November 2012
The way to get startup ideas is not to try to think of startup
ideas. It's to look for problems, preferably problems you have
yourself.
The very best startup ideas tend to have three things in common:
they're something the founders themselves want, that they themselves
can build, and that few others realize are worth doing. Microsoft,
Apple, Yahoo, Google, and Facebook all began this way.
Problems
Why is it so important to work on a problem you have? Among other
things, it ensures the problem really exists. It sounds obvious
to say you should only work on problems that exist. And yet by far
the most common mistake startups make is to solve problems no one
has.
I made it myself. In 1995 I started a company to put art galleries
online. But galleries didn't want to be online. It's not how the
art business works. So why did I spend 6 months working on this
stupid idea? Because I didn't pay attention to users. I invented
a model of the world that didn't correspond to reality, and worked
from that. I didn't notice my model was wrong until I tried
to convince users to pay for what we'd built. Even then I took
embarrassingly long to catch on. I was attached to my model of the
world, and I'd spent a lot of time on the software. They had to
want it!
Why do so many founders build things no one wants? Because they
begin by trying to think of startup ideas. That m.o. is doubly
dangerous: it doesn't merely yield few good ideas; it yields bad
ideas that sound plausible enough to fool you into working on them.
At YC we call these "made-up" or "sitcom" startup ideas. Imagine
one of the characters on a TV show was starting a startup. The
writers would have to invent something for it to do. But coming
up with good startup ideas is hard. It's not something you can do
for the asking. So (unless they got amazingly lucky) the writers
would come up with an idea that sounded plausible, but was actually
bad.
For example, a social network for pet owners. It doesn't sound
obviously mistaken. Millions of people have pets. Often they care
a lot about their pets and spend a lot of money on them. Surely
many of these people would like a site where they could talk to
other pet owners. Not all of them perhaps, but if just 2 or 3
percent were regular visitors, you could have millions of users.
You could serve them targeted offers, and maybe charge for premium
features.
[1]
The danger of an idea like this is that when you run it by your
friends with pets, they don't say "I would never use this." They
say "Yeah, maybe I could see using something like that." Even when
the startup launches, it will sound plausible to a lot of people.
They don't want to use it themselves, at least not right now, but
they could imagine other people wanting it. Sum that reaction
across the entire population, and you have zero users.
[2]
Well
When a startup launches, there have to be at least some users who
really need what they're making—not just people who could see
themselves using it one day, but who want it urgently. Usually
this initial group of users is small, for the simple reason that
if there were something that large numbers of people urgently needed
and that could be built with the amount of effort a startup usually
puts into a version one, it would probably already exist. Which
means you have to compromise on one dimension: you can either build
something a large number of people want a small amount, or something
a small number of people want a large amount. Choose the latter.
Not all ideas of that type are good startup ideas, but nearly all
good startup ideas are of that type.
Imagine a graph whose x axis represents all the people who might
want what you're making and whose y axis represents how much they
want it. If you invert the scale on the y axis, you can envision
companies as holes. Google is an immense crater: hundreds of
millions of people use it, and they need it a lot. A startup just
starting out can't expect to excavate that much volume. So you
have two choices about the shape of hole you start with. You can
either dig a hole that's broad but shallow, or one that's narrow
and deep, like a well.
Made-up startup ideas are usually of the first type. Lots of people
are mildly interested in a social network for pet owners.
Nearly all good startup ideas are of the second type. Microsoft
was a well when they made Altair Basic. There were only a couple
thousand Altair owners, but without this software they were programming
in machine language. Thirty years later Facebook had the same
shape. Their first site was exclusively for Harvard students, of
which there are only a few thousand, but those few thousand users
wanted it a lot.
When you have an idea for a startup, ask yourself: who wants this
right now? Who wants this so much that they'll use it even when
it's a crappy version one made by a two-person startup they've never
heard of? If you can't answer that, the idea is probably bad.
