How to Identify A Magnetic Idea

This article is a guide for folks who are working on an idea to begin their startup journey, early stage angel investors who are looking for the next unicorn, or for folks who are evaluating an early stage startup as a co-founder or early employee.

Throughout my career as a tech leader and advisor, I’ve had the opportunity to be a part of a number of early stage startups. I’ve helped companies raise hundreds of millions in VC capital, done countless investor and customer meetings and advised over a dozen promising early stage companies. I’ve also taken the first steps to launch ideas of my own, including pitching VCs, performing customer research and building MVP product offerings. Some endeavors were successful, some were not, and many landed somewhere in the middle. This article attempts to take my experience and build a framework to identify a great startup idea.

“Ideas Are Cheap, Execution is Everything” is Bullshit

While there are many aspects to building a successful company and execution is certainly a big part of it, the quality of the company’s idea will ultimately play a huge role in the overall success. Let’s take a moment to define what makes up an idea in this context. We are talking about much more than a random observation of something that could be better in the world (although that is often where it starts). When we talk about ideas here, we are referring to a well developed business plan that includes all aspects of what makes a viable business, including the market need, the go-to-market approach and the product/solution itself.

Good ideas are far from cheap. As the barriers to entry to create software continue to get lower, good ideas are increasingly valuable. In fact, the best ideas aren’t just good, they are magnetic. They pull in everyone around them, including customers, investors, and top talent. Magnetic ideas are the ones you hear and immediately think “How can I be involved?” and “Why hasn’t someone done that before?” Magnetic ideas are ideas that have the potential to change the way the world works in some way and build a great business while doing so. They are rare and hard to create.

Attributes of a Magnetic Idea

So, what does a magnetic idea look like? What unique attributes does an idea need to have in order to attract customers, investors, and industry attention? The list below is what I’ve found to be the top attributes. While there are always exceptions, in my experience, at least a few of these need to be present and very strong for an idea to be magnetic.

1. Unique founder insight: From years of hard-earned industry expertise in a given domain, a unique founder insight can make an idea magnetic. For this attribute to be present, it requires a non-obvious and novel approach that most people wouldn’t be able to immediately see or understand why it’s valuable. Usually when this attribute is present, the founder has felt the problem personally and has a vision for a solution that is not currently available. When executed correctly, this can be one of the most powerful differentiators.
2. Proper timing: Taking advantage of a recent change in regulation, technology or customer preferences can be the foundation of a magnetic idea. In a TED talk from a few years back, Bill Gross explains his research that indicates this is the single biggest reason that startups succeed. For example, big technological changes in the past that have enabled a host of new companies included widespread broadband adoption or mobile app stores. In today’s world, recent changes in AI capabilities with LLMs has unlocked infinite new use cases that weren’t possible previously. Similarly, changes in work from home preferences for many companies has created a need for new innovation in workplace collaboration tools.
3. Unfair Go-To-Market approach: Distribution, distribution, distribution. The ability to efficiently and infectiously distribute your idea to the world can be a real differentiator, even in crowded spaces. Having an “unfair” go to market approach can manifest in several ways. Examples include founders that have deep industry connections with lots of decision makers at potential customers or offering a completely free product where others charge a premium. Marketing advantages also can play a role. If a founder has a huge social following or celebrity is involved with a new company, they will have an unfair advantage over a company that has to spend a large portion of their budget to get the same reach. There is high value in brand and connections when it comes to getting a product out to market in a cost effective way. When this attribute is present, it will often create a moat that is very hard to replicate.
4. Focused on a burning problem: Note, the word burning here is key. For an idea to be magnetic, the company should be solving a real, important and urgent problem that a customer is willing to pay to solve. The key is that it is a real problem, not a perceived problem or nice-to-have improvement. This is sometimes referred to as making a painkiller vs a vitamin. Burning problems need painkillers whereas you could skip taking a vitamin and still be okay. Burning problems are also likely to have some existing solutions, which brings us to the next attribute.
5. 10x better than alternatives: Note that “10x” is subjective, but the point is that the solution the company has needs to be differentiated and objectively better than other options. If operating in an established market on a burning problem, there are likely lots of other solutions that may be “good enough”. There’s also a strong chance that others have thought about a similar version of the solution and either decided it wasn’t worth investing in or have tried and failed. In either case, there should be a clear reason why a company’s solution will win in the market.
6. Operating in a big market: For an idea to be magnetic, it needs to be in a big enough space to have the potential for a huge impact in the world. In order for that to be true, the company typically needs a total addressable market (TAM) of typically over $1B. There’s been lots written about how to size you TAM (for example here), but at a high level, taking an honest look at the total number of customers in a market and multiplying that by the average revenue per unit is the foundation. While a company should typically start with solving a specific problem in a unique and differentiated way, there needs to be an accompanying vision of how it will grow into a large market.

It’s worth noting that the depth and quality of any of these attributes is important. Many companies have some aspect of these and if you are a founder, you may look at your company and think “I have all of these!” While that may be partially true, in order to have a magnetic idea, these attributes need to be so deep and so obvious that just about anyone you describe it to can see the advantage you have. The best way to test this is through customer and expert conversations where you pressure test what you believe to be the strongest unique attribute of your idea. However, no matter how much upfront work is done, the real validation of an idea comes when customers agree to pay for your product or service.

What is outlined here is a high bar. Many companies have been successful under different circumstances and without having many of these attributes. However, this article is about how identify a magnetic idea that pulls in capital, talent and customers with ease. For that to be true, not only does a company need good answers to these questions, but a company needs to be able to defend their answers under scrutiny.

I hope this framing is helpful. I’ve been advising and consulting with a number of early stage companies and exploring a number of startup ideas this year. It’s been a lot of fun, and I wanted to share my takeaways for what makes a magnetic idea. Being at the early stages of company building when anything is possible is exciting, but being able to achieve breakout success with a magnetic idea is something special!