- The speaker aims to provide guidance on finding a startup idea and thinking about them in a sophisticated way.
- The most common mistake is building something that doesn't solve a real problem for users.
- "Tar pit ideas" are common startup ideas that seem easy to solve but are actually very hard or impossible.
- Founders should avoid waiting for the perfect idea and instead start with a good starting point that can evolve.
- A framework of 10 key questions is provided to evaluate the potential of a startup idea.
- Founder market fit, market size, problem acuteness, competition, personal interest, and recent changes are among the factors to consider.
- Examples of successful startup ideas are mentioned, such as PlanGrid and Coinbase.

- Checkr is an API for background checks on people, specifically catering to delivery services that needed to run background checks on their workers.
- Rappi, a food delivery company in Latin America, used DoorDash as a proxy to show that the idea of food delivery would work in their region.
- It is important to consider if the idea is something you would want to work on for years, as passion often grows over time.
- Scalability is crucial for software businesses, but services businesses can be more challenging.
- Choosing a good idea space increases the chances of finding a successful startup idea.
- Ideas that are hard to get started, in boring spaces, and have existing competitors are often overlooked by founders, but can actually be good opportunities.
- Stripe and Gusto are examples of successful companies that entered boring spaces with existing problems.
- Existing competitors in a market can indicate a problem that hasn't been solved yet, as seen with Dropbox.
- The best way to come up with startup ideas is to notice them organically rather than explicitly trying to think of one.

- Approximately 70% of successful startup ideas come organically rather than through deliberate brainstorming.
- To position yourself for future startup ideas, become an expert in a valuable field by working at a startup.
- If you're a programmer, build things that interest you, as they may evolve into startup ideas.
- Start with ideas that take advantage of your team's expertise, as this ensures founder market fit.
- Consider problems you've personally encountered or unique perspectives you have.
- Think about things you personally wish existed, but be cautious of potential pitfalls.
- Look for recent changes in the world that create new opportunities.
- Talk to people within a specific idea space to identify problems and potential startup ideas.

- Founders turned themselves into experts in the trucking industry by talking to truck drivers and founders in the space
- They put together a mental map of the industry and identified fuel cars as a potential startup idea
- Looking for big industries that seem broken is a good way to find a startup idea
- Finding a co-founder who already has an idea can be a hack to getting both a co-founder and an idea
- It is often hard to tell if a startup idea is good or not, the only way to know for sure is to launch it and find out

- Speaker provides guidance on finding a startup idea and thinking about them in a sophisticated way.
- Common mistake is building something that doesn't solve a real problem for users.
- "Tar pit ideas" are common startup ideas that seem easy to solve but are actually very hard or impossible.
- Founders should start with a good starting point that can evolve rather than waiting for the perfect idea.
- Framework of 10 key questions provided to evaluate the potential of a startup idea.
- Factors to consider include founder market fit, market size, problem acuteness, competition, personal interest, and recent changes.
- Examples of successful startup ideas mentioned, such as PlanGrid and Coinbase.
- Importance of considering long-term passion and scalability.
- Choosing a good idea space increases chances of success.
- Look for overlooked opportunities in hard-to-get-started, boring spaces with existing competitors.
- Organic discovery of startup ideas is more successful than deliberate brainstorming.
- Become an expert in a valuable field to position oneself for future startup ideas.
- Consider personal problems, unique perspectives, and desired inventions cautiously.
- Look for recent changes in the world for new opportunities.
- Talk to people within specific idea spaces to identify problems and potential startup ideas.
- Finding a co-founder with an existing idea can be beneficial.
- Launching a startup idea is the only way to know if it is good or not.

YC Group Partner Jared Friedman shares a framework for how to get and evaluate startup ideas. He shares many examples of YC companies and the inside stories of how they came up with the ideas that turned into billion dollar companies. Even if you have an existing idea, this talk helps founders confirm that their idea is good and/or provide framework for a future pivot.

Apply to Y Combinator: https://yc.link/SUS-apply
Work at a startup: https://yc.link/SUS-jobs

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Finding a promising idea
00:51 - Where does this advice come from?
01:44 - 4 most common mistakes
06:29 - 10 key questions to ask about any startup idea
14:40 - 3 things that make your startup idea good
19:42 - How to come up with startup ideas
21:25 - 7 recipes for generating startups ideas

#startup #tech #entrepreneur

I've got a lot of content to get through, so I'm going to move fast.

If you are looking for a startup idea right now, I'm going to try to help.

But more importantly, I'm going to try to give you the conceptual tools to think about startup ideas in a sophisticated way, the way that we think about them at YC.

Here's the thing, No 1, not even YC, knows for sure which ideas will succeed.

And in any case, if your idea succeeds has as much to do with how well you execute as your initial idea anyway.

