Let's Find a Good Startup Idea!

Last night, I was reading the essay by Paul Graham, ‘How to Get Startup Ideas,’[1] as a part of Y Combinator Startup School[2]. I must say that I have learned some valuable things from that essay, which I feel compelled to share. The essay was under Lesson 3/5 of Module 2: Getting and Evaluating Startup Ideas.

First, let’s talk about tarpit ideas!

In Lesson 2/5, "Pivoting Out of a Tarpit Idea" by Dalton Caldwell and Michael Seibel[3], they talked about why founders should avoid tarpit ideas. It’s important that we first discuss tarpit ideas and why founders should steer clear of them. A tarpit is an area with water and mud where animals become trapped and unable to escape, leading to their eventual death and attracting more animals to the site.[4]

What are the general traits of tarpit ideas?

• Consumer Ideas: Tarpit ideas are usually consumer ideas, which appear fascinating to a large pool of people. These ideas attract many founders because everyone can see the particular gap (problem to solve). An example used in the video to illustrate a tarpit idea is creating an app that helps you find good restaurants through ratings and recommendations. Consumer ideas are often very generic, lacking substance and rationale.

• Focusing on B2C, then B2B: Tarpit ideas focus on solving problems for everyone, which, upon careful consideration, is not feasible. A good idea caters to a specific industry or area. Tarpit ideas usually start with a business-to-consumer (B2C) approach, then shift to business-to-business (B2B). Prioritizing startups like Cisco or Oracle over Apple or Facebook can be more fruitful, as solving business problems can lead to viable startup ideas.

• Large Supply of Founders: Tarpit ideas generally have a large supply of founders because the nature of the problem they are trying to solve is very basic and widely recognized. Good startup ideas are those where the problem is not identified by many, with a low supply of founders. Ideally, there would be hardly any person who knows or understands the problem that could be solved via software or any other instrument.

• Theoretical and Trends-based: Tarpit ideas are often theoretical and solely based on trends. This means they are not based on real needs or problems. The supply of companies attempting to solve the problem is higher than the demand, which not only renders the effort futile but also leads to significant financial losses. These ideas are also trend-based, meaning the idea comes from something currently popular or discussed among friends. Their lifespan is short-lived, lasting only as long as the trend.

Understanding the nature of your idea is crucial. To truly address a problem, you must experience it firsthand. Experience the problem – live and understand it. Then, create a product for yourself. Sometimes, your idea might initially resemble a tarpit idea, but if you are convinced and interested, additional research can help. Keep your eyes open and know the game you’re playing. Another matrix to check the nature of your idea is assessing your passion and commitment. For instance, if you are willing to forego sleep, meals, and social interactions to work on your idea, it may hold merit.

Reflecting on this, the thought that comes to my mind is that warning people about tarpit ideas might discourage them from pursuing startups. Even I felt discouraged at first when I listened to their talk. But upon giving it conscious thought, I realized it’s important to better assess the traits of your ideas. Otherwise, these tarpit ideas will not only take your money but also your time.

What good startup ideas are?

a) They are something the founders themselves want.

b) That founders themselves can build.

c)  That few others realize it is worth doing.

“The most important thing that entrepreneurs should do is pick something they care about, work on it, but don’t actually commit to turning it into a company until it’s working.” Mark Zuckerberg, founder of Facebook to Sam Altman, CEO of OpenAI. [5]

Substance of Success: ORGANIC IDEAS

Paul Graham, in his essay, encourages founders to pursue organic ideas. These are ideas that naturally emerge from the founders' own experiences. Typically, all successful startups originate from such organic ideas. He asserts, “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 rudimentary version one made by a two-person startup they've never heard of? If you can't affirmatively answer that, the idea is likely flawed.”[6] This becomes the most crucial filter to determine whether an idea is worth pursuing. Further, ponder whether, if you launched the product today, people would be eager to use it, like it, and promote it through word of mouth—the most potent form of marketing.

Organic ideas don't arise under pressure or from merely wanting to spot the next big thing. My personal experience supports this: they often appear in the most unexpected places and times, popping into your mind persistently. If not recorded, they may fade away, missing a potentially golden opportunity. Organic ideas emerge unexpectedly, offering solutions to problems that are apparent to you but not to others. Their hidden potential is not immediately obvious. Consider Airbnb's story, as discussed in the essay. Further, the focus should be on building a beloved product rather than merely a startup. Organic ideas demand clear, conscious thinking rather than wishful thinking, especially since the motivation purely to make money won't yield such ideas.

Pay Attention to Users:

Understanding a startup means recognizing you're solving specific problems for a group of users in exchange for money. Consumers expect the value you provide to equal or surpass the price they pay. This is essentially the game of delivering value to your users. They should choose to pay you because you've identified a unique problem and are offering a substantive solution through your product.

