- The video discusses the concept of "tar pit ideas" in startups, which are ideas that many founders try but often fail at.
- Tar pit ideas are attractive because they seem like good and original ideas, but they often lead to failure.
- Consumer ideas are the most common tar pit ideas, as many founders are consumers themselves and are influenced by stories of successful consumer startups.
- The challenges of consumer ideas include not realizing the high bar set by successful consumer products and not understanding the importance of timing in the market.
- Examples of successful consumer ideas include Google and Facebook, which had high-quality products that attracted a large user base without the need for advertising or marketing.

- The early success of Facebook was due to its addictive nature and lack of competition in the market.
- The timing of launching a consumer product is important, as certain periods have lower competition and higher user demand.
- Tar pit ideas are consumer ideas that seem appealing but are difficult to succeed in due to various factors.
- One example of a tar pit idea is an app for discovering new things, such as restaurants or music, as there is a limited supply of options.
- Another example is software for gambling or stock trading, which many founders apply with but have a low success rate.
- It is important to research and understand the challenges and limitations of these types of ideas before pursuing them.

- Many founders applying to YC have similar ideas and need to set higher bars for success.
- Web3 offers exciting possibilities, but startups need to go beyond theoretical concepts and have practical applications.
- OpenSea was successful because it launched, had users, made money, and was not just wishful thinking.
- Some startup ideas have a high supply of founders interested in them, while others have a low supply due to technical requirements.
- The demand for unlaunched, undifferentiated social apps is low, while the demand for high-quality software solving business problems is high.
- Hard pit ideas are those with an oversupply of founders and low market demand.
- Experienced individuals with expertise in esoteric problems in large industries may not realize they can be startup founders.
- The best pivots are when founders recognize the supply and demand dynamics and move towards ideas with lower supply and higher demand.
- Moving away from tar pit ideas towards less popular areas can increase the odds of success.
- Founders should do their research, understand the bar for success, and make moves to increase their odds of success.

The video discusses the concept of "tar pit ideas" in startups, which are ideas that many founders try but often fail at. Consumer ideas are the most common tar pit ideas, as many founders are consumers themselves and are influenced by stories of successful consumer startups. The challenges of consumer ideas include not realizing the high bar set by successful consumer products and not understanding the importance of timing in the market. Examples of successful consumer ideas include Google and Facebook. It is important for founders to research and understand the challenges and limitations of these types of ideas before pursuing them. Web3 offers exciting possibilities, but startups need to go beyond theoretical concepts and have practical applications. Some startup ideas have a high supply of founders interested in them, while others have a low supply due to technical requirements. The demand for unlaunched, undifferentiated social apps is low, while the demand for high-quality software solving business problems is high. Experienced individuals with expertise in esoteric problems in large industries may not realize they can be startup founders. Founders should do their research, understand the bar for success, and make moves to increase their odds of success.

Thinking of a new startup idea? Dalton Caldwell and Michael Seibel discuss the types of ideas to stay away from—what we commonly refer to as "tarpit ideas." 

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Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Intro
00:16 - Advice on pivoting - Tarpit ideas
00:38 - Tarpit definition
03:49 - Most tarpit - Consumer ideas
04:56 - Why do founders choose consumer ideas so much
06:37 - Why is it hard doing consumer stuff
07:21 - What's the bar for a startup
07:43 - Google
09:53 - Facebook
11:19 - Timing - Web 2
13:38 - Smartphone
14:21 - What is a tarpit idea?
15:45 - App to discover new things
16:34 - Why they don't work
19:37 - Recent target ideas
20:27 - Web3 - Rebuilding the world
21:38 - Theory of supply and demand
23:29 - Demand side
26:13 - Best pivots
27:49 - Closing thoughts

It's like, oh, this looks like a nice pool of water.

I'm gonna go get a drink of water from this pool, right?

This is Michael Seibel with Dalton Caldwell, and today we're going to give advice on pivoting by discussing the startup ideas that founders most often pivot into and away from.

It's surprisingly a lot of people's ideas are surprisingly the same across founders.

And so when we read the thousands of applications that apply every batch, and we interview the thousands of companies every batch that we do, there's a lot of common ideas.

And specifically, what we're going to be talking about today is tar pit ideas, and we'll explain what that means in a moment.

But these are ideas that lots of people try and they don't succeed and they don't pivot back out of them quickly enough.

So it's a cause of death for many, many, many, many companies statistically are some of these tar pit ideas.

Michael, explain why we would use the word tar pit.

Yeah, I did a little bit of Google in here.