[3]
You don't need the narrowness of the well per se. It's depth you
need; you get narrowness as a byproduct of optimizing for depth
(and speed). But you almost always do get it. In practice the
link between depth and narrowness is so strong that it's a good
sign when you know that an idea will appeal strongly to a specific
group or type of user.
But while demand shaped like a well is almost a necessary condition
for a good startup idea, it's not a sufficient one. If Mark
Zuckerberg had built something that could only ever have appealed
to Harvard students, it would not have been a good startup idea.
Facebook was a good idea because it started with a small market
there was a fast path out of. Colleges are similar enough that if
you build a facebook that works at Harvard, it will work at any
college. So you spread rapidly through all the colleges. Once you
have all the college students, you get everyone else simply by
letting them in.
Similarly for Microsoft: Basic for the Altair; Basic for other
machines; other languages besides Basic; operating systems;
applications; IPO.
Self
How do you tell whether there's a path out of an idea? How do you
tell whether something is the germ of a giant company, or just a
niche product? Often you can't. The founders of Airbnb didn't
realize at first how big a market they were tapping. Initially
they had a much narrower idea. They were going to let hosts rent
out space on their floors during conventions. They didn't foresee
the expansion of this idea; it forced itself upon them gradually.
All they knew at first is that they were onto something. That's
probably as much as Bill Gates or Mark Zuckerberg knew at first.
Occasionally it's obvious from the beginning when there's a path
out of the initial niche. And sometimes I can see a path that's
not immediately obvious; that's one of our specialties at YC. But
there are limits to how well this can be done, no matter how much
experience you have. The most important thing to understand about
paths out of the initial idea is the meta-fact that these are hard
to see.
So if you can't predict whether there's a path out of an idea, how
do you choose between ideas? The truth is disappointing but
interesting: if you're the right sort of person, you have the right
sort of hunches. If you're at the leading edge of a field that's
changing fast, when you have a hunch that something is worth doing,
you're more likely to be right.
In Zen and the Art of Motorcycle Maintenance, Robert Pirsig says:
You want to know how to paint a perfect painting? It's easy. Make
yourself perfect and then just paint naturally.
I've wondered about that passage since I read it in high school.
I'm not sure how useful his advice is for painting specifically,
but it fits this situation well. Empirically, the way to have good
startup ideas is to become the sort of person who has them.
Being at the leading edge of a field doesn't mean you have to be
one of the people pushing it forward. You can also be at the leading
edge as a user. It was not so much because he was a programmer
that Facebook seemed a good idea to Mark Zuckerberg as because he
used computers so much. If you'd asked most 40 year olds in 2004
whether they'd like to publish their lives semi-publicly on the
Internet, they'd have been horrified at the idea. But Mark already
lived online; to him it seemed natural.
Paul Buchheit says that people at the leading edge of a rapidly
changing field "live in the future." Combine that with Pirsig and
you get:
Live in the future, then build what's missing.
That describes the way many if not most of the biggest startups got
started. Neither Apple nor Yahoo nor Google nor Facebook were even
supposed to be companies at first. They grew out of things their
founders built because there seemed a gap in the world.
If you look at the way successful founders have had their ideas,
it's generally the result of some external stimulus hitting a
prepared mind. Bill Gates and Paul Allen hear about the Altair and
think "I bet we could write a Basic interpreter for it." Drew Houston
realizes he's forgotten his USB stick and thinks "I really need to
make my files live online." Lots of people heard about the Altair.
Lots forgot USB sticks. The reason those stimuli caused those
founders to start companies was that their experiences had prepared
them to notice the opportunities they represented.
The verb you want to be using with respect to startup ideas is not
"think up" but "notice." At YC we call ideas that grow naturally
out of the founders' own experiences "organic" startup ideas. The
most successful startups almost all begin this way.
That may not have been what you wanted to hear. You may have
expected recipes for coming up with startup ideas, and instead I'm
telling you that the key is to have a mind that's prepared in the
right way. But disappointing though it may be, this is the truth.
And it is a recipe of a sort, just one that in the worst case takes
a year rather than a weekend.
