Summary
The video discusses finding and evaluating startup ideas. Common mistakes made by founders are waiting for a brilliant idea instead of starting with a good enough idea and focusing on execution, jumping into the first idea that comes to mind without critically evaluating its potential, starting with a solution instead of identifying a problem to solve, and believing that startup ideas are hard to find. Evaluating startup ideas involves using the "idea quality score" formula, which considers the size of the idea, founder market fit, solving a big problem, and having a new important insight. Unconscious biases can cause founders to reject their best startup ideas. Generating startup ideas involves noticing them organically and having a prepared mind. Seven recipes for generating startup ideas are presented, with the first recipe being to start with what your team is especially good at. Other recipes include thinking of things you wish someone would build for you, looking for recent changes in the world, looking for successful companies and finding new variants of them, asking people you know for problems they want solved, and looking for broken industries.
Introduction
- The video discusses finding and evaluating startup ideas
- The speaker shares statistical trends and insights from thousands of startups
- Common mistakes made by founders are covered
- Methods for evaluating ideas are discussed
- Recipes for generating startup ideas are provided
Mistakes founders make
The most profound aspect of the text is that founders often make mistakes when coming up with startup ideas, such as waiting for a brilliant idea instead of starting with a good enough idea and focusing on execution.
- Founders often wait for a brilliant idea instead of starting with a good enough idea and focusing on execution.
- Jumping into the first idea that comes to mind without critically evaluating its potential is another mistake.
- Starting with a solution instead of identifying a problem to solve is a common mistake.
- It is important to pick a good starting point for a startup idea and allow it to evolve over time.
- Another mistake is believing that startup ideas are hard to find when in reality there are many real problems left in the world.
- It is better to start with a problem and then find a solution.
- Once you learn how to notice good startup ideas, you will see them everywhere.
Evaluating startup ideas
Evaluating startup ideas involves using the "idea quality score" formula, which considers the size of the idea, founder market fit, solving a big problem, and having a new important insight. Other indicators of a good idea include building for oneself, leveraging recent changes in the world, and the presence of successful companies in a similar space.
- The "idea quality score" formula consists of four criteria: size of the idea, founder market fit, solving a big problem, and having a new important insight.
- Size of the idea can be determined by looking at existing large companies or identifying a small market with growth potential.
- Founder market fit refers to the expertise of the founders in the industry they are targeting.
- Solving a big problem is best done when the founders have personal experience with the problem.
- Having a new important insight can lead to innovative ideas, like Airbnb allowing strangers to stay in their homes.
- Building for oneself allows for trusting intuition, while building for others requires guessing their needs.
- Recent changes in the world, such as new technologies or products, can provide opportunities for startup ideas.
- The presence of successful companies in a similar space can indicate a viable startup idea, like Rapi in Latin America starting in a successful food delivery market.
Bad reasons to reject startup ideas
Unconscious biases can cause founders to reject their best startup ideas. The four major filters are:
- Shying away from ideas that seem hard to get started, leading to missed opportunities.
- Overlooking ideas in boring spaces, despite their potential.
- Avoiding ideas that seem too ambitious, despite their potential for success.
- Assuming that spaces with existing competitors are saturated, missing out on unique opportunities.
Generating startup ideas
The most profound aspect of generating startup ideas is to notice them organically rather than explicitly trying to think of them.
Key points:
- Have a prepared mind and be able to recognize good startup ideas when they encounter them
- Becoming an expert in a valuable field, particularly by working at the forefront of a startup, can help in noticing good startup ideas
- Seven recipes for explicitly generating startup ideas are presented, listed in order from best to worst
- The first recipe, starting with what your team is especially good at and thinking of ideas from there, is considered the best.
Recipe #1: Start with what your team is especially good at.
Starting with what your team is especially good at is an effective way to generate startup ideas. It gives you an unfair advantage in executing the ideas and ensures founder market fit. Here are two recipes for generating ideas:
- Reflect on past work experiences and identify unique knowledge, broken aspects of company life, and in-house tools that other companies might need.
- Think about things you wish someone else would build for you.
Recipe #2: Think of things you wish someone would build for you
- Recipe #2 for generating startup ideas is to think of things you personally wish someone would build for you.
- DoorDash founders exemplify this approach by creating a solution for delivering Thai food to the suburbs when they couldn't find an existing one.
- The key question is to ask yourself what you would be excited to work on.
Recipe #3: What would you be excited to work on for 10 years?
- The video discusses finding startup ideas that one would be excited to work on for 10 years.
- The speaker advises against solely pursuing ideas based on passion, as they may not lead to successful businesses.
- Instead, they suggest looking for recent changes in the world as potential areas to explore for startup ideas.
Recipe #4: Look for things that have changed in the world recently
- Finding startup ideas by looking for recent changes in the world is crucial.
- Changes can include new technologies, developer platforms, regulations, or problems.
- PlanGrid is an example of a company that capitalized on the introduction of the iPad by Apple.
- They digitized construction blueprints on tablets, creating a successful startup.
Recipe #5: Look for companies that have been successful recently and look for new variants of them
One way to generate startup ideas is to look for companies that have recently been successful and find new variations of them. This method often leads to ideas like "Uber for X" or "Airbnb for Y." However, it is important to be skeptical and carefully consider whether the idea actually solves a problem. Another approach is to crowdsource ideas.
- Standard Cognition saw the success of Amazon Go and realized that other retail stores would want the same technology.
- This method of idea generation may lead to solutions in search of problems.
- It is important to carefully consider whether the idea actually solves a problem.
- Another approach is to crowdsource ideas.
Recipe #6: Ask people you know for problems they want solved
- Asking people you know for problems they want solved is a valuable source of startup ideas.
- People with expertise in specific industries can provide valuable insights.
- Most people are not skilled at identifying startup ideas.
- Input from other startup founders is particularly effective.
- Startup founders have a knack for recognizing good startup ideas.
Recipe #7: Look for industries that seem broken
- Looking for broken industries is a valuable strategy for finding startup ideas.
- LendUp successfully disrupted the payday lending industry.
- It is important to have knowledge of the industry when pursuing this approach.
- Stick to industries that you are already familiar with.