YC
Kevin Hale - How to Evaluate Startup Ideas
@ Y Combinator
07/26/19
Takeaways
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Kevin Hale
07/26/19
@ Y Combinator
Evaluating startup ideas is crucial because many founders struggle with choosing which idea to pursue, often feeling stuck or lacking conviction about their choices.
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Kevin Hale
07/26/19
@ Y Combinator
Y Combinator does not only fund companies with significant traction; many successful companies were accepted based solely on their ideas.
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Kevin Hale
07/26/19
@ Y Combinator
A startup idea is essentially a hypothesis about how a company can grow quickly, and your goal is to construct a compelling pitch that demonstrates this potential.
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Kevin Hale
07/26/19
@ Y Combinator
When evaluating a startup idea, it's important to identify a significant problem that many people face, as well as to ensure that the problem is growing, urgent, and expensive to solve.
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Kevin Hale
07/26/19
@ Y Combinator
Good problems are those that are frequent, mandatory, and have a large number of people affected, as these characteristics increase the likelihood of a startup's success.
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Kevin Hale
07/26/19
@ Y Combinator
To effectively change behavior, you need to align motivation, ability, and a trigger, all occurring simultaneously; this principle is essential for understanding market needs. Many startups struggle to retain users because they fail to remind them of their problems and the need for a solution, often not sending enough notifications or reminders to engage users effectively.
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Kevin Hale
07/26/19
@ Y Combinator
Investors prefer markets that are growing at least 20% a year, where problems are currently being addressed and where solutions can save significant amounts of money.
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Kevin Hale
07/26/19
@ Y Combinator
It's crucial to identify problems that users face multiple times a day, as this increases engagement and the likelihood of product adoption. Examples include platforms like Facebook and Slack, which users interact with frequently.
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Kevin Hale
07/26/19
@ Y Combinator
At Y Combinator, we advise against starting with a solution in search of a problem. Instead, focus on identifying real problems that need solving, which will lead to more efficient growth.
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Kevin Hale
07/26/19
@ Y Combinator
Your startup's unfair advantage is essential for attracting investors. It should explain why your company will grow faster than competitors, and it must be related to growth potential.
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Kevin Hale
07/26/19
@ Y Combinator
A product must be at least 10 times better than the competition to be considered an unfair advantage. If it's only marginally better, it won't be compelling enough for investors.
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Kevin Hale
07/26/19
@ Y Combinator
Relying solely on paid acquisition for growth is risky. If your growth depends only on ads, it may not be sustainable in the long run, especially as competition increases.
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Kevin Hale
07/26/19
@ Y Combinator
The best companies grow through word-of-mouth rather than paid acquisition, and in the early days of a startup, if you lack funds, focus on growing your business without spending money by doing things that don't scale. This organic growth is a sign of a strong product that resonates with users.
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Kevin Hale
07/26/19
@ Y Combinator
Having a monopoly means that as your company grows, it becomes increasingly difficult for competitors to defeat you, often due to network effects.
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Kevin Hale
07/26/19
@ Y Combinator
The threshold belief is the basic requirement for a startup to succeed, such as whether the founders can even build the product.
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Kevin Hale
07/26/19
@ Y Combinator
The miracle belief is the optimistic view that the startup can achieve significant success, which is crucial for attracting investment.
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Kevin Hale
07/26/19
@ Y Combinator
To succeed, you need to demonstrate that you can effectively sell your product and convince customers, rather than just focusing on product development.
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Kevin Hale
07/26/19
@ Y Combinator
Y Combinator was created to help founders raise money without needing prior connections in venture capital, allowing anyone to apply with their ideas.
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Kevin Hale
07/26/19
@ Y Combinator
YC's unfair advantages include having exceptional founders and a strong belief in technology companies as the future of billion-dollar businesses.
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Kevin Hale
07/26/19
@ Y Combinator
The YC alumni network grows more powerful over time, providing valuable connections and resources to new startups.
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Kevin Hale
07/26/19
@ Y Combinator
In my startup, we built a drag-and-drop visual editor to help non-technical users create surveys easily, solving a common problem for website owners.
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Kevin Hale
07/26/19
@ Y Combinator
We achieved rapid growth by embedding our forms on users' websites, allowing our product to spread organically without hiring salespeople.
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Kevin Hale
07/26/19
@ Y Combinator
Despite only raising $118,000 throughout our company's life, we achieved returns of over 30,000% upon acquisition, highlighting the potential of lean startups.
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Kevin Hale
07/26/19
@ Y Combinator
Evaluating your startup idea involves identifying the problem, solution, and your unfair advantage, and addressing any gaps in your narrative.
KH
Kevin Hale
07/26/19
@ Y Combinator
A startup idea is essentially a hypothesis that needs to be validated through evidence and customer feedback.