If you're not at the leading edge of some rapidly changing field,
you can get to one. For example, anyone reasonably smart can
probably get to an edge of programming (e.g. building mobile apps)
in a year. Since a successful startup will consume at least 3-5
years of your life, a year's preparation would be a reasonable
investment. Especially if you're also looking for a cofounder.
[4]
You don't have to learn programming to be at the leading edge of a
domain that's changing fast. Other domains change fast. But while
learning to hack is not necessary, it is for the forseeable future
sufficient. As Marc Andreessen put it, software is eating the world,
and this trend has decades left to run.
Knowing how to hack also means that when you have ideas, you'll be
able to implement them. That's not absolutely necessary (Jeff Bezos
couldn't) but it's an advantage. It's a big advantage, when you're
considering an idea like putting a college facebook online, if
instead of merely thinking "That's an interesting idea," you can
think instead "That's an interesting idea. I'll try building an
initial version tonight." It's even better when you're both a
programmer and the target user, because then the cycle of generating
new versions and testing them on users can happen inside one head.
Noticing
Once you're living in the future in some respect, the way to notice
startup ideas is to look for things that seem to be missing. If
you're really at the leading edge of a rapidly changing field, there
will be things that are obviously missing. What won't be obvious
is that they're startup ideas. So if you want to find startup
ideas, don't merely turn on the filter "What's missing?" Also turn
off every other filter, particularly "Could this be a big company?"
There's plenty of time to apply that test later. But if you're
thinking about that initially, it may not only filter out lots
of good ideas, but also cause you to focus on bad ones.
Most things that are missing will take some time to see. You almost
have to trick yourself into seeing the ideas around you.
But you know the ideas are out there. This is not one of those
problems where there might not be an answer. It's impossibly
unlikely that this is the exact moment when technological progress
stops. You can be sure people are going to build things in the
next few years that will make you think "What did I do before x?"
And when these problems get solved, they will probably seem flamingly
obvious in retrospect. What you need to do is turn off the filters
that usually prevent you from seeing them. The most powerful is
simply taking the current state of the world for granted. Even the
most radically open-minded of us mostly do that. You couldn't get
from your bed to the front door if you stopped to question everything.
But if you're looking for startup ideas you can sacrifice some of
the efficiency of taking the status quo for granted and start to
question things. Why is your inbox overflowing? Because you get
a lot of email, or because it's hard to get email out of your inbox?
Why do you get so much email? What problems are people trying to
solve by sending you email? Are there better ways to solve them?
And why is it hard to get emails out of your inbox? Why do you
keep emails around after you've read them? Is an inbox the optimal
tool for that?
Pay particular attention to things that chafe you. The advantage
of taking the status quo for granted is not just that it makes life
(locally) more efficient, but also that it makes life more tolerable.
If you knew about all the things we'll get in the next 50 years but
don't have yet, you'd find present day life pretty constraining,
just as someone from the present would if they were sent back 50
years in a time machine. When something annoys you, it could be
because you're living in the future.
When you find the right sort of problem, you should probably be
able to describe it as obvious, at least to you. When we started
Viaweb, all the online stores were built by hand, by web designers
making individual HTML pages. It was obvious to us as programmers
that these sites would have to be generated by software.
[5]
Which means, strangely enough, that coming up with startup ideas
is a question of seeing the obvious. That suggests how weird this
process is: you're trying to see things that are obvious, and yet
that you hadn't seen.
Since what you need to do here is loosen up your own mind, it may
be best not to make too much of a direct frontal attack on the
problem—i.e. to sit down and try to think of ideas. The best
plan may be just to keep a background process running, looking for
things that seem to be missing. Work on hard problems, driven
mainly by curiosity, but have a second self watching over your
shoulder, taking note of gaps and anomalies.
