How To Get Startup Ideas: A Brief Lit Review and Analysis

post by Adam Zerner (adamzerner) · 2023-03-30T20:33:04.179Z · LW · GW · 10 comments

Contents

  Preliminary notes
  Goals
    How exactly is the advice different?
    Why do they make the billionaire assumption?
    Should you try to be a billionaire?
  Methods
  Advice
    Product
      Make something people love
        Excerpts
        My thoughts
      Problems not solutions
        Excerpts
        My thoughts
      Scratch your own itch
        Excerpts
        My thoughts
      Scratch others' itches
        Excerpts
        My thoughts
      Talk is cheap
        Excerpts
        My thoughts
      Novelty
        Excerpts
        My thoughts
      Be specific
        Excerpts
        My thoughts
    Market
      B2B
        Excerpts
        My thoughts
      Offer something that doesn't suck
        Excerpts
        My thoughts
      Higher priced
        Excerpts
        My thoughts
      Underexplored
        Excerpts
        My thoughts
      Niche
        Excerpts
        My thoughts
      Don't worry about competitors
        Excerpts
        My thoughts
      Market timing
        Excerpts
        My thoughts
    Founder
      Able to build it
        Excerpts
        My thoughts
      Leading edge
        Excerpts
        My thoughts
      Passion
        Excerpts
        My thoughts
      Uniquely qualified
        Excerpts
        My thoughts
    Business
      Upside
        Excerpts
        My thoughts
      Barriers to entry
        Excerpts
        My thoughts
      Acquisition channels
        Excerpts
        My thoughts
      Monetizable
        Excerpts
        My thoughts
    Other
      Check all of the boxes
        Excerpts
        My thoughts
      Fail fast
        Excerpts
        My thoughts
      Everything's a trade off
        Excerpts
        My thoughts
      Activation energy
        Excerpts
        My thoughts
      Brainstorming
        Excerpts
        My thoughts
      Compelling to you
        Excerpts
        My thoughts
      Indulge
        Excerpts
        My thoughts
      Organic
        Excerpts
        My thoughts
      Copy
        Excerpts
        My thoughts
  My plan
None
10 comments

I've been ready to start a startup for a few months now. However, I haven't been able to think of any ideas. Well, I've thought of many ideas. It's just that none have seemed worth pursuing.

I need an idea worth pursuing. I think it makes sense to take some time to get a little meta and investigate the question of how to get startup ideas. That's what I'll do in this post.

If you'd like to skip the fluff, start at the "Advice" section.

Preliminary notes

First, some preliminary notes.

Goals

I think that it's important to start off by talking about goals. Are you trying to make some side income? Quit your day job? Retire early? Be a billionaire?

I find that a lot of the people who offer startup advice do so with the assumption that you're trying to be a billionaire. The advice for someone who's trying to be a billionaire will be different from the advice for someone who's trying to quit their day job though, so if you're just trying to quit your day job it's important to keep this in mind. Especially because the people who offer startup advice often make this billionaire assumption quietly or silently. It's easy to miss.

How exactly is the advice different?

Market size is the main consideration that I'm aware of. And to me, it seems like the only one that is widely agreed on. If you're trying to be a billionaire, you need number of users * revenue per user to be really large. If you go after a small market with a product that isn't crazy expensive, you won't end up as a billionaire.

Other than market size, I'm not sure. One thing is that it might be important to be passionate about the domain if you're trying to be a billionaire whereas if you're just trying to quit your day job it's fine to solve some mundane business problem that you aren't passionate about.

Why do they make the billionaire assumption?

There are two things that come to my mind here.

The first is that a lot of the people who make this assumption are investors. If you're an investor, the way to make money is to invest in 30 companies, have 29 of them fail, and have one of them become a multi-billion dollar unicorn. Upside is the name of the game for them. I think they're just used to thinking about business this way, although maybe that's too charitable.

The second is that, at least to some people, the 1) potential and 2) desire to be huge is precisely what makes a startup a startup. So then, if we're talking about startup advice, it's implied that we're trying to build something huge.[3]

Should you try to be a billionaire?

We're getting dangerously far from the topic of this post here, but I do have a few comments.

In his famous essay How to Start a Startup, Paul Graham says the following:

So who should start a startup? Someone who is a good hacker, between about 23 and 38, and who wants to solve the money problem in one shot instead of getting paid gradually over a conventional working life.

This never made sense to me though. You don't need a billion dollars to solve the money problem! It's more like a million.[4] Which is much, much less.

A large majority of the time, I think the reason to aim for being a billionaire is altruism. With personal happiness, there are huge diminishing marginal returns as you increase your net worth: being 1000x wealthier isn't going to make you 1000x happier. It very well might increase your altruistic impact 1000x though.

Methods

I looked around for various blog posts, interviews and videos where people give advice on how to get startup ideas. From there, I tried to pull out the pieces of advice that were offered.

Given what we talked about in the "Goals" section above, I didn't want all the advice to come from VC types so I made it a point to also look for what indie hacker types have to say. I wanted to get even more diverse viewpoints than that, but I think "VC types" and "indie hacker types" are the two main categories.

LessWrong is another place I looked but I didn't find much.

I also spent some time looking into what academics who study entrepreneurship have found. Unfortunately, it was very underwhelming.

Here is the list of resources I used. I also read/watched other things that I didn't take anything away from and thus am not including here.

Venture capital aligned:

Indie hacker aligned:

LessWrong:

And here are the notes I took: Google Doc.

Paul Graham stood out to me as the most insightful person on this topic. Patrick McKenzie and Eliezer Yudkowsky stood out as the people I'd like to hear more from.

Advice

Here are the pieces of advice I've heard over and over again. I've divided it up very loosely into five categories: product, market, founder, business and other.[5]

Each piece of advice will have two sections: "Excerpts" and "My thoughts". The "My thoughts" sections are meant to be treated as conversation starters moreso than something well written that I'm very confident in.

Product

Make something people love

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

Your goal as a startup is to make something users love. If you do that, then you have to figure out how to get a lot more users. But this first part is critical—think about the really successful companies of today. They all started with a product that their early users loved so much they told other people about it. If you fail to do this, you will fail. If you deceive yourself and think your users love your product when they don’t, you will still fail.

