Welcome to your journey into the dynamic world of startup ideation. In this guide, I will walk you through “How to Get and Evaluate Your Startup Ideas” with the same insights and practical frameworks used by industry-leading experts.
If you are at a stage where you’re actively searching for a breakthrough startup idea, or you’re simply exploring possibilities, this is for you. But, beyond simply offering ideas, my goal is to equip you with the conceptual tools necessary to think critically and strategically about startup ideas.
Why is this important? Because even though no one — not even industry experts at places like Y Combinator (YC) — can definitively predict which ideas will succeed, certain ideas certainly have a higher chance of flourishing.
Your success will depend just as much on how well you execute as on the quality of your initial idea, but starting with a strong idea can stack the odds in your favor.
Let’s start with the processes it takes to get a startup idea or a business idea:
Table of Contents
How to Get Your Startup Ideas
A remarkable startup idea often stems from a unique insight or a new way of addressing an existing problem. Take, for instance, Dropbox. The founder, Drew, recognized that existing file-sharing services failed to integrate seamlessly with users’ operating systems.
While these services required users to manually upload files one by one, Drew’s insight was that integrating file syncing directly into the host operating system would significantly enhance user convenience. This insight led to a substantial improvement in user experience and was a pivotal factor in Dropbox’s success.
One of the most effective ways to come up with startup ideas is to notice them organically rather than trying to force them through brainstorming sessions.
Research indicates that approximately 70% of the top YC companies developed their ideas organically. This method is preferred because it often leads to more authentic and viable startup concepts.
Here’s a structured guide to help you find and refine your startup idea, based on the insights from industry experts.
1. Leverage Your Expertise:
Begin by reflecting on your own expertise and experiences. What are you particularly skilled at? Identify areas where your knowledge is deep and where you can offer unique insights. For example, if you have a background in real estate and fintech, you might find a startup idea at the intersection of these fields. This approach has automatic founder-market fit—your expertise will naturally guide you towards ideas where you can add significant value.
Consider the story of Resi, a company that streamlined rental apartment transactions. The founders had deep experience in real estate and debt financing, allowing them to quickly identify and execute a viable idea. Start by focusing on the areas where your skills and experiences shine, and brainstorm ideas that capitalize on these strengths.
2. Solve Personal Problems:
Look for problems you’ve personally encountered and think about how you might solve them. This approach often leads to innovative ideas because you have firsthand experience with the pain points. For instance, Vetco, an online platform for veterinarians to order supplies, emerged from the founders’ frustration with outdated ordering methods used by their father, a veterinarian. By addressing a problem they intimately understood, they were able to create a solution that filled a genuine need.
3. Explore What You Wish Existed:
Reflect on things you wish were available in your life or work. For example, DoorDash originated from the founders’ desire to have local restaurant food delivered to their dorms. This method can be effective, but be cautious—make sure there’s a clear reason why the solution you envision doesn’t already exist. Avoid falling into the trap of pursuing ideas that might be impractical or already well-covered by existing solutions.
4. Capitalize on Recent Changes:
Keep an eye on recent changes in the world that might open new opportunities. The COVID-19 pandemic, for instance, created new needs and behaviors, leading to the rise of startups like Gather Town, which facilitates virtual hangouts. Similarly, identify recent trends or shifts in your industry and think about how you can address new challenges or leverage emerging opportunities.
5. Analyze Successful Models:
Look at successful companies and explore how you might adapt their models to new markets or niches. Nuvo Cargo, for example, adapted the model of Flexport to serve Latin America, focusing on a market that had not been as well addressed. By understanding successful businesses and considering how their models could be applied in different contexts, you can uncover new ideas.
6. Talk to People:
Engage with potential customers, industry experts, and existing founders to gain insights into their problems and needs. This approach requires skill and effort but can be incredibly fruitful. For instance, the founders of A to B, a company specializing in fuel cards for truck drivers, spent considerable time interacting with truck drivers and industry experts to understand their needs and develop a viable solution.
7. Examine Broken Industries:
Identify large industries that seem outdated or broken. Disrupting such sectors can be highly lucrative. Look for inefficiencies or gaps that you could address with innovative solutions. This strategy involves spotting areas ripe for disruption and developing solutions that challenge the status quo.
Bonus Tip: Partner with an Idea
If you’re still struggling to come up with an idea, consider finding a co-founder who already has one. Platforms like Startup School offer opportunities to connect with potential co-founders who have ideas but need a partner to bring them to life. This can be a practical way to get both an idea and a team.