So a tar pit is a place where petroleum is kind of coming up and seeping up through the earth.

And it tends to be a great place to find fossilized remains, dinosaurs, other forms of life.

And the reason why is that apparently tar pit pools resemble freshwater ponds.

And so animals will come across them, think it's freshwater, step in, get stuck because the tar is very sticky, die, start to decompose, that smell will attract more animals, and then you get this kind of cascading negative effect, which, as I say it out loud, describes the phenomenon in the startup world so perfectly.

You know, it's ideas that are like very appealing.

And the fact that there isn't already famous companies solving them already attracts more founders.

It looks like you've come up with this amazing original idea, and the death of everyone that attempted it is hard to see.

And all you see is like a freshwater pool.

You're like, oh, this is a wide open space for us to solve.

And so look, why are we doing this talk or why are we telling you this?

We would love for this not to happen to you.

We would love to not see the tens of thousands of applications of people working on these really rough ideas.

And if you can manage to not fall into the tar pit yourself, your overall odds of success in your startup journey are much higher.

That's why we're talking about this stuff.

Not only do these companies apply and do we interview them, we have funded many tar pit ideas.

So like we've seen the journey, you know, from founders in YC and them getting stuck in this space too.

So a lot of what we do at YC is we try to communicate the common paths of failure so you don't follow them.

And this is just another example of that.

The fact is, most tar pit ideas, at least the ones we see the most and the ones we're gonna talk about today, are what you would call consumer ideas.

Consumer means, you know, the customer is a consumer.

We'll talk about that in a second, but like, let's dive into that.

So this is a product that's being marketed to people, not companies.

Sometimes these products are free and monetized with ads.

Sometimes these products are paid products, the whole gig economy I would describe as consumer business.

But you know it's consumer business because individual people use it and it's a product that's not primarily marketed to businesses.

That's where you know you're in the consumer world.

Yeah, and there's some nuance here, folks on the internet.

So we don't need to get into a semantic debate.

We're just trying to just go with us on this definition.

Just bear with us here, even if there's some nuance to debate about this.

So why do founders tend to choose consumer ideas so much?

Why do they tend to be tar pits, et cetera, et cetera?

Why is the average person applying to YCE applying with a consumer idea?

Well, I think it starts with we're all consumers.

We are all consumers and we are being marketed products basically our whole lives.

And so often when we think about the problems in our lives or we think about the problems that interest us, they tend to be things that we would use or we think we would use or we think our friends would use.

I think that when we know stories about other founders or about startups, most of the stories we know are about consumer founders and consumer startups and consumer successes.

So you think about the hero worship of Steve Jobs or Mark Zuckerberg or whatever.

And it's hard not to think about these people because they build products we all use every day.

Like if you spend your time watching television and looking at apps and looking at your iPhone for most of your waking hours, it's hard not to be thinking about consumer app ideas.

We rarely meet a founder that's in love with Cisco or Oracle, and that makes sense.

And so I think we get told these stories.

And so I think by default, if you're thinking about starting a company, you by default come up with consumer ideas because it's what you know.

It's what you think every startup is as a consumer, especially if you're not as familiar with how the startup world works.

I think the first challenge is people often don't understand how high the bar is.

The consumer products that they use, they don't realize how actually good they are and how many others existed and failed.

And then The second thing, and we should get into this a little bit more, is that I think that timing tends to be very important in consumer.

So I think sometimes people don't realize when timing is helping them in a consumer business and when timing is actually harming them and existing incumbents can be, have an almost unfair advantage.

Yeah, I think from our perspective or from my perspective reading applications, let's start with this calibration of what good looks like.

Because again, Imagine the person applying with an idea for a consumer social network, it's unlaunched.

They found, you know, they believe what they're doing is like brand new and they don't really know what the bar is.

Let's talk about the bar quickly for something.

I was in college when Google came out and it had incredible word of mouth.

You had to manually have heard of it on the

You would have to go into your web browser and type in google.stanford.edu.

And they got, there was no growth hack and they just had a website.

And they got millions and millions and millions of people to go out of their way every day to open a web browser and go there.

And they have tens if not hundreds of millions of daily active users.

Now They make something like half a billion dollars a day on the ads on their website.

And again, like if you think about them when they were starting, let's zoom into that.

They just built a really good product that people really wanted.

Not only did the people want it, like, people evangelized it.

Like, my roommate in college saw me not using Google and like, scolded me and said, you're using a bad search engine, you got to use Google.

Like, that's way past liking something, right?

