Like everything in the venture creation process, there is no one right way to go about ideation, or the process of developing an idea. It can be scratching an itch, or solving a personal pain, or can be based on years of experience in a space; it can be based on research and spotting an opportunity, or the result of trial and error and a pivot. A good resource I have referenced often, whether in the Zell SIP41 or in guest lectures at accelerators and entrepreneurship programs around the world, is entitled ‘Where Good Ideas Come From’ by Steven Johnson.42
The book explores a myriad of ideation options, from eureka moments to slow hunches, with an emphasis on the power of platforms, networks, and collaboration to foster idea development as an evolutionary process. Only very rarely, as in the case of Jeff Bezos,43
does an idea stem from finding a technology (the internet), and choosing a target niche in which to start (books).44
While there is no one right way, there are some recurring themes among ideas hatched and companies founded in the Zell Program or by program alumni, which we have categorized into four buckets: Scratching an Itch, or answering a personal need or problem; Research to achieve domain expertise; Honing in on a need, problem, or market lacuna in Mind the Gap; or alternatively, Expert on Board, i.e. finding ideas based on someone else’s domain expertise.45 Whatever ideation path taken, some ideas may be revolutionary, but most, as Steven Johnson contends, are evolutionary in nature. Specifically, the last part of the chapter explores Revolution Versus Evolution, or building and improving on ideas that came before.
In the meantime, and with 20 years of program alumni to count for, there are quite a few serial entrepreneurs or individuals who have started additional business ventures after the initial entrepreneurial venture.46 But for the most part, students who join the program seldom have experience with having founded a funded venture or any meaningful domain expertise in any field, having often come from their military service (plus invariable travel afterwards) to their degree at IDC Herzliya.
This means that one popular track for ideation in the Zell Program is ‘scratching an itch’, or in other words, solving one’s own problem. Naturally, over the years I have seen various versions of ventures catered to the student community experience, from roommate finance management to solving late night munch needs.47
However, scratching an itch is the underlying genesis of many alumni ventures as well. Notably and mentioned above, Liat Mordechay Hertanu (Zell 1 – 2002), a working mother trying to manage all of the tasks and errands required of her professionally and as a family, created 24me, a productivity app for managing your life. [See the 24me Case Study]
For program participants, where domain expertise is limited and business experience is generally mitigated, ideas tend to come from researching an industry or a technology.
This is true for many alumni founders as well, notably Assaf Wand (Zell 1 – 2001), who researched the baby boomer generation to understand the needs of the modern elders for his company, Sabi,48 a venture he pursued that developed cool award-winning products for people needing canes and pill boxes but wanting an Apple-branded look and feel to their products. After exiting Sabi,49 but not quite having gotten over the entrepreneurial bug, he started researching another market he felt was encumbered by outdated, non-digital methodology, namely, home insurance.50 He created Hippo.51 With a background in consulting, Assaf knew the value of conducting deep industry research. In both cases, he pored over an incredible amount of research online and learned the market inside and out until he became a veritable expert in both.
For Yotam Cohen (Zell 9 – 2010) on his second venture, Daisy, this was exactly the strategy. The initial notion was developed as a scratching of his own itch of sorts. He had moved apartments and joined the building’s board to find that the property management company was working inefficiently and not effectively serving the needs of the tenants. Yotam decided to set out to disrupt the property management industry. He also knew he had a lot of catching up to do in an industry far removed from his first venture (Wibbitz), and in a space he knew nothing about beyond being a tenant himself.
He spoke with over 500 people in the property management space to understand his customer needs before he began understanding the problem he wanted to solve and developing the idea for a solution. He spoke to everyone, from residents to doormen and handymen, to entrepreneurs and investors from the industry.
“Forget the idea, focus on the market” said Yotam, who advises to focus on a market of interest, become an industry expert, and find the idea there. He knew something was wrong and ripe for disruption, but instead of focusing on an idea that would solve his particular needs, he broadened the scope and focused on understanding the value chain and inner workings of the industry first.
