15 ms·

How to pick startup ideas

385 points by coffeemug 12y ago

wooyi 12y ago
This articles makes sense, but it's hard to step back and be so reflective without being victim of analysis paralysis. Many times, you build a toy, something you like, and it turns out big. If you over analyze it, you may not build it because you can't predict the future no matter how well you think you can. In many cases, analyzing your startup idea with such a complex framework will stop you at your tracks. I prefer to follow the basic rules PG laid out (there are some overlaps) in his article on startup ideas.
marcus_holmes 12y ago
nah, I had to stop reading when it said that First Mover Advantage was the key to success. That's been so thoroughly debunked (try and think of a single successful startup that was First Mover with its business model). The First Mover spends all its time educating the market, the businesses who follow soon after can take advantage of that. Really nice writing though :)
- nvader 12y ago
  I'm not exactly sure about this, and in no way does it detract from your point, but would Uber count as a first mover?
marcus_holmes 12y ago
nah, I had to stop reading when it said that First Mover Advantage was the key to success. That's been so thoroughly debunked (try and think of a single successful startup that was First Mover with its business model). The First Mover spends all its time educating the market, the businesses who follow soon after can take advantage of that. Really nice writing though :)
inthewoods 12y ago
Interesting article - a lot of good stuff in it but I found it a bit to general to be really useful. As an example, the author states: "So you need to get to market with a viable product before anyone else does." That's the type of statement that I question - there are plenty of examples of companies creating products in saturated markets where they were not the first mover. In fact, sometime being a first mover can be a disadvantage as you must, as a startup, spend huge amounts of time and money educating the market. Now, the author's approach of "look at the trend, get in front of it" is great - but it's pretty rare that someone can do that. In startups, I've usually seen that luck plays a bigger role in it than anyone wants to admit - that is, you start a company, and you happen onto the right market wave at the right time. Definitely bookmarking it!
- coffeemug 12y ago
  > there are plenty of examples of companies creating products in saturated markets where they were not the first mover There is an "exceptions" section closer to the end of the post that discuss this, though it probably should have been longer. The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time. You can jump into a saturated market, but you need a hypothesis as to why you're going to win (a distribution edge that existing competitors don't have, a new trend that existing competitors can't capitalize on, etc.) Especially in the latter case, one could make an argument that you will have discovered a new trend/market, though at that point it's a matter of definitions.
  - inthewoods 12y ago
    "The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time." I'd be curious to find data to back up that assertion - I've personally seen way more people/companies fail trying to skate to where the puck is going to be vs. just going after businesses where there are already existing solutions. But again, this is anecdotal data. The best example I have of this is Google. Search was done and owned by a handful of players - they innovated and won. But to your point about definitions - did they win on that, or win on creating Adwords (which they were also not the first mover on)? Perhaps it comes down to this: entering a market where there are low switching costs means that you can enter late with a significantly better product - but it has to be 4x better (that's my rule). Meaning the product has to be 4x better than the existing solution. If, however, you're entering a market with high switching costs, then the benefit probably has to be great than 4x - maybe 8x. As an example - look at all the people trying to get people to switch off of Salesforce.com. I don't know anyone that likes this product - but no one can switch because the costs are too high across the board - organizationally, data-wise, software - while the resulting CRM might be marginally better. That means that startups going after that can get traction with people who don't have a CRM, but not with existing CRM customers - and thus bang their head against the wall/fail.
dkarapetyan 12y ago
Really engaging post. Placed in the context of RethinkDB though it is a bit contradictory no? RethinkDB does not have first mover advantage and they are against the likes of Riak, Mongo, Couchbase, Cassandra, etc. All of those I believe are in a much stronger position according to the criteria in the post.
- coffeemug 12y ago
  RethinkDB won't be in this position for long (and in fact, most lessons in the article came directly from the mistakes made in the process of building RethinkDB). We found a big point of a differentiation (http://rethinkdb.com/blog/realtime-web/ http://rethinkdb.com/blog/realtime-web/), which, depending on one's definition, can be considered discovering a new market, and we'll be the first open-source scalable database in that market. The upcoming 2.0 release will reposition the company around realtime web/push database. A huge part of the reason why we chose this path is the lessons in the article.
  - dkarapetyan 12y ago
    I agree with you. RehinkDB does make a very compelling product for the stream based future. Looking forward to more stuff from you guys. This is the best written article I've read in a long time on startup stuff.
