Paul Graham: the best startup ideas come from solving problems

Venture Capital

I recently read a great piece by Paul Graham that talked about getting startup ideas. In the well thought out essay about entrepreneurship and the various ways startup ideas have come to some of the world’s biggest innovators, Graham finds a central concept at their core: problem solving.

Graham is one of the founders of the widely popular YCombinator, a startup incubator that has funded more than 450 startups, including Dropbox, Airbnb, Stripe, and Reddit in the last seven years.

As an investor Graham knows a thing or two about startups and good ideas. He reckons that startup ideas shouldn’t just be ideas for the sake of ideas.

The veteran investor argues that good ideas are more often a response to “some external stimulus”, citing Bill Gates’s Eureka moment with Microsoft and Drew Houston’s Dropbox clincher.

If you look at the way successful founders have had their ideas, it’s generally the result of some external stimulus hitting a prepared mind. Bill Gates and Paul Allen hear about the Altair and think “I bet we could write a Basic interpreter for it.” Drew Houston realizes he’s forgotten his USB stick and thinks “I really need to make my files live online.” Lots of people heard about the Altair. Lots forgot USB sticks. The reason those stimuli caused those founders to start companies was that their experiences had prepared them to notice the opportunities they represented.

Graham attributes the success of companies like Microsoft and Dropbox to finding what is missing and then fixing it. He reckons entrepreneurs need to live in the future — that way they can search for things that are missing.

“Once you’re living in the future in some respect, the way to notice startup ideas is to look for things that seem to be missing. If you’re really at the leading edge of a rapidly changing field, there will be things that are obviously missing. What won’t be obvious is that they’re startup ideas.”

He takes it step further and suggests that when entrepreneurs are living in the future they are able to not only solve the problem of what is missing but also build something that is interesting.

Finding startup ideas is a subtle business, and that’s why most people who try fail so miserably. It doesn’t work well simply to try to think of startup ideas. If you do that, you get bad ones that sound dangerously plausible. The best approach is more indirect: if you have the right sort of background, good startup ideas will seem obvious to you. But even then, not immediately. It takes time to come across situations where you notice something missing. And often these gaps won’t seem to be ideas for companies, just things that would be interesting to build. Which is why it’s good to have the time and the inclination to build things just because they’re interesting.

Read Graham’s full essay.



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