Before pursuing a business idea, run it through a simple filter. Ask: 1) Is AI already replacing this? 2) Is the industry shrinking? 3) Is it easier to lose money than to make it? Answering 'yes' to any of these questions is a strong signal to abandon the idea and find a different vehicle for success.
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Some business ideas, like a "what's on campus" app or a universal group organizing tool, seem obvious yet consistently fail. These are "mirage opportunities" where a fundamental assumption about user behavior is flawed. If many have tried and failed, it's a signal to stay away.
EARLI's CEO uses a counter-intuitive mental filter for new ventures: he actively tries to forget them. He believes that only the truly compelling, outstanding ideas are the ones that are impossible to forget and keep re-emerging in his mind. This passive persistence test helps separate fleeting interests from foundational concepts.
Most companies are not Vanguard tech firms. Rather than pursuing speculative, high-failure-rate AI projects, small and medium-sized businesses will see a faster and more reliable ROI by using existing AI tools to automate tedious, routine internal processes.
A powerful filter for any potential acquisition is asking: 'If this were the last business we could ever buy, would we still want to own it?' This simple question forces a long-term, operational mindset and helps avoid deals that rely on future exits or financial engineering.
The best business opportunities often appear foolish to the majority at first. If an idea sounds good to everyone, it's likely a competitive space. Starting a print magazine in 2024 sounds dumb, but the underlying desire for high-quality, scarce content makes it a powerful, contrarian bet.
![Patrick O’Shaughnessy - Creating on Principle - [Invest Like the Best, EP.455] thumbnail](https://megaphone.imgix.net/podcasts/816fce6a-f5b6-11f0-9c9c-33831009577b/image/1f5ec11a816e37bc484e46cbf9b3421d.jpg?ixlib=rails-4.3.1&max-w=3000&max-h=3000&fit=crop&auto=format,compress)
Spend significant time debating and mapping out a project's feasibility with a trusted group before starting to build. This internal stress-test is crucial for de-risking massive undertakings by ensuring there's a clear, plausible path to the end goal.
AI can generate hundreds of statistically novel ideas in seconds, but they lack context and feasibility. The bottleneck isn't a lack of ideas, but a lack of *good* ideas. Humans excel at filtering this volume through the lens of experience and strategic value, steering raw output toward a genuinely useful solution.
The ease of AI development tools tempts founders to build products immediately. A more effective approach is to first use AI for deep market research and GTM strategy validation. This prevents wasting time building a product that nobody wants.
Use gross margin as a quick filter for a new business idea. A low margin often indicates a lack of differentiation or true value-add. If a customer won't pay a premium, it suggests they have alternatives and you're competing in a commoditized space, facing inevitable margin compression.
Avoid trendy, saturated markets. Instead, focus on stable, 'boring' industries that are slow to innovate and still rely on manual processes. These markets are ripe for disruption, have less competition, and typically offer higher margins for AI solutions.