— Startup Playbook by Sam Altman

 

It’s much better to first make a product a small number of users love than a product that a large number of users like. Even though the total amount of positive feeling is the same, it’s much easier to get more users than to go from like to love.

— Startup Playbook by Sam Altman

 

If the idea does not really excite at least some people the first time they hear it, that’s bad.

— Startup Playbook by Sam Altman

 

We greatly prefer something new to something derivative. Most really big companies start with something fundamentally new (one acceptable definition of new is 10x better.) If there are ten other companies starting at the same time with the same plan, and it sounds a whole lot like something that already exists, we are skeptical.

— Startup Playbook by Sam Altman

 

Before I share them, let me explain why they work: they increase the chance of your startup having market pull. Market pull is when consumers reflexively want a product upon learning of it, and they’re willing to do whatever is required to get it. Market pull is the force behind "product-market fit".

— Startup Handbook: Market Pull by Julian Shapiro

 

If you wonder how someone who seems crazy or incompetent could be the CEO of a successful startup, the answer is that some startups are so viral that they'll grow (for a while at least) almost regardless of who's in charge.

— Startup Handbook: Market Pull by Julian Shapiro, quoting a tweet by Paul Graham

 

Should you restrict yourself to these categories? No, but remember this criterion for market pull: Consumers must intuitively value the product without needing an extensive explanation of it. That's why each of the market pull categories above requires you to offer something that people badly want with immediately clear ROI.

— Startup Handbook: Market Pull by Julian Shapiro

 

I've overseen paid marketing for hundreds of companies, and I will tell you this with certainty: it’s hugely advantageous to pursue an idea that immediately strikes people as a no-brainer when they hear about it. In a highly competitive market, it's how you scale ads and sales without friction.

In contrast, the opposite of market pull is market push. This is where a startup has to slog to convince consumers they should want the product in the first place. Or, if consumers already want the product category but not the company’s specific product, they slog to convince consumers that the product’s benefits are worth the time, cost, and risk of switching.

— Startup Handbook: Market Pull by Julian Shapiro

My thoughts

Related: Painkillers Not Vitamins and Hair On Fire Problems.

Having users love your product this much is clearly a desirable thing. It'd be great if they were banging down your door and rushing to tell all of their friends about it. I think the difficult question is how important this is. Should you actually keep looking for ideas and/or iterating until you reach this point?

Here is how I am thinking about it. Imagine a spectrum where a 10/10 means that they LOVE LOVE LOVE your product omgsofuckingmuch, and a 0/10 means they are indifferent to it. If you held out for a 10/10, you'd be ideating and iterating forever. On the other hand, if you pulled the trigger on a 3/10, you're very likely to fail. That establishes a sort of upper bound and lower bound. But that isn't actually helpful because of how wide the gap is between a 3/10 and a 10/10.

I think that where the lower bound is probably depends a lot on the context. Suppose you are selling enterprise software for $1,000/month. You are focused on bringing in enough revenue to allow you to quit your day job, and for that you'll need 10 customers. Should you wait until you've reached 10/10 on that scale? I think the answer is pretty clearly "no", and I think that the authors of the quotes above would agree.

On the other hand, imagine that you have a consumer product that you are charging $1/year for. Revenue per user is low enough where ads won't work as an acquisition channel. You need your product to spread via word of mouth. And for it to spread via word of mouth, I think the bar is super high and you do really want to be aiming for something like a 9/10 or higher.

Overall, I find myself wanting more nuance and clarity here. Do people think you almost always want a 9/10 or higher? If you have a consumer product? An enterprise product? If you're trying to make a billion dollars? Trying to quit your day job?

Problems not solutions

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

Start with a problem, not an idea.

— How to Get and Test Startup Ideas by Michael Seibel

 

Notice that I listed the problem first and your solution last. Your product should be the last thing you think about. In fact, this is the #1 rule for coming up with business ideas.

— How to Brainstorm Great Business Ideas by Courtland Allen

 

A lot of companies start not from the problem but from the solution. This is one of the biggest mistakes you can make. Technology needs to solve a problem. If you make a solution for a problem that doesn't exist, it might look sexy technologically, but it won't get users.

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

I think there are a couple of things going on here.

Sometimes people suffer from the infamous "solution in search of a problem". Yeah, don't do that.

Another thing is that, when brainstorming, people dismiss ideas too quickly. They've identified a problem, don't see a solution, and move on. In reality, the problem they've identified is very important and worth holding on to. Maybe it's more solvable than it initially seems.

That is very believable to me. Seems like a good thing to keep in mind.

Scratch your own itch

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

The best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?

— Organic Startup Ideas by Paul Graham

 

And ideally you have the same problem as them, too, so you can empathize with what they're going through when building a solution.

— How to Brainstorm Great Business Ideas by Courtland Allen

 

The most important thing is to find ideas from solving your own problems. You do that by looking at your own life and observing what your daily challenges are. Then you see if you could make those challenges easier using technology. If you solve your own problem, it's very realistic that there's many more people like you who would also love their problem solved. And that's pretty much what a business is. Solving lots of people's problems in return for money.

— Make, Chapter 4: Idea by Pieter Levels

 

Your problem might just be everyone else's.

— Make, Chapter 4: Idea by Pieter Levels

 

You are the greatest expert at your own problems.

— Make, Chapter 4: Idea by Pieter Levels

 

So, I think that one of the biggest things for me in terms of coming up with ideas is I have become much more sensitive to what things are hard in my life or what things I don’t like doing and thinking about how can I potentially solve this. Kettle and Fire is a great example. Making bone broth is a pain in the ass. I’m a terrible cook. If there was a high-quality packaged option that’s probably something that would work and if there’s any number of people like me it should be a decent business.

— Indie Hackers Podcast with Justin Mares

 

A great way to build software is to start out by solving your own problems. You’ll be the target audience and you’ll know what’s important and what’s not. That gives you a great head start on delivering a breakout product.

The key here is understanding that you’re not alone. If you’re having this problem, it’s likely hundreds of thousands of others are in the same boat. There’s your market. Wasn’t that easy?