Yotam spent six months reading, learning, and talking to a broad range of industry experts and residents alike, until he felt that he had enough knowledge to define the business friction points he would aim to reduce. “You need to get to a point where experts from the industry cannot surprise you with a new competitor or a term you don't know,” said Yotam.
In the same vein, Liad Rubin, mentor of many years in the program and a Partner at Emerge Venture Capital, offers students the advice to choose a market of interest and ideate in that market in order to be able to capitalize on the market learnings and research, even as the idea morphs and changes, and sometimes evolves into something starkly different than what it started as.52
This is exactly what Ori Cohen, Neta Rozy, and Yonatan Hatzor of Parametrix53 did. [see the Parametrix Case Study] Inspired by a lecture by Shai Wininger, long-time mentor and speaker in the program and the co-founder and President/COO at Lemonade,54 about the innovation sweeping the insurance business, they chose that as the field to research and become experts in.55
Once they chose a space, they narrowed in and had to choose between existing insurance products ripe for innovation, or a completely blue ocean where no products yet existed. They chose the latter.56 They also made a pact to stick to this space, even if they needed to drastically pivot, in order to be able to exploit their hours of research and market understanding.
Zell Program we put an emphasis on exploring the problem before rushing to a solution. Professor Eyal Maoz,57 who has taught in the program since its fifth year, is a big proponent of focusing on the problem definition and need before fast forwarding to a solution, which can be a pitfall for first-time entrepreneurs. It follows from the idea of research first. In this particular strain of ideation, it's about noticing market developments and pain points in the course of research, and focusing there.
Hagar Rips (Zell 8 – 2009) did just that for Ladingo.58 Armed with research on the shipping industry and a hypothesis that there is inefficiency in cost management, she set out to interview as many people as she could on all ends of her ecosystem before formulating
a solution.
She tapped into her LinkedIn and Zell networks, went to trade-shows, cold-called, and leveraged every lead to get to the next. This helped her map the friction points in the industry, namely
These friction points helped her consider the range of possible solutions and come up with an out-of-the-box solution focusing on e-commerce. By focusing on the problem and letting it brew, thus becoming an expert in shipping but unconstrained by experience that might otherwise have prevented her from seeing beyond the present reality, she was able to formulate a solution. She then had to validate not only the need for her solution, but also the demand for it.
Experts can testify to a need, but design partners and strategic investors validate demand. In her case, that validation came in the form of an investment from ZIM,59 one of the world’s leading shipping companies. [See the Ladingo Case Study]
Often, one research direction yields unexpected results. For example, when the team behind Bizzabo was starting out in Zell 9 in the Fall of 2009, they were researching an idea and went to a trade show to learn more about the industry they were exploring. [Read more in the Bizzabo Case Study]
The program ethos very much drives learning by doing, so we encourage and even financially support having students attend trade shows and business conferences in the spaces they are researching. From my experience, there is no better place to get a broad outlook of the market environment, from the stalwart beacons to the up-and-coming newbies, including all of the ancillary stakeholders, from service providers to investors. At least in this case though, the learnings of the particular industry they were researching ended up being overshadowed by the need the team felt as attendees of the conference, and the problem opportunity it presented.
When Eran Ben Shushan, Boaz Katz, and Alon Alroy60 (Zell 9 – 2010) attended the said trade show, they found it hard to get oriented, prioritize their time, and know who was who. This eventually led to the first iteration of Bizzabo.
That iteration was about noticing a problem and trying to solve it. The mechanics of being open to evolving situations has continued as a theme for Bizzabo as the case study unfolds from pivot to pivot. Most dramatically, in the latest twist to align to a world going through a pandemic, Bizzabo proves the most fundamental part of the ideation process, which is that ideation never ends and that you must always ‘mind the gaps.’
Sometimes, paying attention to market lacunas even leads to a whole new venture idea only loosely connected to the original venture.
