YC: Avoid These Tempting Startup Ideas Notes
YC: Avoid These Tempting Startup Ideas Notes summary

YC: Avoid These Tempting Startup Ideas Notes

Rating: 9/10

Author: Dalton Caldwell | Michael Seibel Listen to The Original

Avoid These Tempting Startup Ideas Summary / Notes

What is a Tarpit?

  • A tarpit is kind of coming up and seeping up through the Earth and it tends to be a great place to find fossilized remains dinosaurs other forms of life and the reason why is that apparently tar pit pools resemble fresh water ponds and so animals will come across them think it's fresh water step in get stuck because the tar is very sticky die start to decompose that smell will attract more animals and then you get this kind of cascading negative effect which as I say it out loud describes the phenomenon in the startup world so perfectly (01:32)
  • "We see the tens o thousands of applications of people working on these really rough ideas and if you can manage to not fall into the tar pit yourself your overall odds of success in your startup journey are much higher" (03:09)
  • Consumer startups are the biggest tarpits.

The Challenges with Consumer

There's two challenges: (06:40)

  • The first challenge is people often don't understand how high the bar is the consumer products that they use they don't realize how actually good they are and how many others existed and failed so that's the first thing
  • The second thing and we should get into this a little bit more is that I think that timing tends to be very important in consumer so I think sometimes people don't realize um when timing
  • I think sometimes people don't realize when timing is helping them in a consumer business and when timing is actually harming them

What PMF for consumer looks like:

  • Consumer companies they tend to have in common really excited users that use their product a lot and the and the founders of these companies weren't like begging people to use them per se they weren't paying a bunch of money in ads they weren't like all those kinds of tactics weren't what they did they just actually made products that people became obsessed with very early on frankly (10:56)

Why Consumer was so easy in the past

  • Why was it easier to make a consumer company in 2005 2006 2007 or a mobile company in 2010, 2011 what was happening in the 2000s a lot of people had gotten broadband and they had gotten computers and they were bored and they're when if you if back in that era you just launched something cool people were bored and you were basically competing with television or something Β and so again when you think about when Facebook came out they weren't competing with attention from a bunch of other social networks they were competing with nothing and so these college kids on the campuses back then it was like crack how addicted people got to this thing (10:56)

Why Founders Flock to Consumer

  • it's a tarpit and it's not just a hard idea is it has to feel sexy or you have to get lots of encouragement to work on it you're likely to get positive feedback something about it will emotionally make you not want to pivot away from it again this is kind of what's weird about why we use this term is if you are not obstinately unwilling to quit working on it then it's not a tarpet it's just a regular bad idea it's (14:36)
  • One of them is an app to discover new things and new things could mean new restaurants new events new concerts new bands. I think for the longest time I agreed like I was like yes this needs to exist and as I got older I learned something that was slightly depressing but is proven to be true the magical place doesn't exist right like there is a finite number of restaurants that are open tonight that's it and like you wanting there to be a better option doesn't change the fact that there aren't better options. (16:35)

If you choose to build in Consumer

  1. Do a lot of Β research, don't simply build a Robinhood competitor because you and your friends don't like Robinhood.
  1. Understand that the reason those that came before you it's not that they're stupid it's not that they've never thought of this before it's not that they haven't shipped anything before like just realize that's the tarpit talking
  • it's like oh this looks like a nice pool no one's no one's here drinking at it I'm gonna I'm gonna go get a drink of water from this pool right like no danger
  1. You will be defensive about when you are presented with evidence that the idea is challenging you know the funny thing is and I think you keep on saying it is that like these are not ideas where it appears like there's no hope and sometimes ideas in these spaces work right which is kind of the definition of like there's there's hope so I Think It's tricky and I think what we're trying to say is that not don't build ideas in this space it's just like going with both eyes open know the game you're playing you know like going with both eyes open know the bar (15:07)

Supply & Demand

  • There's many startup ideas that have very large supply of Founders that would want to work on them and there's some startup ideas with a very low supply of Founders that want and not just want have the skill set to work on them.
  • Let's imagine the startup idea is one where as a consequence of being a Founder you party with celebrities and your job is to party as many celebrities as possible yes I think the supply of Founders that are excited about that.
  • Versus how many people could start a Quantum Computing startup what's the set of people in the universe that could credibly start one of those?
  • What is the demand for an unlaunched undifferentiated social app zero right think about how many apps launch on a lot in the App Store every day folks hundreds thousands I don't know like most people don't search in the app store for absent launch that day to download them and try them out people are busy they don't care
  • What's the demand for high quality software that solves a major business problem so that companies can run more efficiently in some industry really high yeah like think about again you have to know what industry you're doing let's take your most expensive workers yeah let's take your most expensive workers and make them 50% more productive it's something like [[$Retool]]: here's a no code tool to help help you uh let your non-technical people effectively be coders to build all these dashboards
  • Gives example a person from YC who got in with software for mining companies. He's someone who's been working in that industry for a decade.
  • I I think this is almost a plea to people who are experienced and don't think they're startup people it's like you might be a startup person like if you've solved an esoteric problem in a large industry or you have Insight on it you could be a startup person. (25:39)
  • I think the best startup pivots are when a founding team recognizes these things of the supply and demand theory that I'm that I'm discussing and they find an idea with a lower supply of other people doing it and with larger demand from customers and that when you move when you move from a lots of Supply Founders low demand to low supply of other Founders high demand. (26:16)

Conclusion

  • this is how you create luck and so one of the reasons we want to put this there is we would love to see more Founders kind of recognize this Dynamic we're describing and make some moves on the supply and demand side ( 28:02)
  • We think it's our responsibility to tell you the plays that we see losing Β all the time you know and and if you can avoid the most common patterns of death (28:05)

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