The Secret to Finding Profitable Software Ideas

- Before taking the plunge to start a software company, be careful not to make the same mistakes that I did. It doesn't matter how good the idea is, it matters how painful the problem that it solves for the customer. - The first thing to do is to select a market that you want to build a product in. Then find people who have a real problem they want solved. - Speaker A: Then the next question is how are they going about solving it today?

But you are going to have some people who are going to respond and they are going to tell you what their painful problem is. Are you sick of grinding away at your tech job, starting to think about building a software product so you can work for yourself? Well, before you take the plunge, be careful that you dont make the same mistakes that I did. Have you ever seen the show Shark tank? Probably. Bunch of rich VC's investors watching people pitch their latest big business idea and deciding if they're going to fund it or give them money. And whether they give them money or not is based on whether they think it's really a profitable business idea. Well when watching that show, you might think it's your job to come up with a brilliant business idea. But if you just wait around for an idea to strike, that waiting could take forever. I personally tried to start up three software companies over my career and the first two failed badly. I also thought my ideas were good enough, but I was going about starting the company the completely wrong way. It doesn't matter how good you think your idea is. What matters is how painful is the problem that it solves for the customer. So in this episode, I'm going to share a simple process that you can use to find people who have a real problem they want solved, that they're willing to pay money for. So the first thing to do before you even think about starting a software product, building it, doing something on your own, is to select a market that you want to build a product in. There's a website called Ibis World. I use this with some of my career coaching clients to help them with finding markets that they want to work in. But you can also use this website, it's got a bunch of data in it based on, I think it's the IR's and the United States. But there's a giant list of all kinds of industries, different markets, you know, healthcare, education, disposal services, tech, the airline industry. There's a much larger set of industries than you might even be aware of. But before you do anything else, you want to basically identify a few different industries that you think there might be people who have problems in that you could build a small software product for to solve. Next you want to figure out how do I contact these people? If for example, you thought, you know what, I want to help, let's say audio engineers who are recording music for movies with problems they have and see if there's some little software product or solution I could build to make some money helping them with the problem they have. Well you need to find a way to find those people and talk to them to find the problems. And the way that I do this today with my own business and a lot of people do is just use chat GPT basically, just ask chat GPT. Hey, where can I find online or in person people who work in audio engineering and they're in the film industry, see what it comes up with. It's often going to tell you, you know, Facebook groups, Reddit, LinkedIn, Twitter, maybe trademarks, there's going to be a variety of places, but you're going to have to then go there and find these people so you can actually find what their biggest problems are. And I should mention this set of questions I'm about to tell you in a moment here is based off of a man named Dane Maxwell. He wrote a book called start from zero. You can look them up, I'll put a link in the description. So I didn't come up with this. I use this with other people just as part of what I do to try to help people if they're considering starting a software company. But the next thing that you need to do is you need to use whatever features of that platform. Again, let's say it's LinkedIn or Reddit or Twitter or whatever. And once you find people through chat GPT, through searching, through whatever means that are in that market, that you might want to help them with a problem. You want to send them an email or send them a DM and basically just say, hey, I'm researching problems people have, let's say again, in the audio engineering industry or in the healthcare industry, and I noticed you work in this industry. Would you be comfortable telling me what your most painful and persistent problem is? And you're going to contact, let's say, 20 to 100 different people, and a lot of them are going to ignore you. They're not going to respond, but you are going to have some people who are going to respond and they're going to tell you what their painful problem is. Now, one of the mistakes I made in my earlier first two startups is when I asked that question, or I started this conversation or this way of finding if my business ideas were good or not, I sort of pitched the solution that I had, the software product I wanted to build, the thing I wanted to solve to them first. And if you really want to start a business and be successful, it's really important that you actually solve a real problem that your customer has that you didn't kind of trick them into saying they have. This has to be an authentic problem. I talked about in one of my earlier episodes about why programmers specifically, we can fail to start software projects or software companies if we try to do it ourselves. And this is one of the biggest reasons. But once those people get back to you, the ones that do, you're going to want to then follow up and just say, hey, I'm thinking about building a product to try to solve that specific problem. Would you be okay with meeting with me? And you could say, would you be comfortable, however you want to word it, but would you be willing to meet with me for a 15 minutes conversation or a half hour conversation or an hour conversation where I can ask you five questions to just get a little bit more info and make sure that whatever I build solves problems that people like you are having. Now, again, let's say ten people got back to you. You send that follow up email, that follow up DM, and you ask to meet with them. There's only a certain percentage of those people who are going to take the time to do it. Some of the others are going to just ignore you. They're not going to be interested. They don't want to participate. But once you do get some people that you can talk to, it could be over