How to Get and Evaluate Startup Ideas with Jared Friedman | Startup School

The key to a successful startup idea lies in identifying and solving a real problem for your users. The most common mistake founders make is focusing on a solution without first understanding the underlying problem. Instead, it's essential to "fall in love with the problem" and ensure it's a high-quality, specific, and tractable issue that resonates with potential users. Based on an analysis of successful YC companies and common mistakes in rejected applications, the speaker outlined three parts to this talk: identifying common mistakes, determining if your idea is good, and generating new ideas. The first mistake, as mentioned, is building a solution in search of a problem (CISP). Founders should instead focus on understanding the problem and validating its importance to users. The second mistake is getting stuck on "tar pit ideas," which are unrealistic or overly complex problems that can hinder progress. Instead, focus on a problem that is both solvable and valuable to your target audience. Lastly, the speaker recommended several methods for generating new ideas, such as observing and understanding user pain points, identifying market gaps, and combining existing ideas in new ways. By following these guidelines, you'll be better equipped to identify and execute on a promising startup idea.

Certain common startup ideas, often referred to as "tar pit ideas," can be misleadingly appealing but ultimately difficult or impossible to execute effectively. These ideas emerge from widespread problems that seem easily solvable with a startup, but are actually structurally complex and have eluded solution for years. For instance, the idea of creating an app to streamline social plans with friends may seem simple, but has proven elusive despite its widespread appeal. To avoid wasting time and resources on tar pit ideas, founders should first research the idea thoroughly, learning from those who have attempted it before and understanding the underlying challenges. Additionally, founders should avoid either jumping into the first idea that comes to mind or waiting for a perfect idea, instead focusing on a good starting point and being willing to adapt and iterate as they learn.

When evaluating a startup idea, it's essential to consider various factors beyond just its abstract potential. The speaker suggests asking ten key questions to assess the viability of an idea for your team. The first question is about founder market fit – are you and your team the right people to execute this idea? A good example is PlanGrid, where the founders' expertise in construction and app development made them the ideal team. Second, consider the market size – aim for a large, growing market or one with significant potential. Coinbase, for instance, targeted a small but rapidly expanding Bitcoin trading market. Third, assess the problem's acuteness – ensure the issue your solution addresses is significant and that the alternative is not nothing. For instance, Brax filled a gap in the market by providing credit cards for startups when no other banks offered them. Fourth, recognize the importance of competition – having competition is not necessarily a bad sign, but you may need a unique insight to stand out. Lastly, ensure personal investment – know people who want your product, as it's a good indicator of market demand. Remember, the goal is to find an idea that suits your team and addresses a real problem.

Identifying new opportunities often arises from recent changes in the world, such as new technologies, regulatory shifts, or emerging problems. A prime example of this is the company Checker, which offers background checks via an API, and capitalized on the need for delivery services like DoorDash and Instacart to conduct background checks on their large pools of workers. Another concept discussed is the role of proxies, or companies doing similar things but not direct competitors, such as RAPI in food delivery in Latin America. The longevity and scalability of an idea are also crucial factors, with software businesses generally being more scalable and some idea spaces having higher success rates than others. It's essential to consider these factors when evaluating potential startup ideas.

Exploring idea spaces with potential for growth can lead to successful startups, even if initial ideas don't pan out. The example of 5Tran illustrates this concept well. Initially, they attempted to sell a data analysis tool to companies, but when they didn't succeed, they pivoted and continued to refine their offerings based on feedback from potential customers. This process eventually led them to a successful product. Moreover, certain types of startup ideas may seem unattractive due to challenges or existing competition, but these very qualities can make them valuable opportunities. For instance, Stripe, which simplified credit card payments for websites, was an idea that seemed hard to get started due to the complexities of banking and credit card infrastructure. However, this deterred other founders, leaving the opportunity open for Stripe to capitalize on. Similarly, Gusto, which provides payroll software, is a seemingly boring idea, but its lack of competition made it an attractive opportunity for the founders to pursue. In summary, persisting in idea spaces with potential, even when initial ideas don't succeed, and embracing seemingly unattractive ideas can lead to successful startups.

The initial excitement or fun factor of a startup idea may not correlate with the enjoyment and success of executing it in the long run. Instead, founders should focus on identifying gaps or improvements in existing markets with competitors, as these areas often have untapped potential. Dropbox is a classic example, as it launched in a market with 20 competitors but succeeded by offering a more convenient and integrated user experience. The best startup ideas often come organically, rather than being forced, and it's essential to avoid being deterred by the presence of competitors. Instead, look for opportunities to differentiate and offer unique value.

Having organic startup ideas is more likely to result in successful businesses. If you're not planning to start a company immediately but want to position yourself for future organic ideas, consider becoming an expert in a valuable field by working at a startup or building things that interest you as a programmer. For those looking to generate startup ideas right now, the most effective method is to start with what your team is especially good at and think of ideas that take advantage of your expertise. This not only increases the likelihood of having founder market fit but also makes the idea generation process quicker and more painless. For those without extensive domain expertise, consider starting with a problem you've personally encountered, ideally one that you're in an unusual position to see. The founders of VET Cove, a website for veterinarians to order supplies, are a great example of this. They were able to identify a need in their unique position as brothers of a veterinarian and turned it into a successful business.

Identifying genuine startup opportunities often requires looking beyond the obvious and considering unique perspectives. The story of the veterinarian code founders highlights this concept perfectly. Thousands of veterinarians faced the frustration of outdated supply ordering systems, but due to the infrequent intersection of their industry with tech startups, no solution emerged. Meanwhile, thousands of programmers in Silicon Valley were unaware of this problem. By encouraging founders to reflect on their past experiences and consider problems they've encountered, as well as looking for new opportunities in recent changes, they may uncover untapped markets and create successful startups. For instance, DoorDash was born out of undergrads' desire for food delivery, and Gather Town pivoted to capitalize on the pandemic's shift to virtual socializing. Similarly, Nuvo Cargo identified a need for a Flexport-like service in Latin America. So, to find the next great startup idea, consider your personal experiences, identify unmet needs, and look for opportunities in recent changes.

Finding a successful startup idea involves a systematic approach and a willingness to learn. Deepak, the founder of Nuva Cargo, adopted this approach when his initial idea didn't work out. He looked for large markets with good proxies and used his connections to get started, even without deep domain expertise. A similar approach was taken by the founders of A to B, who identified the trucking industry as a fertile idea space despite lacking specific expertise. They became experts by talking to truck drivers and other industry insiders to understand the problems worth solving. This systematic approach to idea generation requires skill and a willingness to learn, but can lead to successful startups like Nuva Cargo and A to B.

Finding a successful startup idea involves hard work and looking in unconventional places. The example of A to B, a phenomenal company that came out of Y Combinator, demonstrates the value of putting in the effort to identify a problem and finding a unique solution. Another approach is to look for industries that seem broken and are ripe for disruption. Additionally, finding a co-founder who already has an idea can be an effective hack for those without one. However, it's important to remember that determining the viability of a startup idea can be challenging. While the concepts discussed can help, the only surefire way to know if an idea is good is to launch it and find out.