👋 Hey, Lenny here! Welcome to a ✨ monthly free edition ✨ of my weekly newsletter. Each week I tackle reader questions about building product, driving growth, working with humans, and anything else that’s stressing you out about work.

If you’re not a subscriber, here’s what you missed this month:

1. What is a good growth rate

2. Preparing for a PM interview

3. Open thread: How is your product org organized?

Q: I have an idea for a startup. How can I validate that it’s a good idea, and how will I know when an idea is promising enough to commit to?

Committing to a startup idea is possibly the most consequential decision you’ll ever make. It’ll impact everything they do for the next 1 to 50 years, and either lead you to fame and fortune or a brick wall to endlessly bang your head against. No pressure.

To help you navigate this critical time, Todd Jackson (partner at First Round Capital) spent 2+ months researching, interviewing, and synthesizing lessons from some of today’s most exciting companies to understand what gave them the confidence to commit to their idea. Below you’ll learn how these companies come up with their idea, validated it, and gained traction—along with a host of lessons learned along the way.

In his nearly 20-year career, Todd has helped build some of the biggest products in tech that hundreds of millions of people use every day, from Gmail’s UX and Facebook’s Newsfeed, to Twitter’s timeline and Dropbox’s bottom-up revenue engine. He founded his own company, Cover, in 2013 and met First Round Capital when they led his seed round. Now at First Round he helps early founders launch and grow their businesses. You can find him on Twitter and LinkedIn.

As a seed-stage investor at First Round Capital, I get to meet a lot of founders who are exploring and validating their ideas. It’s an exciting time for them and, as a former founder myself, I relate to the thrill and anxiety of just getting started. You believe you’re onto something and feel ready to bring your idea to life, but there’s also a lot of wondering, Am I crazy to pursue this?

While there’s no single right way to get started or build a business—and timing, luck, and grit often play an outsize role—over the years, I’ve observed a few commonalities in how strong businesses got their start. From my own startup ideas (more on that here) and from talking to many successful founders, I’ve seen a few clear patterns around how people come up with their ideas, validate them, and build the conviction they need to go all in. There may not be a single playbook on how to build the next unicorn, but you can learn a lot from reverse-engineering how the best entrepreneurs went about building their companies.

To give you some recent examples of the path from initial idea to success, I interviewed the founders of eight companies and spent many hours over the past two months digging into their incredible stories:

1. Christina Cacioppo, CEO and co-founder of Vanta

2. Ryan Petersen, CEO and founder of Flexport

3. Mahima Chawla, CEO and co-founder of Cocoon

4. Josh Wais and Lauren McDevitt, co-founders of Good Dog

5. Kevin Tan, CEO and founder of Snackpass

6. Nick Fajt, CEO and co-founder of Rec Room

7. Edith Harbaugh, CEO and co-founder of LaunchDarkly

8. Kurtis Lin, CEO and co-founder of Pinwheel

Here’s what I learned.

How do I pick an idea and validate it?

Based on my research, there are three common ways to come up with an idea:

1. Market first: Start with a market or space that interests you, then look for a specific problem.

2. Experience ripe for improvement: Look for areas where you believe there should be a better consumer experience than what currently exists, and iterate from there.

3. Problem first: Start with a problem you’ve experienced firsthand and figure out if enough other people have the same problem. 

These methods tend to correlate with specific categories of companies:

Let’s look at examples of how the founders I talked to used each method to come up with an idea, validate it, and gain confidence that they were on the right track. 

Start with a market/space first and look for a problem.

If you already have a particular market in mind, talk to people in that space to more deeply understand their experience and challenges. There’s no set number of conversations to have, but I’ll offer suggestions near the end of this article. You want to look for a burning pain that’s so bad, customers will literally try anything to solve it.

Christina Cacioppo is the CEO and co-founder of Vanta, an automated security monitoring platform that helps companies get SOC 2, HIPAA, or ISO 27001 certified quickly. Launched in 2017, Vanta has over 2,800 customers today and has raised $55M.

Finding an idea

Christina started out on a couch with her co-founders, tossing around ideas for several months. Her advice? “Don’t do this.” She elaborates that when you’re at the idea stage, it’s easy to poke holes in everything if you ideate in a bubble: all the ideas are flawed, you’re limited by what you already know (which might be a lot, but it’s still a small subset of what the market knows), and it’s hard to get real feedback from anyone when you’re just talking through hypotheticals. Instead, she recommends getting out into the market, having conversations, and testing early models.

