How to Get and Evaluate Startup Ideas | Startup School

How to Get and Evaluate Startup Ideas | Startup School

Finding a promising idea (00:00:00)

  • Emphasizes the importance of starting with a promising idea for a startup’s success
  • The talk provides conceptual tools to evaluate startup ideas similar to the approach taken by Y Combinator (YC)
  • Acknowledges that while no one can predict with certainty which ideas will succeed, better initial ideas have higher chances

Where does this advice come from? (00:00:51)

  • The advice is based on analysis of the top 100 YC companies by valuation and their idea origins
  • It is also influenced by an essay by Paul Graham, experiences with pivoting YC companies, and reading applications of rejected YC startups
  • Aims to help founders avoid common mistakes and provides insights into recognizing good ideas and the process of generating them

4 most common mistakes (00:01:44)

  • Building something that doesn’t solve a real problem for users is a top mistake, akin to a solution in search of a problem (CISP)
  • Falling in love with a problem is recommended, rather than being fascinated by a technology looking for an application
  • Avoid overly abstract societal issues and focus on specific, tractable problems instead
  • 'Tar pit' ideas are common startup ideas that seem plausible but have structural reasons for failure, and thus they trap founders
  • Founders often fall for tar pit ideas because they encounter the problem frequently and believe the solution appears simple
  • Advises researching past attempts, understanding the structural challenges, and not insisting on pursuing "the perfect startup idea"
  • Suggests aiming for a "good starting point" as ideas will likely evolve and there is no perfect initial concept

10 key questions to ask about any startup idea (00:06:29)

  • Determine if you have founder-market fit; assess if your team is suited for the idea, like PlanGrid founders.
  • Gauge the market size and potential; consider rapidly growing small markets, similar to Coinbase in 2012.
  • Evaluate the problem's severity; a good problem has no existing solutions, like startups needing credit cards before Brex.
  • Analyze the competition; positive competition suggests a valid market, but a new insight is often needed.
  • Confirm personal desire and knowledge of others needing the solution; avoid ventures no one wants.
  • Identify recent changes in the world; consider new technologies or regulatory changes, such as Checker's background check API.
  • Utilize proxies; large companies in related fields, like Rappi with Doordash as a proxy in Latin America.
  • Consider your willingness to commit to the idea long-term; passion may develop as the business grows successful.
  • Question business scalability; Software scales easily, but services or labor-intensive models may not.
  • Choose a good idea space; an adaptable field can lead to successful pivots if the initial idea fails, similar to 5tran's journey.

3 things that make your startup idea good (00:14:40)

  • Difficult startup ideas can deter others, leaving opportunities like Stripe did with credit card integration.
  • Ideas in unglamorous, boring spaces, such as Gusto's payroll software, may have a high hit rate due to lack of competition.
  • Existing competitors may indicate a valid market that hasn't been fully served, as Dropbox showed by improving UI for cloud storage.

How to come up with startup ideas (00:19:42)

  • Good startup ideas are often found organically, with 70% of YC top companies doing so.
  • To generate good startup ideas, become an expert in a valuable field, work at a startup, or build interesting projects even if not intended as businesses, such as how Replicon began.

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