Avoid These Tempting Startup Ideas
Summary
TLDRThe video script features a conversation with Michael Seibel and Dalton Caldwell discussing the concept of 'tar pit' startup ideas. These are consumer-focused ideas that attract many founders due to their appealing nature but are often difficult to succeed in, leading to a common cause of failure for new companies. The speakers use the analogy of tar pits, which trap animals with the illusion of a refreshing water source, to illustrate how these ideas can ensnare founders. They delve into why consumer ideas are particularly enticing and the high bar for success in this space, emphasizing the importance of understanding market demand and supply when choosing a startup idea. The conversation provides insights into the startup world's dynamics, the challenges of timing, and the need for founders to critically assess their ideas and the competitive landscape before committing resources. The advice is to pivot towards ideas with lower founder supply and higher market demand, using the supply and demand framework to increase the odds of success.
Takeaways
- 🌪️ **Tar Pit Ideas**: Many startup ideas are common and often fail because they resemble a 'tar pit' – they attract founders but are hard to escape from once stuck.
- 📉 **Commonality**: There is a surprising similarity in ideas across founders, leading to many attempting the same 'tar pit' ideas without success.
- ⚠️ **Slow Pivot**: Founders often don’t pivot away from these ideas quickly enough, which can lead to the downfall of their companies.
- 🕵️♂️ **Research**: Michael Seibel emphasizes the importance of research to understand why previous attempts at similar ideas failed.
- 💡 **Consumer Ideas**: Many 'tar pit' ideas are consumer-based, which are products or services marketed to individuals rather than businesses.
- 📈 **High Bar for Success**: Successful consumer products often have extremely high user engagement and word-of-mouth, without the need for aggressive marketing.
- ⏳ **Timing Matters**: The timing of a consumer product can greatly affect its success, with some ideas benefiting from a lack of competition or a new technology wave.
- 🎯 **Supply and Demand**: The best startup ideas have a low supply of founders capable of pursuing them and high market demand.
- 🚧 **Pivots**: Pivoting from a 'tar pit' idea to one with lower founder interest and higher market demand can be a successful strategy.
- 🧐 **Recognizing Tar Pits**: Founders should be aware of the emotional allure of 'tar pit' ideas and be willing to pivot when faced with evidence of the challenge.
- 💼 **Unique Expertise**: Founders with specialized knowledge or experience in a particular industry can leverage this for unique startup ideas with less competition.
Q & A
What is the term 'tar pit ideas' referring to in the context of startups?
-Tar pit ideas refer to startup concepts that attract many founders due to their appealing nature, but are difficult to succeed in, often leading to companies getting stuck and failing to pivot away from these ideas quickly enough.
Why are consumer ideas often considered tar pit ideas?
-Consumer ideas are often considered tar pit ideas because they seem attractive and have a large pool of potential customers, but they also face high competition, require exceptional product quality to stand out, and are subject to timing and market saturation.
What is the significance of the term 'supply and demand' in relation to startup ideas?
-The term 'supply and demand' is used to describe the ratio of founders wanting to work on a particular idea versus the actual market demand for that idea. Ideas with a high supply of founders and low market demand are more likely to be tar pit ideas.
Why do many founders default to consumer ideas when thinking about starting a company?
-Many founders default to consumer ideas because as consumers themselves, they are more familiar with consumer products and services. They also tend to be influenced by well-known consumer success stories and the visibility of consumer products in their daily lives.
What are some common challenges faced by consumer product startups?
-Common challenges include understanding the high bar for success, timing the market entry correctly, and competing with incumbents who may have an unfair advantage. Additionally, consumer product startups often struggle with user acquisition without substantial marketing budgets.
How did Google initially gain users without any advertising or growth hacking?
-Google gained users through incredible word of mouth. They provided a superior product that people wanted and evangelized to others. The quality of their search engine led to users actively seeking out and using Google, which helped them amass millions of daily active users.
What is the importance of timing in the success of a consumer startup?
-Timing is crucial because it determines whether a startup faces little competition or is entering a saturated market. Early movers can capture user attention and habits before competition intensifies, giving them a significant advantage.
Why do some founders find it hard to pivot away from tar pit ideas?
-Founders may find it hard to pivot away from tar pit ideas because these ideas often seem promising and receive positive feedback, making founders emotionally invested. They may also believe they have discovered a unique solution that no one else has thought of before.