And famously, the product was so good, the founders didn't really want to run a startup.

The founders were disinterested in running a startup, but people wanted their products so badly that they got pulled into it.

This is the bar for a lot of these consumer ideas is you make something that people are so obsessed with and is so high quality.

You as a founder get pulled this direction that you weren't even sure you wanted to take.

That's a sign of a pretty good consumer idea.

That's a pretty good bar if we look at Google in historical context.

Is there another example you want to talk about here, man?

I believe the stat was within 48 hours of Facebook being released at Harvard, 75% of the campus was using it.

And when I think Peter Thiel and Reid Hoffman invested, the average time on site per user was 2 hours a day.

And I think that's what's crazy is that like, oftentimes people don't communicate the truth about how these products actually started.

Like most people don't realize, well, they weren't there in the early days.

And you know, you might hear some later stories about Facebook growth hacking and the Facebook growth team and all this other shit.

They were pissed when Facebook wasn't at the university.

And again, I think this is a lesson on what the bar is for consumer.

This is why we're telling you these stories is that the really iconic consumer companies, they tend to have in common really excited users that use their product a lot.

And the founders of these companies weren't like begging people to use them per se.

They weren't paying a bunch of money in ads.

They weren't, like all those kinds of tactics weren't what they did.

They just actually made products that people became obsessed with very early on, frankly.

So I think that is the first thing is this bar.

Let's talk about timing a little bit here.

Because I think that you and I were fortunate enough to do startups during kind of 2 big, let's say kind of explosions of consumer products, right?

And so why was it easier to make a consumer company in 2005, 2006, 2007, or a mobile company in 2010, 2011, 12, 13, 14?

In the 2000s, a lot of people had gotten broadband and they had gotten computers and they were bored.

And if back in that era, you just launched something cool, people were bored and you were basically competing with television or something.

And so again, when you think about when Facebook came out, they weren't competing with attention from a bunch of other social networks.

And so these college kids on the campuses back then, it was like crack how addicted people got to this thing.

And they would have people using multiple hours a day looking at everyone's photos, leaving comments, poking and liking.

It was like so addictive because there was nothing remotely competing with those hours for the day.

Well, and it's interesting because like I'll put this in perspective.

Like, you know, we were both in school during this period of time.

And like everyone would have a computer screen, but at least in our dorm room, there'd only be 1 television, right?

And so, practically speaking, everyone was in front of their computer a lot more during that period of time.

Of course, college gives great broadband and the big incumbents, the entertainment incumbents were all on TV.

So they were all battling each other on TV And then on the web, there weren't big incumbents.

And, you know, of course, MySpace was there, but MySpace was nowhere close to as powerful as like an NBC or a CBS or a Fox was on television.

So I think that was like a really big thing that people didn't realize is that the devices were there, all the hardware was there, all the connectivity was there, but the consumer products weren't there yet.

And let's be clear, very similar in the smartphone game, right?

Yeah, we all had smartphones and there was an app store and you, at that era, if you were building mobile apps, right when the iPhone came out, you could have made some pretty basic stuff and got a lot of users.

The bar was quite low in historical perspectives because like, you know, people wanted to do stuff with their iPhone.

Whereas now in every app category, there's dozens of things.

And so, right, like it's, you had to be in the right time and right place for some of those ideas, right?

So we've kind of talked all around it, but let's kind of pin the tail here.

A tar pit idea is a consumer idea that many people try.

It's an idea, part of the reason it's a tar pit and not just a hard idea is it has to feel sexy or you have to get lots of encouragement to work on it.

Something about it will emotionally make you not want to pivot away from it.

Again, this is kind of what's weird about why we use this term is if you are not obstinately unwilling to quit working on it, then it's not a tarpon.

It's just a regular idea if you're not like, and so a true tarpon is 1 that you will be defensive about when you are presented with evidence that the idea is challenging.

You know, the funny thing is, and I think you keep on saying it, is that like, these are not ideas where it appears like there's no hope.

And sometimes ideas in these spaces work, right?

Which is kind of the definition of like, there's hope.

And I think what we're trying to say is that not don't build ideas in this space.

It's just like going with both eyes open.

You know, like going with both eyes open, know the bar.

So 1 of them is an app to discover new things.

And new things could mean new restaurants, new events, new concerts, new bands, new videos.

Like there's all these good restaurants that I don't know about and yes, Yelp exists and Google exists, but I want to hear new recommendations from my friends or I want to machine learning recommendations And I have this problem.

I follow the YC advice of talking to my users.

And many people are telling me they would love to find a better way to discover new restaurants or music.

