Exactly How 100 Multi-Million Dollar Tech Founders Came Up With Their Winning Business Idea

Exactly How 100 Multi-Million Dollar Tech Founders Came Up With Their Winning Business Idea

Movies like The Social Network romanticize the world of tech entrepreneurship, and that’s okay. What is not okay is that they misrepresent how winning ideas are discovered.

SaaS — one of the hottest, fastest growing vehicles for entrepreneurship — is a prime example of how damaging the mythologized stories of Apple and Facebook can be. 92% of slow-growing SaaS startups fail within the first three years. Primary reason: a failure to establish the product-market fit. Which is a fancy way of saying “nobody wants your damn app.”

92% is a domesticated number that under-reports an extensive and profoundly brutal world of entrepreneurship failure. Assuming entrepreneurs are some of society’s most creative and determined individuals, it’s difficult to fully grasp the amount of talented productivity lost every year. Perhaps it doesn’t have to be this way.

After watching a few interviews with revenue-generating, small to mid-sized startup founders, I noticed a pattern in how they come up with winning ideas. Over the next two weeks, I analyzed 203 interviews in total to make sure. About half of them did not articulate precisely how they came up with the idea, so I did not consider them a data point. Below are the key findings from 100 interviews with founders who did remember and articulate their “aha moment.”

Key Findings

(For the data, please scroll down)

95% of founders had 12.2 years of previous job and/or business experience on average before discovering the winning product-market fit.
40% of founders worked at a company when they noticed an inefficient internal process, an unsolved client need or a rising business trend.
25% of founders ran an agency, consulting firm or software development company when they noticed a reoccurring client need that could be automated or simplified.
14% of founders ran a business, built an internal tool to solve a problem, then realized other companies needed it, too.
8% of founders built a minimum viable product, got client feedback, and then pivoted towards the winning idea.
4% of founders used work experience and skills to solve a personal problem.
4% of founders left their company to build a similar, but non-competing tool using their know-how or applied gained know-how in a different context/industry.
Only 5% of founders successfully built a company without any job or client experience.

It’s important to consider that seasoned founders have experience in management, operations and, sometimes, sales. They’ve seen firsthand how things are done — whether in their own business, or a company they’ve worked at. So, in addition to being exposed to real client needs and business processes, they’re also more proficient in business culture — which makes them more likely to execute their winning ideas in a winning fashion.

Another speculative argument could be made that seasoned founders are less likely to run into cash-flow problems. This is unconfirmed and warrants a separate investigation, but it appears that the 95%-cohort have either saved up enough money to build and market their MVP, or they already run a steady, cash-flow-positive business that finances their new venture. Day-to-day cash-flow problems are a primary reason for small business failure — it’s difficult to build the next big thing when you can’t pay rent.

There are two types of founders I did not include:

Post-exit-preneurs. I think it’s safe to say that serial entrepreneurs with multiple successful previous exits think quite differently from aspiring ones. They often have access to information that may not be available to a self-starter — VC insight, top-level business feedback — as well as the experience to make sense of that information. The average first-timer does not break bread with tech rockstars, nor would he know what to ask them.
VC-led-preneurs. Some founders trace their first steps to a defining VC conversation, rather than the MVP-meets-market moment. My hypothesis is that the average starter does not have the access to nor the aspiration to deal with VCs at the beginning.

Note: all revenue numbers are estimates and can be a couple years old. I found them either on this platform or a quick Google search. Most interviews analyzed can be found either on this channel or this website. All job/business experience numbers were taken from founders’ Linkedin pages, by substracting the year of the first professional experience from the year they founded the company analyzed. As far as I consciously know, all interviews were randomly selected.

Note #2: I reached out to most of the mentioned founders to verify their story and the numbers. 30 of them replied with additional context and insight.

Disclosure: Nothing to disclose. There are no affiliate links or other sponsored content in this article.

Exceptions to the rule: 5 dorm-room teen-preneurs

01. David Rusenko — Weebly — $10–50M annual revenue

Weebly’s free website builder makes it easy to create a website, blog, or online store.

