How I Evaluate Ideas

Jesse Pujji
December 03, 2023

I had a VERY exciting development this week!

I had a post go Viral…

ICYMI, we announced the latest venture out of Gateway X: Aux Insights. The post got >500k impressions across platforms, and we got 200+ inbound inquiries from potential clients and employees! Energized just writing that, Whew!

But let's back up a second. One of the most common questions I get from this community is: "Jesse, how do you evaluate and choose business ideas?"

Here is my approach:

1) Identify Trends - What is Changing in the World?

I'm a very curious person, whether that means reading different mediums (books, twitter, etc) or talking to people and learning about their previous jobs, current companies, etc.

One slightly corny admission: whenever I interact with a business, like going to TopGolf, staying at a hotel, working with an agency, I mentally try to build up their PnL in my mind. What are their margins? What do they do in revenue per day? Major cost items. It's part of my business curiosity.

But beyond taking in information, I'm always trying to connect dots to see how the world works and most importantly, what is changing.

An example from the early days of Ampush: I had become super familiar with the paid search landscape. By 2010, it was a multi billion dollar industry with software, agencies, lead gen companies, etc. So when Facebook started emerging as a force in advertising, I started connecting dots of what an industry built around FB might look like. It led to us betting the farm on FB and it worked out!

These days, something I think a lot about is the changing nature of jobs/work. Post Covid, I'm squarely in the "work will be hybrid" camp. Not only for full time employees but even for the nature of employment.

Here's what I see: 5 years ago, 90%+ of my employees were full time and co-located.

Today: (at most) 50% are full time and co-located. 25% are full time in any city and 25% are "long term" contractors (people who weave in and out and are not full time).

Keep this trend in mind because we'll come back to it later in this email. I'll refer to it as the "Changing Nature of Work".

2) Look for Problems

Once I have a trend in mind, I start to look for problems.

Problems are not product ideas. They are not SaaS platforms. They are not services. They are just issues people have, consumers or businesses (important note: "businesses" don't have problems. People who work at businesses do).

BTW: this is WAY easier if you've lived something. GrowthAssistant is a great example here. My last company was a tech-enabled digital marketing agency and we built an offshore team of 60+ people to do all the grunt work for us. So I already knew the benefits of offshoring, and I knew how to build an offshore team.

I even remember when I was a young consultant at McKinsey spending late nights putting together slides. When my boss told me we could outsource the slide-creation process to an offshore team, my ears perked. I became known as a very resourceful consultant because I used that offshore team as much as I could.

I lived it multiple times, so spotting this problem was WAY easier than when we started Unbloat (digestive supplements for pre-meno women)!

For the Changing Nature of Work, "long term” contractors and their employers have A LOT of problems. How do these people get healthcare? How do they manage potentially working multiple jobs? How will equipment and cyber security work for them? How do they receive feedback/learning in their jobs?

I just came up with that in a couple minutes of brainstorming. To take it up a notch, I’d ping my friends who work in HR and ask what issues they’re seeing with this group and learn more about their challenges.

With a clear problem or two in mind, I start to think up solutions.

3) Ideate Solutions

Here my typical take is to find ideas that can be started quick/cheap/easy (basic service offering, newsletter, "painted door" landing page, etc) but that can also build defensibility over time.

Again, I'll point to GrowthAssistant. It cost us nothing to start it. We just needed a few customers who wanted offshore digital marketing people, and then we put up some job posts and interviewed candidates to fill those roles.

But after a couple years, we now have 150 customers. Top brands. A huge recruiting engine. Advertising spend in the Philippines.

We attract great workers because of our reputation as an employer of choice and we attract great customers because of that talent. The flywheel spins. I think something similar can happen with Aux Insights.

For the Changing Nature of Work example, I love personal growth and development so my mind immediately went to: "let’s build a unique feedback tool for remote contract workers." It would be somewhere between star ratings on Upwork and Lattice. Here's a thought: it integrates into Google Calendar so every time you get off a call with the remote contractor, you both enter feedback that gets aggregated over time!

There's tons of potential solutions, but it's your job to figure out what solution the market wants.

The fastest way to figure out it out? Get to market as soon as you can. You'll learn a lot more in a month running into the market and failing than you will trying to develop the perfect solution.

Remember Mike Tyson's line: "everyone has a plan until they get punched in the face."

There's value in planning, but don't overdo it. The win comes after you get punched.

4) Unfair Advantage + Unique Insight + Why Now?

I combined these 3 but they all deserve tons of individual attention.

And this is where I go off the typical "venture script." Remember my Google Calendar feedback tool from before? Let's assume that's a halfway decent idea. The why now? Work is changing, and there isn't a tool that does this. But importantly, I DO NOT have a unique insight here (MAYBE I could develop one with some interviews/convos). So while I think it’s a cool idea, it probably falls apart in this section.

Let's contrast that with Aux Insights: I have tons of friends in Private Equity because of where I went to college. The guys and girls who I went to frat parties with, bailed out of trouble and studied into the wee hours with. I also spent 10+ years pioneering one of the biggest digital marketing agencies working with big unicorn brands. So I thought to myself, how can I take what I know and sell it to people I know? Enter Aux.

Now of course if you are younger and less experienced, you're less likely to have a similar unfair advantage. But you'd be surprised…if you start looking at yourself / your knowledge-base / your experiences, you may find them. One thing I like to do is to take a cross section of 2 or more attributes of a person and see if they can combine to generate unique insights and unfair advantages. For example, I know ecommerce, and I know turbans. I could crush with a DTC turban business.

On that note, I have a FREE email course on the 5 Steps I'd take to bootstrap a business from scratch. Check it out if you're interested.

Special Note: The Holy Spirit

Last but not least is what I often call "The Holy Spirit". Sometimes either the right stars align or you just have an energy/feeling inside for something that nags away at you. Maybe steps 1-4 aren't perfect but you FEEL something pulling you towards an idea.

My advice: don't ignore this. But also don't follow it blindly. My best successes have come when I followed my energy while also iterating/refining the ideas based on smart choices.

One last thought: I love this link to Sequoia’s "Writing a Business Plan". Before I seriously consider any idea, I make it a point to do a brief (2-3 page) memo that takes a few hours to do. It forces critical thinking and provides a level of clarity that often makes it easier to thumbs up or down an idea.

Ok, one last last thought: if you're spending >3 months evaluating ideas, you’re doing something wrong. You’re better off jumping in with whatever shitty idea you have and then iterating as you go. Trust me, the first idea for Gateway X was called Poophoria (supplements for pooping). It was shitty in more ways than one and failed quickly. 💩

Well, there you have it. Between this email and my course, you have everything I do to find and evaluate ideas. Hope this helps!

Jesse