Even if your product is in its beta phase or an imperfect version, its ability to attract users signifies a good product. There should be an urgency in the user's need for the product. Presenting a product that consumers might consider using "someday" is not conducive to success. Your product should compel users to want it now. Entrepreneurship is fundamentally about adding value to society and being useful to your fellow humans. If customers aren't excited to use your product or service immediately, it's a signal to reevaluate what your product lacks. Honest reflection can lead to insights that significantly improve your product and its market positioning. Reflection will fill you with impressive observations and outcomes.

Live in the Future and Build What Seems Interesting:

Take a breath and then answer the following question: when do you want to make an impact or earn money? The answer is likely in the future. To achieve this, you need a product or service that belongs to the future. Can you make a product for the future without thinking about the future? The answer is simply, no. Living in the present alone won't suffice; you need to "time travel" to the future by constantly learning about the market's past, present, and where it's headed. The actions we take today lay the groundwork for tomorrow.

Be at the leading edge of technology. Understand the market and technology fully, and be an expert in that area. For instance, as a lawyer interested in startups, I see great potential at the intersection of Artificial Intelligence and Arbitration. These are current buzzwords in both tech and law, suggesting that deep understanding and experimentation in these areas could lead to the generation of a truly organic idea, not a tarpit idea. Remember, if something annoys you, you might already be living in the future.

Schlep Filter & Unsexy Filter:

If you are thinking that you can write some clever code, put it on the server and the money will start coming, I am sorry but you are mistaken. As Elon Musk said, “Running a start-up is like chewing glass and staring into the abyss. After a while, you stop staring, but the glass chewing never ends.” Inspiration can get you started but it’s perspiration that will make you win the race. Paul in his other essay, Schlep Blindness[7] talks about great startup ideas lying unexploited right under our noses because of Schlep blindness. Schlep means tedious and unpleasant tasks. He says, which I quote:

“But I soon learned from experience that schleps are not merely inevitable, but pretty much what business consists of. A company is defined by the schleps it will undertake. And schleps should be dealt with the same way you'd deal with a cold swimming pool: just jump in. Which is not to say you should seek out unpleasant work per se, but that you should never shrink from it if it's on the path to something great.” [8]

Unconsciousness is the reason why we dislike schleps. To overcome schlep blindness, ignorance becomes a valuable antidote because many successful founders say that they might not have started in the first place if they knew about obstacles. Quite interesting, right? The example of Stripe in the essay will tell you more about the concept of schlep blindness.

You need to turn off this filter, schlep filter. The other filter you need to turn off is of unsexy filter. Usually, founders avoid those ideas which are perceived as uninteresting or undesirable because they don’t look cool or not all people talk about it. Because sometimes, these ideas which are undesirable or uninteresting could have the maximum potential to revolutionise the market. It’s important to prioritize identifying valuable problems over convenience or perceived appeal. Don’t let fear of effort deter you from pursuing impactful ideas. Though, passion for an idea can be beneficial but should be supported with efforts. The unsexy filter can be valuable on a few occasions but still depends upon case case-to-case basis.

Pointers:

1. Add value to society.

2. Pay attention to users.

3. Take an organic approach to ideas.

4. Live in the future.

5. Be at the leading edge.

6. Find the missing gap.

7. Don’t fear efforts.

8. Don’t fear competition.

9. Work on hard problems.

10. Aim high.

Nothing is impossible. Impossible is a word for weak and impotent. “Ideas don’t come out fully formed. They only become clear as you work on them. You just have to get started.” [9] Remember, every innovation visible today once existed merely as an idea. Let this be the guiding principle of your entrepreneurial journey.

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Footnotes:

[1] Graham, P. (2012). Startup Ideas. https://paulgraham.com/startupideas.html

[2] Startup School by Y Combinator. https://www.startupschool.org

[3] Caldwell D. & Seibel M. ‘Pivoting Out of a Tarpit Idea.’ https://www.youtube.com/watch?v=GMIawSAygO4

[4] Mirzaie, H. (2023, February 8). Tarpit of Ideas: How can we know a startup idea is a good idea? [LinkedIn post]. Retrieved February 20, 2024, from https://www.linkedin.com/pulse/tarpit-ideas-how-can-we-know-startup-idea-good-hadi-mirzaie-ik9if/

[5] Zuckerberg, M. (2014). Mark Zuckerberg: How to Build the Future [Video]. YouTube. Retrieved from https://www.youtube.com/watch?v=Lb4IcGF5iTQ

[6] Refer to footnote 1.

[7] Graham, P. (2012). Schlep blindness. https://paulgraham.com/schlep.html

[8] Ibid.

[9] Mark Zuckerberg during his address at Harvard University. https://youtube.com/shorts/ubQOqbKzOMY?si=tY4K85oTBMjurYSI