— Getting Real, Chapter 5: What's Your Problem? by Basecamp

 

Open Source developers, scratching their own itches, don’t suffer this. Because they are their own users, they know the correct answers to 90% of the decisions they have to make.

— Getting Real, Chapter 5: What's Your Problem? by Basecamp

My thoughts

Let's think about what's actually going on here.

One thing is that if you yourself actually have the problem, well, you know it's a real problem. This is important because a lot of people build a product that isn't actually solving a real problem and end up with zero users.

You might worry that there aren't enough people out there like you. Often times, there are. It reminds me of what they used to say in school about asking questions during class: if you are confused about something and have a question, chances are you're not the only one.

Another thing is that if you yourself don't have the problem, you won't be able to do a good job of solving it. You need a deep understanding of the problem to build a good product.

I think it's important to realize that scratching your own itch is a means, not an end. A damn good means, but not the only one. The ends you're actually after here are 1) make sure the problem is real and 2) make sure you have a way to build a good product.

Scratch others' itches

Excerpts

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?

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

[2] In retrospect, we should have become direct marketers. If I were doing Viaweb again, I'd open our own online store. If we had, we'd have understood users a lot better. I'd encourage anyone starting a startup to become one of its users, however unnatural it seems.

— Organic Startup Ideas by Paul Graham

 

Organic ideas are generally preferable to the made up kind, but particularly so when the founders are young. It takes experience to predict what other people will want. The worst ideas we see at Y Combinator are from young founders making things they think other people will want.

— Organic Startup Ideas by Paul Graham

My thoughts

Yeah, so people do acknowledge that, although desirable, you don't need to have the itch yourself. We'll revisit this more in other sections like B2B.

For now I just want to call out what Paul Graham said about Viaweb. With Viaweb, he was scratching someone else's itch. Specifically, people with online stores. In the third excerpt above he was saying that if he could go back he'd open an online store himself in order to better understand users. In other words, he would have put himself in a position to try his own dogfood instead of asking others how it tastes. I think that is a really, really great thought. 

Talk is cheap

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

Finally, and arguably most importantly, you want it to be a valuable problem. In other words, you want it to be a problem that people pay money to solve. Preferably lots of money.

— How to Brainstorm Great Business Ideas by Courtland Allen

 

My personal favorite is to start by looking at where people are already spending lots of time and money and go from there. Money changing hands is almost always a sign that there's a valuable problem being solved. Who's spending tons of money, and what problem are they solving by doing that?

— How to Brainstorm Great Business Ideas by Courtland Allen

 

I think collaborations can be very dangerous. Because if you work with somebody else in a team, there's a big tendency of groupthink, where everyone starts hyping each other on the value of the idea. The prototype might only get mild validation from paying users, but you're working with this group and you're already so crazy about it that it doesn't really matter what users pay/do/say. That's very bad. It should only be about the users.

— Make, Chapter 4: Idea by Pieter Levels

 

The benefit of being able to share your ideas is that you'll be discussing them with everyone. Potential customers, vendors, suppliers, whoever. Everyone will have some input on it which you may or may not use as feedback. Again, the market remains the most important feedback though.

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

This definitely blends into the "validating" stage rather than the "idea generation" stage but I think it's also relevant to the idea generation stage.

I've been bit by this one myself. Twice. In both of the startups I founded. I trusted people when they told me my product was cool and they were excited. It'd be a mistake to assign zero Bayesian evidence to such data points, but I think it's wise to take whatever evidence you'd intuitively assign to it and cut it in half a few times.

Novelty

Excerpts

That space of ideas has been so thoroughly picked over that a startup generally has to work on something everyone else has overlooked.

— Startup = Growth by Paul Graham

We greatly prefer something new to something derivative. Most really big companies start with something fundamentally new (one acceptable definition of new is 10x better.) If there are ten other companies starting at the same time with the same plan, and it sounds a whole lot like something that already exists, we are skeptical.

— Startup Playbook by Sam Altman

I don't think your idea should be earth-shattering. If you look at most big startups, their first idea was not earth- shattering at all, most of them. Think Uber. They started as an app where you can simply call a taxi. Right?

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

I see novelty as a nice to have, definitely not something that's necessary. Especially if you're not swinging for the fences. But even if you are, there's lots of counterexamples. Facebook wasn't the first social media site.

Be specific

Excerpts

Who is a specific hypothetical person who will use your product, and in which specific scenario will they use it? That's it, that's the question most startups can’t answer.

— The Power To Judge Startup Ideas [LW · GW] by Liron Shapira

 

"Our software is providing the better connections for people" - the entrepreneur who said that might have had something specific in mind, or they might have just been bluffing or succumbing to wishful thinking.  But they described it using an abstract statement so broad that it included Facebook, or Western Union back when they were sending telegrams.  They might - though this is somewhat optimistic - they might have known themselves what they had in mind; they didn't think of Facebook; so they didn't realize how many other possibilities fit their words.  This is a classic manifestation of the Illusion of Transparency, and it's why we have to keep telling people to navigate the lattice downward.

The skill of Being Specific is the skill of understanding how to navigate the lattice of abstraction.  You can see why this would be a key element of cognition on a par with Bayes's Theorem or consequentialism [? · GW].

— Be Specific [LW · GW] by Eliezer Yudkowsky

My thoughts

Specificity is extremely important. I think people get this one wrong.

Market

B2B

Excerpts

Broadly speaking in terms of figuring out an idea for things that someone will buy, I'm gonna give one potentially controversial piece of advice, but feel free to run with this until you understand why you are a person who does need to run with this: sell to businesses rather than selling to consumers. Businesses have much, much, much deeper pockets, they are easier to sell to. If you're selling to consumers, you're locked in at price points that are low because consumers don't have much money, and so you have to get good at marketing and sales and sell tens of thousands of units to make whatever your magic number is. Whereas if you're selling to businesses, you only have to sell in single digit to hundreds of units to make whatever your number is. So sell to businesses first.

— Indie Hackers Podcast with Patrick McKenzie

 

Talk to people who have businesses and ask what their two most pressing problems are. Repeat this exercise as often as possible. Ideally, focus on businesses which you like, which are adjacent to areas you're already knowledgeable about, and which have money to spend on making problems go away. (e.g. piano teachers probably don't, insurance agents probably do.)

