire a team, and begin executing. The only difference is, how good is your idea? Are you rolling downhill with a big tank of gas, or are you chugging slowly uphill with gravity pulling you down?

Keep in mind that a business is nothing more than an instrument, similar to a weapon used by a martial artist. A business is simply an extension of the entrepreneur. A sword in the hands of the right person can be a great weapon, but it’s useless in the hands of the wrong person. Similarly, a crossbow is an amazing weapon to a master marksman, but it is about as good as tits on a pig for most. Your business is just the same; it is an extension of your current abilities. It is a lever. If you can be in a business that harnesses your individual powers and magnifies them, you are in a good place.

So, how then do you find a business that provides you the maximum leverage for all the work you will inevitably do initiating and executing your idea for the next five years? For each and every person, the picking of the right idea will be a little bit different. For me, I like to look at it a little more scientifically. But I will contend that for most, it will be a close variation of these things, with small tweaks designed to fit their life goals:

1. List your skills, and be honest with yourself. Write down all the things you’re good at and what you enjoy doing. In the final analysis, your business will take up most of your life, and you should pick something you genuinely enjoy doing. The right idea will allow you to use your skills and leverage them to their maximum potential.

2. Addressable market size. I would look at this in terms of the number of potential customers as well as dollars. Your addressable market may only be 500 companies, but if the money up for grabs is in the billions or tens of billions, it’s still viable. Just make sure the industry you’ll be in has an addressable market large enough that if you do attain success, you have a lot of room to run.

3. Exit multiples. Essentially, this is value creation. If you’re in an industry with a multiple of 2x on EBITDA, that means you’ll have to work 10x as hard as if you were in an industry where buyers are paying a 20x multiple on EBITDA. And that’s not the type of 10x we’re looking for! For me, if the multiples are not attractive, then the rest is mute.

A final piece is incredibly important, in my opinion, and it’s not so much about “what” but more about “when.” There is a quote attributed to Warren Buffet which (and I’m paraphrasing here) essentially says, “First the innovator, then the imitator, then the idiot.”

We can all accept that the status of idiot is self-eliminating; none of us want to be that. But is it fair to say that the innovator is the preferred status? I would say not necessarily. Being an innovator or an inventor rather is certainly a very unique skill set; very few are capable of coming up with novel ideas that will work and also have the capability of seeing them through.

Even if you do have this particular skill set, you run an incredible amount of risk since, in most cases, you will have to spend massive amounts of money on educating the public about your product, and essentially, you will have to create demand. This is extremely expensive and, in most cases, very time-consuming. And when you’re in this position, time is your enemy because time allows competitors to enter the market and “ride the wave” you’re creating. Many talk about a “first-mover advantage,” but I say there’s an easy way to see who the first movers really are; just look at the folks with the arrows in their backs. It is true that the first movers have the greatest upside potential, but in my opinion, it’s very close to playing the lottery. If you’re a true entrepreneur, then you’re not here to gamble. You’re here to take calculated risks with clear payoffs, not to throw hail marys.

Therefore, for me (and probably many others), our sweet spot is the imitator. I would push away any negative connotation you may associate with the word. Instead, let’s look at what it means in this situation. An imitator is someone who takes an objective view of a new industry that is taking form and conducts an analysis to see if there is space there for a new contender. The imitator then should turn his microscope onto himself and do some introspection. Does he see obvious room for improvement on what the main player(s) in this blooming industry are doing? Can he be the one to beat out the competitors because of some specific information or skillset he has?

If the answer is yes, and assuming the other three criteria are met, then it is time to get the ball rolling.

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