  - MichaelGG 12y ago
    Isn't that something like SQL Server Query Notifications, where you can submit a query and the DB lets you know when the results have changed? Albeit your API looks much smoother. Speaking of which, I really hope at one point you reconsider the driver model. Having official drivers for only a few not-so-awesomely-typed languages is a big turnoff.
    - coffeemug 12y ago
      > Isn't that something like SQL Server Query Notifications Yes, very similar, but there are a few major differences -- open-source product, horizontally scalable, json data model, packaging/api designed for web developers from the ground up. When you add all of these up, the differences are quite dramatic. > I really hope at one point you reconsider the driver model. Yes -- after 2.0 is out, we'll start bringing the community drivers under the official umbrella.
dshankar 12y ago
This is excellent. Your intuition, thought process, and writing style remind me of PG's essays.
nostrademons 12y ago
I like this article. Much of the advice on startups is biased from an investor perspective, this is something that's very real from a founder's perspective. If I had to summarize and riff off of the ideas here, I'd phrase it as "Be very careful about where you're getting your information from." If you got your startup idea because you heard about something from a news article, you are way too late. If you got it from an Internet forum, there's a chance that you might be on to something, but it depends on how niche the forum is and how close to the bleeding ege. If you got it from a problem that you or a friend personally had and you know how to solve it right now, you may be on to something, but you have to carefully consider how many other people are like your friend and whether that's going to grow in the future. If you're in a niche community yourself and that community is growing rapidly, there are probably lots of things you can explore that might be fruitful startup ideas.
- davemel37 12y ago
  "Be very careful about where you're getting your information from." I would encourage you to apply this nugget of gold to this post as well. It is a mistake to dismiss an idea just because others are working on it. In fact, I would argue the opposite. It validates the idea and the market.
  - deleted 12y ago
    [deleted]
davemel37 12y ago
This article is built on top of many faulty assumptions... Most notably,"When you’re second to market with a viable product, your customers will compare you to the company and product that got to market first." This assumes that the entire market knows about a solution the moment a first mover comes to market. The reality is that building a brand to the point where every prospect you approach is comparing you to an incumbent takes years. The first couple years of a new market opportunity, even with dozens of competitors, there are enough prospects in the market that you can be first to market with the people you reach and your competitors will be first to market with a different segment of the market. That being said, it is ABSOLUTELY CRUCIAL for every company to differentiate themselves in a way that they can't be compared to a competitor. There are some nuggets of wisdom sprinkled throughout this post, but It is clearly built on one subjective individuals perception of things that are beyond our control to really grasp. (i.e. the surface is successful because of a massive ad budget. I would argue the surface is a new category by itself.)
- nostrademons 12y ago
  That's true, but you also need a story about how you're going to grow your reach & influence faster than your competitor does. It can work, for example, if your main competitor is a hobbyist who doesn't take his product seriously. Ditto a major corporation for whom this is a sideshow that can't get resources from execs whose attention is focused elsewhere. But anybody can spend more money to tell more people about their product. This is not a competitive differentiator; if you do it, and the company who got to market first does it, they'll win simply through Gambler's Ruin, since they start from a bigger base.
  - coffeemug 12y ago
    > This assumes that the entire market knows about a solution the moment a first mover comes to market. It doesn't. The first mover will start getting customers before you do, and as they do their ability to reach customers will grow exponentially. You might start reaching a segment of the market they aren't reaching, but they'll trivially be able to lock you out.
brandonb 12y ago
What an excellent post! I don't agree with every point, but this is thoughtful, clearly articulated, and the thought process reminds me of PG's best writing.
- swah 12y ago
  It did felt pgish - I don't like this way of trying to structure the world too much though. I think patio11 would agree with me...
debidika 12y ago
Good Article, Thanks.
shinamee 12y ago
== Paradoxically, the solution is to stop thinking of startup ideas in terms of solving problems in the early stages of startup germination, and instead start thinking in terms of changes in the economic environment and the opportunities these changes unlock. == strong point, exactly what I have been thinking lately while trying to understand every single products Google acquires. I still think there are rooms for innovation.
graphene 12y ago