— Startup Advice from Patrick McKenzie

 

How do you figure out what customers want? Watch them. One of the best places to do this was at trade shows. Trade shows didn't pay as a way of getting new customers, but they were worth it as market research. We didn't just give canned presentations at trade shows. We used to show people how to build real, working stores. Which meant we got to watch as they used our software, and talk to them about what they needed.

— How to Start a Startup by Paul Graham

 

No matter what kind of startup you start, it will probably be a stretch for you, the founders, to understand what users want. The only kind of software you can build without studying users is the sort for which you are the typical user. But this is just the kind that tends to be open source: operating systems, programming languages, editors, and so on. So if you're developing technology for money, you're probably not going to be developing it for people like you. Indeed, you can use this as a way to generate ideas for startups: what do people who are not like you want from technology?

— How to Start a Startup by Paul Graham

 

When most people think of startups, they think of companies like Apple or Google. Everyone knows these, because they're big consumer brands. But for every startup like that, there are twenty more that operate in niche markets or live quietly down in the infrastructure. So if you start a successful startup, odds are you'll start one of those.

— How to Start a Startup by Paul Graham

 

If you want ideas for startups, one of the most valuable things you could do is find a middle-sized non-technology company and spend a couple weeks just watching what they do with computers. Most good hackers have no more idea of the horrors perpetrated in these places than rich Americans do of what goes on in Brazilian slums.

Start by writing software for smaller companies, because it's easier to sell to them. It's worth so much to sell stuff to big companies that the people selling them the crap they currently use spend a lot of time and money to do it. And while you can outhack Oracle with one frontal lobe tied behind your back, you can't outsell an Oracle salesman. So if you want to win through better technology, aim at smaller customers.

— How to Start a Startup by Paul Graham

 

Corollary: Avoid starting a startup to sell things to the biggest company of all, the government. Yes, there are lots of opportunities to sell them technology. But let someone else start those startups.

— How to Start a Startup by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

My thoughts

This all just makes a ton of sense to me. B2B is something I'm pretty bullish on. I'll return to it later in this post.

Offer something that doesn't suck

Excerpts

In particular, you don't need a brilliant idea to start a startup around. The way a startup makes money is to offer people better technology than they have now. But what people have now is often so bad that it doesn't take brilliance to do better.

— How to Start a Startup by Paul Graham

 

I can think of several heuristics for generating ideas for startups, but most reduce to this: look at something people are trying to do, and figure out how to do it in a way that doesn't suck.

— How to Start a Startup by Paul Graham

My thoughts

Interesting! Makes a lot of sense to me. And I think it opposes the ideas of "novelty" and "others are skeptical". In some sense at least. And to a lesser extent, the idea of "make something people love".

Higher priced

Excerpts

So what will it take, for example, with your pricing model that you’ve got in your head, to get to $10k a month per founder? If the answer is it takes 10,000 customers or even 1,000 customers to get there, my general feeling is that’s too many...That was why it would take a thousand customers. So it kind of implies this price range of $50 to $150, maybe even $250 a month, being a better price range for a bootstrapped, profitable company.

— Indie Hackers Podcast with Jason Cohen

 

Businesses have much, much, much deeper pockets, they are easier to sell to. If you're selling to consumers, you're locked in at price points that are low because consumers don't have much money, and so you have to get good at marketing and sales and sell tens of thousands of units to make whatever your magic number is. Whereas if you're selling to businesses, you only have to sell in single digit to hundreds of units to make whatever your number is. So sell to businesses first.

— Indie Hackers Podcast with Patrick McKenzie

My thoughts

I like this a lot. I think a lot of people should focus more on products with higher price points. This hit me when I was reading through Justin Shapiro and Demand Curve's content on marketing. Here's how I'd sum it up.

There's actually not that many ways of marketing a product.

It seems easier to hustle to get sales of a higher price point product or to spin up some Google ads than to get a consumer product to go viral. At least more straightforward.

Of course, this is just a heuristic. There are also good ideas at lower price points. Or at really high price points. Don't ignore ideas that seem good because of the price point. Just be aware of what you're getting yourself into. Low price points mean people have to tell their friends. Super high price points mean dealing with weird drawn out enterprise sales processes. And speaking of weird drawn out enterprise sales processes...

Underexplored

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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?

— How to Get Startup Ideas by Paul Graham

 

If you want ideas for startups, one of the most valuable things you could do is find a middle-sized non-technology company and spend a couple weeks just watching what they do with computers. Most good hackers have no more idea of the horrors perpetrated in these places than rich Americans do of what goes on in Brazilian slums.

— How to Get Startup Ideas by Paul Graham
 

 

Start by writing software for smaller companies, because it's easier to sell to them. It's worth so much to sell stuff to big companies that the people selling them the crap they currently use spend a lot of time and money to do it. And while you can outhack Oracle with one frontal lobe tied behind your back, you can't outsell an Oracle salesman. So if you want to win through better technology, aim at smaller customers.

— How to Start a Startup by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

My thoughts

Ahhhh I love this! Schlep blindness! Such a good idea. And title for an essay.

Niche

Excerpts

When most people think of startups, they think of companies like Apple or Google. Everyone knows these, because they're big consumer brands. But for every startup like that, there are twenty more that operate in niche markets or live quietly down in the infrastructure. So if you start a successful startup, odds are you'll start one of those.

— How to Start a Startup by Paul Graham

 

...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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

Niches are specific market segments that are shallow enough to easily access, with not many players in there. Niches are a great start because they're usually too small in economic value for big companies to attend to. They're also the perfect size to market a new company towards.

— Make, Chapter 4: Idea by Pieter Levels

 

See what happened here? You became big by starting small. Most people do the opposite and crash and burn.

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

Makes sense to me. Good idea for people who aren't swinging for the fences. If you are swinging for the fences, think about whether there'll be a path to grow out of the niche. And of course, like most things, it's just a rule of thumb, not a hard and fast rule.

By the way: the example that comes to my mind when I think of niche success stories is Patrick McKenzie's Bingo Card Creator. I'm having trouble digging up the source, but I remember reading about Patrick talking about this.