Started out as a class project in college in 2006
Started receiving unsolicited $50 checks from multiple happy users
Applied to YCombinator, a seed accelerator
Got accepted since they had a beta product launched, while most other companies were still at the idea stage
Received $20,000 from YCombinator
Started working full-time on the project
Raised $650,000 the same year

Exactly How 100 Multi-Million Dollar Tech Founders Came Up With Their Winning Business Idea

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Exactly How 100 Multi-Million Dollar Tech Founders Came Up With Their Winning Business Idea

Key Findings

Exceptions to the rule: 5 dorm-room teen-preneurs

01. David Rusenko — Weebly — $10–50M annual revenue

02. Paras Chopra — Wingify — $10–50M annual revenue

03. Andrew Sutherland — Quizlet — $10–50M annual revenue

04. Tiago Paiva — TalkDesk — $10–50M annual revenue

05. Panayotis Nikolaidis — Savings United — $10–50M annual revenue

The rule: 95 seasoned in-the-trenches problem solvers

06. Sean Hoban — Kimble — $10–50M annual revenue

07. Chris Marentis — SurefireLocal — $10–50M annual revenue

08. Gordon Russell — Springboard Retail — $10–50M annual revenue

09. Haresh Patel — Mercatus

10. Dan Berger — Social Tables — $10–50M annual revenue

11. Mikael Thuneberg — Supermetrics — $10–50M annual revenue

12. Babak Hedayati — TapClicks — $10–50M annual revenue

13. Niels Hartvig— Umbraco

14. Jonathan Treiber — RevTrax — $10–50M annual revenue

15. Aditya Bhamidipaty — FirstHive — $1–10M annual revenue

16. Franz Riedl — Styla — $1–10M annual revenue

17. Dave Lee — PlusThis — $2.1M annual revenue

18. Juha Berghall — ONEiO — $1–10M annual revenue

19. Michael McCarthy — InKit — $1–10M annual revenue

20. Mike Oddo — Market Maker Leads — $1–10M annual revenue

21. Tamas Cser — Functionize — $1–10M annual revenue

22. Dave Savage — Mortgage Coach — $1–10M annual revenue

23. Eran Ben-Shushan — Bizzabo — $10–50M annual revenue

24. Matthew White — Qebot — $1–10M annual revenue

25. Dawn Dickson — PopCom — $1–10M annual revenue

26. Tore Steen — CrowdStreet — $10–50M annual revenue

27. Scott Shatford — AirDNA — $10–50M annual revenue

28. Greg Mercer — Jungle Scout

29. Mike Sedzielewski — Voucherify — $1–10M annual revenue

30. Randy Frisch — UberFlip — $10–50M annual revenue

31. Guy Tytunovich — Cheq — $10–50M annual revenue

32. Eric Lam— AspireIQ

33. Jai Rawat — Zinrelo — $10–50M annual revenue

34. Markus Linder — SmartAssistant — (merged with Zoovu)

35. Darren M. Jer — MarketFactory — $10–50M annual revenue

36. Joshua Tillman — DialSource — $10–50M annual revenue

37. Derek O’Carroll — Brightpearl — $10–50M annual revenue (founder Chris Tanner)

38. Brian Reale — ProcessMaker — $10–50M annual revenue

39. Clay McDaniel — Ripl — $10–50M annual revenue

40. Pini Yakuel — Optimove — $10–50M annual revenue

41. Suchit Bachalli — Unilog — $10–50M annual revenue

42. John Panaccione — LogicBay — $10–50M annual revenue

43. Guru Hariharan — CommerceIQ

44. Adam Harris — CloudBeds — $10–50M annual revenue

45. Alex Quilici — YouMail

46. Bjorn Espenes — Finch — $10–50M annual revenue

47. Don Charlton — JazzHR — $10–50M annual revenue

48. Aydin Acar — Influenster — $10–50M annual revenue

49. Vijay Bisani — Cygilant — $10–50M annual revenue

50. Gil Eyal — HYPR — $10–50M annual revenue

51. Amanda Newman — Parkbench — $5–10M annual revenue

52. Lalit Bhise — Bizom — $10–50M annual revenue

53. Nathan Barry — ConvertKit — $10–50M annual revenue

54. Marc Aubin — Appbuddy — (acquired by Validity)

55. Tim Valishev — JivoChat — $5–10M annual revenue

56. Michael Mandel — CompStak

57. David Okuniev — Typeform — $10–50M annual revenue

58. Chad Rubin — Skubana — $10–50M annual revenue

59. Bahar Ansari — Case.one — $10–50M annual revenue

60. Arthur Lozinski — Oomnitza — $10–50M annual revenue

61. Oscar Macia — Forcemanager — $10–50M annual revenue

62. Ted Murphy — IZEA — $1–10M annual revenue

63. Alexey Orap — YouScan — $1–10M annual revenue

64. Rob Woollen — Sigma Computing

65. Marcin Cichon — Price f(x)

66. Alexandr Galkin — Competera

67. Sovan Bin — Odaseva

68. Ashwin Navin — Samba TV — $50–100M annual revenue

69. Ben Harris — Decibel

70. Parker Morse — H Code Media — $10–50M annual revenue

71. Alex Fly — Quickpath — $1–10M annual revenue

72. Vijay Chittoor — Blueshift

73. Lynn Browne — BrandVerge

74. Ezra Doty — Quorum — $10–50M annual revenue