What advice is given to founders considering working on tar pit ideas?
-Founders are advised to conduct thorough research, understand the high bar for success in their chosen field, and consider the supply and demand dynamics. They should also be open to pivoting if evidence suggests their idea is challenging and not gaining traction.
How can founders increase their odds of success when starting a company?
-Founders can increase their odds of success by identifying startup ideas with a lower supply of founders and higher market demand, creating a product that users are passionate about, and avoiding common patterns of failure by learning from the experiences of others.
What is the role of Y Combinator (YC) in guiding founders away from tar pit ideas?
-YC aims to communicate common paths of failure to help founders avoid them. They provide advice, share experiences, and offer insights to help founders recognize tar pit ideas and make informed decisions about whether to pursue or pivot from these ideas.
Outlines
🔥 Tar Pit Ideas in Startups
The first paragraph introduces the concept of 'tar pit ideas' in the startup world, which are startup ideas that many founders often pivot into but struggle to pivot away from, leading to failure. Michael Seibel and Dalton Caldwell discuss the prevalence of such ideas and the importance of recognizing them to increase the odds of success in a startup journey. They use the analogy of a tar pit, where animals get stuck due to its deceptive appearance, to illustrate how these ideas attract founders despite being hard to succeed in.
🚀 The Allure of Consumer Ideas
The second paragraph delves into why consumer ideas are so appealing to founders. It discusses how our everyday experiences as consumers influence the types of startup ideas we conceive. The speakers point out the influence of successful consumer stories and the lack of awareness about the high bar for success in consumer products. They also mention the significance of timing in consumer markets and how incumbents can have a strong advantage.
🌐 The High Bar for Consumer Success
In the third paragraph, the speakers use examples like Google and Facebook to illustrate the exceptionally high standard that defines a successful consumer product. They emphasize the importance of creating a product that not only meets a need but also generates such enthusiasm among users that they become its advocates. The paragraph highlights the misconceptions about the ease of consumer product success and the reality of the competitive landscape.
🕳️ Identifying Tar Pit Ideas
The fourth paragraph focuses on defining 'tar pit ideas' more concretely. It explains that these are not just challenging ideas but ones that emotionally compel founders to stay the course despite evidence of difficulty. The paragraph also discusses the common traits of tar pit ideas, such as their appeal and the positive feedback they often receive, which can make it hard for founders to consider pivoting.
🎰 Risky Ideas in High-Interest Areas
The fifth paragraph provides examples of tar pit ideas, particularly in areas like gambling and stock trading apps, which are currently popular but also highly competitive. It cautions against the assumption that because an idea is appealing or there's a perceived gap in the market, it will automatically succeed. The paragraph encourages founders to recognize when they are working on a tar pit idea and to consider the market demand and the bar for success realistically.
⛏️ Navigating the Startup Landscape
The sixth and final paragraph offers advice on how founders can increase their chances of success by understanding the supply and demand dynamics of their startup ideas. It encourages founders with specialized skills and insights into specific industries to consider the startup world as a viable path. The paragraph also presents a framework for a successful pivot, emphasizing moving from a high supply and low demand scenario to one with low supply and high demand.
Mindmap
Keywords
💡Tar pit ideas
💡Pivoting
💡Consumer ideas
💡Supply and demand
💡Word of Mouth
💡Incumbents
💡Growth hacking
💡Web 3
💡NFTs (Non-Fungible Tokens)
💡Gambling software
💡Supply-side and demand-side dynamics
Highlights
The term 'tar pit ideas' is introduced to describe startup ideas that many founders are attracted to but often fail to succeed in.
Tar pit ideas are common and often not recognized quickly enough, leading to the failure of many companies.
The analogy of a tar pit is used to illustrate how startups can get stuck in ideas that seem promising but are actually dangerous.
Consumer ideas are highlighted as the most common type of tar pit ideas, appealing to a wide range of founders.
The importance of understanding the high bar for success in consumer products is emphasized.
The role of timing in the success of consumer businesses is discussed, with examples like Google and Facebook.
Founders often underestimate the quality of existing successful consumer products and the difficulty of outperforming them.
The concept of supply and demand for startup ideas is introduced as a framework for evaluating the potential success of an idea.
The speakers advise founders to research thoroughly and understand the market demand before committing to a tar pit idea.
