How to get startup ideas

I recently discovered Y Combinator through their Youtube Channel and came across a video mentioning Paul Graham, the co-founder of Y Combinator and one of the most influential voices in the startup ecosystem, he has written extensively on how to come up with startup ideas. In his essay, “How to Get Startup Ideas,” he explains that the most successful startup ideas tend to arise not from deliberate brainstorming but from the founders’ deep personal experience and understanding of a particular problem. Below are the 5 key take aways I got after reading his article.

The very best startup ideas tend to have three things in common: they’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way.

1. Look for Problems, Not Ideas

The way to get startup ideas is not to try to think of startup ideas. It’s to look for problems, preferably problems you have yourself.

A significant misconception about startups is that they begin with a brilliant idea. In reality, Graham stresses that good startup ideas often start by focusing on a problem, not a pre-existing idea. Aspiring founders often spend time brainstorming business ideas, but Graham advises that this is backward. The better approach is to look for a problem, especially one that’s poorly addressed or even ignored by others, and then work on developing a solution.

Graham refers to the common trap of thinking up clever ideas that sound like they would work but have little basis in actual user needs. In fact, he argues that most bad startup ideas come from the desire to be clever or to be “the next big thing,” rather than from a genuine need. The best startup ideas come from noticing a problem that is persistent, and ideally one that the founder has firsthand experience with.

Stripe, the payment processing company, came about when its founders, Patrick and John Collison, noticed how difficult it was for developers to integrate payment systems into their websites. Instead of waiting for someone else to solve this problem, they decided to solve it themselves. Today, Stripe is a crucial part of the online payments ecosystem.

2. Solve Real Problems, Preferably Problems You Understand

Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas.

By far the most important point, is to solve real problems and the best way to ensure a problem is real, is to experience it yourself. This way you are sure at least one person has this problem. A study from Harvard Business Review confirms that a whooping 85% of executives in both the private- and public-sector companies from 17 countries believe that their organisations diagnose problems poorly

Graham argues that one of the most effective ways to come up with a startup idea is to solve problems you have a personal understanding of. This insight comes from the realization that the best startup ideas often come from the founders’ personal struggles or frustrations. Founders who build solutions to problems they know well have a unique perspective and an intrinsic motivation to solve them.

This idea goes against the conventional wisdom that advises entrepreneurs to find markets with large opportunities and then design a product to match. Instead, Graham suggests that entrepreneurs start with a problem they themselves face or have faced in the past. This intimate understanding gives them a deeper insight into what the real pain points are and how best to solve them. It also gives them an advantage in terms of customer empathy and a long-term passion for improving the solution.

For instance, Airbnb began when its founders were struggling to pay rent and came up with the idea of renting out air mattresses in their apartment to people attending a conference in town. What started as a personal solution to their problem of making rent ended up becoming a multi-billion-dollar business, addressing a global problem for travelers looking for affordable hotel accommodations.

3. Work on Ideas That Interest You

Graham advises founders to work on ideas that genuinely interest them. Passion is a crucial ingredient in startup success because building a company is a long, hard journey filled with obstacles. If you don’t have a genuine interest in the problem you’re solving, it will be hard to stay motivated through the tough times.

Startups like Tesla and SpaceX are examples of companies born out of the founder’s deep interest and passion. Elon Musk, for instance, had a personal fascination with electric vehicles and space exploration long before these industries became as hot as they are today. His passion has driven these companies through multiple challenges, keeping him motivated to push through despite setbacks.

4. Start with Something Small

Graham also advises that aspiring entrepreneurs should start with something small. When solving a problem, it is often tempting to go after big markets immediately, but Graham warns that this can be a mistake. Instead, he advises founders to start with a small, narrow problem and solve it really well. Once you have solved a small problem and proven that there is demand, you can always expand your product or service to solve larger problems.

It is better to fully satisfy a small group of users than mildly satisfying a large group

For example, Facebook started as a social network for Harvard students, solving the small problem of connecting college students with each other. It didn’t try to be a global social network from the outset. Only after Facebook dominated the college market did it expand to other universities and eventually to the general public.

By starting with a small but real problem, founders give themselves the opportunity to perfect their product, gain early traction, and refine their approach. This is far more manageable and less risky than trying to solve a large, complex problem from day one.

2. Live in the Future

Live in the future, then build what’s missing.

Paul Graham’s advice to “live in the future.” describes the way many if not most of the biggest startups got started. Neither Apple nor Yahoo nor Google nor Facebook were even supposed to be companies at first. They grew out of things their founders built because there believe there was a gap in the world. For instance, Drew Houston (Dropox) realizes he’s forgotten his USB stick and thinks “I really need to make my files live online.”,  Bill Gates and Paul Allen hear about the Altair and think “I bet we could write a Basic interpreter for it.”

Living in the future means paying attention to changes in technology and society and imagining what the world will look like in the years ahead. The best ideas for startups come from people who are already living in that future state of mind. They experience daily the kinds of problems that most people aren’t even aware of yet, and they have the insight to foresee which of those problems will become more prevalent as time goes on.

For example, many successful startups have come from founders who noticed inefficiencies in a certain industry or daily practice and devised technological solutions before anyone else thought to do so. Graham mentions Dropbox as an example. Its founder, Drew Houston, realized that existing methods of storing and sharing files were clunky and inadequate. While most people accepted the inconvenience of carrying USB sticks or emailing themselves files, Houston envisioned a future where all files could be seamlessly synced across devices. His solution, Dropbox, solved this problem in a way that was easy to use and universally appealing.

Wrapping-up

In summary, Paul Graham’s guide to startup ideas emphasizes the importance of focusing on problems you deeply understand, often from personal experience. Rather than seeking a perfect idea upfront, Graham advises entrepreneurs to live in the future, notice problems, and work on solutions that genuinely interest them. These strategies lead to startups that not only address real pain points but also have the potential for significant impact and long-term success.