This was the origin story of Good Pharm.61 Adam Friedler (Zell 10 – 2011) was in the program when he came upon an idea that ‘scratched his own itch’, as the entrepreneurial adage goes. Living in Tel Aviv, he found a personal need for a solution to forgetting to bring sunscreen to the beach, and in any case needing only a one-off amount. He created a venture called MiniSun to offer a vending machine for single-serve portions of sunscreen to be placed at parks and beaches.
This venture gave him firsthand experience and visibility into how pricing, and more pointedly markups, work in the over-the-counter pharmaceuticals business. This, in turn, led him onto a new ideation path that eventually led to Good Pharm,[see the Good Pharm Case Study] which leveraged lower cost storage facilities, parallel import, lean management, and organic marketing to offer lower cost over-the-counter pharmaceutical products, including sunscreen.
Sometimes teams look to industry experts to help them develop an idea. Adam of MiniSun and Good Pharm worked on a completely different idea in the program called Segoma,62 along with Gil Goldstein, Tomer Salvi, and Litan Yahav (all Zell 10 – 2011). The Zell 10 venture sought to make the sale of diamonds more operationally efficient by creating high-resolution and multi-faceted digital images of the diamonds to mitigate having to send them from prospective buyer to buyer. Another way to ideate without domain expertise is to find someone who does have that expertise!
They got to the idea by interviewing Tomer’s brother-in-law who was in the diamond business. They relied on his deep knowledge and experience in the industry to understand the gap and formulate a solution called Segoma.63
While it can also be limiting, since sometimes experts are fixated on the limitations they know; If you know what to ask, they can be an invaluable source of holistic information on a market that you do not know.
We spend time in SIP teaching students how to assess a market, including mapping their competitors and then finding the industry experts to interview in order to help get a landscape view of the industry at hand. But we also make the case that industry experts may be confined to what they know and unable to see change coming, whether it be an industry revolution caused by new technology, or an evolutionary change over a protracted period of time.
While all ideas come from somewhere (standing on the shoulders of giants),64 there are ideas that revolutionize and herald tremendous technological change, and then there are ideas that are more evolutionary in nature.
Most ideas in the Zell realm tend to be of the latter. The students and alumni of the program have a social science background and often lack deep technology expertise. Moreover, the program pushes students to work on something real, so often innovation comes in the form of a new business model, distribution channel, or user interface, etc. somehow pieced together with existing off-the-shelf technology.
But even evolutions can be revolutionary: for example, Argus,65 founded in the program by Ofer Ben-Noon (Zell 13 – 2014), brought cyber security to the automotive industry,66 and Formlabs,67 founded by Nathan Linder and Eyal Toledano (Zell 2 – 2003), created a small consumer-grade 3D printer, etc.68
For Lumen, what started out as an evolutionary idea, taking laboratory grade breath analysis equipment and downsizing it into a handheld device, ultimately led down a technology creation path that was far more costly and time-consuming, but also far more innovative than the off-the-shelf sensor solution they had envisioned when they started out.
For most Zell Ventures founded in the program, the initial product or the version 1.0 is less about innovative proprietary technology, and more about piecing together existing solutions for a new use-case or market. Along the journey, with experience and time in the market, proprietary technology is developed.69
For Loox,70 evolution rather than revolution was an outright strategy, as Yoni notes in the Loox case study: “We always work towards evolution not revolution, we are evolving the product and adding additional types of content that merchants can collect from their customers (outside of their core reviews product) through more channels, and then use in more ways across their marketing touchpoints.”
Whatever the means of ideation, a good idea is only a good idea and is ultimately not very interesting if it’s not validated and pursued. Once during an interview with a candidate for Zell 9, the candidate told me that the idea he’d had and presented at a pitch event, the very one he decided not to pursue eventually, was launched and ended up raising millions of dollars. I asked him what he thought the difference was. He thought for a while and said he could not think of a thing. The product offering, the target market, and even the marketing strategy and distribution plan were all the same. I urged him to nevertheless consider what the difference was. He scratched his head, but finally got it. “They pursued the idea, and I didnt.”
In the venture creation journey, pursuing the idea is the holy grail and finding a product-market fit is the jackpot.