Excellent essay. I feel like the emphasis on "the story" reinforces pmarca's point in his "product market fit" article (http://web.stanford.edu/class/ee204/ProductMarketFit.html http://web.stanford.edu/class/ee204/ProductMarketFit.html): that more important than the team or the idea is the market (in coffeemug's words: the environment). You can obviously screw up a great market -- and that has been done, and not infrequently -- but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most. And neither a stellar team nor a fantastic product will redeem a bad market.
- coffeemug 12y ago
  The whole essay is really a rip off of pmarca's product/market fit argument, and Peter Thiel's contrarian but right argument. I just rewrote it through the lens of my own experience. The only truly new thing that I discovered was the "story" bit. I haven't heard that anywhere else before.
levlandau 12y ago
I agree with the statement that startups are like biological organisms evolving in the broth of an economic environment. In @pmarca's words "the market needs to be fulfilled and the market will be fulfilled". Once we move on from this fact (that we can't create startups out of thin air without there being an underlying wave ...without a "why now"), the rest of the actionable advice here will work better for an investor and/or the entrepreneur who views herself more as an investor than say a hacker. Alternative advice is to "live in the future" as PG would say it or to be different as Peter Thiel would imply. What I think this means is to ask yourself how similar what you do for fun/ for projects is to what everyone else is doing[similar --> bad]. How often do you work on that stuff? Do you collaborate with people? I am convinced ideas emerge as a natural consequence of working on ideas at the fringe with interesting people. What is hard is a) working on ideas and b) finding interesting people to work with. Another thing that doesn't help is committing to a company prematurely. Easier said than done, but i think if we as entrepreneurs took it a little less serious...we'd net out with more successful companies.
derekp7 12y ago
Question -- is there any good place to post ideas for startups? Quite often, I'm looking for a company that provides X, and there is no one that I'm aware of that does X. However, I can see how X could be a profitable business for someone, even if I'm not in a position to start X myself.
- betadreamer 12y ago
  http://www.requestsforstartups.com/ http://www.requestsforstartups.com/
- hayksaakian 12y ago
  This is an idea me and a friend wanted to try out. http://idealist.tips/ http://idealist.tips/ We promoted it but it didn't get any up-take (the site is using the opensource lobste.rs code from https://github.com/jcs/lobsters https://github.com/jcs/lobsters ) There is also a sub-reddit where people post this type of stuff (i'm unaffiliated with it) http://www.reddit.com/r/SomebodyMakeThis/ http://www.reddit.com/r/SomebodyMakeThis/
- leesalminen 12y ago
  I normally give these ideas to people that I know and like and offer to talk the idea through with them if they ever decide to follow through.
- EC1 12y ago
  was posted many times on HN: http://firespotting.com/ http://firespotting.com/
nnx 12y ago
I would love to have Slava's articles in my feeds but can't find any RSS/Atom link. Anyone?
- misframer 12y ago
  How about http://www.defmacro.org/feed.atom http://www.defmacro.org/feed.atom ?
  - nnx 12y ago
    Oh, so there is. Thanks a bunch!
deleted 12y ago
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hayksaakian 12y ago
on saturated markets: many of the companies you've never heard of made their money building an easier to use X in a saturated market. If the dominant company in the industry has not made significant changes to their product in 10 years, then that's an obvious opportunity for a startup, even if the market is completely saturated. at least in B2B i've found that many companies solve a problem for their customer demographic in year X, grow pretty big, and rake in the cash. They stay stagnant for X+5 to 10 years and they leave their customers frustrated without any real options. ----- Another fallacy I hear from people thinking of ideas has to do with "solved problems" A "solved problem" is just a problem with 1 solution. People are different, customers are different. Is there another way to solve the problem that obsoletes the previous solution? ex: transportation; solved by "horse and buggy", and then obsoleted by cars and public transportation.
- k__ 12y ago
  Depends on how specific you let the problem be. Horses (and the first cars) didn't solve the problem to travel 100km in under 1h. Which can be seen as a new problem itself.
- arethuza 12y ago
  Search on the web was a "solved problem" until Google came along and showed that all of the search engines before then were actually pretty useless. However, until Google came along we didn't know they weren't very good as any kind of web-scale search seemed like a miracle at the time.
leroy_masochist 12y ago
Thought this was a great article and found the Pixar storytelling framework particularly interesting. Thank you very much for taking the time to put this to paper. I'll definitely check out RethinkDB!
tracker1 12y ago
I like the distilled version you get from @FakeGrimlock ... find right because, make people want.
fsloth 12y ago
"Market efficiency implies that if a problem is valuable and solvable, it’s overwhelmingly likely that it already would have been solved." I think it depends on many things, including the size of the market. I'm willing to bet there are many profitable niches which are served currently with only sub-optimal products. But to find these one needs domain knowledge od the niche, and I think these are served best by teams of adventurous established experts rather than teams without domaim knowledge.
deleted 12y ago
