How to come up with great startup ideas

Season 4, Episode 2

Hey y’all!

As usual, at the end of this post I’ll include some links to interesting things I’ve learned lately, but here’s a quick preview of news in the tech world last week: WeWork went public, Bitcoin hit an all-time high, DWAC (Trump’s company) went public via SPAC and Wall Street Bets memed it towards the moon to grab some quick bucks, and Sam Altman (founder of YC and OpenAI 👀) announced “Worldcoin,” a digital currency that you receive in exchange for scanning your retina (not a joke).

For this week’s post, I’m talking about how to come up with great startup ideas. 

As I write out that title, I’m already overwhelmed with imposter syndrome. I haven’t built a billion-dollar company (yet), so you should take this all with a very large grain of salt. But it is my primary goal, to build a large business. And I have spent the last several years in San Francisco, observing founders who have built massively valuable companies. So, the following post is the best attempt I can make to curate the most helpful and proven strategies, resources and frameworks, to come up with great startup ideas.

I’ve also observed best practices via books, podcasts, and interviews, in addition to soaking up information while working at startups and talking to other colleagues in the startup world. FWIW - I’m building a B2B SaaS company, so that’s the type of ideas most of the context of this article is written around, but I think the majority of the content is still applicable for consumer apps, side hustles, bootstrapped business and even non-profits.

Last note before we jump in. I spent 18 months thinking through startup ideas before landing on the one that I’m pursuing now. I had a running list of about 50 ideas. And about a dozen of those ideas, I built some sort of “pitch deck” or hacked together an MVP (minimum viable product). It sounds crazy to spend that much time finding an idea and/or problem to solve. But keep in mind, I want to build a big company, which will probably take ~15 years (give or take), so 18 months is a fraction of that timeline. “Measure twice, cut once,” as they say.

I’ll do my best to cherrypick the things that worked for me during those 18 months of exploring, and skip over the things that were just fluff.

Here is what I’ll cover today:

1. Can you decide to start a startup?

2. Rule #1

3. Learn from proven greats 

4. Where to brainstorm 

5. Get feedback from others 

6. My favorite framework for great startup ideas

Let’s get into it. 

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Can you decide to start a startup?

I wanted to say up-front: it is up for debate if you can create a startup by simply saying “I want to start a company,” finding an idea and then starting the company.

This weekend, I rewatched an interview of Sam Altman and Mark Zuckerberg, and they both vehemently were in agreement that you cannot consciously choose to start a startup and succeed. I am challenging that. I decided I wanted to start a startup, found an idea, and started one. But we need ~15 years to find out if my experiment is “a success” or not. Here is the interview:

All that to say, you should decide for yourself if you think starting a company just to start a company is even possible. But either way, having open eyes to startup ideas is definitely possible.

Let’s explore a few ways on how to do that.

Rule #1

If and when at all possible, build something for yourself.

A gap in a market, or a problem you are actively trying to solve. “Drink your own champagne” is probably the most quantifiable thread between all of the successful companies I’ve observed first-hand, and learned about, from afar. The benefits of being your own customer will compound in ways you can’t fathom today.

Learn from proven greats 

I’m not great.

I am simply here to tell you what I’ve observed, and a little bit of my own experience. So, here are the people who I have observed and want to learn from, and suggest you do as well.

• Paul Graham. The godfather of startups. There may be no person on earth who has seen more ideas go from “just an idea” to “a startup” than PG. And it’s not just the volume that’s impressive, it’s the quality. So, when PG talks about finding startup ideas, I would take a close listen. Start with this essay: How to Get Startup Ideas, and work your way through his other essays. He’s also a very active tweeter. Finally, watch this lecture PG did at Stanford from 2014.

• YC YouTube. Tons of resources, interviews, and content about coming up with startup ideas. Their “Startup School” series is phenomenal as well.  