Zoom, it could be over a phone call. You want to ask them five questions. And again, this comes from Dane Maxwell. I didn't come up with this on my own. So when you start the call, whether it's phone calls, Zoom, however you meet them, you know, you say hello and then you want to remind them, hey, you know, when I sent you that DM or I sent you that email, you said your most painful and persistent problem was x, and just make sure that they agree. Oh, yeah, yeah, that's what I said. You know, and that you're talking about the same thing. Then the next question you want to ask is, how are you going about solving it today? You don't want to start a business, if possible. And I again, learned this the hard way by offering some solution or some product for something they're not even doing. Because then they have to basically establish a new behavior or do something they're not even doing today. And I think, you know, I certainly do that changing habits and behavior is pretty hard. But they're going to tell you, oh, yeah, today, when I have this problem, I work around it this way, or I, I get frustrated and I escape from it this way. You know, it depends on what their current solution is. It might not even be a solution at all. But this helps you understand the implications a little bit. You know, how are they working around it? And speaking of implications, the next question you want to ask them is, well, what happens when you don't solve this problem? Or what happens when the way that you solve this problem has to be the way you're working around it or the way you're, you know, not dealing with it today? And this helps them get to think, you know, is this problem costing me money? Is it causing me stress? Is it preventing future opportunities? Because if it's not doing any of those things or something similar to that, they're probably not going to be motivated enough to actually pay money. If you were to come up with a solution and then you want to ask them, hey, if you had a magic wand and you could just wave that wand and suddenly a solution appeared for that problem, how do you think that might work? What would you like to see it do? And here you're looking for an opportunity for the potential customer that you might build a product for to give you some ideas of what's important to them to feel like it's really, truly a solution, some ideas they might have of how they would like to see it solved, considering what they can't do themselves. This is all super important information because if you ever do build that software product, you're going to want to make sure if you hear this consistently from enough people that you solve that problem in that way. And then the final question is, if you had that solution available to you, how much would it be worth to you? What would you pay for it? Now, I think people can get a little freaked out asking this question, but hey, at the end of the day, if you're going to spend the next year, two years, six months, however long, trying to build a small software product of some sort to help a customer base, you need to know that people are really willing to pay for it. Now, can people say they're willing to pay for it and not actually pay for it? Sure, a lot of this has to do with the problem, how urgent it is, but you'll be able to tell some in the conversations you need to get them to say, you know, I'd pay $100 a month for that, or $25 a month, or I'd pay a couple grand for that problem to be solved and just get some sort of idea. Now you're eventually going to have to figure out, is that enough money to make it worth your while? And that's the last step. Once you've had these interviews with people and you know, you want to shoot for. This is just an arbitrary number, but let's say 15 to 25 people in this market that you're considering have this actual conversation with, you know, get through that many of these conversations. You're looking for a pattern, a consistent pattern where they tell you over and over again, yeah, I'm really frustrated with this. It's got a lot of implications that frustrate me. You know, here's what I got to do to work around it, and here's what I'd pay for it. And they might all tell you different amounts they'd pay for it, different ways they'd like to see it solved. But, you know, if you talk to, let's say, 25 people and 20 of them have a very similar, pretty much the same problem, and only five of them have some, you know, other problem in the space that you're talking to them in that might be really worth exploring. Now, the next thing you need to do is you need to figure out how big is this market, you know, how many people are in it, if they're going to pay me, how many, you know, people would I, how many of these would I have to sell or how many subscriptions would I have have to, you know, sell per month? Let's say again, this gets into pricing, and I've talked about, you know, pricing your products and services in some earlier episodes, but there's additional stuff you're going to need to do now that you have this information to see if it's a worthwhile business. But the important thing is, as far as this episode coming up with the idea, you didn't come up with the idea. You found the idea by talking to people and having them tell you directly what their biggest problem is. Now, you can decide after this that you don't want to pursue it, but at least you aren't poisoning the well, so to speak, by coming to a potential customer with, hey, I've got this product idea already, what do you think? Because I did that earlier, again, in my career, there's two different startups I did this with, and I kind of brought up the solution I was thinking about without even naming the name of it a little bit in the conversation in a way that it just narrowed the focus and I kind of got false positives and thought that this business idea was better than it was. So it's really important if you're really going to spend your hard earned time and money starting up a little software company. You don't have these conversations in a way that tricks you into thinking your idea is good, and it truly is their idea. So are you considering starting a software product company yourself? Do you already have some ideas? Have you validated them yet? Have you talked to your customers and asked them openly about what problems that you theorize your product's going to solve exist and see if that's something that's on their mind that they're really thinking about? What's the things that would hold you back from going about finding a business idea this way? And what are some of the problems you see with this approach? Leave me some comments and let me know about it until next time. Thanks.