How should you find a startup idea?

Instead of passively waiting for inspiration, actively find problems you are passionate about. This can stem from personal life experiences or challenges encountered in your work life. The key is to identify something that genuinely 'sucks' for you or others.

What is the first step in the startup order of operations?

The first step is to identify a particular problem that you are passionate about. This problem should be significant enough that solving it would create real value.

What's the importance of brainstorming with friends for a startup?

Brainstorming with like-minded individuals helps generate and iterate on potential solutions. It's crucial to find people who can build upon your ideas rather than shut them down, transforming a single idea into a collaborative effort.

Why is building an MVP crucial for a new startup?

Building a Minimum Viable Product (MVP) turns a spark into a fire. It helps solidify the team, validates the solution with early customers, and generates excitement, which is vital for later stages like incorporation and fundraising.

What are common failed approaches to starting a tech company?

Two common failures are pitching investors with only an idea and lacking a technical co-founder. Another is outsourcing MVP development, which often leads to iterating on a poor product, running out of money, and a weak position when seeking further investment.

Is outsourcing MVP development a good strategy for startups?

While some exceptions exist, outsourcing MVP development is generally a more difficult and expensive path. It often results in a subpar product, lack of users, and can deplete initial funds, making it harder to attract a technical co-founder later.

Key Moments

One Order of Operations for Starting a Startup by Michael Seibel

Y Combinator

Science & Technology5 min read16 min video

Nov 28, 2018|95,711 views|1,975|43

YC Y Combinator Michael Seibel Podcast Essay Advice Interview Craig Cannon

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Key Moments

TL;DR

Building a successful startup hinges on solving a real problem you're passionate about, not just having a 'great idea,' and the process is iterative, not a one-time stroke of genius.

Key Insights

The biggest blocker for aspiring founders is the belief they need a perfect idea first, a notion Seibel calls the 'number one excuse.'

Seibel's proposed order of operations for startups is: 1. Identify a problem you're passionate about. 2. Brainstorm solutions with friends. 3. Build and launch an MVP.

Founders should assess problems by their frequency and intensity, using the example of stroller-friendly paths versus affordable child care.

A solution is merely a hypothesis; the goal is to iterate through testing and learning, not to have the perfect answer upfront.

Building an MVP with a co-founder is crucial for validating the team's ability to work together and for gaining traction before seeking investment.

Outsourcing MVP development is a common failure mode, often leading to iterated, expensive products and premature depletion of funds before finding product-market fit.

The myth of the perfect startup idea

Many aspiring founders, particularly those with technical backgrounds, believe their primary hurdle is coming up with a brilliant, unique idea. This often stems from a misconception that all successful startups originated from such ideas, leading to analysis paralysis or a search for external validation before even starting. Michael Seibel, CEO of Y Combinator, argues this is a major excuse that prevents talented individuals from pursuing entrepreneurship. He suggests that this focus on the 'idea' is an outdated entrepreneurial rule that doesn't necessarily apply to tech startups. Instead of waiting for an idea to strike organically, Seibel proposes an active, structured process to generate and validate potential startup concepts. He emphasizes that the journey from having an idea to building a successful company is often more about execution and iteration than about the initial spark of genius.

Identifying a problem you're passionate about

The foundational step in Seibel's 'order of operations' is to identify a problem that the founder is genuinely passionate about solving. This passion is critical because it fuels the persistence required to overcome the inevitable challenges of building a startup. He shares an anecdote about a woman at a conference who initially proposed a 'meta startup' aimed at advising other startups, which he dislikes because it lacks direct experience. When pressed on her own problems, she identified the difficulty of navigating new places with a stroller. While a valid problem, Seibel guided her to consider its frequency and intensity. He then contrasted this with a much larger, more intense problem: affordable child care. This highlights that a problem's significance, measured by how many people it affects and how deeply it impacts them, is a key indicator for startup potential. He stresses that personal problems, whether from work or life, are fertile ground because they offer inherent understanding and a built-in customer base, at least for the founder themselves.