Sell bingo cards to school teachers? How is that ever going to work? How many school teachers are there out there who need bingo cards? And who are willing to pay for them? His dad was making these objections. Patrick went through the numbers explaining how, actually, you don't need that many customers. And the world is a big place. Even if the percent of schoolteachers who adopt it is small, it's plausible that it's large enough.

Don't worry about competitors

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

My thoughts

This one has always seemed weird to me. Competitors aren't good! I dunno. I guess it makes sense that if your product has a good competitive advantage you don't have to worry much about competitors. Especially when the market is big enough such that a slice of the pie is still satisfying, not just the whole pie, which is often the case.

What about barriers to entry though? I know that's a thing that I've heard before. And Peter Thiel talks a lot about it with the "monopoly is good" stuff. PG is saying it's super rare and you just don't need to worry about it at all? Something about that just seems off. I don't think I'm smarter than Paul Graham, I just sense that something about his intended message is getting lost in translation when I read it.

Market timing

Excerpts

There’s an important question that founders of $1B+ startups can answer: What recently changed about the world that made your startup newly scalable? They should tell you that something changed in one of these five market forces: technology, consumer behavior, environment, regulation, or distribution channels.

— Startup Handbook: Startup Ideas by Julian Shapiro

 

To find startup ideas, become your customer then monitor for changes in technology, consumer behavior, environment, regulation, and distribution channels. Stay on top of the field: consume blogs, tweets, podcasts, legislation, and research. Talk to experts and consumers. Whenever you learn of a big market force change, ask: What type of business does this newly make possible?

— Startup Handbook: Startup Ideas by Julian Shapiro

My thoughts

Meh. I like Julian Shapiro a lot and put a good amount of weight in his opinions, but this way of thinking about startup ideas doesn't really click with me. Maybe it is effective for others.

Founder

Able to build it

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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."

— How to Get Startup Ideas by Paul Graham

My thoughts

Yeah, makes sense. You could totally start a startup and have someone else build the actual product for you. It's just easier if you are able to do it yourself.

Leading edge

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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."

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

Live in the future, then build what's missing.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

There's an issue in itself with only solving your own problems. What if you're not as unique as you think? It takes only a slight glimpse at current startups ideas to see that everyone is making the same stuff.

Everybody's doing a to-do list app. Everybody's doing productivity apps. For a decade, people have been making apps to find your friends on a map. Everybody's doing some kind of photo sharing app. These are basic ideas that everyone has. And they're too obvious.

Everybody's doing them because everybody has the same problems. So how can you find problems that are actually unique and original? Well, become more unique and original yourself. I would have never built Nomad List if I didn't go traveling and working.

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

This one is really interesting to me. I'm not sure what to think.

Passion

Excerpts

You need to be personally invested in some way. If you’re going to live with something for two years, three years, the rest of your life, you need to care about it.

— Getting Real, Chapter 5: What's Your Problem? by Basecamp

 

As mentioned earlier, startups are really hard. They take a very long time, and consistent intense effort. The founders and employees need to have a shared sense of mission to sustain them. So we ask why founders want to start this particular company.

— Startup Playbook by Sam Altman

 

(My notes) Something you have a personal connection to 1) You can tell whether the solution is real. 2) You'll be motivated to push through when things get tough.

— How to Get and Test Startup Ideas by Michael Seibel (video)

 

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."

— How to Get Startup Ideas by Paul Graham

My thoughts

I'm pretty bearish about this. I think what Cal Newport says about passion in the context of (normal) careers is applicable. Passion grows. You don't need to start out with it.

Yes, it grows when things are going well. I guess that doesn't address their point of it sustaining you through the tough times. I'm just not sure that's so important. Sometimes it's the right move to quit. Being so passionate that you're resistant to quitting doesn't actually seem like a good thing.

Well, maybe this is one of those things where it depends if you're trying to be a billionaire or not. You don't need to be passionate about inventory management to make $21k/month solving that problem for SMBs, but maybe you do need to be passionate about something if you're going to grow it into a unicorn.

Then again, I feel like there are just so many examples of successful companies where the founders weren't passionate about the domain. Was Brian Chesky of Airbnb passionate about hospitality when they got started?

Uniquely qualified

Excerpts

(My notes) Uniquely qualified. What's your insight? What did others do wrong?

— How to Get and Test Startup Ideas by Michael Seibel (video)

My thoughts

Closely related to "Leading edge". Meh.

Business

Upside

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. Barbershops are doing fine in the (a) department. Almost everyone needs their hair cut. The problem for a barbershop, as for any retail establishment, is (b). A barbershop serves customers in person, and few will travel far for a haircut. And even if they did, the barbershop couldn't accomodate them.

...

Most businesses are tightly constrained in (a) or (b). The distinctive feature of successful startups is that they're not.

— Startup = Growth by Paul Graham

 

Success for a startup approximately equals getting bought. You need some kind of exit strategy, because you can't get the smartest people to work for you without giving them options likely to be worth something. Which means you either have to get bought or go public, and the number of startups that go public is very small.

— Ideas for Startups by Paul Graham

 

Finally, we ask about the market. We ask how big it is today, how fast it’s growing, and why it’s going to be big in ten years. We try to understand why the market is going to grow quickly, and why it’s a good market for a startup to go after. We like it when major technological shifts are just starting that most people haven’t realized yet—big companies are bad at addressing those. And somewhat counterintuitively, the best answer is going after a large part of a small market.

— Startup Playbook by Sam Altman

 

It helps if the problem is a growing one, meaning more and more people have it every year. This sets the stage for your business to grow.

— How to Brainstorm Great Business Ideas by Courtland Allen

 

Later, however, scalable channels are important. It's not enough just to do a glitzy launch, because you can usually only do that once. You need to put some thought into long-term, repeatable channels.

— How to Brainstorm Great Business Ideas by Courtland Allen

My thoughts

This really just depends on your goals, as discussed in that section earlier. Maybe you want to be able to quit your day job. Maybe you want to be a billionaire. If it's the former you probably don't need something with much upside. If it's the latter you do.

Barriers to entry

Excerpts

We also ask how the company will one day be a monopoly. There are a lot of different terms for this, but we use Peter Thiel’s. Obviously, we don’t want your company to behave in an unethical way against competitors. Instead, we’re looking for businesses that get more powerful with scale and that are difficult to copy.