But certain ideas are much more likely to succeed than others.

And so my goal here is to help you stack the deck in your favor by starting with a promising idea.

The advice in this talk came from several places.

First, I analyzed the top 100 YC companies by valuation, and I looked at how they all got their idea.

So I started with some hard quantitative data on how recent billion dollar companies actually came up with their idea.

It also draws on a classic essay by Paul Graham that I really recommend, it's called How to Get Startup Ideas.

It also comes from helping YC companies that pivot in the middle of the batch and learning over the years what advice helps them to find a new good startup idea.

And then finally, it comes from reading thousands of YC applications that we rejected and looking at the mistakes that caused good founders to come up with bad ideas.

And those are the mistakes I want to help you all avoid.

First, I'm going to tell you the most common mistakes founders make with startup ideas.

Then I'm going to talk about how to know if your idea is good.

And then about how to come up with new ones.

Okay, the 4 most common mistakes with startup ideas.

So the most common mistake is just building something that doesn't solve a real problem for your users.

Typically, you can articulate the problem that you're solving, you can put it in words, but when you actually go and talk to the users, it's just not something that they really care about.

We call it a solution in search of a problem, or a CISP.

So a lot of founders come up with an idea with this kind of thought process.

And then they go look for a problem that they could solve with AI.

That's a solution in search of a problem.

And the reason it's dangerous is that if you do that, you'll probably find a problem, but It will be a superficially plausible problem.

It'll be a made up problem that people don't really care about, rather than a real problem that people actually care about.

And if people don't really care about the problem, they won't really care about your solution.

So instead, you want to fall in love with a problem.

The best way to find a startup idea is to start with a high quality problem.

Now, sometimes founders hear this and they decide to interpret that as guidance to work on some like huge societal problem, like, I don't know, global poverty or something.

No doubt, those are real problems, but they're too abstract to make good starting points for startup ideas.

You need something that's more specific, something that's tractable with a startup.

The next mistake is getting stuck on what we call tar pit ideas.

So there's this certain set of common startup ideas that have been around for forever.

They have been applying in droves to YC, batch after batch, for years.

And when founders start working on these ideas, it's like they've gotten stuck in tar.

They all form around some like widespread problem that lots of potential founders encounter.

And it's a problem that seems like it could be easily solved with a startup, but it's an illusion.

There's actually a structural reason why it's very hard or impossible to solve, which is why after all these years, no 1 has solved it.

And you can see why ideas like this would be so dangerous, why they will cause so many founders to waste months of their life stuck in a tar pit.

Like they're very tantalizing from a distance because they're so superficially plausible as startup ideas.

This is a very common tar pit idea that's been applying to YC for like 20 years.

This is like the stereotypical college student idea.

You think, man, every Friday or Saturday night when I'm making plans to meet up with my friends, it's so inefficient.

I'm in all these different text threads and chat groups, and we're like trying to make plans to meet up, I'm just going to make an app to make it more efficient.

Well, it turns out that there are some structural reasons why this idea is hard, which is why in like 20 years of people applying to YC with this idea, nobody has actually pulled it off.

You can see why so many people have been attracted to it.

It's like, it's a problem that almost everyone encounters at some point.

And it seems like it would be so easy to solve.

It's just got a list of events, and you invite friends to it.

The thing about Tarpet ideas is that they are not necessarily impossible.

Like, I'm even open-minded that somebody will eventually make the, like, app to meet up with your friends idea work.

Is more accurate to think of them as common ideas that are much harder than they seem.

So if you want to work on 1, Here's my advice.

It's amazing how many founders skip the step of just like Googling for their own startup idea to see who has worked on it in the past.

You should find who's worked on this in the past and actually talk to them if you can.

Try to figure out what the hard part of this idea is that has caused other people to not be able to solve it yet.

It is amazing how many founders will basically just jump into the first idea they have without even stopping to consider whether it would actually make a good business.

But more dangerous is the founders on the opposite side of the spectrum who sit around waiting for the perfect startup idea.

So these people just never actually start a company.

So if you imagine that there's like a spectrum between picking the first idea that comes to mind and waiting for the perfect idea, and you know, somewhere in the middle, there's this like happy place, which is the place that you want to be, right?

And the way that Paul Graham put this is that you should think of your idea as a good starting point.

No startup idea is perfect and no matter what you start with, it's probably going to morph anyway.

So you just want to have an initial idea that has enough interesting qualities that can morph in the right direction.

So Now suppose you have a startup idea, and you want to know if it's good.

I'm going to give you a framework for this.

And the format of the framework is 10 key questions to ask about any startup idea.

So the first 1 is, do you have founder market fit?

If I had to pick 1 most important criteria, it'd probably be this 1.

And what I mean by founder market fit is just, are you the right team to be working on this idea?