Again, all these things is very similar pitch.

So I have personal experience with this 1.

And I think for the longest time, I agreed, like I was like, yes, this needs to exist.

And as I got older, I learned something that was slightly depressing, but is proven to be true.

Like there is a finite number of restaurants that are open tonight.

And like, you wanting there to be a better option doesn't mean that a better option exists.

And I think this is what's so tricky is that like the world seems limitless, but for these physical things, it's actually fairly limited.

Every day people go on Yelp, search the restaurants in their neighborhood, don't like what they find and are frustrated.

But that doesn't mean that there are restaurants that they don't know about.

That just means that what exists is not sufficient.

And ditto for parties, dittos for events and concerts and da, da, da, da.

And I think, you know, this is an honest, it's an honest mistake, right?

It's a very honest mistake because there is a problem.

I don't like the restaurants in my neighborhood or my city, right?

I've spent years of my life working on music discovery and I understand the problems.

1 of the problems is that we think that the other users are like us, and people like to say they want to discover new music.

But in practice, people like popular music from a small number of bands.

Just like with restaurants, do you know what?

Something we've learned from DoorDash over the years is most people order like McDonald's and stuff.

the comparable or the burger from somewhere else.

They're not ordering like really esoteric, strange dishes.

And this is 1 of those things where I'm sure there's people that are gonna see this video and be like, you're wrong.

The thing with these ideas is it makes people emotional and it makes them wanna debate or it makes them wanna, like something about it makes you feel like you figured something out and the world is wrong and you have the vision.

There's something weird about this and these discovery startup ideas really bring this out in founders.

And so again, we're saying if you're working on this kind of stuff, you're interested in it, do a lot of research and understand that the reason those that came before you, it's not that they're stupid.

It's not that they've never thought of this before.

It's not that they haven't shipped anything before.

Like just realize that's the tar pit talking.

I'm going to go get a drink of water from this pool, right?

Dalton, I must be the first person who've ever discovered this pond.

I just realized that Gen Z doesn't like Facebook very much.

Here's some other recent kind of tar pit ideas to share with people.

Software to help people bet or gamble on things, or things that people saw a lot of the GameStop fun things with Wall Street Bet.

So options, stock trading stuff are very active traders.

And again, maybe some of these ideas are good, but I want folks to realize what a high percentage of all founders applying to YC apply with these types of ideas.

And so you need the bars higher if you're gonna be working in that kind of space.

You can't just be like, self-evidently people like to gamble.

People like stock trading, but they don't like Robinhood.

Like that is not a compelling argument by itself.

And I think that the, probably the last thing is kind of in this world of Web3, right?

Web3 opens up so many possibilities because it's the idea that everything could be rebuilt.

And like, what couldn't be more exciting to a young founder coming into a world that feels like everything's been built to be told, oh, no, everything's going to be rebuilt in this way.

The challenge is like, that's a very theoretical concept, right Dalton?

And ideally you want to, ideally you have something deeper than, and so therefore we're going to add tokens or therefore something, something NFTs.

And again, speaking of NFTs, remember OpenSea, I interviewed those guys.

And what I will tell you is OpenSea was not theoretical.

They launched, they had users, they had graphs, they made money.

It was like actually something we could understand that made sense and wasn't all wishful thinking.

So you've got a theory about this whole game.

Here's a theory I'd like to share with everybody.

Like let's think about founders and startups.

And the argument is this, there's many startup ideas that have very large supply of founders that would want to work on them.

And there's some startup ideas with a very low supply of founders that want, and not just want, have the skillset to work on them.

So for instance, let's imagine the startup idea is 1 where as a consequence of being a founder, you party with celebrities, and your job is to party with as many celebrities as possible.

I think the supply of founders that are excited about that, and again, a lot of this is the music discovery or the concert discovery.

If your startup idea is, hey, I want to help people discover new concerts to go to, as a consequence of working on that startup idea, you're gonna go to a lot of concerts and you're gonna have a lot of fun.

And so there is a huge pool of people out in the universe that would love to work on that startup idea.

On the other side of the spectrum, the supply of founders that would want to build open source developer orchestration tools pretty low.

And for, and there's some people where that stuff is great, like, right.

It's just, it's not, you have to be technical.

Like there's all these like boxes and filters you have to pass through to think to yourself, I'm going to work on developer orchestration.

Some ideas, a lot of people want to work on because it's cool and sexy and fun.

Some of them, you know, how many people could start a quantum computing startup?

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Avoid These Tempting Startup Ideas