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Animats 12y ago
What he refers to as "technology" companies are not ones innovating in any technological area. He's really talking about online application business-to-consumer startups ("appcrap"), for which there's a well-defined assembly line process. A real technology company is defined by their ability to do something hard that others have trouble doing. The first mover has an advantage, but it's not overwhelming. IBM didn't come out with the first personal computer - Apple and Commodore did. Microsoft didn't have the first operating system for x86 machines - Digital Research did. AOL once dominated social networking. Facebook moved into a quite mature space - Myspace, Geocities, and several others were big companies when Facebook started. Luck does indeed play a big part. If Gary Kildall, the author of CP/M, had been in the office the day IBM was looking for an OS for their new PC, the history of personal computing could have been very different.
- k__ 12y ago
  "A real technology company is defined by their ability to do something hard that others have trouble doing." You're right. But of those companies that just "use" high tech for their services start to put efforts in R&D to stay on top later in their game.
- pmikesell 12y ago
  >>> He's really talking about online application business-to-consumer startups ("appcrap") No, I don't think so. The author is Slava from RethinkDB. His company is definitely not "appcrap" (as you put it), and I think his same line of reasoning applies equally well to "real technology" companies (like RethinkDB), it just takes place on a longer time horizon. If you extend his metaphors to include the time to competitively create "real technology" they apply equally well.
  - coffeemug 12y ago
    Exactly right. If Google can make self-driving cars, there are at least two other companies in the world (and probably many more) that can (and will) make competing self-driving cars. The timeline is a big longer, but the basic rules are the same. As much as we all like to think we're exceptional, we aren't.
jzheng 12y ago
It's a good article and has some good points. But after some thinking, it seems that almost none of successful startup ideas come with capturing the change of environment. Instead, most of successful startup ideas come from hobby, solving a problem, iteration, improving existing products, etc. Besides a good idea, building a successful startup requires a lots of other stuff like great team, good fund raising, great execution, great user growth, etc. I guess all the other parts are much difficult than finding a good idea. If you don't have a good idea yet, you can just focus on other parts: building a good team, or learning to executing well. You can start with small projects with positive cashflow like consulting, etc. The best way to pickup a startup ideas is to look at new startups and find the ideas that you like and that you can improve and execute well. Just as some other posts mentioned, if you are smart, you can make difference even in mature market. Market is not efficient at all, especially for new and emerging market.
mbolton 12y ago
Solutions to problems, be those problems you personally experienced or in the workplace, is what creates a successful product. Without a successful product, you can't have a successful startup. That being said, a successful product doesn't guarantee startup success.
ElComradio 12y ago
Two efficient market theorists are walking down the street. They see a hundred dollar bill on the sidewalk but keep walking. One turns to the other and says, "If that was real, somebody would have picked it up already."
kpennell 12y ago
It's an interesting argument but I can think of so many counterexamples. A guy named Michael Wolfe (pipewise founder) wrote an interesting quora answer on dropbox. Dropbox was way late to the file syncing party. The answer: Well, let's take a step back and think about the sync problem and what the ideal solution for it would do: There would be a folder. You'd put your stuff in it. It would sync. They built that. Why didn't anyone else build that? I have no idea. "But," you may ask, "so much more you could do! What about task management, calendaring, customized dashboards, virtual white boarding. More than just folders and files!" No, shut up. People don't use that crap. They just want a folder. A folder that syncs. "But," you may say, "this is valuable data... certainly users will feel more comfortable tying their data to Windows Live, Apple's MobileMe, or a name they already know." No, shut up. Not a single person on Earth wakes up in the morning worried about deriving more value from their Windows Live login. People already trust folders. And Dropbox looks just like a folder. One that syncs. "But," you may say, "folders are so 1995. Why not leverage the full power of the web? With HTML5 you can drag and drop files, you can build intergalactic dashboards of statistics showing how much storage you are using, you can publish your files as RSS feeds and tweets, and you can add your company logo!" No, shut up. Most of the world doesn't sit in front of their browser all day. If they do, it is Internet Explorer 6 at work that they are not allowed to upgrade. Browsers suck for these kinds of things. Their stuff is already in folders. They just want a folder. That syncs. That is what it does.
- TeMPOraL 12y ago
  This is the best start-up lesson I've seen this year. I wish more people followed it, though cynic in me thinks it's irrelevant because most of the time, it's not customers that are the users - it's investors and potential acquihirers.