The idea of discovery platforms for restaurants, events, and music is identified as a common tar pit idea.
The limitations of physical world offerings, such as the number of available restaurants, are discussed as a challenge for discovery platforms.
The emotional appeal of tar pit ideas and the difficulty founders face in pivoting away from them is highlighted.
Examples of other tar pit ideas include software for gambling and stock trading, which attract many founders but may not have high market demand.
The potential of Web 3 and blockchain technologies is discussed, but the need for practical applications beyond theoretical concepts is emphasized.
The speakers encourage founders with specialized skills and industry insights to consider entering the startup world, even if they don't fit the typical profile.
The importance of differentiating between ideas with high founder interest and low market demand versus those with low founder interest and high market demand is stressed.
Pivoting from a tar pit idea to one with lower founder supply and higher market demand is presented as a successful strategy.
The advice to avoid common patterns of failure and to create unique paths to success concludes the discussion.
Transcripts
that's the tar pit talking it's like oh
this looks like a nice pool water 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
quicksand
this is Michael Seibel with Dalton
Caldwell and today we're going to give
advice on pivoting by discussing the
startup ideas that Founders most often
pivot into and away from
we call these ideas
tar pit ideas
Dalton explain the problem here what's
going on
so here's the deal
it's surprisingly
um
a lot of people's ideas are surprisingly
the same across Founders and so when we
read the thousands of applications that
apply every batch and we interviewed the
thousands of companies every batch that
we do
there's a lot of uh common ideas
and specifically what we'll be talking
about today is tar pit ideas and we'll
explain what that means in a moment but
these are ideas that lots of people try
and they don't succeed and they don't
pivot back out of them quickly enough so
it's a cause of death for many many many
many many companies statistically are
some of these Target ideas so so I'll
put this back to you Michael Michael
explain why we would use the word tar
pit what are we trying to say what does
that mean I know you did some research
here
yeah did a little bit of Google in here
so
um a tar pit is
um a place where petroleum 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 yeah
it's it's not even funny yeah Tarpon
ideas
attract Founders to them they say and
they seem like good ideas they seem like
something people want you know it's
ideas that are like very appealing and
and the fact that there isn't already
famous companies solving them already
attracts more Founders do you see what
I'm saying like it looks like you've
come up with this amazing original idea
and the death of everyone that attempted
it is hard to see and all you see is
like a freshwater pool you're like oh
this is a wide open space but right
below the surface okay
yeah it looks good right that's why it's
so alluring and so and so look why are
we doing this talk or why are we telling
you this
we would love for this not to happen to
you we would love to not see the tens of
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 that's why we're talking
about this stuff
well let's be clear not only do these
companies apply it and do we interview
them we have funded many tarponitis so
like we've seen the journey you know
from Founders NYC and them getting stuck
in this space too so a lot of what we do
at YC is we try to communicate the
common Paths of failure so you don't
follow them this is just another example
of that let's start so let's begin with
this the fact is
most tar pit ideas at least the ones we
see the most are the ones we're talking
about today are what you would call
consumer ideas
um consumer means you know the customer
is a consumer we'll talk about that in a
second but like let's let's dive into
that Michael why don't you kick this off
what what is a consumer idea what is a
consumer business so this is a product
that's being marketed to people
not companies
sometimes these products are free and
monetized with ads um social networks
are extremely common sometimes these
products are paid products you know the
whole gig economy I would describe as a
consumer business
um but you know it's a consumer business
because individual people use it and
it's a product that's not primarily
marketed to businesses
um that's where you know you're in the
consumer world yeah and there's some
Nuance here folks on the internet so we
don't need to get into a semantic debate
we're just trying to just go with us on
this definition just bear with us here
even if there's some Nuance to debate
about this so why do founders Chen tend
to choose consumer ideas so much why do
they tend to be Tar Pits et cetera et
cetera so yeah why is that Michael why
why is the average person applying to
ycee applying with a consumer idea well
I think it starts with we're all
consumers
we are all consumers and we are being
marketed products basically our whole
lives
and so often when we think about the
problems in our lives or we think about
the problems that interest us they tend
to be things that we would use or we
think we would use or we think our
friends would use
that's a big one what are others I think
that when we know stories about other
Founders or about startups most of the
stories we know are about consumer
Founders and consumer startups and
consumer successes so you think about
the hero worship of Steve Jobs or Mark
Zuckerberg or whatever and it's hard not
to think about these people because they
