YC
How to Get and Evaluate Startup Ideas | Startup School
@ Y Combinator
11/18/22
Takeaways
JF
Jared Friedman
11/18/22
@ Y Combinator
No one, not even Y Combinator, knows for sure which startup ideas will succeed, but certain ideas are much more likely to succeed than others. My goal is to help you stack the deck in your favor by starting with a promising idea.
JF
Jared Friedman
11/18/22
@ Y Combinator
The advice in this talk comes from analyzing the top 100 Y Combinator companies by evaluation and understanding how they came up with their ideas, as well as from helping companies pivot and learning from thousands of rejected applications.
JF
Jared Friedman
11/18/22
@ Y Combinator
The most common mistake founders make is building something that doesn't solve a real problem for users, often resulting in a solution in search of a problem.
JF
Jared Friedman
11/18/22
@ Y Combinator
Instead of looking for a problem to solve with a technology like AI, you should fall in love with a real problem that people care about.
JF
Jared Friedman
11/18/22
@ Y Combinator
Founders often get stuck on tar pit ideas, which are common startup ideas that seem easy to solve but are actually very hard due to structural reasons, causing many founders to waste time on them.
JF
Jared Friedman
11/18/22
@ Y Combinator
If you want to work on a common idea that seems easy, first Google it to see who has worked on it before and understand the challenges they faced.
JF
Jared Friedman
11/18/22
@ Y Combinator
Many founders jump into the first idea they have without considering if it would make a good business, while others wait for the perfect idea that never comes, leading to inaction.
JF
Jared Friedman
11/18/22
@ Y Combinator
You should think of your startup idea as a good starting point, knowing that it will likely evolve as you work on it.
JF
Jared Friedman
11/18/22
@ Y Combinator
The first key question to evaluate your startup idea is whether you have founder-market fit, meaning you are the right team to work on this idea.
JF
Jared Friedman
11/18/22
@ Y Combinator
A good example of founder-market fit is PlanGrid, where the founders had relevant experience in the construction industry and the technical skills to build the product.
JF
Jared Friedman
11/18/22
@ Y Combinator
When searching for a startup idea, focus on finding an idea that is a good fit for your team rather than just a good idea in the abstract.
JF
Jared Friedman
11/18/22
@ Y Combinator
You need a big market for your startup, which typically means a billion-dollar market, or a small but rapidly growing market.
JF
Jared Friedman
11/18/22
@ Y Combinator
A good problem to solve is one that is acute and significant enough that people care about it, like the need for corporate credit cards for startups, which was previously unmet.
JF
Jared Friedman
11/18/22
@ Y Combinator
Having competition is often a good sign for a startup idea, as it indicates that there is a market, but you need a new insight to compete effectively against entrenched players.
JF
Jared Friedman
11/18/22
@ Y Combinator
It's crucial to personally want the solution you are building and to know others who want it as well; otherwise, you risk creating something that nobody cares about.
JF
Jared Friedman
11/18/22
@ Y Combinator
New opportunities often arise from recent changes in technology or regulations, which can create a demand for solutions that didn't exist before.
JF
Jared Friedman
11/18/22
@ Y Combinator
An example of a company that capitalized on a new opportunity is Checker, which provides background checks via an API, addressing the needs of delivery services that require rapid hiring.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
A proxy is a large company that operates similarly to your startup but isn't a direct competitor, like DoorDash for food delivery in Latin America, which indicates that the idea could work there.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Many of the best startup ideas emerge in boring spaces, such as tax accounting software, which may not initially excite founders but can turn into successful businesses over time.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
When building software, it's generally scalable, but founders often struggle with service-based businesses that require high-skill human labor.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
An idea space is a class of closely related startup ideas, and different idea spaces have varying success rates; for instance, fintech and vertical SaaS have higher hit rates compared to consumer hardware or social networks.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Founders often overlook ideas that seem hard to start, are in boring spaces, or have existing competitors, but these can actually be good opportunities because they are less pursued by others.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Stripe succeeded because it addressed a known problem in credit card payment integration that many developers faced, but no one attempted to solve it due to perceived difficulties.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Gusto, which provides payroll software, illustrates that boring ideas can have high hit rates because many founders avoid them, leaving opportunities for those willing to tackle them.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Even if a startup idea seems fun initially, the day-to-day reality of running a startup often involves similar tasks regardless of the idea's excitement level.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Founders mistakenly avoid markets with existing competitors, but these markets can indicate a real demand for solutions that existing products fail to address, as seen with Dropbox's success despite many competitors.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
To generate startup ideas, it's more effective to notice them organically rather than forcing the process, as most successful YC companies found their ideas this way.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Becoming an expert in a valuable field or working at a startup can help you notice good startup ideas, as you'll be more attuned to the needs and gaps in that area.
YC
Y Combinator Cast
11/18/22
@ Y Combinator
Building interesting projects, even if they aren't initially intended as businesses, can lead to startup ideas over time, as demonstrated by the origin of Replica.
JF
Jared Friedman
11/18/22
@ Y Combinator
Start with what your team is especially good at and think of ideas that take advantage of your expertise. This approach ensures that any idea you generate has automatic founder-market fit.
JF
Jared Friedman
11/18/22
@ Y Combinator
The founders of Resi, who had expertise in real estate and debt financing, focused on ideas within the intersection of real estate and fintech, leading to a quick and effective search for their startup idea.
JF
Jared Friedman
11/18/22
@ Y Combinator
If you have specific expertise, like the founders of Resi, you should start by looking for ideas in areas where you are knowledgeable.
JF
Jared Friedman
11/18/22
@ Y Combinator
A good recipe for generating startup ideas is to start with a problem you've personally encountered, ideally one that you're in a unique position to see.
JF
Jared Friedman
11/18/22
@ Y Combinator
Vetco, a website for veterinarians to order supplies, was founded by brothers who noticed their father's outdated ordering methods, highlighting a significant opportunity in the veterinary supply space.
JF
Jared Friedman
11/18/22
@ Y Combinator
Many veterinarians recognize the problem of outdated supply ordering methods, but they often don't start tech startups, leaving a gap for tech-savvy founders to address.
JF
Jared Friedman
11/18/22
@ Y Combinator
When looking for startup ideas, consider recent changes in the world that may have created new opportunities, such as the behavioral shifts caused by the pandemic.
JF
Jared Friedman
11/18/22
@ Y Combinator
Gather Town emerged as a successful startup during the pandemic by pivoting from a different idea to create a platform for social interaction online, capitalizing on new opportunities.
JF
Jared Friedman
11/18/22
@ Y Combinator
Nuvo Cargo, which helps U.S. companies import from Mexico, was founded by Deepak, who systematically searched for better ideas after realizing his initial concept wouldn't work.
JF
Jared Friedman
11/18/22
@ Y Combinator
To find startup ideas, engage with people to understand their problems, but ensure you have the skills to navigate the conversations effectively.
JF
Jared Friedman
11/18/22
@ Y Combinator
A to B, a company that makes fuel cards for truck drivers, successfully identified a startup idea by systematically exploring the trucking industry despite lacking initial expertise.
JF
Jared Friedman
11/18/22
@ Y Combinator
Look for big industries that seem broken, as they are often ripe for disruption and innovation.
JF
Jared Friedman
11/18/22
@ Y Combinator
Finding a co-founder who already has an idea can be an effective way to get both a partnership and a startup concept simultaneously.
JF
Jared Friedman
11/18/22
@ Y Combinator
It's often difficult to determine if a startup idea is good, and the best way to find out is to launch it and see the results.