385 points by coffeemug 12y ago

wooyi 12y ago

This articles makes sense, but it's hard to step back and be so reflective without being victim of analysis paralysis. Many times, you build a toy, something you like, and it turns out big. If you over analyze it, you may not build it because you can't predict the future no matter how well you think you can. In many cases, analyzing your startup idea with such a complex framework will stop you at your tracks. I prefer to follow the basic rules PG laid out (there are some overlaps) in his article on startup ideas.

marcus_holmes 12y ago

nah, I had to stop reading when it said that First Mover Advantage was the key to success. That's been so thoroughly debunked (try and think of a single successful startup that was First Mover with its business model). The First Mover spends all its time educating the market, the businesses who follow soon after can take advantage of that. Really nice writing though :)

nvader 12y ago
I'm not exactly sure about this, and in no way does it detract from your point, but would Uber count as a first mover?

marcus_holmes 12y ago

inthewoods 12y ago

Interesting article - a lot of good stuff in it but I found it a bit to general to be really useful. As an example, the author states: "So you need to get to market with a viable product before anyone else does." That's the type of statement that I question - there are plenty of examples of companies creating products in saturated markets where they were not the first mover. In fact, sometime being a first mover can be a disadvantage as you must, as a startup, spend huge amounts of time and money educating the market. Now, the author's approach of "look at the trend, get in front of it" is great - but it's pretty rare that someone can do that. In startups, I've usually seen that luck plays a bigger role in it than anyone wants to admit - that is, you start a company, and you happen onto the right market wave at the right time. Definitely bookmarking it!

coffeemug 12y ago
> there are plenty of examples of companies creating products in saturated markets where they were not the first mover There is an "exceptions" section closer to the end of the post that discuss this, though it probably should have been longer. The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time. You can jump into a saturated market, but you need a hypothesis as to why you're going to win (a distribution edge that existing competitors don't have, a new trend that existing competitors can't capitalize on, etc.) Especially in the latter case, one could make an argument that you will have discovered a new trend/market, though at that point it's a matter of definitions.
- inthewoods 12y ago
  "The biggest issue with exceptions like this is that first-time founders often jump into a saturated market and think "we can do better -- look at all the counterexamples", but they end up losing the overwhelming majority of the time." I'd be curious to find data to back up that assertion - I've personally seen way more people/companies fail trying to skate to where the puck is going to be vs. just going after businesses where there are already existing solutions. But again, this is anecdotal data. The best example I have of this is Google. Search was done and owned by a handful of players - they innovated and won. But to your point about definitions - did they win on that, or win on creating Adwords (which they were also not the first mover on)? Perhaps it comes down to this: entering a market where there are low switching costs means that you can enter late with a significantly better product - but it has to be 4x better (that's my rule). Meaning the product has to be 4x better than the existing solution. If, however, you're entering a market with high switching costs, then the benefit probably has to be great than 4x - maybe 8x. As an example - look at all the people trying to get people to switch off of Salesforce.com. I don't know anyone that likes this product - but no one can switch because the costs are too high across the board - organizationally, data-wise, software - while the resulting CRM might be marginally better. That means that startups going after that can get traction with people who don't have a CRM, but not with existing CRM customers - and thus bang their head against the wall/fail.

dkarapetyan 12y ago

Really engaging post. Placed in the context of RethinkDB though it is a bit contradictory no? RethinkDB does not have first mover advantage and they are against the likes of Riak, Mongo, Couchbase, Cassandra, etc. All of those I believe are in a much stronger position according to the criteria in the post.

coffeemug 12y ago
RethinkDB won't be in this position for long (and in fact, most lessons in the article came directly from the mistakes made in the process of building RethinkDB). We found a big point of a differentiation (http://rethinkdb.com/blog/realtime-web/ http://rethinkdb.com/blog/realtime-web/), which, depending on one's definition, can be considered discovering a new market, and we'll be the first open-source scalable database in that market. The upcoming 2.0 release will reposition the company around realtime web/push database. A huge part of the reason why we chose this path is the lessons in the article.
- dkarapetyan 12y ago
  I agree with you. RehinkDB does make a very compelling product for the stream based future. Looking forward to more stuff from you guys. This is the best written article I've read in a long time on startup stuff.
- MichaelGG 12y ago
  Isn't that something like SQL Server Query Notifications, where you can submit a query and the DB lets you know when the results have changed? Albeit your API looks much smoother. Speaking of which, I really hope at one point you reconsider the driver model. Having official drivers for only a few not-so-awesomely-typed languages is a big turnoff.
  - coffeemug 12y ago
    > Isn't that something like SQL Server Query Notifications Yes, very similar, but there are a few major differences -- open-source product, horizontally scalable, json data model, packaging/api designed for web developers from the ground up. When you add all of these up, the differences are quite dramatic. > I really hope at one point you reconsider the driver model. Yes -- after 2.0 is out, we'll start bringing the community drivers under the official umbrella.