And a great example of what good founder market fit looks like is PlanGrid.

So PlanGrid makes an iPad app to view construction blueprints.

And 2 of the founders of PlanGrid were Tracy and Ralph.

And Tracy had worked in the construction industry and she knew a lot about construction.

And Ralph was an awesome developer who was like the perfect person to build this iPad app.

If you were going to imagine a team to start PlanGrid, the team that you would imagine would look, you know, something like that.

And that's what good founder market fit looks like.

It's like this team is obviously the right team to work on the idea.

In fact, founder market fit is so important that I would recast your search for a startup idea.

When most people go to pick a startup idea, they try to look for a good startup idea like in the abstract.

And instead, I would think about this exercise as an exercise to pick a good idea for your team.

It doesn't matter if something is a good startup idea for someone else, if it's not a good idea for your team.

So you may as well just look for ideas that you would actually be good at executing.

Obviously you need a big market, which for startups typically means like a billion dollar market.

But actually, less obviously, there are 2 kinds of markets for startups that are good.

Ones that are big now, and ones that are small but rapidly growing.

And an example of the second 1 is Coinbase.

So when Coinbase got started in 2012, the Bitcoin trading market was minuscule.

But even at that time, it was pretty obvious that if Bitcoin succeeded the way people hoped that it would, that this would eventually be a billion dollar market.

So as I said earlier, the most common mistake is just like working on something that just isn't really a problem, or it's just not a problem that people care enough about.

Here's an example of what a good problem looks like.

So Brex, from winter 2017, makes a credit card for startups.

And before Brex, if a startup in YC wanted a corporate credit card, They literally could not get 1 because no bank would give a credit card to a startup.

Like if the alternative to your solution is literally nothing, that's what a good problem looks like.

Now most founders think that if you have competition, that that's bad.

But counterintuitively, it is the opposite.

Most good startup ideas have competition.

But if you are going up against especially entrenched competition, you typically need a new insight.

Next 1 is like, do you want this personally?

Do you know people personally who want this?

It's amazing how often people start companies where the answer to both these questions is no.

If that's the case, you definitely got to worry that, you know, maybe nobody wants this.

So definitely time to go talk to some users.

Did this only recently become possible or only recently become necessary?

So something has recently changed in the world, like a new technology, a regulatory change, or a new problem.

That is often what creates a new opportunity.

And a great example of this is a company called Checkr, which does background checks via an API.

So it's an API for doing background checks on people.

And roughly the story of Checkr is delivery services like DoorDash and Instacart and Uber started to take off.

And they were all hiring huge pools of delivery people and workers.

And they needed to run background checks on all of these people.

And there were at the time already a bunch of large existing companies that run background checks, but they weren't well suited for this very new use case.

And that is like exactly the kind of change in the world that creates a new opportunity.

So a proxy is a large company that does something similar to your startup, but it is not a direct competitor.

And so a good example of this in practice is a company called Rappi, which does food delivery in Latin America.

And when Rappi got started, there were already food delivery companies in other parts of the world like DoorDash that were doing very well.

They just hadn't caught on in Latin America yet.

And so DoorDash was a great proxy to show that this idea of doing food delivery in Latin America would probably work.

Is this an idea you'd want to work on for years?

Like sure, if the answer to this question is yes, that's a good sign.

Often an idea grows on founders over time as it starts to work.

As I'm going to talk about in a moment, a lot of the best startup ideas are in boring spaces like tax accounting software or something like that, like no 1 is particularly passionate about.

Like nobody starts off being passionate about tax accounting software.

But tax accounting software is probably a good business and if you're actually running a successful business, you tend to become passionate about it over time.

So if you're building pure software, the answer is yes, because software scales infinitely and you can just like check this 1 off.

The place where founders most often get into trouble here is with services businesses, like agencies or dev shops, anything that requires high-skill human labor in order to serve your customers.

OK, and my last question is, is this a good idea space?

Which of course means I need to tell you what an idea space is.

This is a concept from my colleague Dalton, who you'll hear from later in this course.

An idea space is like 1 level of abstraction out from a particular startup idea.

It is a class of closely related startup ideas, like software for hospitals, or infrastructure monitoring tools, or food delivery services.

And here's the thing, Different idea spaces have wildly different hit rates.

Over the last 10 years, if you started a company that did like FinTech infrastructure or vertical SaaS for enterprise, the probability that your company became a billion-dollar company was astonishingly high.

Whereas if you started something in consumer hardware, or social networks, or ad tech, the success rate was like orders of magnitude lower.

I can't say that that will continue to be the case for those specific areas, because space has flipped from hot to cold over time.

But it is still worth thinking about picking a good idea space.

And a good idea space is really just 1 that you expect is going to have a reasonable hit rate for new startup ideas and 1 that has founder market fit.