build products we all use every day like
if you spend your time watching
television and looking at apps and
looking at your iPhone with for most of
your waking hours it's hard not to be
thinking about consumer app ideas right
like I get it
um I get where I get where it's coming
from we rarely meet a Founder that's in
love with Cisco or Oracle you know and
and that makes sense exactly
and and so I think we get told these
stories and so I think by default if
you're thinking about starting a company
You by default come up with consumer
ideas because it's what you know it's
what you think every startup is as a
consumer especially if you're not as
familiar with how the startup World
works yeah
um
and this is rough why is this rough
Michael why is why is it hard
doing consumer stuff so I think there's
two challenges here I think 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 and I think
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 is helping them in a
consumer business and when timing is
actually harming them and existing
incumbents can be
um have an almost unfair advantage yeah
I I think from our perspective or from
my perspective reading applications
let's start with this calibration of
what good looks like because again
imagine the the the person applying with
an idea for a consumer social network
it's unlaunched they found you know they
believe what they're doing is like brand
new and they don't really know what the
bar is let's talk about the bar quickly
um for something let's just talk about
Google I'll throw that one out really
quickly yep I was in college when Google
came out
and
it had incredible Word of Mouth
you had to manually have heard of it on
the internet somewhere I think I heard
of it from slash dot you would have to
go into your web browser and type in
google.stanford.edu yep
right there was they didn't do any
advertising there was no growth and they
got
there's no growth hacking they just had
a website and they got millions and
millions and millions of people to go
out of their way every day to open a web
browser and go there
okay and they have tens if not hundreds
of millions of daily active users now
they make something like half a billion
dollars a day
on the ads on their website
um
and again like if you think about them
when they were startup let's zoom into
that
they spent no money on user acquisition
they needed to know branding they didn't
no marketing they just built a really
good product that people really wanted
not only did the people wanted like they
people evangelized it like my roommate
in college saw me not using Google and
like scolded me and said you're using
the a bad search engine you've got to
use Google like that's way past like
liking something right it was obviously
bad and famously
the I the product was so good the
founders didn't really want to run a
startup they tried to sell the
technology yes they tried to get Yahoo
to buy it like the founders were
disinterested in running a startup
but people wanted their products so
badly
that they got pulled into it yes
isn't that weird and again this is the
sign this is the bar for a lot of these
consumer ideas is you make something
that people are so obsessed with and is
so high quality
you you don't have a choice basically
like you as a Founder get pulled this
direction that you weren't even sure you
wanted to take that's a sign of like a
pretty good consumer idea okay like
that's a pretty good bar if we look at
Google in historical contexts
um is there another example if you want
to talk about your man like you know
Facebook is extremely similar you know I
believe the stat was within 48 Hours of
Facebook being released at Harvard 75 of
the campus was using it and when
um I think Peter Thiel and Reed Hoffman
invested the average time on site per
user was two hours a day
and so it's like
holy crap and did they spend money on
marketing and did they you know no no
and I think that's what's crazy is that
like oftentimes people don't communicate
the truth about how these products
actually started like most people don't
realize well they weren't there in the
early days they don't realize and you
know you might hear some later stories
about Facebook growth hacking and the
Facebook growth team and all this other
[ __ ] yeah that's not how Facebook
started like people pulled the product
they were pissed when Facebook wasn't at
their University and again I think this
is a lesson on what the bar is for
Consumer this is why we're telling you
these stories is that the really iconic
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 so I think
that is the first thing is this bar
let's talk about timing a little bit
here because I think that you and I were
fortunate enough to do startups
during kind of two big
let's say kind of uh explosions of
consumer products right web3 I'm sorry
Web Two
that was a Freudian slip web 2 and and
mobile
and so
why was it easier to make a consumer
company in 2005 2006 2007 or a mobile
company in 2010 2011 12 13 14 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
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 and
they would have people using them
multiple hours a day looking at
everyone's photos leaving comments
poking and liking it was like
so addictive
because there was nothing remotely
competing with those hours for the day
well and it's interesting because like
I'll put this in perspective like you
know we were both in school during this
period of time and like everyone would
have a computer screen but at least in
our dorm room there'd only be one
television right and so practically
speaking everyone was in front of their
computer a lot more
um during that period of time of course
College gives great broadband and the
big incumbents the entertainment
incumbents were all on TV
