What are 'tar pit ideas' and why should startups avoid them?

Tar pit ideas are common startup concepts that have been tried repeatedly without success. They seem easy to solve but have underlying structural reasons making them extremely difficult or impossible to execute. Founders can get stuck working on these for months or years, wasting valuable time.

What is 'founder-market fit' and why is it critical?

Founder-market fit means your team is the right group to tackle a specific startup idea. It's crucial because it significantly increases the chances of successful execution. It's advised to look for ideas that are a good fit for *your* team, rather than abstract 'good' ideas.

Should I worry if my startup idea already has competitors?

Counter-intuitively, having existing competitors is often a good sign. It indicates a real market and demand. Founders should only worry if they have missed a crucial insight or if existing solutions are poor, suggesting an opportunity for improvement.

What is an 'idea space' and how does it relate to startup success?

An idea space is a class of closely related startup ideas, like 'software for hospitals' or 'fintech infrastructure.' Different idea spaces have varying success rates. Choosing a fertile idea space with a historically high hit rate increases the probability of finding a billion-dollar company.

What are some of the 'bad' startup ideas that can actually be good?

Three categories of 'bad' ideas that can be good are: 1) ideas that are hard to get started (like Stripe, due to initial complexity), 2) ideas in 'boring' spaces (like Gusto's payroll software, which have less competition), and 3) ideas with existing competitors (like Dropbox, where incumbents may have missed key insights).

What's the best way to generate startup ideas?

The best way is to notice ideas organically, often by becoming an expert in a valuable field, or by building things you find interesting. While structured approaches exist (like solving personal problems or looking at market changes), organic insights tend to be stronger.

How can I find a startup idea if I'm young and lack domain expertise?

If you lack deep expertise, you can identify problems you personally encounter or wish existed, but critically assess why they haven't been solved. Another effective method is to systematically research a large, seemingly broken industry by talking to people within it (like drivers in the trucking industry) to uncover unmet needs.

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How to Get and Evaluate Startup Ideas | Startup School

Y Combinator

Science & Technology5 min read33 min video

Nov 17, 2022|1,437,106 views|30,744|518

YC Y Combinator yt:cc=on

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TL;DR

Y Combinator's guide to finding and evaluating startup ideas, focusing on real problems, founder-market fit, and avoiding common pitfalls like tar pits.

Key Insights

Prioritize solving genuine, acute problems over building solutions in search of a problem.

Founder-market fit (team's expertise aligning with the idea) is the most critical factor for success.

Evaluate ideas based on market size, problem acuteness, competition, personal desire, market changes, and scalability.

Avoid 'tar pit' ideas that seem plausible but have hidden structural difficulties, often revealed by thorough research.

Organic idea generation through expertise and personal experience is more effective than forced brainstorming.

Differentiate between seemingly 'bad' ideas (hard to start, boring spaces, existing competitors) that can be advantageous.

COMMON MISTAKES TO AVOID

A primary pitfall is developing a 'solution in search of a problem,' where a technology like AI is chosen first, and then a problem is sought for it. This leads to superficial issues that users don't actually care about. Instead, founders should 'fall in love with a problem' and ensure it's specific and tractable for a startup. Another significant mistake is pursuing 'tar pit ideas'—common startup concepts that appear promising but possess inherent structural difficulties, preventing success over many years. These often arise from widespread, seemingly easy-to-solve problems that have historically eluded solutions.

IDENTIFYING A GOOD STARTUP IDEA

Eleven key questions help evaluate an idea's viability. Crucially, founders must assess 'founder-market fit,' ensuring their team possesses the necessary skills and domain knowledge. The market must be substantial, either currently large or rapidly growing. The problem addressed should be acute, meaning the alternative to the solution is often nothing. While competition can be a positive signal, indicating market interest, the idea must also align with the founders' personal desires and be scalable, ideally through software. Finally, considering the 'idea space'—a broader category of related startup ideas—and its historical success rate is vital.

THE ADVANTAGE OF SEEMINGLY 'BAD' IDEAS

Certain characteristics that might initially deter founders can actually signal better opportunities. Ideas that are 'hard to get started' often have high barriers to entry that deter less committed individuals, as seen with Stripe’s payment integration. 'Boring spaces,' like payroll software addressed by Gusto, tend to have less competition and a higher success rate because fewer founders are attracted to them initially. Similarly, spaces with existing competitors, like Dropbox in cloud storage, can be advantageous if a founder has a unique insight—such as Stripe’s focus on developer UI—that addresses overlooked flaws in existing solutions.

GENERATING STARTUP IDEAS ORGANICALLY

While explicit brainstorming can lead to ineffective 'tar pit' ideas, organic generation is more fruitful. Becoming an expert in a valuable field, often through working at a startup, exposes founders to real problems and opportunities. For programmers, building interesting projects, even without immediate business intent, can evolve into startup ideas, as with Replit. This approach aligns with the idea that true innovation often stems from deep understanding and personal engagement with a domain, rather than abstract ideation.

SYSTEMATIC APPROACHES TO IDEA GENERATION

When explicit generation is necessary, several 'recipes' can be employed. Starting with what the team excels at guarantees founder-market fit, as demonstrated by Resy in real estate and fintech. Identifying problems encountered personally, especially if one is in a unique position to observe them, like Vetco for veterinarians, is effective. Wishing for personal conveniences, like DoorDash for food delivery, can work but requires validating that no structural reasons prevent the idea's existence. Observing recent world changes, such as the pandemic's impact on virtual interactions leading to Gather Town, also reveals opportunities.