[6]
Give yourself some time. You have a lot of control over the rate
at which you turn yours into a prepared mind, but you have less
control over the stimuli that spark ideas when they hit it. If
Bill Gates and Paul Allen had constrained themselves to come up
with a startup idea in one month, what if they'd chosen a month
before the Altair appeared? They probably would have worked on a
less promising idea. Drew Houston did work on a less promising
idea before Dropbox: an SAT prep startup. But Dropbox was a much
better idea, both in the absolute sense and also as a match for his
skills.
[7]
A good way to trick yourself into noticing ideas is to work on
projects that seem like they'd be cool. If you do that, you'll
naturally tend to build things that are missing. It wouldn't seem
as interesting to build something that already existed.
Just as trying to think up startup ideas tends to produce bad ones,
working on things that could be dismissed as "toys" often produces
good ones. When something is described as a toy, that means it has
everything an idea needs except being important. It's cool; users
love it; it just doesn't matter. But if you're living in the future
and you build something cool that users love, it may matter more
than outsiders think. Microcomputers seemed like toys when Apple
and Microsoft started working on them. I'm old enough to remember
that era; the usual term for people with their own microcomputers
was "hobbyists." BackRub seemed like an inconsequential science
project. The Facebook was just a way for undergrads to stalk one
another.
At YC we're excited when we meet startups working on things that
we could imagine know-it-alls on forums dismissing as toys. To us
that's positive evidence an idea is good.
If you can afford to take a long view (and arguably you can't afford
not to), you can turn "Live in the future and build what's missing"
into something even better:
Live in the future and build what seems interesting.
School
That's what I'd advise college students to do, rather than trying
to learn about "entrepreneurship." "Entrepreneurship" is something
you learn best by doing it. The examples of the most successful
founders make that clear. What you should be spending your time
on in college is ratcheting yourself into the future. College is
an incomparable opportunity to do that. What a waste to sacrifice
an opportunity to solve the hard part of starting a startup—becoming
the sort of person who can have organic startup ideas—by
spending time learning about the easy part. Especially since
you won't even really learn about it, any more than you'd learn
about sex in a class. All you'll learn is the words for things.
The clash of domains is a particularly fruitful source of ideas.
If you know a lot about programming and you start learning about
some other field, you'll probably see problems that software could
solve. In fact, you're doubly likely to find good problems in
another domain: (a) the inhabitants of that domain are not as likely
as software people to have already solved their problems with
software, and (b) since you come into the new domain totally ignorant,
you don't even know what the status quo is to take it for granted.
So if you're a CS major and you want to start a startup, instead
of taking a class on entrepreneurship you're better off taking a
class on, say, genetics. Or better still, go work for a biotech
company. CS majors normally get summer jobs at computer hardware
or software companies. But if you want to find startup ideas, you
might do better to get a summer job in some unrelated field.
[8]
Or don't take any extra classes, and just build things. It's no
coincidence that Microsoft and Facebook both got started in January.
At Harvard that is (or was) Reading Period, when students have no
classes to attend because they're supposed to be studying for finals.
[9]
But don't feel like you have to build things that will become startups. That's
premature optimization. Just build things. Preferably with other
students. It's not just the classes that make a university such a
good place to crank oneself into the future. You're also surrounded
by other people trying to do the same thing. If you work together
with them on projects, you'll end up producing not just organic
ideas, but organic ideas with organic founding teams—and that,
empirically, is the best combination.
Beware of research. If an undergrad writes something all his friends
start using, it's quite likely to represent a good startup idea.
Whereas a PhD dissertation is extremely unlikely to. For some
reason, the more a project has to count as research, the less likely
it is to be something that could be turned into a startup.
[10]
I think the reason is that the subset of ideas that count as research
is so narrow that it's unlikely that a project that satisfied that
constraint would also satisfy the orthogonal constraint of solving
users' problems. Whereas when students (or professors) build
something as a side-project, they automatically gravitate toward
solving users' problems—perhaps even with an additional energy
that comes from being freed from the constraints of research.