dshankar 12y ago

This is excellent. Your intuition, thought process, and writing style remind me of PG's essays.

nostrademons 12y ago

I like this article. Much of the advice on startups is biased from an investor perspective, this is something that's very real from a founder's perspective. If I had to summarize and riff off of the ideas here, I'd phrase it as "Be very careful about where you're getting your information from." If you got your startup idea because you heard about something from a news article, you are way too late. If you got it from an Internet forum, there's a chance that you might be on to something, but it depends on how niche the forum is and how close to the bleeding ege. If you got it from a problem that you or a friend personally had and you know how to solve it right now, you may be on to something, but you have to carefully consider how many other people are like your friend and whether that's going to grow in the future. If you're in a niche community yourself and that community is growing rapidly, there are probably lots of things you can explore that might be fruitful startup ideas.

davemel37 12y ago
"Be very careful about where you're getting your information from." I would encourage you to apply this nugget of gold to this post as well. It is a mistake to dismiss an idea just because others are working on it. In fact, I would argue the opposite. It validates the idea and the market.
- deleted 12y ago
  [deleted]

davemel37 12y ago

This article is built on top of many faulty assumptions... Most notably,"When you’re second to market with a viable product, your customers will compare you to the company and product that got to market first." This assumes that the entire market knows about a solution the moment a first mover comes to market. The reality is that building a brand to the point where every prospect you approach is comparing you to an incumbent takes years. The first couple years of a new market opportunity, even with dozens of competitors, there are enough prospects in the market that you can be first to market with the people you reach and your competitors will be first to market with a different segment of the market. That being said, it is ABSOLUTELY CRUCIAL for every company to differentiate themselves in a way that they can't be compared to a competitor. There are some nuggets of wisdom sprinkled throughout this post, but It is clearly built on one subjective individuals perception of things that are beyond our control to really grasp. (i.e. the surface is successful because of a massive ad budget. I would argue the surface is a new category by itself.)

nostrademons 12y ago
That's true, but you also need a story about how you're going to grow your reach & influence faster than your competitor does. It can work, for example, if your main competitor is a hobbyist who doesn't take his product seriously. Ditto a major corporation for whom this is a sideshow that can't get resources from execs whose attention is focused elsewhere. But anybody can spend more money to tell more people about their product. This is not a competitive differentiator; if you do it, and the company who got to market first does it, they'll win simply through Gambler's Ruin, since they start from a bigger base.
- coffeemug 12y ago
  > This assumes that the entire market knows about a solution the moment a first mover comes to market. It doesn't. The first mover will start getting customers before you do, and as they do their ability to reach customers will grow exponentially. You might start reaching a segment of the market they aren't reaching, but they'll trivially be able to lock you out.

brandonb 12y ago

What an excellent post! I don't agree with every point, but this is thoughtful, clearly articulated, and the thought process reminds me of PG's best writing.

swah 12y ago
It did felt pgish - I don't like this way of trying to structure the world too much though. I think patio11 would agree with me...

debidika 12y ago

Good Article, Thanks.

shinamee 12y ago

== Paradoxically, the solution is to stop thinking of startup ideas in terms of solving problems in the early stages of startup germination, and instead start thinking in terms of changes in the economic environment and the opportunities these changes unlock. == strong point, exactly what I have been thinking lately while trying to understand every single products Google acquires. I still think there are rooms for innovation.

graphene 12y ago

Excellent essay. I feel like the emphasis on "the story" reinforces pmarca's point in his "product market fit" article (http://web.stanford.edu/class/ee204/ProductMarketFit.html http://web.stanford.edu/class/ee204/ProductMarketFit.html): that more important than the team or the idea is the market (in coffeemug's words: the environment). You can obviously screw up a great market -- and that has been done, and not infrequently -- but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most. And neither a stellar team nor a fantastic product will redeem a bad market.

