Where does your next startup ideas come from?

The TL;DR: get a job first.

Let's start with some context.

Peter Thiel’s book, Zero to One: Notes on Startups, or How to Build the Future. (Co-founder of Paypal and first investor in Facebook)

The book starts with;

WHENEVER I (Peter) INTERVIEW someone for a job, I like to ask this question:
“What important truth do very few people agree with you on?”

According to Peter, the answer to this question is significant because it allows you to go from Zero to One. To make a jump to something new.

He continues with;

This question sounds easy because it’s straightforward. Actually, it’s very hard to answer. It’s intellectually difficult because the knowledge that everyone is taught in school is by definition agreed upon. And it’s psychologically difficult because anyone trying to answer must say something she knows to be unpopular. Brilliant thinking is rare, but courage is in even shorter supply than genius. Most commonly, I hear answers like the following:
“Our educational system is broken and urgently needs to be fixed.”
“America 🇺🇸 is exceptional.”
“There is no God.”

This is a wrong direction, because Peter tricks you to focuses on general 🌍 knowledge. He wants you to give an answer that everybody understands. You are supposed to make general observations of the world and come up with something smart. It is easier to give him an answer that he doesn’t understand, because it is out of his scope, but still an important truth very few people agree on. This is the area where great startup ideas are created.

Great new startup ideas

You should still have a great answer to that question: “What important truth do very few people agree with you on?” But for a very specific context, a situation only you and a few others have experienced.

Many new businesses are started by a couple of friends who gained a new insight.
They see something new, an unexplored area of opportunity, by bouncing off 🏓 each other while working something in a specific context. They are solving problems, acting on feedback of early customers who can see through the rough edges of a product. Once these are fixed, new boundaries appear, new issues emerge that need to be solved.
En voilà, a new context for insight appears, a new opportunity.

Context is everything 🤴🏼

Context makes new ideas easier to come up with. To show you how powerful this is, here are a few examples, of this year's launches 🚀 of y-combinators recent batches. I just grabbed the first few startups.

Launch HN: Hightouch (YC S19) – Sync data from data warehouses to SaaS tools
We were exposed to the data integration space as early engineers at Segment
Launch HN: Dendron (YC W21) – Structured note-taking for developers and teams
Before Dendron, I worked at AWS for 5 years on systems that had grown more complicated than what any one person (or team) could hope to understand.
Launch HN: Kitemaker (YC W21) – Fast alternative to Jira, built for remote teams
We made Kitemaker because in our previous jobs, we were managing distributed teams, and we always had a bunch of challenges with the tools we used.
Launch HN: Albedo (YC W21) – Highest resolution satellite imagery
I previously worked for Lockheed Martin, where I met AJ, who is an expert in satellite architecture and systems engineering. We started Albedo in order to create a new type of satellite architecture that captures high-resolution imagery at a fraction of the cost historically required. Winston was previously a software engineer at Facebook, where he frequently used satellite imagery and realized the huge potential of higher resolution datasets.

I could have selected many more examples.

Startups are spin offs.

See the theme? These startups are all spinoffs.

You see, none of them said: I was walking in the park with my dog one morning and had a Eureka 💡 moment. Or I saw this great website and just copied it. Or I copied this idea from a top 5 idea generator I saw on IH. Every single idea here emerged from a specific context that was already innovative

A very specific set of circumstances created the opportunity to come up with something new. An important truth, very few people agree on. To see these new truths, you have to put yourself in such a situation and be aware of this.

Startup pivot

Not every idea is a successful startup. Many startups pivot to a new idea, that does serve a market. Famous examples a Slack and Flickr, both created by the same founder in pursuit of creating a game.
Creating a product, talking to users. Asking them about their problems, you can solve. This creates a context for you to come up with new ideas. New insights that can become a startup.

Where bad startup ideas come from

Bad startup ideas come from the inverse of this. You copy a generally good idea and put an arbitrary context on top of it. They come in the form of "Very popular startup, for specific target audience". Like airbnb for tall people, dog walk services for Chihuahua, cleaning service for wall carpets. You might think this is innovative, but it is only restrictive.

What makes existing companies win 🥇 again and again:

They have the ability to gain new insights in a very specific context. They operate on the edge of knowledge gained with their products and services.
They have the ability to execute, because they have money to spare, a competent team to create the solutions.
An easy way to validate the idea, because of their user base.
A frame of reference for the total market.
An authority and thrust amongst their current customers.
A way to market, through integration, the new solution into existing products.
A way to up-sell at low cost, with their existing billing infrastructure.
Lower cost of acquisition, because they know which distribution channels work.

Why would that company not cash on that idea.

Loads of reasons;

Management doesn’t think it is a good idea.
It might be out of scope 🙈 , they just don’t want to solve that problem, because it is too far from their core business. You can only do so much.
It is disruptive for their current business model. They can't make any money from the current solution.
The target market is perceived as too small. Intel did not want to make Apple’s iPhone chips, because they did not think they could sell enough units.

How to come up with a great startup idea: Get the Job first.

But not just any job, it should be a job to get into a very specific context.
You have to put yourself in a context to come up with something new.
You can disagree with your manager and do think it is a great idea.
You can create your own scope and make this new idea your core business.
You can disrupt a business model.
You can choose a new small market and make it big.

How we came up with cliperado.com

I was creating new documentation for Paydro. Instead of having pages full of text, I wanted visual instructions, like LEGO and IKEA, with tons of screenshots for easy to follow step-by-step guides. But after taking 10 screenshots, saving them to disk, coming up with a name, cropping in Photoshop, adding arrows. Etc., It just took too long, there had to be a better way.

I remembered a YouTube video of a guy at Google using browser automation for testing, by comparing screenshots. And that was the moment I thought, I can use that tech to capture hundreds of screenshots automatically. If I do this every week, I can just check the changed screenshots and update these in the docs. But why stop there? What about keeping the screenshots online and create the simple tools for cropping, adding markup such as boxes and arrows in a web app. Instead of uploading the screenshots, I can link to the always up-to-date clips in Cliperado.com. That was my very specific context, I wanted to do something and no available tool offered a solution.

How we came up with Paydro

Paydro was born out of organizing the first Next Web Conference in Amsterdam. We needed an online ticket shop, that could handle international transactions and create invoices with proper TAX. In The Netherlands still 40% of businesses pay by invoice, credit card adoption is low. We have iDeal, a low cost direct bank to bank transaction system. We were one of the first to implement Adyen, Stripe did not exist yet.

How we came up with the Conference

We wanted to launch our startup Fleck, social bookmarking (RIP). We actually never launched our startup on our own event. It wasn’t ready yet, haha. Eventually, we launched a year later at TechCrunch’s first east coast event in NY, but not before we broke into Micheal Arrington’s house (founder of TC) in our white suits. (So the story goes)

Coming up with something new is not that hard. You have to put yourself in the proper context. And answer that important question; What important truth do very few people agree with you on.