After testing a few prototypes that didn’t work out, Christina decided to investigate the security space out of naive interest.

“Securing the internet seemed important, particularly around the recent 2016 election and Equifax breach, and yet the tech industry seemed really bad at it. Why? And why are there so many cybersecurity companies and yet no startup uses any of them?” —Christina Cacioppo

She started by interviewing founder friends and security leaders and asked them about the best and worst part of their days. She heard many answers, and tried and discarded several different ideas. But when she heard about security being a blocker to companies moving upmarket and unlocking revenue, that’s when she started to feel real interest from the people she spoke to. Digging in deeper, Christina and her co-founders discovered that SOC 2—often the first way a company needs to prove its security competency—was a major pain point and, while security consultants offered expensive help, many people wanted an easier solution.

Validating the idea

They started by developing a gap assessment similar to what a SOC 2 consultant would create, with the goal of confirming they understood the requirements of the SOC 2 process and that it could be broken down into simple steps. After hearing a strong desire for a “SOC 2 easy button” solution, they built a zero-code MVP (a spreadsheet) to test with potential customers and determine whether SOC 2 preparation was actually productizable. Both founders were skilled at product development but had learned the hard way not to write code until they’d validated that people wanted the product.

Christina shared this MVP with friends, former coworkers, and people in their networks at companies ranging from two-person startups to multi-thousand-person enterprises to gauge their reactions. She knew they were onto something when she got a call from a friend out of the blue saying, “I heard you’re doing SOC 2. We should get a drink, and also can you do that for my company?” As more people proactively reached out to ask about what she was building, she got a real sense of market pull, which led to growing confidence.

Christina didn’t try to segment her customers by total addressable market (TAM) but instead went where the pull felt the strongest. From her customer discovery conversations, she not only validated product-market fit but also found that selling to smaller startups would initially be easiest because those founders were most eager to get their SOC 2 report in hand. As the co-founders continued building, they found that small startups were seeking SOC 2 earlier and earlier—for example, fintech companies like Modern Treasury got their first SOC 2 report when the teams were just the founders.

💡 Moment: When people whom Christina hadn’t even spoken to started reaching out directly to ask about using Vanta.

Finding traction

They joined Y Combinator, kept building the product, and completed their first full audit with a customer in November 2018. By the end of the year, with seed funding, a nascent team, and 30 customers, they suddenly realized, “Wow, this is working better than it should.”

While raising their seed round, Christina was routinely asked, “How many startups, especially small ones, really need SOC 2?” At the time, they believed there were maybe 600 companies in the world that would need SOC 2. The co-founders knew that was too small of a TAM for a compelling venture-scale business, but they bet that as the technology evolved, software security would change and the need for SOC 2 would continue to grow. That prediction ended up coming true faster than they expected. Today, Vanta has thousands more customers than they even thought were in the company’s initial market.

What advice would you give a founder just starting out?

“Do all the product development best practices [market research, user interviews, validating mockups before building, starting with a lightweight MVP to test the core problem].

Nobody wants to do them because they seem tedious, they’re less fulfilling than building, and when you’re excited, you just want to get started. But these steps make such a difference. It’s so easy to change a spreadsheet or mockup; it’s much harder to change code.”

Quick tips:

1. Build prototypes and test your early ideas on real customers; listen to their responses, and anything short of “I want this!” is really a “No thanks.”

2. Don’t build a full product until you’re feeling real pull from the market. 

3. Figure out who you can sell to most easily, and start there. Market analysis can come later.

4. Develop a product that unlocks revenue for your customers.

Mahima Chawla is the CEO and co-founder of Cocoon, an employee-leave platform designed to empower companies to better support their team members through life’s most pivotal moments. Founded in 2020, Cocoon has raised $26M and seen rapid customer growth since its initial launch.

Finding an idea

Mahima and her co-founders, Amber Feng and Lauren Dai, started by exploring pivotal life moments, particularly around the significant transition to becoming first-time parents. They interviewed dozens of parents to surface the challenges faced during that major life change. Initially their interview script was open-ended around financial planning, but conversations consistently steered to the problematic topic of leave. They heard about big pains over and over.

“In other areas, we were searching for the problem, whereas with leave it was obvious.” —Mahima Chawla

Validating the idea

This prompted the team to start a deep exploration into the world of leave. They heard about the challenges of state and federal regulations. They heard crazy stories, including one where a coworker brought her laptop to the hospital for her C-section and was applying for California state EDD benefits while being wheeled into the OR so she would be paid during leave. After exhausting their own networks (which tended to be tech employees), they put an ad on Craigslist to talk to a broader audience that included hourly workers. The nightmare leave stories continued: not getting paid in full, not knowing they had the option to take federal- or state-entitled leave, drowning in paperwork, spending 10 hours on hold trying to track down state and private insurance benefits, and more.

