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How to get the best start-up ideas

A couple of weeks ago I came across a great article by Y Combinator’s Paul Graham about how to get start-up ideas (thanks for the link Raghu). Today I was in the playground while my daughter Elaine was playing and I was looking at the articles that I saved in Pocket over the past weeks. Then I saw this one again. I decided to re-read it and while doing that I felt it was so good that I should probably post the main points, combined with my own experiences, on my blog.

Paul Graham has seen thousands of start-ups over the years, and as a serial entrepreneur and programmer himself he has a lot of personal experience with founding and growing businesses. He writes about it on his personal site, it’s a great resource if you’re interested in entrepreneurship. His latest essay is titled ‘How to Get Start-up Ideas’ and gives IMHO a very good overview of how to find the next big thing, or at the very least how to avoid working on the wrong ideas. The post that he wrote is quite long, so take your time to read it. One reason why I saved it in Pocket is because it was too long to read during the daytime, so I saved it to read it during my daily commute (or in the playground!).

The best way to find a good start-up is to look for problems, preferbly your own problems. Good ideas have generally 3 things in common: founders want or need this function/app/product, they can build it themselves, and few others realize it’s worth doing. The second one is especially important for me when I invest in start-ups. I hardly ever put money in a company that has to outsource its programming. If you are not a programmer and don’t have a technical co-founder, make sure you learn to code yourself. Basic programming skills only take about 3 months to learn, it’s probably one of the best investments you’ll ever make if you want to run a start-up.

Don’t sit down and think of start-up ideas. Not only will you not get a lot of ideas, but the ones that you’ll get are probably the wrong ones. You can either build something that a large group of people want a little bit, or something that a small group of people want a lot. If that’s the case go for the latter. That’s how Facebook, Apple and Microsoft all got started (see the article for more details).

You’ll get the best ideas when you are on the edge of a fast-moving field. Focus on the field that you know a lot about, if you then get an idea that seems right, the chance that it will work is relatively high. Take your time, even if it will take you a year to get to the edge of a field it may be a good investment.

Live in the future (look at how the world should be in 3-5 years from now) and focus on what is missing. Or even better, focus on what seems interesting to do. If you do that chances of success are biggest.

When I was in university I once had a discussion with a friend over a some beers, in which I said something like “I think all the big things have been invented already, it will be hard to come up with something completely new if you want to set up your own business”. This was around 1993, the moment when the Internet had just been invented! My mind was totally closed for what was happening and the implications it would have. I mainly looked at existing things (trading, physical production of goods etc.) and could not think big yet. I really believe this takes time to learn. Therefore don’t sit down and expect the good ideas to come to you.

Give yourself time to find an idea. Open your mind for things that are missing, but don’t consider right away whether it would be a good start-up idea or whether it could turn into a big company (you’ll throw away a lot of good ideas or focus on the bad ones). It took me years to look at the world in a way that I constantly see opportunities. I now have new ideas literally almost every day. Most won’t work, but that’s not the point. You just need to look at the world in a different way, and that works best if you are on the leading edge of a field (in my case right now a combination of consumer Internet, mobile apps and China).

The best ideas come when you know a lot about 2 different fields. Paul Graham advises programmers not to take an internship at a software company, but to for example work at a biotech company. From my experience that’s indeed how the best ideas are formed.

People in one industry (TV, fashion, etc.) know mainly about their own business field, but don’t see what’s happening in other areas. Having an open mind because you come from a different industry helps you to see what’s missing and fill the gaps. Be prepared for the experts to tell you that it won’t work because ‘you don’t understand the industry’. If you believe in your idea getting this kind of criticism is actually a good thing, because it lowers the risk that others from the industry will do something similar.

Not that you should be afraid of competition. Start-ups are normally not killed off by competitors, so don’t give your competition too much credit. Just make sure you do something different (or better) than they do. In my opinion most business fields are not a winner-takes-it-all market, so even if there is a lot of competition you should still go ahead if you feel that you can do things better. Think about Google that entered the saturated search market in the late 90s, they had a secret weapon and beat all of them.

Paul Graham’s essay has a lot more advice, including what to do if your start-up is not doing the right thing and you need a new idea quickly. Whether you are a wannabe entrepreneur or already very experienced, take 30 minutes to read his thoughts and experiences. And then take another 30 minutes to think about your own business or the field you are an expert in and try to figure out how it might (or should) look like a few years from now. Happy entrepreneuring!

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