• Sam Altman. Yep, the guy who just created a Bitcoin competitor that requires you to give up your retina data. Maybe in web3, he’s NGMI. But he’s a web2 guy and has proven his skills time and time again. Start here: Developing Ideas for Startups by President of Y Combinator & Cofounder of Facebook and here: Idea Generation.

• Garry Tan’s YouTube channel is awesome. It’s fun to see someone so successful making videos that only get hundreds or thousands of views (though it’s improving lately). Also, I just realized, Garry is also YC… there’s a definite trend here. Check out this video: Billion dollar startup ideas.

• Serial entrepreneurs are also great to look at. They didn’t get lucky. So that proves to me they’re able to build a mental model in their head, not just be right one time. In other words, they seem to have a repeatable pattern for coming up with great startup ideas. Here are a few folks that fit that mold: Suhail Doshi, Danielle Morrill, David Cancel, and David Sacks. (The other common thread with these folks is apparently the letter “D”).

Where to brainstorm

Get those juices flowing!

Walks are my favorite. Build a deck or put together a small solution (and be using no-code) over a weekend. Below are some of the places I continued to visit when I was exploring startup ideas for 18 months.  

• My First Million podcast (shout-out to Shaan, one of the hosts, for helping me ideate, and now has invested in Groundswell! Full circle.).

• Foundation Series, by Kevin Rose. Fun fact: this is the series that made me intrigued with entrepreneurship and decided to move to San Francisco to join a “tech startup.”

• On Deck is a phenomenal resource and the community is only getting strong. This is where I brainstormed my company idea, got feedback, and met my two-founders. I’m very bullish on OD.

• Other podcasts that you can check out to hear founder stories and the frameworks they used to create their companies include Invest Like The Best, Acquired, How I Built This, Master’s of Scale, and Indie Hackers.

• This is also a great list of newsletters and podcasts: 

Aleksandr Volodarsky 🍋 👁 @volodarik

I asked 400 founders what podcasts and newsletters do they consume Top podcasts: 9 - @AcquiredFM 8 - @InvestLikeBest 7 - @IndieHackers 6 - @HowIBuiltThis 5 - @TWiStartups 4 - @a16z 3 - @NFX 2 - @myfirstmilpod 1 - @theallinpod Top newsletters:

Get feedback from others 

I have told this story before, but one entrepreneur and teacher I have observed and come to respect a lot over the years is Hiten Shah. Hiten started Kissmetrics, Crazy Egg and is now building Nira. Early last year, when I was in ideation mode, I emailed Hiten to get his feedback on one of my ideas at the time. I sent him an email, and his reply was really annoying. But, I’ve thought about it a lot since then. He said: 

Since you're good at sales, if you're going to build a SaaS product I'd pick an idea and/or target customer and sell it before you build it.

My feedback on your ideas doesn't matter. Your potential customers are the ones that matter!

In hindsight, I probably just wanted his validation. I wasn’t actually looking for his feedback. I wanted him to say “wow, this is such a good idea! You should do this.” Validation is good. But call it what it is. It’s not product feedback from a real (potential) customer — big difference here. At some point, I’m going to write a full post on “The Mom Test,” which is an incredible method to use in Customer Discovery. But that is once you have your idea and need to validate it — for another day. 

Talk to real customers! Early and often. 

There is no secret hack here. Hustle is the only way. Asking the right questions is crucial. But asking the right people is equally as important. If your startup idea is for construction software, go talk to construction workers and managers. See if they like it. See what they’re doing today to solve the problem you’re setting out to solve. See if there is a different problem that is a more burning need for them, that you should be solving instead. 

Put a product or even a document in front of potential customers. Writing out an idea forces you to 1. be thoughtful 2. carefully articulate the problem and solution 3. share with others to get their feedback. You can iterate based on the feedback you receive.

At the end of the day, it comes back to Rule #1.

My favorite framework for great startup ideas 

Alright, this one is stolen from Shaan Puri. It’s by far my favorite framework. It’s also how I observed the idea that I’m currently pursuing at Groundswell, while I was working full-time at Zoom last year. 