Once it was abundantly clear that leave was a pain point for employees, they did similar research on the employer side. Talking to dozens of companies confirmed that leave is an absolute nightmare, both for administration and employee experience. 

With conviction in the opportunity, Mahima, Lauren, and Amber limited their initial scope to addressing parental leave in California. They began by designing a UI flow in Figma, which they shared with the employees and employers they’d previously interviewed. The general reaction was that it was almost too good to be true: “I’ve never seen something like this before” and “I’ll believe it when I see it live!” They signed their first two customers—Carta and Benchling—off the Figma prototypes, which strengthened their confidence that they were on the right track.

💡 Moment: Strong positive feedback from both employees and employers on product mockups of Cocoon—including selling their first customers based on Figma prototypes!

Finding traction

The Cocoon team raised a seed round in December 2020 and started building the product. While they’d validated that all types of employers in the U.S. and Canada, regardless of size and industry, needed a leave solution, they started by focusing on parental leave for companies in California, Utah, and Pennsylvania with 100 to 200 employees (the stage of growth when the challenges with leave administration start to surface). They expanded quickly to all 50 states and added medical leave.

They used outreach to their networks early on to find companies interested in using Cocoon but soon had an influx of inbound leads from word of mouth and their website. That rush of interest gave them confidence that they were on the road to success (a pattern we’ve seen in both the Vanta and Cocoon examples!). 

What advice would you give a founder just starting out?

“Go in with a very open mind. Don’t try to make something a problem, because if you do you’re going to find the evidence to support it. Really just truly listen to what the person you’re interviewing is actually saying and notice if there is a trend.”

Quick tips: 

1. If it feels like you’re pulling teeth to find the pain point, you haven’t found a problem worth solving.

2. If you’re building a marketplace or platform for multiple audiences, be sure to validate the pain points for each persona you’re targeting.

3. Use an MVP or mockups to get early customer feedback before you build.

4. Inbound demand is a strong signal you have product-market fit.

Start with an intuition about a better consumer experience and work your way to a winning idea

Other founders, particularly those building consumer or marketplace companies, start with an intuition that there should just be a better consumer experience and set out to build it. This approach still takes a lot of conversations with consumers to pinpoint exactly where they’re experiencing pain, in and around the hunch that got you started. Start with your intuition, but don’t let it be the only information that informs your approach—unless you’re happy being your only customer.

Josh Wais, CEO, and Lauren McDevitt, Chief Experience Officer, co-founded Good Dog to make it simple to get a dog responsibly. Started in 2018, Good Dog has now raised its Series B.

Finding an idea

Back in 2010, Josh and Lauren started an online shopping platform called Wantworthy that didn’t work out, because it required consumers to adopt a new behavior. They wanted to try again, approaching the fresh start with a clear view of what it takes to create a successful company. They explored a number of ideas but were struggling to find a good one that leveraged their strengths and had a mission they felt passionate about.

“For somebody entrepreneurial, you want to start a company, but you have to wait for the right thing to hit you personally and logically.”
—Josh Wais

They found that idea in the concept for Good Dog. Both Josh and Lauren had experienced firsthand the challenges of finding a dog. As they talked to more people, they heard that others had faced these problems too—long waitlists, finding the right breed, finding a reputable breeder or shelter/rescue, avoiding potential scams, etc.—and saw the effects this had on both people and dogs. They saw an opportunity to create a marketplace bringing together reputable sources for getting a dog with consumers who wanted a trustworthy, confidence-inspiring, convenient experience. This mission felt more compelling than anything they’d worked on before, and they were excited about the prospects of creating a better system.

Validating the idea

Lauren’s background in product helped them employ design thinking to shape their validation process. She used “sacrificial concepts”—low-fidelity concepts that could be printed out and put in front of consumers to test different adaptations of potential solutions. They asked friends and colleagues if they knew of anyone who had recently gotten a dog or was looking for one. Since people tend to talk about their dog search process, they were able to find a lot of subjects to interview. They also compensated participants for their time to reduce bias by making it less about the person doing them a favor.

They then did a series of 20+ dog owner interviews, asking people to walk them through the whole process with questions like How did you decide you wanted to get a dog? What was the most painful part of the process? Which part was most exciting?

