Olivier Truong

Commentary: Startup Ideas by PG

A crowded market is actually a good sign, because it means both that there's demand and that none of the existing solutions are good enough. A startup can't hope to enter a market that's obviously big and yet in which they have no competitors. So any startup that succeeds is either going to be entering a market with existing competitors, but armed with some secret weapon that will get them all the users (like Google), or entering a market that looks small but which will turn out to be big (like Microsoft).

Well-known market opportunity with competitors:

  1. Google started after Yahoo, Altavista, Lycos, etc.
  2. DoorDash started after Postmates (but before UberEats)
  3. Facebook. Friendster, MySpace.
  4. Snapchat. Instagram, Facebook.
  5. Slack. Hipchat, email.
  6. Netflix. Blockbusters.

Small market with huge potential with no winner yet

  1. Microsoft
  2. Coinbase
  3. Whatsapp
  4. Twilio
  5. Uber/Lyft - they converged on the right product at the same time and created the market
  6. Shopify
  7. OnlyFans

Little of both: players in the space but market was effectively created by these companies.

  1. Airbnb. Homeaway and Couchsurfing existed but home sharing / vacation rental was not a real market until Airbnb showed everyone how to do it right.
  2. Instacart. Last real attempt had been Webvan in the dot com boom.

When you use the organic method, you don't even notice an idea unless it's evidence that something is truly missing. But when you make a conscious effort to think of startup ideas, you have to replace this natural constraint with self-discipline. You'll see a lot more ideas, most of them bad, so you need to be able to filter them. One of the biggest dangers of not using the organic method is the example of the organic method. Organic ideas feel like inspirations. There are a lot of stories about successful startups that began when the founders had what seemed a crazy idea but "just knew" it was promising. When you feel that about an idea you've had while trying to come up with startup ideas, you're probably mistaken.

You can retroactively describe any made-up idea as something you need. But do you really need that recipe site or local event aggregator as much as Drew Houston needed Dropbox, or Brian Chesky and Joe Gebbia needed Airbnb?

Quite often at YC I find myself asking founders "Would you use this thing yourself, if you hadn't written it?" and you'd be surprised how often the answer is no.

When you're consciously trying to come up with a startup idea, your brain will trick you into believing a problem is real or that you've come up with the right solution. You'll tell yourself, "Oh yes I have this problem and I would use this solution". In reality, the problem is just a minor inconvenience and you haven't come up with a solution that you would use had someone else presented it to you.

The best trick to avoid falling into this trap is to convince someone who is deeply skeptical that you're right. This is why cofounders are important but also advisors.

I've always had a fear of sharing my seemingly great startup ideas. I know that ideas need to be socialized because it's nearly impossible for you to have come up with an idea without serious flaws. The benefits of saving yourself months working on a bad idea greatly outweighs the risk of your idea being ripped off, either by that person or somebody else who that person tells. Let me say one more thing about this because I think this is a common and expensive mistake that founders make (as I myself have made). You will be emotionally resistant to sharing your idea because human bias for loss aversion is very powerful. You need to make the intellectual decision based on the math: 90% of ideas are bad and 90% of startups fail.