He calls it the “Import/Export Framework.” 

It’s pretty simple, here’s how it works. 

Import: 

You have an idea that you try to solve for your business, can’t build internally, and can’t find software on the market to buy and ‘import’ into your company. So you should consider building a company to do this, to import into other companies. 

I came up with Groundswell by trying to solve a very specific problem while I was at Zoom. I didn’t have a tool internally to build a solution, so I wrote up a little document and sent it around to a few founders who had companies that I thought could help. I wanted to buy a software to help me solve this problem. But after talking with about a dozen companies, I realized that no one was doing the thing that I wanted to be done. The more I dug in, the more I understood the root causes of why no one had built a solution yet — turned out, we are in the middle of a couple of massive inflection points that make the time to start this company, right now. So I started the company. :) More on that exact journey in the weeks to come.  

Export: 

You build something internally that solves a problem. There are other companies that have the same problem you had, and could solve it with the tool you built.

The classic example here is Slack. Slack started as a gaming company, and when they were running out of money, they had to let go of most of their staff. With only months left of runway, they decided to talk to some potential customers about a little chat product they had built for their developers to chat to each other in real-time, more easily. Turned out, lots of companies wanted that product. So they ended up pivoting from a gaming company to an internal company communications tool, and 10 years later and $40B from Salesforce, seems like it was a smart move to export that idea. 

The export method is tricky from an IP perspective. If you build something while you’re working at a company, it’s very likely that they will own the IP of the things you build. So you have to be careful with the export method. 

Here’s a visualization I built about this framework:

Brendan (trygroundswell.com) @brendanjshort

How to brainstorm startup ideas. I originally tried writing about this framework. But ultimately decided to create a simple visualization instead. Hope it helps others as much as it’s helped me. Coined by @ShaanVP, he calls it: “The Import/Export Framework”

Conclusion

As Elon quoted in a talk a few years back:

Trying to build a company and have it succeed is like eating glass and staring into the abyss.

On that inspiration note, choose a problem/space you enjoy. Because it will probably be a long ride.

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Thanks for jamming with me again this week. Please keep all the feedback coming! I’ve got a bunch more posts I’m trying to get out there into the world to help founders make the leap into entrepreneurship. But if you have ideas, please let me know!

If you have a friend who would enjoy this newsletter, shoot them the link so sign up now 🤝 . WAGMI.

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Quote I’ve Been Pondering

Brendan (trygroundswell.com) @brendanjshort

It's okay to look at the past, but don't stare. Let go, but don't close the door. Listen closely. -Van Neistat

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Portals to corners of the internet

• The best podcast episode I listened to this week was 20VC: Chris Sacca on Coming Out of Retirement to Unf**ck The Planet with Lowercarbon, How Chris Evaluates His Relationship To Money Today, Why We Have Bred a Generation of Ass**** Kids, Do VCs Provide Any Real Value and The True Unfiltered Opinion of Facebook (quite the title).

• Fun video from Justin Kan’s YouTube channel. My favorite part was in minute 35 and the discussion around the “pay it forward” ethics of Silicon Valley.

• On Deck announced a Y Combinator competitor, offering $125K for 7% and a 10-week program.

• Web3 movements: Coinbase announced an NFT marketplace to take on OpenSea (waitlist is already 2M+, which is more than OpenSea — although it’s hard to say how many of those are bots🙄), Stripe said they’re moving into crypto (again, I’m doubling down on my prediction that Stripe will be the biggest company in the world in 2030), and Robinhood is set to launch a crypto wallet.

• Not Investment Advice (Twitter Memers chopping it up on Web 3 Inflection Points, DAOs, Axi Infinity, Play-To-Earn Model + Social Tokens).

• Pushback from Edward Snowden on Worldcoin. And Sam’s response.

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Have a great week!

Cheers,
Brendan J Short