so they were all battling each other on
TV and then on the web there weren't big
incumbents
and you know of course Myspace was there
but Myspace was nowhere close to as
powerful as like an NBC or a CVS or a
fox was on on television so I think that
was like a really big thing that people
didn't realize is that the devices were
there all the hardware was there all the
connectivity was there
but the consumer products Weren't There
Yet bam perfect place and let's be clear
very similar in the smartphone game
right very similar yeah we all had
smartphones and there was an app store
and you at that era if you were building
mobile apps right when the iPhone came
out you could have made some pretty
basic stuff and got a lot of users
the bar was quite low in historical
perspectives because like
you know people wanted to do stuff with
their iPhone whereas now in every app
category there's dozens of things
um it's so right like it's you had to be
in the right time and right place for
some of those ideas right so we've we've
kind of talked all around it but let's
let's kind of
Pin the Tail here like what is a tar pit
idea let's really dig in what are we
talking about here
um a tarpet idea is a consumer idea that
many people try
um it's an idea
part of the reason it's a tar pit and
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
just a regular idea if you're not like
and so a true tar pit is one that 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 so one of
them is
an app to discover new things and new
things could mean new restaurants new
events New concerts new bands new videos
it's basically Discovery and the pitch
goes something like this discovery is
broken
it's hard for me like
there's all these good restaurants that
I don't know about and yes Yelp exists
and Google exists but I want to hear new
recommendations from my friends or I
want a machine learning recommendations
and I have this problem I've talked to a
bunch of people I follow the YC advice
of talking to my users and many people
are telling me they would love
to find a better way to discover new
restaurants or music again all these
things is a very similar pitch so they
would love to discover it and so we know
people want it so I have personal
experience with this one and 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 mean that a
better option exists and I think this is
what's so tricky is that like the world
seems Limitless but for these physical
things it's actually fairly limited
every day people go on Yelp search the
restaurants in their neighborhood don't
like what they find and are frustrated
but that doesn't mean that there are
restaurants that don't they don't know
about that that just means that what
exists is not sufficient and ditto for
parties Dittos for events and concerts
and I think
you know this is an honest it's an
honest mistake right it's a very honest
mistake because there is a problem I
don't like the restaurants in my
neighborhood or my city right I've spent
years of my life working on music
discovery
and I understand the problems
one of the problems is that we think
that the other users are like us and
people like to say they want to discover
new music but in practice people like
popular music from a small number of
bands
just like with restaurants do you know
what something we've learned from
doordash over the years
is most people order like McDonald's and
stuff like the average year they're
comparable or the burger from somewhere
else that's what people like they're not
ordering like really esoteric strange
dishes
and and this is one of those things
where I'm sure there's people they're
gonna see this video and be like you're
wrong the thing with these ideas is it
makes people emotional
and it makes them want to debate or it
makes them want to like something about
it makes you feel like the you figured
something out and the world is wrong and
you have the vision there's something
weird about this and these Discovery
startup ideas really bring this out in
Founders again we've been there I've
worked on this stuff I get it and so
again we're saying if you're working on
this kind of stuff we're interested in
it do a lot of research and 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 tar pit 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
quicksand
right Dalton I must be the first person
who've ever discovered this problem
I just realized that gen Z doesn't like
Facebook very much I just invented this
idea no one has ever thought of this
before
no one's ever yeah the bar is higher
folks
um here's some other recent kind of tar
pit ideas just to share with people
software to help people bet or gamble on
things or things that um people saw a
lot of The Game Stop fun things with
Wall Street bet so
options stock trading stuff for very
active Traders this is very common right
now and again maybe some of these ideas
are good but I want folks to realize
what a high percentage of all founders
applying to IC apply with these types of
ideas it's a very popular set of ideas
and so you need the bar is higher if
you're going to be working in that kind
of space you can't just be like
self-evidently people like to gamble
people like stock trading but they don't
like Robin Hood therefore my startup
will succeed like that is not um
that is not a compelling argument uh by
itself okay no for sure not and
um
I think that the
probably the last thing is is kind of in
this world of web 3 right and and you've
talked about this a lot
web 3 opens up so many possibilities
because it's the idea that everything
could be rebuilt and like what couldn't
be more exciting to a young founder
coming into a world with that that feels
like everything's been built
to be told oh no everything's going to
be rebuilt in this way
the the challenge is is like that's a