coffeemug 12y ago
The whole essay is really a rip off of pmarca's product/market fit argument, and Peter Thiel's contrarian but right argument. I just rewrote it through the lens of my own experience. The only truly new thing that I discovered was the "story" bit. I haven't heard that anywhere else before.

levlandau 12y ago

I agree with the statement that startups are like biological organisms evolving in the broth of an economic environment. In @pmarca's words "the market needs to be fulfilled and the market will be fulfilled". Once we move on from this fact (that we can't create startups out of thin air without there being an underlying wave ...without a "why now"), the rest of the actionable advice here will work better for an investor and/or the entrepreneur who views herself more as an investor than say a hacker. Alternative advice is to "live in the future" as PG would say it or to be different as Peter Thiel would imply. What I think this means is to ask yourself how similar what you do for fun/ for projects is to what everyone else is doing[similar --> bad]. How often do you work on that stuff? Do you collaborate with people? I am convinced ideas emerge as a natural consequence of working on ideas at the fringe with interesting people. What is hard is a) working on ideas and b) finding interesting people to work with. Another thing that doesn't help is committing to a company prematurely. Easier said than done, but i think if we as entrepreneurs took it a little less serious...we'd net out with more successful companies.

derekp7 12y ago

Question -- is there any good place to post ideas for startups? Quite often, I'm looking for a company that provides X, and there is no one that I'm aware of that does X. However, I can see how X could be a profitable business for someone, even if I'm not in a position to start X myself.

betadreamer 12y ago
http://www.requestsforstartups.com/ http://www.requestsforstartups.com/
hayksaakian 12y ago
This is an idea me and a friend wanted to try out. http://idealist.tips/ http://idealist.tips/ We promoted it but it didn't get any up-take (the site is using the opensource lobste.rs code from https://github.com/jcs/lobsters https://github.com/jcs/lobsters ) There is also a sub-reddit where people post this type of stuff (i'm unaffiliated with it) http://www.reddit.com/r/SomebodyMakeThis/ http://www.reddit.com/r/SomebodyMakeThis/
leesalminen 12y ago
I normally give these ideas to people that I know and like and offer to talk the idea through with them if they ever decide to follow through.
EC1 12y ago
was posted many times on HN: http://firespotting.com/ http://firespotting.com/

nnx 12y ago

I would love to have Slava's articles in my feeds but can't find any RSS/Atom link. Anyone?

misframer 12y ago
How about http://www.defmacro.org/feed.atom http://www.defmacro.org/feed.atom ?
- nnx 12y ago
  Oh, so there is. Thanks a bunch!

deleted 12y ago

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hayksaakian 12y ago

on saturated markets: many of the companies you've never heard of made their money building an easier to use X in a saturated market. If the dominant company in the industry has not made significant changes to their product in 10 years, then that's an obvious opportunity for a startup, even if the market is completely saturated. at least in B2B i've found that many companies solve a problem for their customer demographic in year X, grow pretty big, and rake in the cash. They stay stagnant for X+5 to 10 years and they leave their customers frustrated without any real options. ----- Another fallacy I hear from people thinking of ideas has to do with "solved problems" A "solved problem" is just a problem with 1 solution. People are different, customers are different. Is there another way to solve the problem that obsoletes the previous solution? ex: transportation; solved by "horse and buggy", and then obsoleted by cars and public transportation.

k__ 12y ago
Depends on how specific you let the problem be. Horses (and the first cars) didn't solve the problem to travel 100km in under 1h. Which can be seen as a new problem itself.
arethuza 12y ago
Search on the web was a "solved problem" until Google came along and showed that all of the search engines before then were actually pretty useless. However, until Google came along we didn't know they weren't very good as any kind of web-scale search seemed like a miracle at the time.

leroy_masochist 12y ago

Thought this was a great article and found the Pixar storytelling framework particularly interesting. Thank you very much for taking the time to put this to paper. I'll definitely check out RethinkDB!

tracker1 12y ago

I like the distilled version you get from @FakeGrimlock ... find right because, make people want.

fsloth 12y ago

"Market efficiency implies that if a problem is valuable and solvable, it’s overwhelmingly likely that it already would have been solved." I think it depends on many things, including the size of the market. I'm willing to bet there are many profitable niches which are served currently with only sub-optimal products. But to find these one needs domain knowledge od the niche, and I think these are served best by teams of adventurous established experts rather than teams without domaim knowledge.