After a month of interviews, they’d learned that people struggled or even gave up trying to get a dog because it was such a time-consuming and challenging process. Pain and hassle were consistent themes across almost every conversation. Finding so many pain points around trust and convenience in an area so personally important to people gave them certainty that they were onto something big on the demand side. To confirm their hypothesis, they experimented with finding dogs manually for hopeful owners and discovered there were a lot of people who were desperate for assistance. 

They then worked on validating the supply side of the marketplace because it was critical to have trusted, quality breeders on the platform for the community to work. This part turned out to be more challenging—they worked on it nights and weekends for six months, cold-calling hundreds of breeders and trying to get them to answer questions. Josh and Lauren didn’t know exactly what the value proposition would be for breeders, but they had so much conviction on the consumer side that they were determined to crack it. “We need to figure out the specifics, but we believe in the vision of where we’re going,” they said.

Finding traction

It took a full year to crack the supply side of the marketplace. Josh initially cold-called breeders using a script that felt painful and awkward to him. Then he had a revelation: if he explained the mission and that he was focused on recognizing responsible breeders and then dove right into the screening questions (i.e. starting with the hardest part), the breeders he called were much more inclined to engage. That approach tapped into the breeder’s pride and passion for their dogs, as well as the effort they put into their work and the welfare of their dogs. 

Good Dog went live with 300 breeders on the platform in March 2019 and started using Facebook ads, initially to build brand awareness with breeders and then shifting into informational content. Three months later, they had 600 breeders and a strong enough reputation to focus on adding a sign-up flow to the site. 

By the end of 2021, they had over 20K breeders live on Good Dog. Josh says, “The goal we set out, to become the go-to platform for responsible breeders, is now within our sights. Of the estimated several hundred thousand breeders in the U.S., over 50K have signed up to be on Good Dog and are either live or we’re screening and helping to onboard or bring up to our standards.” They’ve successfully built a community dedicated to advocating for responsible breeders and helped hundreds of thousands of people in their dog search.

💡 Moment: On the consumer side, it was hearing about the deep pains people encountered, including giving up on their dog search altogether. On the breeder side, it was discovering that tapping into breeders’ pride in their work and passion for ethical treatment of dogs motivated them to engage with a new startup like Good Dog.

What advice would you give a founder just starting out?

“Put in the work to try to gather as much information as you can to understand the underlying motivations/needs of users and the dynamics of the market you’d be entering up-front. You don’t want to be blindsided by something that’s fundamental later. Better to know early on to understand if it’s worth moving forward, and if so, you’ll be prepared to work through it.

And don’t ignore your gut and how you personally feel about the idea and mission. You’ll face more than just the one challenge of finding PMF at the beginning. There are a lot of steps you’ll need to work through to bring your company to life. Having belief in your idea and feeling it in your core is really important. Believing it should exist and having information to support that is really critical. Everything after that is problem solving.”
—Josh Wais

Quick tips: 

1. Don’t rush into just starting a company—wait for the right thing to hit you personally, emotionally, and logically.

2. Be clear-eyed about what it means to start a venture-backed company.

3. Be self-aware about what you know and don’t know.

Kevin Tan is the CEO and founder of Snackpass, a social commerce platform that focuses on mobile order pickup at local restaurants. Founded in 2016, Snackpass has raised $96.5M to date.

Finding an idea

When Kevin was in school at Yale, there was a big culture around going out for food after class or late at night, particularly at a really popular place called Gourmet Heaven (“G-Heav”). It was ridiculous pandemonium every Saturday night when people would struggle to even place their orders. Uber Eats had just recently launched, but students were still going to pick up their food and it was a crappy process, a bad customer experience, and a likely cause of lost revenue. Kevin envisioned a future where people could order ahead and skip the lines entirely.

Validating the idea

With this insight in mind and the desire to create something his roommates would love, Kevin tapped into relationships with a few local restaurant owners he’d built websites for in the past (including G-Heav) and went door-to-door to talk to the owners. He convinced them to join his new website to reach more customers, grow their brands, and offer discounts to verified students. He then built the website over Thanksgiving break, used an API to send orders to the restaurants by fax machine, and launched with five restaurants.

In December around finals week, Kevin printed flyers and distributed them across campus to tell students about the website that would give them discounts and let them skip the line at participating restaurants.

“It was amazing. It was the first time people signed up for a product I’d made. It was a trickle at first but kept growing and growing.”
—Kevin Tan

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