very theoretical concept right Dalton
like yeah how do you dig a Little Deeper
you want to put that into practice and
ideally you want to ideally you have
something deeper then and so therefore
we're going to add tokens or therefore
something something nfts like the bar is
higher and again speaking of nfts
remember open c i I interviewed those
guys I remember doing office hours with
them and what I will tell you is openc
was not theoretical
they launched they had users they had
graphs they made money it was like
actually something we could unders that
made sense and wasn't all wishful
thinking so you've got a theory about
this whole game so here's something
here's a theory I'd like to share with
everybody like let's think about
Founders and startups let's talk about
supply and demand
and the argument is this
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 still with me so for
instance 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 and again a lot
of this is the uh the music Discovery or
the concert Discovery if your startup
ideas hey I want to help people discover
new concerts to go to as a consequence
of working on that startup idea you're
going to go to a lot of concerts and you
have a lot of fun yay and so there is a
huge pool of people out in the universe
that would love to work on that startup
idea okay
on the other side of the spectrum the
supply of Founders that would want to
build open source developer
orchestration tools
pretty low
and for and there's some people where
that stuff is great like right it's just
it's not you have to be technical you
have to be a programmer like there's all
these like boxes and filters you have to
pass through
to think to yourself I'm going to work
on developer orchestration
you know this is my passion
and so that's on the supply side some
ideas a lot of people want to work on
because it's cool and sexy and fun you
hang out with cool people some of them
you know 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 Michael 20
people
100 okay yeah no hundreds okay so very
small Supply now let's talk about the
demand side Michael 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 and then and
then also on the demand side 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 I guess would be an example
oh here's a no code tool to help help
you uh let your non-technical people
effectively be coders to build all these
dashboards what's the demand for a
product like that
infinite
people want that and so I think what you
yes when we're talking about heart pit
ideas what we're describing is ideas
that have the largest
of oversupply of Founders that want to
start them relative to market demand
I think you can think about this in
terms of like being on the job market or
something if you don't really have
differentiating skills from other
candidates it's just going to be harder
than if you have really differentiated
really special skills that stand out
from the crowd
I think what's interesting about this
concept is how many founder or how many
potential founders
are sitting somewhere with expertise
and they don't think the startup world
is for them like for example we funded a
mining software company
from you know this founder in Australia
who used to basically work for a mining
company building software to tell the
company like how to like deploy all this
really expensive equipment and not lose
money
and I think that there are probably
hundreds of people like this founder
who would never think that the startup
world is for them because they were to
think the startup worlds for people
making stuff for creators or social
networks
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 and solve
that problem for the world like
you might be you might have a more
unique perspective startups aren't
exclusively apps to discover restaurants
again like like no there's too many of
them no and kind of like my my last set
on this
I think the best 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
that's a good pivot I would that's
that's brexit that's retool that's I
mean we have so many examples of this
stuff
um that's one framework I would have for
describing what makes a great pivot is
moving in a good direction on both of
these vectors well and this might be
torturing the metaphor but basically
what we're saying is
instead of moving towards what looks
like the easy fresh water Pond but
that's a trap
you move towards the mountains the
desert right the places that people
don't want to go
but you know when people find gold they
usually don't find it in the middle of
downtown Manhattan you know but they
usually have to go far away and so I
think that
those companies are really encouraging
to work with in YC because you think to
yourself if you continue to walk that
path away from the tar pit even if you
start with a tar pit idea
great and you know honestly we fund
folks with tarpet ideas because we have
we have the a thought that maybe they'll
pivot out and many of them do which is
kind of cool to watch look in closing
folks out here know do your research
know what the bar is think about the
supply and demand thing and you know
give yourself the best best odds for
Success 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 because I
think that'll meaningfully increase your
odds of success so just think on that
and take it from us because we can't
tell you what the play to win is but
like we think it's our responsibility to
tell you the plays that we see losing
all the time
you know and and if you can avoid the
most common patterns of death
you can perhaps chart a unique path to
success and and that's if any advisor
tells you they can do more for you than
that
be wary all right Dalton great chat
thanks okay
[Music]
thank you
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