How to Evaluate/Validate Your Startup Ideas
A startup journey involves more than just a great idea; it demands a strategic evaluation to ensure that the idea has the potential to succeed. As you assess your startup ideas, it’s essential to avoid common pitfalls and apply a rigorous framework to gauge their viability. This guide will help you navigate this process with practical insights.
Avoid Common Pitfalls
- Identifying Real Problems: One of the most frequent mistakes founders make is developing a solution without a genuine problem to solve. It’s easy to fall into the trap of creating a “solution in search of a problem”—for instance, trying to apply AI to a problem without confirming if it’s something users actually care about. Instead, focus on identifying real, pressing problems that users are eager to solve. This approach ensures that your solution addresses a need that people genuinely care about.
- Steering Clear of Tar Pit Ideas: Certain startup ideas may seem promising at first but are essentially “tar pit ideas”—concepts that, despite appearing viable, have structural issues that make them difficult to solve. These ideas often stem from widespread but misleadingly simple problems. A common example is trying to develop an app to streamline making plans with friends. While this seems like a problem everyone faces, it’s notoriously challenging due to underlying complexities. To avoid this, research existing solutions and understand why they haven’t succeeded before diving into similar ideas.
- Balancing Idea Selection: Avoid the extremes of either jumping on the first idea that comes to mind or waiting indefinitely for the perfect one. Instead, find a balance where your idea is good enough to start with but flexible enough to evolve. As Paul Graham suggests, consider your initial idea as a starting point—one that can be refined and adjusted as you progress.
Framework for Evaluating Ideas
- Founder-Market Fit: The first critical question is whether you and your team are well-suited for the idea. Founder-market fit is crucial; your team should possess the necessary expertise and passion for the problem you’re addressing. For example, PlanGrid’s founders had deep experience in construction, making them the ideal team to develop a construction blueprint app.
- Market Size: Evaluate the market potential of your idea. Ideally, the market should be large, either currently or showing rapid growth. For instance, Coinbase entered a nascent market in Bitcoin trading but positioned itself for future growth, betting on the cryptocurrency’s potential.
- Problem Acute: Assess how acute the problem is. The best startup ideas often solve problems that are pressing and significant to users. For instance, Brex addressed a significant gap in corporate credit cards for startups, highlighting the importance of solving a problem where existing solutions were inadequate.
- Competition: Having competition isn’t necessarily negative; in fact, it often indicates that there’s a market for the idea. Instead of avoiding competitive spaces, look for gaps or deficiencies in existing solutions. Dropbox, for example, succeeded by improving on existing file storage solutions with a more user-friendly interface.
- Personal Passion and Demand: Reflect on whether you personally want the solution and if people you know would benefit from it. If you lack personal interest or connections to the problem, it may be worth investigating further before fully committing.
- Recent Changes: Consider whether recent changes in technology, regulations, or societal trends have created new opportunities. Checker, for example, capitalized on the rise of gig economy jobs to offer an API for background checks, responding to a new and pressing need.
- Proxies: Use successful companies in related fields as proxies to evaluate your idea’s potential. If similar concepts have succeeded elsewhere, they can provide insights into the feasibility of your idea. For instance, the success of delivery services like DoorDash in other regions supported the viability of Rappi’s food delivery service in Latin America.
- Long-Term Commitment: Ensure you are willing to work on the idea for years. This involves being ready to navigate the ups and downs of startup life, where initial excitement may wane but perseverance is crucial. The success of many startups depends on the founder’s ability to adapt and persist.
- Scalability: Evaluate if the idea is scalable. Software-based startups generally have an advantage here, as software scales efficiently. In contrast, service-based businesses may face scalability challenges due to the reliance on high-skill labor.
- Idea Space: Finally, consider the broader “idea space” or category your startup falls into. Some idea spaces have higher success rates due to their historical performance. For example, fintech infrastructure has a higher probability of success compared to consumer hardware. Choose an idea space that aligns with high success rates and fits your team’s strengths.
Embrace Hidden Opportunities
Sometimes, the best ideas are those that seem difficult, boring, or competitive. Ideas that are hard to start, belong to seemingly dull industries, or face established competitors often remain underexplored, presenting significant opportunities for those willing to tackle them. For example, Stripe succeeded despite the complexities of integrating credit card payments because others were deterred by the initial difficulties.
By applying these principles and evaluating your startup ideas through these lenses, you increase your chances of building a successful venture. Remember, the key is not just to have a good idea but to align it with your team’s strengths, market needs, and long-term vision.