Competition
Because a good idea should seem obvious, when you have one you'll
tend to feel that you're late. Don't let that deter you. Worrying
that you're late is one of the signs of a good idea. Ten minutes
of searching the web will usually settle the question. Even if you
find someone else working on the same thing, you're probably not
too late. It's exceptionally rare for startups to be killed by
competitors—so rare that you can almost discount the possibility.
So unless you discover a competitor with the sort of lock-in that
would prevent users from choosing you, don't discard the idea.
If you're uncertain, ask users. The question of whether you're too
late is subsumed by the question of whether anyone urgently needs
what you plan to make. If you have something that no competitor
does and that some subset of users urgently need, you have a
beachhead.
[11]
The question then is whether that beachhead is big enough. Or more
importantly, who's in it: if the beachhead consists of people doing
something lots more people will be doing in the future, then it's
probably big enough no matter how small it is. For example, if
you're building something differentiated from competitors by the
fact that it works on phones, but it only works on the newest phones,
that's probably a big enough beachhead.
Err on the side of doing things where you'll face competitors.
Inexperienced founders usually give competitors more credit than
they deserve. Whether you succeed depends far more on you than on
your competitors. So better a good idea with competitors than a
bad one without.
You don't need to worry about entering a "crowded market" so long
as you have a thesis about what everyone else in it is overlooking.
In fact that's a very promising starting point. Google was that
type of idea. Your thesis has to be more precise than "we're going
to make an x that doesn't suck" though. You have to be able to
phrase it in terms of something the incumbents are overlooking.
Best of all is when you can say that they didn't have the courage
of their convictions, and that your plan is what they'd have done
if they'd followed through on their own insights. Google was that
type of idea too. The search engines that preceded them shied away
from the most radical implications of what they were doing—particularly
that the better a job they did, the faster users would
leave.
A crowded market is actually a good sign, because it means both
that there's demand and that none of the existing solutions are
good enough. A startup can't hope to enter a market that's obviously
big and yet in which they have no competitors. So any startup that
succeeds is either going to be entering a market with existing
competitors, but armed with some secret weapon that will get them
all the users (like Google), or entering a market that looks small
but which will turn out to be big (like Microsoft).
[12]
Filters
There are two more filters you'll need to turn off if you want to
notice startup ideas: the unsexy filter and the schlep filter.
Most programmers wish they could start a startup by just writing
some brilliant code, pushing it to a server, and having users pay
them lots of money. They'd prefer not to deal with tedious problems
or get involved in messy ways with the real world. Which is a
reasonable preference, because such things slow you down. But this
preference is so widespread that the space of convenient startup
ideas has been stripped pretty clean. If you let your mind wander
a few blocks down the street to the messy, tedious ideas, you'll
find valuable ones just sitting there waiting to be implemented.
The schlep filter is so dangerous that I wrote a separate essay
about the condition it induces, which I called
schlep blindness.
I gave Stripe as an example of a startup that benefited from turning
off this filter, and a pretty striking example it is. Thousands
of programmers were in a position to see this idea; thousands of
programmers knew how painful it was to process payments before
Stripe. But when they looked for startup ideas they didn't see
this one, because unconsciously they shrank from having to deal
with payments. And dealing with payments is a schlep for Stripe,
but not an intolerable one. In fact they might have had net less
pain; because the fear of dealing with payments kept most people
away from this idea, Stripe has had comparatively smooth sailing
in other areas that are sometimes painful, like user acquisition.
They didn't have to try very hard to make themselves heard by users,
because users were desperately waiting for what they were building.
The unsexy filter is similar to the schlep filter, except it keeps
you from working on problems you despise rather than ones you fear.
We overcame this one to work on Viaweb. There were interesting
things about the architecture of our software, but we weren't
interested in ecommerce per se. We could see the problem was one
that needed to be solved though.
Turning off the schlep filter is more important than turning off
the unsexy filter, because the schlep filter is more likely to be
an illusion. And even to the degree it isn't, it's a worse form
of self-indulgence. Starting a successful startup is going to be
fairly laborious no matter what. Even if the product doesn't entail
a lot of schleps, you'll still have plenty dealing with investors,
hiring and firing people, and so on. So if there's some idea you
think would be cool but you're kept away from by fear of the schleps
involved, don't worry: any sufficiently good idea will have as many.