— Startup Playbook by Sam Altman

My thoughts

This is very related to the "Don't worry about competitors" section. My feelings are that it's definitely something to think about. Maybe, based on what Paul Graham said, competitors aren't quite as big of a risk as you'd intuitively think. You definitely can't ignore them though.

Oh, also, you should consider whether (or really when) AI will come along and disrupt your business. I think that's a very practical and relevant thing to be thinking about.

Acquisition channels

Excerpts

Once you have a good problem, you need a distribution strategy. You need an answer to the question, "How am I actually going to reach my customers?" The number one mistake here is skipping this step entirely. Especially if you're a developer, a designer, or a creator of any kind—you're antsy to get to the product.

— How to Brainstorm Great Business Ideas by Courtland Allen

 

If you're still in the idea-making stage, the how I find the customers question should be really tied into the idea-making stage. A great idea without a plan to get it in front of people is not a great idea anymore.

— Indie Hackers Podcast with Patrick McKenzie

My thoughts

100%! Definitely something you need to think about, and something that people seem to fail to think about. If you have a good product but no way to get it in front of prospective users, you will, with certainty, fail.

Monetizable

Excerpts

Okay, so you said profitable self-funded, which I love because number one, I just love those kinds of businesses because I agree with the idea that a lot of the VC-funded businesses don’t have a business model. They agree. They just say they’ll find it. Personally, I don’t like that attitude, but it’s okay, I guess, but I agree. That’s kind of weird.

— Indie Hackers Podcast with Jason Cohen

 

There's a few companies that had some sort of revenue model, but all the companies that were celebrated were the ones that had just raised the most money, you know? Who raised from A16Z the earliest, you know. There's one founder in our batch, who I will not name, who raised from A16Z the very first week of YC.

And they raised millions. And they were putting up kind of Facebook growth numbers and everybody worshiped the ground that these founders walked on, the whole, it was obnoxious to the point it was I didn't want to see them. But you're kind of jealous too, because you and I, I kind of want that level of success, you know? But at the end of the day, nobody was making money.

Nobody wanted to make money. No one, it was all about growth. And so when I heard Kevin Hale talk about how Wufoo was just kind of crushing it. I remember running up to PG and like, "Hey, you know, we're not growing that much. What if we just did this? What if we charged money?" And he was like, "That's cool. Whatever it takes to stay alive." You know, he was very much like, “Be the cockroach, you know, don't die. If you need to make money to survive until you pivot to a better idea, that's what you should do.”

— Indie Hackers Podcast with Courtland Allen

My thoughts

This makes a lot of sense to me. Treating monetizing as something that you can just figure out later sounds very unwise.

Well, possibly not. This is a bit of a steelman, but if your goal is to get acquired, maybe you can just focus on growth. Or if your goal is to keep raising VC rounds - A, B, C, D - and then make money via salary or equity or a golden parachute or whatever (yuck), maybe you could do that with high growth and no plan for monetization.

It's also possible that I'm wrong and monetizing is easy when you have high growth.

Other

Check all of the boxes

Excerpts

The thing that makes it hard is you have to pass each of these things through an additional filter and what ends up on the bottom can sometimes feel like, “Wow, there's nothing really here.” You need the right market. You need a market with distribution channels. You need a to build a good product for that market, for sure. Then you need founder fit with all three of those things. Founder product fit, founder market fit, and founder channel fit, we'll say. That's where people get frustrated because they're like, I just want to start a business and I'm just going to choose something. And my recommendation would be to just keep looking. Yes you want check marks on each of those things.

— Indie Hackers Podcast with Justin Jackson

My thoughts

This right here is probably my favorite piece of advice.

In that interview with Justin Jackson, the host Courtland Allen gave an analogy that I really liked: a car with three wheels isn't going to run. I'm definitely going to steal that and use it myself.

So yeah, you have to check all the boxes. If one of them is unchecked, you fail.

That's probably not an exhaustive list, but I think it gets the message across.

Fail fast

Excerpts

Yeah, so I had a couple sort of reasons for that. Part of it was, I had a bunch of other ideas that I had come up with in my brainstorming and Indie Hackers kind of scored the highest on my rubric because it was so quick to build.

— Indie Hackers Podcast with Courtland Allen

My thoughts

I think this is super important and underappreciated. Also just very logical.

Everything we've discussed so far is about the potential benefit, but what about the cost? The cost is usually just time but can also be money and energy. You can't ignore that part of the equation.

For example, if one idea would take three months to pursue and another would take three weeks, all else equal, the three week idea is better. You can pursue four three-week ideas in a span of three months.[7]

Everything's a trade off

Excerpts

Yeah, I think everything in business is basically a trade off. And what you really want to do is just be aware of the trade-offs that you're making. There are no hard and fast rules, like never built on a platform, right? If you're building a platform, maybe they can give you additional distribution, but then you get the risk that they might shut you down or change things so you might lose out on the branding or ability to differentiate yourself, et cetera.

Maybe you can charge a high amount of revenue per user, but that means you're going to get, you know, maybe fewer users in the door, fewer customers, but then also you can spend more to acquire your customers. It's all tradeoffs.

— Indie Hackers Podcast with Courtland Allen

My thoughts

I love this piece of advice as well. Definitely an important thing to keep in mind.

Activation energy

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

My thoughts

What a great analogy. It comes from chemistry. If two molecules start off in state A but "want" to be in state B, they won't just move from A to B. It takes a "kick".

Same thing with products. If you have a product that is 5% better than the competitor, users won't automatically switch to your product. You have to get past this sort of activation energy barrier, which I think could be pointing to various different things. Discussing them all would make for a great essay.

Brainstorming

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

The initial idea is just a starting point-- not a blueprint, but a question. It might help if they were expressed that way.

— Ideas for Startups by Paul Graham

 

It's obvious why you want exposure to new technology, but why do you need other people? Can't you just think of new ideas yourself? The empirical answer is: no. Even Einstein needed people to bounce ideas off. Ideas get developed in the process of explaining them to the right kind of person. You need that resistance, just as a carver needs the resistance of the wood.