Brainstorming solutions with co-founders

Once a significant problem is identified, the next step is to find friends or potential co-founders and brainstorm solutions. Seibel warns against becoming overly attached to a specific solution too early. He likens the process to a scientific experiment where the initial solution is merely a hypothesis to be tested. The goal isn't to have the definitive answer but to start exploring possibilities. Crucially, this phase involves talking to other people, particularly those with complementary skills (e.g., technical or business acumen). The right co-founders are those with whom you can riff, build on ideas, and engage in constructive debate—not those who shut down suggestions. This collaborative ideation process fosters a shared sense of ownership. If multiple people contribute to developing a potential solution, they are more likely to be invested in its success, which is vital for building a strong founding team. This teamwork is essential for moving beyond individual imagination to collective creation.

Building and launching an MVP

The most critical phase, according to Seibel, is to turn the brainstormed ideas into a tangible reality by building and launching a Minimum Viable Product (MVP). He aggressively steers founders away from premature actions like incorporation, fundraising, or excessive legal preparation. These are common distractions that can derail a nascent startup before it even has a chance to be tested. An MVP should be the simplest possible version of the product, even if it's initially powered by something as basic as an Excel spreadsheet. The act of building and trying something, even on a small scale, galvanizes the team, validates the concept, and offers crucial early feedback. Getting even one or two customers is a significant milestone; it proves the team can work together effectively, injects excitement, and provides leverage when eventually seeking investment. This practical step is about proving execution capability, which is far more valuable than just having an idea or a polished deck.

Common startup failure modes

Seibel outlines two common, detrimental orders of operations that startups should avoid. The first is to come up with an idea and immediately pitch it to investors. In today's competitive landscape, a pitch deck and an idea alone are insufficient to impress sophisticated investors, unlike in earlier eras when technology development was prohibitively expensive. The second, and deeply problematic, failure mode is having an idea but lacking the technical co-founders to build it. This often leads founders to outsource development. While outsourcing might seem like progress, it's frequently a trap. Outsourced MVPs are often mediocre, requiring extensive, costly iterations. Founders can burn through their savings and initial funding without achieving product-market fit, leaving them in a worse position to attract technical talent or secure further investment, ultimately leading to failure.

The danger of outsourcing MVP development

The temptation to outsource the creation of an MVP when lacking technical expertise is a significant pitfall. Many founders believe this path will get them traction and customer validation before they need to find a technical co-founder. However, Seibel argues this is a mistake with a high probability of failure. Outsourced products are often suboptimal and require continuous, expensive modifications. This cycle can consume all available capital before the startup has a viable product or a clear understanding of its market. Consequently, founders end up approaching potential technical co-founders with a weak product, no customers, and diminishing funds. This severely weakens their negotiating position, making it difficult to secure skilled partners who might demand significant equity in exchange for joining a struggling venture. Seibel suggests that the hustle required for finding a technical co-founder is often less expensive and more beneficial in the long run than outsourcing.

Mentioned in This Episode

●People Referenced

Startup Order of Operations

Practical takeaways from this episode

Do This

Identify a problem YOU are passionate about.

Brainstorm potential solutions with friends who can riff and iterate on ideas.

Build and launch a Minimum Viable Product (MVP) to test solutions and excite your team.

Focus on building a product and getting customers before incorporating or fundraising.

Seek out technical co-founders who can help build the product.

Apply your hustle to solving the core problem, rather than getting lost in legal or fundraising.

Avoid This

Don't rely on 'amazing' ideas judged by others; focus on genuine problems.

Don't think ideas happen organically; use a structured process.

Don't be married to a single solution; treat initial ideas as hypotheses.

Don't rush into incorporation or fundraising before building an MVP.

Don't outsource MVP development as a primary strategy; it's often more expensive and less effective.

Don't pitch investors with just an idea; have a product and some traction.

Common Questions

The most common blocker is the perceived need for a 'great idea.' Many talented individuals believe every great startup starts with an amazing idea, leading them to delay or abandon their ventures if they don't feel their idea is perfect.

Topics

Idea Generation Mindset & Self-Improvement Business & Entrepreneurship Product Development Founder Mindset Team-building Startup Strategy Minimum Viable Product

Mentioned in this video

People

Michael Seibel

The speaker and author of the essay 'One Order of Operations for Starting a Startup'. He outlines a framework for idea generation and building a startup.