Exploring Startup Ideas

What should you work on?

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Startups are hard, so you should work on something where you’re intrinsically motivated (and not just financially motivated). Otherwise it’s hard to keep going during rough patches.

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Ask yourself if you would be happy working on an idea for the next 5 or 10 or 20 years, even if there are long, painful periods along the way.

What do you love to do?

Startups are competitive.

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If your idea is good and valuable, incumbents and other startups will compete with you.

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To mitigate against that, work on something where your personal skills are a strong competitive advantage, or where you can build durable competitive advantages like IP or network effects.

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To have a personal competitive advantage, you need to be exceptionally good in some area – i.e. top 1% or better, and ideally world class.

What are you good at?

One caveat: you can be world class at one thing (e.g. you’re one of the leading experts on X), or at a combination of things (e.g. you’re very good at X but also very knowledgeable about industry Y, and that’s a unique and valuable combination).

What are you good at?

Maximize your impact.

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If you’re investing years into something, pick something worthwhile.

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There are lots of ideas that can make money, but some are low impact, some make the world much better, and some make it worse.

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If you can, work on something meaningful: creating cheaper energy, curing diseases, broadening access to powerful new capabilities, etc.

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Companies with great missions are fun to work on, but also have big advantages with recruiting, fundraising, selling, etc.

What does the world need?

For a VC-fundable business, you should pursue a $1b+ (ideally $10b+) market.

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A $1b+ market means the total revenue you could capture if you had 100% market share is at least $1b.

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$1b+ is a good threshold because if you can hit 10-20% market share then you can go public.

Where can you make money?

Market size estimation techniques:

• Revenue of existing players. If there are existing public companies that make $X in revenue solving the same problem as you, then the market size is at least $X.�
• Bottom-up: if you charge $X/customer and there are Y potential customers, your market size is $X*Y. (But please talk to a few prospective customers and validate that they would pay you $X!)�
• Research reports: consulting firms publish market/sector research, which is easy to find on Google. These market size estimates are often exaggerated**, but directionally interesting.

Where can you make money?

** nobody wants to fund market research that proves that an entire sector is small and uninteresting

Attributes of good markets:

• Not too top heavy – otherwise your business won’t be huge unless you can capture 5-10 specific customers.�
• Lots of meaningful-sized customers that will pay an interesting amount relative to the work required to get them to use your product.�
• Easy to differentiate against incumbents. If your technology is 10x better or faster or cheaper, that’s easy to sell. If incumbents are very good and you only offer a tiny relative improvement, that’s hard to sell.

Where can you make money?

Thank You!