7/5/22 Week 2

How to get and evaluate startup ideas

Slides

• Mistakes:
  • not solving a real problem
    • solution in search of a problem
  • getting stuck on a tarpit idea
    • “tarpit ideas” common ideas that have been around forever, but are difficult to solve
    • widespread problem that lots of founders encounter
    • seems like it could be easily solved with a startup
    • there’s s structural reason why it’s actually really difficult to solve
      • example: app to make causal plans with your friends
    • if you must, research past attempts and find out why they failed, do you have a novel solution to solve why it’s structurally hard
  • Jumping into an idea without evaluating if it’s a good one
  • Waiting for the perfect idea

“Think of your idea as a ‘good starting point.’”

• Evaluating startup ideas:
  • Do you have founder/market fit?
    • are you the right team to do this?
    • “Instead of picking a good idea… pick a good idea for your team.”
  • How big is the market for this idea? How big could it be in the future?
  • do you have entrenched competition? do you ave a new insight?
  • did this only recently become possible or necessary?
  • are there good proxies for this business?
    • proxies: successful companies that do something similar, but not exactly the same thing
  • Is this an idea you’d want to work on for years?
  • can your solution scale?
    • software? yes. agency or service business? no.
• Idea Spaces
  • What is an idea space? a class of closely related startup ideas
  • examples: software for hospitals, food delivery services
• Hard to get started
  • read Schlep Blindness by Paul Graham
• “boring” ideas have a much higher hit rate than “fun” ideas.
  • examples: Gusto
• Existing competitors is not a bad thing

• Other recipes for coming up with startup ideas:
  • think of every job you’ve had … what problems did you come across? what did you learn that other people don’t know?
    • compared to other likely founders what are problems or opportunities you’ve been in a special position to see?
  • look for things that have changed in the world recently
  • go talk to people and ask them about problems they have
  • bonus: find a cofounder that already has an idea