Evaluating and Scaling Your Startup Idea

I'm John and I'm a partner at YC. I often meet founders who have lots of ideas about what to work on and can't decide between them Sometimes they're working on multiple things Often they'll say that they're waiting to find the best idea before fully committing. But it's extremely hard to make meaningful progress on a startup. without committing to a single idea, So in this video I'm going to give you rubric for how to stop overthinking. pick an idea. commit to it. and then figure out fast whether it's actually working. The most important piece of advice I'd give to founders struggling to pick a startup idea is overthink it. Overthinking a startup in the earliest days can take many forms But here are a couple of the most common failure modes I see. The first is thinking that you need to find the perfect idea In some ways, this is an understandable impulse Startups are hard So shouldn't you figure out the best idea before committing? The problem with this approach is that it's impossible to figure out the perfect idea in the abstract You can only figure out what you should be working on by making contact with reality getting feedback from customers. The second overthink is am I the perfect founder for this It's true that Founder Market fit matters A non technical founder likely won't be the right person to come up with a killer DevTools startup idea, for example But often founders, especially second time founders, weaponize this line against themselves They convince themselves that they need a decade of domain experience before they can start The truth is Pick an idea you're curious about go extremely deep and most importantly, talk to customers It's often possible to develop extraordinary knowledge in a short amount of time We see incredible examples of this all the time at YC Blake Schul The CEO of Boom Supersonic. Blake spent his early career working on Atech at companies like Amazon and Grouupon before deciding to work on commercializing supersonic flight. Lots of people probably thought he was crazy But now, boom is a billion dollar company. So don't let the question of whether you're allowed to work on something stop you from starting. Once you've stopped overthinking your ideas, it's important to commit to just Often, I meet founders who are working on multiple ideas at once because they believe that this is the best way to figure out which one will actually work There are a couple problems with this approach The most serious is that it tends to produce data. If you don't actually go deep on an idea, but instead juggle it with several others. good signal about whether what you're doing actually works If you don't get good signal then you could either prematurely talk yourself out of a good idea or convince yourself that a bad one is worth continuing The solution to this is to go in depth first. If you're trying to decide between several ideas all of which look equally attractive Take one idea and go deep on it What do I mean by going deep First thing is that you should burn the other boats. That is you should explicitly foreclose your other startup idea options Stop working on them Tell any customers that you've pivoted and work with single minded focus on the idea you've chosen One way to think about going deep is that it should feel like wearing a new skin You should become an almost unrecognizable version of yourself This could mean changing your company's name, your emails, your website, and even your internal narrative about why you're building a startup in the first place. For example, I worked with a startup called GvDash that helps customers win government contracts. pivoted at least five times before finding this idea And each time they explored something new They changed their company name talked about their mission At one point I forgot how to get in touch with them because they changed their email addresses with each pivot by truly becoming domain experts in government procurement, Their fifth idea works so well that they could barely keep up with demand. They recently raised the series B to scale the business and meet that demand Once you've decided to fully commit to an idea and go deep, How do you know if you're actually doing it well the high watermark I use to help founders answer this question Could you actually run your customer's business? Say you want to build voice customer service agents for cleaning services. The question isn't just whether you've talked to twenty owners The question is if I dropped you into a cleaning business tomorrow Would you know How to run it? Do you know? what their daily crises are Do you know whether answering the phone is a top five problems Do you know how much business they lose when a call goes unanswered they would actually pay to never lose another one. These are the kinds of questions you need to be able to answer. with very high confidence Another way to think about this is could you teach a class on the problem you're solving Are you one of the most informed people in the world on the subject. Getting to this level will involve lots of conversations with customers And sometimes even literally doing the job yourself But don't obsess over needing to talk to hundreds of customers before writing code goal is to do both at the same time tight loop de understanding of customer needs than product delivery deper understanding of customer needs delivery. Real customers using your product produces concrete data complement your abstract knowledge giving you a sense of whether what you're building is actually working Once you're going deep on an idea, There's several ways to validate whether it's worth continuing to work on. The most obvious one is pull from customers But there's several other qualities of good ideas in the AI era that you should look out for as you go. The first is that the idea sits at the edge of what models can do today. This might mean that your product barely works on today's frontier models. clearly improve as they get better You should understand the bottlenecks impeding your product's performance intimately. particular bottleneck doesn't clear the way you hope Solving that become the company. This is a version of Paul Graham's well known quote that you should live in a future. Build what's missing. The second quality of a good idea, is that it should verticalize. By this, I mean that it should ultimately sell an outcome. For example, providing insurance or medical care, rather than just software. In the AI era, the cost of producing software is going to zero So the things that actually become valuable aren't just software for X. their customer trust licenses, regulatory permission, and outcome ownership So if you want to get into the insurance space, don't build software for insurance companies Just be the insurer Similarly, rather than selling back office software for banks be the bank. One example of this is Corgi Insurance, an AI powered commercial insurance company from YC's summer twenty four batch They were not content being a tech enabled broker. or even a managing general agent, because that was just owning a part of the solution Instead, they set an ambitious goal of owning everything underwriting to providing customer service the entire commercial insurance stack and even took the unprecedented step acquiring an insurance carrier during their YC batch to make it happen. Be the full stack insurance company allows Corgi to underwrite any insurance line in any vertical with a fraction of the headcount of traditional carriers They can offer far better pricing much faster turnaround and own all of the economics That brings me to the third quality of a good idea It should be the most ambitious version of itself It may seem unintuitive. cost of pursuing a wildly ambitious startup idea and the cost of pursuing a modest one are roughly the same. Both extremely hard Both place extreme demands on your time Aim at the version If it works rewrites a sector of the economy becausecause that's also the version that protects you from competitors attracts the best talent. and has a moat worth building. This could mean building and selling into the most regulated industries like legal. health care or financial services taking on very large incumbents like a ten billion dollar legacy SaaS company, or building hard tech like robotics for space assembly What if you do all of this? And the idea fails Good news is that you'll be in a dramatically better position. then where you started. first you have unambiguous customer data You know whether there's actually a hair on fire problem in this space, or whether you just talked yourself into thinking there was you'll have real conviction space a pivot on Bet sense exxecute going forward. But more importantly You will often come away from the process with a new idea that will actually work. When most founders begin They're solving surface level pain points The real opportunities are almost always the deeper structural problems. In other words, going deep isn't primarily a process for validating the idea you started with It's a way to find the better idea underneath almost always happens, especially if you're at the forefront of what models can do today. You'll notice the bottlenecks tools nobody's built And one of those turn out to be the actual company Here's what I want you to take away from this video First, stop trying to find the perfect idea Just pick one Burn the other boats Learn everything you can about the customer and try to execute for them In the early idea fog, where you can only see ten feet in front of you The temptation is to take a few cautious steps in every direction. Sample a little here, a little there, stay close to home. The problem is that gives you almost no information actually works is to commit to one direction and walk fast. You're not guaranteed to end up in the right place You generate much more information per unit of time And when you're walking You might arrive at a better destination one you couldn't have seen from the start The worst failure mode isn't being wrong It's not making a decision spinning your wheels Dabbling between ideas and never going deep enough on any one of them to learn anything So pick one and go deep. Thanks for watching