The unsexy filter, while still a source of error, is not as entirely
useless as the schlep filter. If you're at the leading edge of a
field that's changing rapidly, your ideas about what's sexy will
be somewhat correlated with what's valuable in practice. Particularly
as you get older and more experienced. Plus if you find an idea
sexy, you'll work on it more enthusiastically.
[13]
Recipes
While the best way to discover startup ideas is to become the sort
of person who has them and then build whatever interests you,
sometimes you don't have that luxury. Sometimes you need an idea
now. For example, if you're working on a startup and your initial
idea turns out to be bad.
For the rest of this essay I'll talk about tricks for coming up
with startup ideas on demand. Although empirically you're better
off using the organic strategy, you could succeed this way. You
just have to be more disciplined. When you use the organic method,
you don't even notice an idea unless it's evidence that something
is truly missing. But when you make a conscious effort to think
of startup ideas, you have to replace this natural constraint with
self-discipline. You'll see a lot more ideas, most of them bad,
so you need to be able to filter them.
One of the biggest dangers of not using the organic method is the
example of the organic method. Organic ideas feel like inspirations.
There are a lot of stories about successful startups that began
when the founders had what seemed a crazy idea but "just knew" it
was promising. When you feel that about an idea you've had while
trying to come up with startup ideas, you're probably mistaken.
When searching for ideas, look in areas where you have some expertise.
If you're a database expert, don't build a chat app for teenagers
(unless you're also a teenager). Maybe it's a good idea, but you
can't trust your judgment about that, so ignore it. There have to
be other ideas that involve databases, and whose quality you can
judge. Do you find it hard to come up with good ideas involving
databases? That's because your expertise raises your standards.
Your ideas about chat apps are just as bad, but you're giving
yourself a Dunning-Kruger pass in that domain.
The place to start looking for ideas is things you need. There
must be things you need.
[14]
One good trick is to ask yourself whether in your previous job you
ever found yourself saying "Why doesn't someone make x? If someone
made x we'd buy it in a second." If you can think of any x people
said that about, you probably have an idea. You know there's demand,
and people don't say that about things that are impossible to build.
More generally, try asking yourself whether there's something unusual
about you that makes your needs different from most other people's.
You're probably not the only one. It's especially good if you're
different in a way people will increasingly be.
If you're changing ideas, one unusual thing about you is the idea
you'd previously been working on. Did you discover any needs while
working on it? Several well-known startups began this way. Hotmail
began as something its founders wrote to talk about their previous
startup idea while they were working at their day jobs.
[15]
A particularly promising way to be unusual is to be young. Some
of the most valuable new ideas take root first among people in their
teens and early twenties. And while young founders are at a
disadvantage in some respects, they're the only ones who really
understand their peers. It would have been very hard for someone
who wasn't a college student to start Facebook. So if you're a
young founder (under 23 say), are there things you and your friends
would like to do that current technology won't let you?
The next best thing to an unmet need of your own is an unmet need
of someone else. Try talking to everyone you can about the gaps
they find in the world. What's missing? What would they like to
do that they can't? What's tedious or annoying, particularly in
their work? Let the conversation get general; don't be trying too
hard to find startup ideas. You're just looking for something to
spark a thought. Maybe you'll notice a problem they didn't consciously
realize they had, because you know how to solve it.
When you find an unmet need that isn't your own, it may be somewhat
blurry at first. The person who needs something may not know exactly
what they need. In that case I often recommend that founders act
like consultants—that they do what they'd do if they'd been
retained to solve the problems of this one user. People's problems
are similar enough that nearly all the code you write this way will
be reusable, and whatever isn't will be a small price to start out
certain that you've reached the bottom of the well.