ANALYTICAL AND EXPLORATORY IDEA GENERATION

Another strategy involves analyzing successful companies and seeking variants, such as Nuvo Cargo building a 'Flexport for Latin America.' Directly asking people about their problems, particularly within a chosen 'fertile idea space,' also yields results, though it requires significant skill. The A to B company's founders, young and lacking specific industry expertise, systematically investigated the trucking industry by visiting truck stops and speaking with drivers and other founders, mapping out problems to eventually develop fuel cards within this underserved sector. This methodical exploration within a promising space is powerful.

EXPLORING BROADER INDUSTRIES AND PARTNERSHIPS

A broad approach involves identifying large, seemingly 'broken' industries ripe for disruption. These industries, often overlooked due to their complexity or perceived lack of glamour, can harbor significant opportunities. Additionally, finding a co-founder who already possesses a compelling startup idea can be a direct route to obtaining both a partner and a validated concept. Many individuals seeking co-founders on platforms like YC's co-founder matching already have ideas, presenting a pragmatic way to enter the startup world with a clear direction and shared vision.

LEVERAGING EXPERTISE AND PERSONAL EXPERIENCE

The most effective startup ideas often arise from deep expertise or direct, personal encounters with a problem. YC partners emphasize that founders should leverage their existing knowledge base, whether from previous jobs, education, or life experiences, to identify issues that others might miss. For example, the founders of Rezi, experts in real estate and debt financing, strategically focused their idea search within that intersection, leading to a swift and successful outcome. Similarly, problems encountered within one's own professional or personal sphere provide a unique vantage point for identifying viable business opportunities.

VALIDATING IDEAS AND THE PATH FORWARD

Ultimately, assessing a startup idea's true potential is challenging, and even the most rigorous evaluation frameworks have limitations. The most reliable method to confirm an idea's merit is through execution and market feedback. If founders remain on the fence about an idea's viability after thorough consideration, the pragmatic advice is to launch the product or service as swiftly as possible. This iterative process of building, launching, learning, and adapting is fundamental to navigating the uncertainties inherent in entrepreneurship and discovering what truly resonates with the market.

Mentioned in This Episode

●Software & Apps

●Companies

●Organizations

●People Referenced

Startup Idea Evaluation Checklist

Practical takeaways from this episode

Do This

Start with a high-quality, specific, and tractable problem, not a broad societal issue.

Ensure you have founder-market fit: the right team for the idea.

Look for large markets, either currently big or small but rapidly growing.

Prioritize ideas with acute problems where the alternative is nothing.

Seek ideas where there's already competition (indicates a real market).

Consider if you or people you know personally want this idea.

Identify opportunities created by recent changes (technology, regulations, new problems).

Look for serviceable proxies (successful companies in similar but not direct markets).

Choose ideas you're willing to work on for years.

Ensure the business is scalable, especially avoiding service-heavy models.

Pick a fertile 'idea space' with a good historical hit rate for startups.

Consider ideas that seem 'bad' but aren't: hard to get started, in boring spaces, or have competitors.

Generate ideas organically by becoming an expert or building interesting things.

Leverage your team's existing expertise and network.

Solve problems you've personally encountered, especially from an unusual vantage point.

Think about things you personally wish existed, but critically assess why they don't.

If you're a programmer, build things you find interesting—they might evolve into startups.

Explore big industries that appear broken and ripe for disruption.

Consider finding a co-founder who already has a promising idea.

Avoid This

Don't build a solution in search of a problem.

Avoid working on overly abstract or huge societal problems as a starting point.

Steer clear of 'tar pit ideas' that seem plausible but have structural reasons for failure.

Don't skip Googling your idea to see who has worked on it before.

Avoid jumping on the first idea without considering business viability.

Don't wait for the 'perfect' startup idea; it doesn't exist.

Don't assume competition is bad; it often validates a market.

Be wary if you or people you know don't personally want the product.

Don't dismiss 'boring' idea spaces; they often have a higher success rate.

Avoid service-based businesses if scalability is a primary concern.

Don't shy away from ideas that appear difficult to start initially.

Be cautious of ideas that seem too simple and might lack a real user base.

Avoid ideas where there's no existing competition, as it might mean no one wants it.

Common Questions

This refers to building a product or service based on a cool technology like AI, and then trying to find a problem it solves, rather than starting with a genuine user problem that needs solving. Founders often create superficially plausible but ultimately unimportant problems that users don't care about.

Topics

Technology & Innovation Business & Entrepreneurship Product Development Business Strategy Founder Market Fit Venture Capital Market Research Early Stage Startups Startup Ideation

Mentioned in this video

organizationYC

Applicant organization that evaluates startup ideas and provides advice.

personPaul Graham

Author of 'how to get startup ideas' and creator of the 'schlep blindness' concept.

organizationCoinbase

An example of a startup that succeeded by entering a small but rapidly growing market (Bitcoin trading in 2012).

companyBrex

A company that provides credit cards for startups, highlighting a problem where traditional banks wouldn't offer corporate cards to new businesses.

toolDoorDash

A food delivery service mentioned as an example of a proxy for Rappi's business model in Latin America and also as an idea that originated from founders wishing they could order food to their dorms.

companyInstacart

A delivery service mentioned in the context of companies needing background checks via API.

toolUber

A ride-sharing service mentioned in the context of companies needing background checks via API.

organizationStripe

An example of an idea that was hard to get started (requiring bank deals and credit card infrastructure knowledge), illustrating 'schlep blindness'.

companyGusto

A company providing payroll software, used as an example of a successful business in a 'boring' space that others shy away from.

organizationDropbox

A file storage company that succeeded despite numerous competitors by having a superior UI and integrating directly into the operating system.

companyNuvo Cargo

A company described as 'Flexport for Latin America', which helps US companies import from Mexico. The founder systematically searched for ideas and chose this based on market size, proxies, and operational capability.

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