That way, even if your initial idea isn't quite right, there are probably good adjacent ideas that you can sort of like drift into.

I'm gonna give a good example of like how this played out in practice.

So a good example of picking a good idea space is this company called 5TRAN from YC Winter 13.

And basically, the story of 5TRAN is they started making this tool for data analysis.

And they went to some companies and they tried to sell it, and the companies didn't want it.

So they pivoted, And they built a different tool for data analysis.

And they went back to the same companies and they tried to sell them that 1.

And the companies didn't want that either.

But each time they went to companies and tried to sell them some tool for data analysis, they would learn more about what those companies actually wanted.

And so eventually, they sort of stumbled into an actual problem, into an actual tool for data analysis that companies actually wanted.

And this is why picking a good idea space to start with is so important.

Like because the 5 trend founders were shopping for ideas in a fertile idea space, they put themselves in a good position to like bump into a good startup idea.

If they had picked a bad idea space, they probably wouldn't have found anything.

Okay, before I talk about how to generate startup ideas, I've got 1 important topic to tell you about.

These are 3 things that make your startup idea seem bad, but actually make them good.

And the reason that they make them good is that most founders will shy away from ideas like these, which leaves them on the table for smarter founders to go and grab them.

Ideas that are hard to get started, ideas that are in a boring space, and ideas that have existing competitors.

So Paul Graham wrote a terrific article about this called Schlepp Blindness, which I'd really recommend reading.

And the example that Paul discusses is Stripe.

They make it easy to integrate credit card payments to your website.

And the fascinating thing about Stripe is that when Stripe launched, there were thousands of developers who already knew that this was a problem.

They had tried to integrate credit card payments to their site and they realized that the existing options sucked.

But strangely, Not 1 of them even tried to start Stripe.

And it's kind of a fascinating question why nobody else tried when so many people were in a perfect position to see this problem.

And the reason is that getting started building Stripe required some things that seemed really hard.

You had to get a special deal with a bank.

You had to learn a lot about the nitty gritty details of credit card infrastructure.

Those things seemed so hard that they scared off all the other people who might have started Stripe, which caused them to leave this like $100 billion opportunity on the table for the Stripe founders to go and pick up.

Okay, the second 1 is ideas that are in a boring space.

And A great example of this is Gusto, which makes payroll software.

The thing is, there are thousands of people who must have realized that payroll software sucked.

But because it's kind of a boring problem, nobody tried to fix it until the Gusto founders came along.

And the thing is that because most founders shy away from ideas like this, boring ideas like payroll software have a much higher hit rate than fun ideas like apps to find new restaurants to eat at or like apps to find the next song to listen to, something like that.

Boring ideas get left on the table for a long time.

Now, you might be thinking, Jared, why would I want to work on a boring idea that sounds boring?

Even if you work on an idea that sounds fun at the outset, the day-to-day reality of your startup is going to be mostly the same anyway.

Either way, you'll be mostly writing code, fixing bugs, talking to users, like pretty much the same stuff.

And so I would argue that once the initial excitement of your idea has worn off, and you are 6 or 12 months in and you are grinding out the execution that makes your idea actually work.

How fun the initial idea sounded actually has little to no correlation with how much fun you will actually be having working on your company.

And the last 1 is that founders incorrectly shy away from spaces where there are existing competitors.

Counterintuitively, most startup ideas, most good startup ideas have existing competitors.

When founders go into spaces with no existing competitors, they often find out that the reason that there are no competitors is because no 1 wants the product.

A great situation is actually a market where there are existing competitors, but you've noticed something that they all seem to have missed, or they all just kind of suck.

So When Dropbox launched, there were already about 20 cloud-based file storage companies.

Dropbox was like the 20th company in its space to launch.

Naively, you might have thought that that made this a bad market.

I mean, you would have gone and looked and said like, oh, there are already 20 competitors.

But if you were savvy about startup ideas, you would have realized that it actually made it a great market.

And the reason is that even though there were like 20 companies doing this, most people didn't use any of them.

And that strongly suggests that there actually was a problem here, but the existing products hadn't solved it.

And Drew, the founder of Dropbox, had a very specific insight about what all of them were missing.

His insight was that basically Their UI sucked.

And the reason their UI sucked was that at the time, the way that they all worked is you had to go to their website and manually upload your files 1 at a time into their website, which sucked, of course.

And Drew had really a technical insight, which was that if he integrated directly into the host operating system, he could just sync your files automatically without you having to do anything.

And that was a real step function change in how convenient these services were to use, and that was the right insight.

OK, let's talk about how to come up with startup ideas.

So it is possible to sit down and explicitly think of startup ideas.

And in a moment, I'm gonna talk about how to do this.

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How to Get and Evaluate Startup Ideas | Startup School