All founders have an idea. Better founders have a vision. The best founders have a thesis. This post will teach you about the concept of ‘Original Thesis’. It will show how the three most valuable companies from Accelerace benefitted from having one. Finally, it will be apparent why the post features a chimpanzee.
There are no holes in the market.
In 1759, Adam Smith coined a term that became a pillar of economic understanding. Smith understood the following: In a free market economy, people will find ways to serve the needs of others. He called it the invisible hand.
An economy has network effects, meaning that the strength of an economy is related to the number of participants. Today, infinitely more people are participating than in the days of Adam Smith. Thus, the invisible hand is equally more forceful.
Now, the invisible hand is sweeping with unprecedented force. If people taste bubble tea in Kuala Lumpur, a few weeks later, bubble tea pops up in Copenhagen. If people get medicine delivered by bike in Berlin, next month, the same is offered in Buenos Aires.
Today, the needs of people are satisfied before you can write a business plan. I suspect this makes you slightly uncomfortable. It means; there are “no holes in the market”.
Startup founders who think they have spotted a large unmet need are simply deluding themselves. And if there is an unmet need, it is extremely short-lived because hordes of hopeful entrepreneurs are already on it. Thus, the “opportunity” is not compelling. Not to a VC anyway.
After having accelerated 700 startups, we see the most successful companies did not have a large market. In fact, many did not have a market at all. Instead, these founders had something else. Something much more potent. An Original Thesis.
The difference between Vision and Thesis.
Arguably, the three most successful companies from Accelerace are Trustpilot, Templafy and Labster. None of these founders thought they had spotted a “hole in the market”.
Instead, Peter Holten Mühlmann, founder of Trustpilot, had an Original Thesis. In 2007, he surmised that in the (near) future, the internet would enable anyone could set up a webshop. Consequently, consumers would be flooded with the availability of new online shops. Peter further speculated that because web shops would be easy to set up, lots of fraudulent shops would appear. Peter believed that consumers would find it hard to navigate between good and bad shops. Consequently, they would need Trustpilot. A tool that would warn people about bad shops.
When Peter pitched Trustpilot, he did not claim a big market. The facts were clear. Less than 2% of commerce was done online. In fact, the market was non-existing. Today, Trustpilot is valued at 1,3 billion dollars and traded on the London stock exchange.
If you had tried to identify the “hole in the market” for Trustpilot, you would come up short. No amount of market research, customer interview, focus groups, or Garter Reports would have identified the market for Trustpilot. Why? Because at the time, there was no problem.
Peter Holten Mühlmann understood this. His claim was that this problem would arise in the (near) future. But more importantly, he could articulate why. And as we will learn later, this defines an Original Thesis.
When Christian and Henrik co-founded Templafy during our acceleration program in 2013, they too were seeing into the future. Below is a slide from their first pitch deck.
(slide from the Templafy 2013 seed round pitch deck above)
The slide paints a picture of a future when corporate employees are working in cloud-based programs and on mobile devices. This was not yet a reality, but the founders surmised that this future was nigh. They knew that some of the most innovative corporates were already planning to migrate to cloud versions of office programs. They also speculated that Microsoft and Google would not offer advanced template control when that happened. How did they know this? Because the founders were leading consultants within the field of template management.
In other words, Christian and Henrik had an Original Thesis. Their thesis was that in the (near) future corporates would migrate to cloud-based programs and mobile devices. Furthermore, the leading providers would not offer advanced template management, and that would create a need for a separate tool. In addition, they surmised that Microsoft and Google would endorse Templafy because Templafy would be an important enabler for corporates to migrate to the cloud.
Christian and Henrik turned out to be correct. But again, if you had attempted to validate the market for Templafy in 2013, you would have failed. There was no market. Nor did the founders claim so. Instead, they argued the validity of their thesis. And because it was based on Original Insight, it was an Original Thesis.
The third example is Labster. In 2012, the Founder Mads Tvillinggaard Bonde surmised that in the (near) future, STEM degrees would increase in popularity due to scientific and technology-driven innovation. This would course the problem that the current university campuses would have little laboratory space for the growing number of STEM students.
Simultaneously, advances in computing power, game engines, GPUs would make virtual labs good enough to replace physical labs. It would take many years before his thesis would be proven correct. But it ultimately did. And in early 2021, almost ten years after his Original Thesis was conceived, Andreessen Horowitz invested in Labster.
The truth is none of these founders claimed to have spotted a “hole in the market”, or a “business opportunity”. Instead, they had an Original Thesis. And so must you. But at this point you might wonder: how do you qualify a thesis?
Describing the future in detail
Anyone can make guesses about the future. A lot of people say that China will replace the US as the global leader. But few people can tell you why they think so. And even fewer people can state original arguments.
An Original Thesis has two requirements. It is must Original. And it must be a Thesis.
For something to qualify as a Thesis, it must include a time perspective. Most people can agree that one day, we will live in Virtual Reality. But that is not a Thesis. That is a vision.
A Thesis about Virtual Reality must include when it will happen. Furthermore, it must identify the drivers behind the development. A Thesis would sound more like 5G will enable high enough bandwidth to stream 8K content to VR headsets. 8K resolutions will remove the grainy effect in VR, and streaming will make the headsets light enough to be comfortable for long periods of time. Tactile suits will develop due to advances in smart materials and will make the VR experience fully immersive. At the same time, the largest gaming studios will focus on VR releases due to premium price points on VR versions. This cocktail will take VR from a fun experience, into an alternate reality. 8K resolutions will be coming within three years, 5G and smart suits within two years.
Put differently, something is a Thesis when you can describe your vision in detail and understand the drivers that will make your vision come true.
However, if you took my (mock) thesis from above and put it into a pitch deck, it would lack Originality. It is a thesis, but it would not be Original. Why does originality matter? Because ideally, you are the only person with this thesis. Because if you are non-consensus, then you will be free of competition.
If Charles Darwin had been one out of thousand people who had the thesis about natural evolution, the Origin of Species would be a lot less special.
More importantly, originality gives you conviction. The brutality of startup journeys tests your conviction to the fullest. During hard times, conviction makes you persevere. And conviction makes you speak with enough passion to rally your troops.
It took more than ten years before the Original Thesis of Charles Darwin was accepted by the scientific community. Ten years of mockery. But never doubt.
Ten years is also the time it takes most startups to reach maturity. Perhaps not with mockery. But certainly, with doubt. That unless you have an Original Thesis. I know that our most successful founders would agree.