[16]
One way to ensure you do a good job solving other people's problems
is to make them your own. When Rajat Suri of E la Carte decided
to write software for restaurants, he got a job as a waiter to learn
how restaurants worked. That may seem like taking things to extremes,
but startups are extreme. We love it when founders do such things.
In fact, one strategy I recommend to people who need a new idea is
not merely to turn off their schlep and unsexy filters, but to seek
out ideas that are unsexy or involve schleps. Don't try to start
Twitter. Those ideas are so rare that you can't find them by looking
for them. Make something unsexy that people will pay you for.
A good trick for bypassing the schlep and to some extent the unsexy
filter is to ask what you wish someone else would build, so that
you could use it. What would you pay for right now?
Since startups often garbage-collect broken companies and industries,
it can be a good trick to look for those that are dying, or deserve
to, and try to imagine what kind of company would profit from their
demise. For example, journalism is in free fall at the moment.
But there may still be money to be made from something like journalism.
What sort of company might cause people in the future to say "this
replaced journalism" on some axis?
But imagine asking that in the future, not now. When one company
or industry replaces another, it usually comes in from the side.
So don't look for a replacement for x; look for something that
people will later say turned out to be a replacement for x. And
be imaginative about the axis along which the replacement occurs.
Traditional journalism, for example, is a way for readers to get
information and to kill time, a way for writers to make money and
to get attention, and a vehicle for several different types of
advertising. It could be replaced on any of these axes (it has
already started to be on most).
When startups consume incumbents, they usually start by serving
some small but important market that the big players ignore. It's
particularly good if there's an admixture of disdain in the big
players' attitude, because that often misleads them. For example,
after Steve Wozniak built the computer that became the Apple I, he
felt obliged to give his then-employer Hewlett-Packard the option
to produce it. Fortunately for him, they turned it down, and one
of the reasons they did was that it used a TV for a monitor, which
seemed intolerably déclassé to a high-end hardware company like HP
was at the time.
[17]
Are there groups of
scruffy
but sophisticated users like the early
microcomputer "hobbyists" that are currently being ignored by the
big players? A startup with its sights set on bigger things can
often capture a small market easily by expending an effort that
wouldn't be justified by that market alone.
Similarly, since the most successful startups generally ride some
wave bigger than themselves, it could be a good trick to look for
waves and ask how one could benefit from them. The prices of gene
sequencing and 3D printing are both experiencing Moore's Law-like
declines. What new things will we be able to do in the new world
we'll have in a few years? What are we unconsciously ruling out
as impossible that will soon be possible?
Organic
But talking about looking explicitly for waves makes it clear that
such recipes are plan B for getting startup ideas. Looking for
waves is essentially a way to simulate the organic method. If
you're at the leading edge of some rapidly changing field, you don't
have to look for waves; you are the wave.
Finding startup ideas is a subtle business, and that's why most
people who try fail so miserably. It doesn't work well simply to
try to think of startup ideas. If you do that, you get bad ones
that sound dangerously plausible. The best approach is more indirect:
if you have the right sort of background, good startup ideas will
seem obvious to you. But even then, not immediately. It takes
time to come across situations where you notice something missing.
And often these gaps won't seem to be ideas for companies, just
things that would be interesting to build. Which is why it's good
to have the time and the inclination to build things just because
they're interesting.
Live in the future and build what seems interesting. Strange as
it sounds, that's the real recipe.
Notes
[1]
This form of bad idea has been around as long as the web. It
was common in the 1990s, except then people who had it used to say
they were going to create a portal for x instead of a social network
for x. Structurally the idea is stone soup: you post a sign saying
"this is the place for people interested in x," and all those people
show up and you make money from them. What lures founders into
this sort of idea are statistics about the millions of people who
might be interested in each type of x. What they forget is that
any given person might have 20 affinities by this standard, and no
one is going to visit 20 different communities regularly.
[2]
I'm not saying, incidentally, that I know for sure a social
network for pet owners is a bad idea. I know it's a bad idea the
way I know randomly generated DNA would not produce a viable organism.
