I have a confession
I will never tell you that I do not like your idea. When you talk to investors it feels like they try to poke holes in your idea to find downsides of your idea and show how smart they are. At YC, it’s not to figure out what’s wrong with the company but to figure out how it could possibly win.
Your startup idea is a hypothesis
Your job is how to construct your hypothesis (speech) for investors so they understand how to grow quickly.
Startup Idea
- Problem - initial conditions, setting of the company that allows it to grow quickly
- Solution - what is the experiment that you’re basically running
- Insight - what your explanations why your experiments will be successful
Problem
You want to have some aspect of the experiment you’re working on have at least one of the aspects above.
Changing behavior
Frequency is important because it allows startups to convert clients.
To change behavior you need:
- Motivation - I have this problem that needs to be solved
- Ability - Your startup
- Trigger - What’s gonna be the thing that gets them to all of a sudden to realize “Oh, I need to solve it with your thing.”
A lot of the times sales are not working is because companies you’re hoping that they will remember the problem and will use exactly for to solve. So you need to keep reminding them
Ideal problem
Solution
Don’t start here. [Start from problem]
SISP
SISP - Solution In Search of a Problem. Don’t do like that.
Do not focus on new tech that can solve issues. Focus first on the problem and just pick technologies from stash that you can use.
Insights
5 different types of Insights
- Founders - be the top 10 expert in the market in the world
- Market - rise of the Total Addressable Market (TAM). If it is the only advantage of your startup, then it is the weakest advantage you could have.
- Product - is your product 10x better than your competition? [I believe that other alternatives such as building it on their own is also can be considered]
- Acquisition - customer acquisition cost (CAC), better to be free, aka word of mouth to prove that you have a sustainable acquisition model. If you show that only paid acquisition is the way to grow you company, it would be bad. It is a reallly really great advantage.
- Monopoly - As your company grows, is it harder to be defeated, will you get stronger? It is seen in companies with:
- Network effects
- Marketplaces
Beliefs of the author
Threshold
Can founders make it, at least technically?
Miracle
If I believe that they can do that.
[Sales]
But success will be determined on sales: How well you can tell stories, convince customers and work through sales process.
Examples