— Ideas for Startups by Paul Graham

 

I find that to have good ideas I need to be working on some problem. You can't start with randomness. You have to start with a problem, then let your mind wander just far enough for new ideas to form.

— Ideas for Startups by Paul Graham

 

I think collaborations can be very dangerous. Because if you work with somebody else in a team, there's a big tendency of groupthink, where everyone starts hyping each other on the value of the idea. The prototype might only get mild validation from paying users, but you're working with this group and you're already so crazy about it that it doesn't really matter what users pay/do/say. That's very bad. It should only be about the users.

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

I don't have much to say here. I find it to all be pretty thought provoking.

Compelling to you

Excerpts

But sometimes, a few things start to come together. Excitement, insights, concepts start to spin. Potential begins to orbit the idea. And then the idea starts to move. It picks up mass. And more and more things are attracted. Concepts tie together, cases become clear. And then... Snap! Stuff begins to collide. Pulled into the core by a force that feels like gravity. A strong magnet. Snap! Ah, this could work with that, and that feature begets this one. Flows materialize. A name might even be pulled in. Snap!

It pulls. That's when I feel like I'm on to something.

— A product's gravity by Jason Fried

 

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.

— Ideas for Startups by Paul Graham

 

The thing with ideas is, at least with me, that they keep coming back in my brain. I'll get a basic hunch, then weeks later it comes back, and then months later it'll start to manifest in my mind. Then sometimes even 2 years later I'll finally start executing it.

— Make, Chapter 4: Idea by Pieter Levels

My thoughts

I'm not sure what to think of this. It sorta seems like a high bar, but also seems wise. I lean moderately strongly towards the latter. Towards waiting for an idea that meets the bar of being something you'd describe as compelling.

Be careful though: this is probably a "necessary but not sufficient" sort of thing. You might get really excited about a product, feel very compelled to pursue it, but not have considered how you'd actually get it in front of users. Or maybe you considered it but are so excited that you dismiss it as something you'll "figure out later". Again: check all the boxes.

Indulge

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

My thoughts

Meh, I don't really love this. I feel like it goes against the "check all the boxes" idea. Maybe it serves as a weak heuristic though.

Organic

Excerpts

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.

— How to Get Startup Ideas by Paul Graham

 

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.

— How to Get Startup Ideas by Paul Graham

 

Organic ideas are generally preferable to the made up kind, but particularly so when the founders are young. It takes experience to predict what other people will want. The worst ideas we see at Y Combinator are from young founders making things they think other people will want.

— Organic Startup Ideas by Paul Graham

My thoughts

I guess it makes sense that organic ideas tend to do better. I just don't see how that would be actionable.

Well, PG does talk about things you can do to increase the likelihood of coming across ideas organically, like being at the leading edge of a field. That sort of stuff just takes so much time though. If you're a college student who wants to start a startup one day, maybe that is helpful, but someone who wants to start one in the next few months, not so much.

Copy

Excerpts

And then the other thing I think is interesting is assuming you’re not one of the Clausen Brothers or like a Jeff Bezos or Steve Jobs, you’re probably – but you’re probably not. No offense. It’s hard to come up with super visionary ideas and so I think the other thing that works really well is seeing what is actually working in one industry and applying it elsewhere. Like one of the things that we actually saw and that I’m seeing multiple times is like okay, wow SAS – you know, being in software, SAS is taking over people’s workflows, it’s doing all this stuff yet moving in the CPG and the space that we’re playing in right now like physical retail, there’s almost nothing in software. Great. That’s probably a huge opportunity to apply an existing technology to something that doesn’t exist.

— Indie Hackers Podcast with Justin Mares

My thoughts

To be clear, the idea here isn't just to clone some existing product and make trivial changes. It's to find something that works in one field and explore whether it can be applied somewhere else. I haven't thought much about this but my initial thought is that it seems like a decent thing to explore.

My plan

Personally, I would like to start something that makes me enough money to retire.[8] After that I'd like to start something that makes billions and then use that money to do something good for the world. First I want to retire though.

So then, the question I want to think about right now is how I should proceed to find a startup idea that allows me to retire. Fortunately, I think that most others have the same goal (as opposed to making billions or just having a little side income). This means, hopefully, that talking about my plan will be helpful to others. I'll do that in a follow up post.

  1. ^

    I think it's the sort of thing that some college or grad student could spend months writing a paper on. However, I also sense that there's somewhat large diminishing returns to investigating it more than I did.

  2. ^

    I'd like to write about the the extent to which ideas matter one day. Now isn't the time though. If you want to read something about it, my favorite post on the topic is Ascending to Angelhood, Version 1.

  3. ^

    I think a big part of the problem here is that we don't have the right words. What do you call the startup equivalent of an SMB? Indie hacker? That's describing the person, not the business. Same with "maker". Maybe a lifestyle business? Meh, doesn't seem right.

  4. ^

    If you want to live a Mustachian lifestyle, it's more like $500k. And if you want to move to a cheap country, maybe it's only $200k.

  5. ^

    Categorizing was hard so don't hate.

    Well no, you can hate. I think it'd be cool to see how others would divide things up. Just know that I didn't feel particularly motivated to do the best job with the categories when I wrote this.

    Also, I included some counterexamples in the excerpts at times because that seemed useful.

  6. ^

    Stuff like SEO can also work but I think it's underrated just how tough SEO is. If the keywords are competitive, are you really going to be able to produce content so good that it kicks out the incumbents? Is that part of your skillset? Are you ok with waiting 12+ months for it to happen?

  7. ^

    Well, in theory. In practice you might need to take a break in between ideas.

  8. ^

    Well, I don't want to retire in the sense of sipping drinks on the beach. I want to 1) free up the 9-5 hours of my days so that I can pursue bigger things, 2) give myself the peace of mind that financial security provides and 3) prove to myself that I can do it.

10 comments

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comment by DirectedEvolution (AllAmericanBreakfast) · 2023-03-30T21:44:25.405Z · LW(p) · GW(p)

I synthesized the advice:

Find a little-recognized but massive problem with no good solution, that affects you personally, where early adopters will love even the crappy MVP and pay $50-$250/month for it ($600-$3000/year), and where you can bust out a marketable early version in weeks. Be specific about the problem, solution, and customer (ideally a business). Find a business that can become enormous and that intrinsically tends toward monopoly.