The set of plausible sounding startup ideas is many times larger
than the set of good ones, and many of the good ones don't even
sound that plausible. So if all you know about a startup idea is
that it sounds plausible, you have to assume it's bad.
[3]
More precisely, the users' need has to give them sufficient
activation energy to start using whatever you make, which can vary
a lot. For example, the activation energy for enterprise software
sold through traditional channels is very high, so you'd have to
be a lot better to get users to switch. Whereas the activation
energy required to switch to a new search engine is low. Which in
turn is why search engines are so much better than enterprise
software.
[4]
This gets harder as you get older. While the space of ideas
doesn't have dangerous local maxima, the space of careers does.
There are fairly high walls between most of the paths people take
through life, and the older you get, the higher the walls become.
[5]
It was also obvious to us that the web was going to be a big
deal. Few non-programmers grasped that in 1995, but the programmers
had seen what GUIs had done for desktop computers.
[6]
Maybe it would work to have this second self keep a journal,
and each night to make a brief entry listing the gaps and anomalies
you'd noticed that day. Not startup ideas, just the raw gaps and
anomalies.
[7]
Sam Altman points out that taking time to come up with an
idea is not merely a better strategy in an absolute sense, but also
like an undervalued stock in that so few founders do it.
There's comparatively little competition for the best ideas, because
few founders are willing to put in the time required to notice them.
Whereas there is a great deal of competition for mediocre ideas,
because when people make up startup ideas, they tend to make up the
same ones.
[8]
For the computer hardware and software companies, summer jobs
are the first phase of the recruiting funnel. But if you're good
you can skip the first phase. If you're good you'll have no trouble
getting hired by these companies when you graduate, regardless of
how you spent your summers.
[9]
The empirical evidence suggests that if colleges want to help
their students start startups, the best thing they can do is leave
them alone in the right way.
[10]
I'm speaking here of IT startups; in biotech things are different.
[11]
This is an instance of a more general rule: focus on users,
not competitors. The most important information about competitors
is what you learn via users anyway.
[12]
In practice most successful startups have elements of both.
And you can describe each strategy in terms of the other by adjusting
the boundaries of what you call the market. But it's useful to
consider these two ideas separately.
[13]
I almost hesitate to raise that point though. Startups are
businesses; the point of a business is to make money; and with that
additional constraint, you can't expect you'll be able to spend all
your time working on what interests you most.
[14]
The need has to be a strong one. You can retroactively
describe any made-up idea as something you need. But do you really
need that recipe site or local event aggregator as much as Drew
Houston needed Dropbox, or Brian Chesky and Joe Gebbia needed Airbnb?
Quite often at YC I find myself asking founders "Would you use this
thing yourself, if you hadn't written it?" and you'd be surprised
how often the answer is no.
[15]
Paul Buchheit points out that trying to sell something bad
can be a source of better ideas:
"The best technique I've found for dealing with YC companies that
have bad ideas is to tell them to go sell the product ASAP (before
wasting time building it). Not only do they learn that nobody
wants what they are building, they very often come back with a
real idea that they discovered in the process of trying to sell
the bad idea."
[16]
Here's a recipe that might produce the next Facebook, if
you're college students. If you have a connection to one of the
more powerful sororities at your school, approach the queen bees
thereof and offer to be their personal IT consultants, building
anything they could imagine needing in their social lives that
didn't already exist. Anything that got built this way would be
very promising, because such users are not just the most demanding
but also the perfect point to spread from.
I have no idea whether this would work.
[17]
And the reason it used a TV for a monitor is that Steve Wozniak
started out by solving his own problems. He, like most of his
peers, couldn't afford a monitor.
Thanks to Sam Altman, Mike Arrington, Paul Buchheit, John Collison,
Patrick Collison, Garry Tan, and Harj Taggar for reading drafts of
this, and Marc Andreessen, Joe Gebbia, Reid Hoffman, Shel Kaphan,
Mike Moritz and Kevin Systrom for answering my questions about
startup history.
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