deleted 12y ago

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Animats 12y ago

What he refers to as "technology" companies are not ones innovating in any technological area. He's really talking about online application business-to-consumer startups ("appcrap"), for which there's a well-defined assembly line process. A real technology company is defined by their ability to do something hard that others have trouble doing. The first mover has an advantage, but it's not overwhelming. IBM didn't come out with the first personal computer - Apple and Commodore did. Microsoft didn't have the first operating system for x86 machines - Digital Research did. AOL once dominated social networking. Facebook moved into a quite mature space - Myspace, Geocities, and several others were big companies when Facebook started. Luck does indeed play a big part. If Gary Kildall, the author of CP/M, had been in the office the day IBM was looking for an OS for their new PC, the history of personal computing could have been very different.

k__ 12y ago
"A real technology company is defined by their ability to do something hard that others have trouble doing." You're right. But of those companies that just "use" high tech for their services start to put efforts in R&D to stay on top later in their game.
pmikesell 12y ago
>>> He's really talking about online application business-to-consumer startups ("appcrap") No, I don't think so. The author is Slava from RethinkDB. His company is definitely not "appcrap" (as you put it), and I think his same line of reasoning applies equally well to "real technology" companies (like RethinkDB), it just takes place on a longer time horizon. If you extend his metaphors to include the time to competitively create "real technology" they apply equally well.
- coffeemug 12y ago
  Exactly right. If Google can make self-driving cars, there are at least two other companies in the world (and probably many more) that can (and will) make competing self-driving cars. The timeline is a big longer, but the basic rules are the same. As much as we all like to think we're exceptional, we aren't.

jzheng 12y ago

It's a good article and has some good points. But after some thinking, it seems that almost none of successful startup ideas come with capturing the change of environment. Instead, most of successful startup ideas come from hobby, solving a problem, iteration, improving existing products, etc. Besides a good idea, building a successful startup requires a lots of other stuff like great team, good fund raising, great execution, great user growth, etc. I guess all the other parts are much difficult than finding a good idea. If you don't have a good idea yet, you can just focus on other parts: building a good team, or learning to executing well. You can start with small projects with positive cashflow like consulting, etc. The best way to pickup a startup ideas is to look at new startups and find the ideas that you like and that you can improve and execute well. Just as some other posts mentioned, if you are smart, you can make difference even in mature market. Market is not efficient at all, especially for new and emerging market.

mbolton 12y ago

Solutions to problems, be those problems you personally experienced or in the workplace, is what creates a successful product. Without a successful product, you can't have a successful startup. That being said, a successful product doesn't guarantee startup success.

ElComradio 12y ago

Two efficient market theorists are walking down the street. They see a hundred dollar bill on the sidewalk but keep walking. One turns to the other and says, "If that was real, somebody would have picked it up already."

kpennell 12y ago

It's an interesting argument but I can think of so many counterexamples. A guy named Michael Wolfe (pipewise founder) wrote an interesting quora answer on dropbox. Dropbox was way late to the file syncing party. The answer: Well, let's take a step back and think about the sync problem and what the ideal solution for it would do: There would be a folder. You'd put your stuff in it. It would sync. They built that. Why didn't anyone else build that? I have no idea. "But," you may ask, "so much more you could do! What about task management, calendaring, customized dashboards, virtual white boarding. More than just folders and files!" No, shut up. People don't use that crap. They just want a folder. A folder that syncs. "But," you may say, "this is valuable data... certainly users will feel more comfortable tying their data to Windows Live, Apple's MobileMe, or a name they already know." No, shut up. Not a single person on Earth wakes up in the morning worried about deriving more value from their Windows Live login. People already trust folders. And Dropbox looks just like a folder. One that syncs. "But," you may say, "folders are so 1995. Why not leverage the full power of the web? With HTML5 you can drag and drop files, you can build intergalactic dashboards of statistics showing how much storage you are using, you can publish your files as RSS feeds and tweets, and you can add your company logo!" No, shut up. Most of the world doesn't sit in front of their browser all day. If they do, it is Internet Explorer 6 at work that they are not allowed to upgrade. Browsers suck for these kinds of things. Their stuff is already in folders. They just want a folder. That syncs. That is what it does.

TeMPOraL 12y ago
This is the best start-up lesson I've seen this year. I wish more people followed it, though cynic in me thinks it's irrelevant because most of the time, it's not customers that are the users - it's investors and potential acquihirers.