Make sure the reason the idea is neglected is something like "it's intimidating" or "it's uncool" or "it's a weird super-specific niche almost nobody's ever heard of" or "the timing wasn't right until just recently." Be on the bleeding edge of some industrial frontier to find these ideas, and be capable, willing to sacrifice, flexible and adaptable and a great fit for the work so that you can execute.

Don't compromise on any of this.

Replies from: adamzerner, lahwran
↑ comment by Adam Zerner (adamzerner) · 2023-03-31T06:17:47.888Z · LW(p) · GW(p)

Thanks, I think that is a concise and helpful way of framing things! However, I have two critiques:

  1. It confuses means and ends. For example, finding a problem that affects you personally isn't an end. It is a means to the ends (or, really, intermediate means) of things like "make sure the problem is real", "be able to build a good product" and "be motivated to work reasonably hard on it and not give up to easily".
  2. It's too inflexible. I assume you don't mean "Don't compromise on any of this." literally. Otherwise you'd be advising people to only start businesses that charge $50-250/month, for example. But I do read it as being only slightly less strong. Ie. "You should very rarely compromise on any of these points." I disagree with that. I think that a lot of the things you listed are rather frequently things that you can ignore.
↑ comment by the gears to ascension (lahwran) · 2023-03-30T21:51:31.730Z · LW(p) · GW(p)

Extremely yikes. I'm curious about folks' thoughts on how to make this become bad startup advice - in particular, the tending towards monopoly and needing to be business targetted. If we can disrupt most startups that attempt those two things, the world would be a much better place

Replies from: AllAmericanBreakfast
↑ comment by DirectedEvolution (AllAmericanBreakfast) · 2023-03-30T21:58:03.209Z · LW(p) · GW(p)

How familiar are you with the reasoning behind these ideas?

The tending-towards-monopoly idea is most clearly articulated (AFAIK) by Peter Thiel in his book, Zero to One. A marketplace or social network would be an example, where the bigger you are, the more value you provide to users and thus the harder it is for a competitor to get established. Contrast this with an artificial monopoly for a product that ought to be a commodity good, but that is a monopoly because of corporate shenanigans. Standard Oil would be a classic example.

Businesses don't need to be targeted, but because they have a focused, more or less rational agenda, and deep pockets, it can be easier to conceive of and demonstrate the value of products that meet their needs and get well-compensated for it.

I don't find either of those ideas objectionable, but if you do, it might be helpful to explain why.

Replies from: lahwran
↑ comment by the gears to ascension (lahwran) · 2023-03-31T01:48:34.241Z · LW(p) · GW(p)

The tending-towards-monopoly idea is most clearly articulated (AFAIK) by Peter Thiel in his book, Zero to One. A marketplace or social network would be an example, where the bigger you are, the more value you provide to users and thus the harder it is for a competitor to get established

Right. So, how can we prevent companies from being able to use that strategy anymore? seems like a lot of it is that things that are natural monopolies should be open sourced. So, if you see a way to open source a natural monopoly before others do, please try, so that it doesn't get monopolized. Because natural monopolies get so big, you can probably make plenty of money with eg mere donations, using a federated model.

Thiel is not someone to take advice from without taking a step back to figure out why he gave the advice and how to prevent people in economic situations like his from benefiting from your work.

My goal with this comment is not to make money, but to ensure that malicious ways of making money stop working. If your goal is to make money by getting there first and camping on a natural resource, then you're a rent seeker, and others should do what they can to stop you.

Replies from: AllAmericanBreakfast
↑ comment by DirectedEvolution (AllAmericanBreakfast) · 2023-03-31T01:51:49.616Z · LW(p) · GW(p)

ah, i see what you're driving at. I'm not sure if I see Amazon.com becoming what it is now via a nonprofit model, but it's plausible to me that could have worked for facebook. But I'm not sure if they could support the staff and hardware it takes to keep it operational using a donation-based model. Mainly, I'd rather get these products into existence than capture additional public value by open-sourcing them, and that seems like a tradeoff to me. what do you think?

Replies from: lahwran
↑ comment by the gears to ascension (lahwran) · 2023-03-31T04:24:06.205Z · LW(p) · GW(p)

It depends on the product. Another option is profit caps - I've seen businesses starting to adopt those, and I certainly will buy from those corps preferentially.

comment by DirectedEvolution (AllAmericanBreakfast) · 2023-03-30T22:06:13.740Z · LW(p) · GW(p)

Now that I've synthesized the advice, we can work backwards to figure out how to find good ideas:

Get deeply involved with a weird industrial/technological niche that nobody understands very well and get to know all the pain points in that sector from personal experience. Be trying to do stuff that nobody's done before in some domain, where fundamental ideas have barely been reduced to practice. Make friends with the most capable people you meet along the way. Come up with ideas as often as you can, then find the cheapest, fastest ways to rule them out until you find something you just can't get away from. Then take a month to build it and try to sell it immediately.

  • Right now, this might be something like services related to prompt engineering.
    • Maybe... a prompt engineering analytics company that compiles an enormous dataset of metrics on how well engineered prompts perform on specific tasks for a particular type of model, then sells that data to companies.
    • I recently came across a startup building advanced ChatGPT-cheating detection software that takes the text-entry behavior of the user into a Google Doc into account along with analysis of the text itself.

I'd also note that the whole class of "good tech startup ideas" has been under optimization pressure for decades now, which means that these ideas, which may have accurately reflected where to find alpha when Paul Graham was making his first billion, may not apply any longer. By the time you have this much advice easy consensus available by proven experts, it might be the worst sort of advice to take.

comment by Metacelsus · 2023-03-31T02:26:17.136Z · LW(p) · GW(p)

Do most good startups begin with people who want to start a startup and need an idea for it? Or do they begin with people with an idea, who think, "this should be a startup"?

Replies from: adamzerner
↑ comment by Adam Zerner (adamzerner) · 2023-03-31T05:10:52.384Z · LW(p) · GW(p)

I'm not sure about most, but I think the probability of success with the latter is higher. See Organic Startup Ideas. However, although that fact might be helpful to investors, I don't see how it can be helpful to prospective founders.