You’re probably half-assing your startup idea

I finally finished reading Paul Grahams prose on how to get startup ideas. The whole essay is incredible. I did want to call out a few critical nuggets that he touches on that I especially liked:

The verb you want to be using with respect to startup ideas is not “think up” but “notice”

And

When you have an idea for a startup, ask yourself: who wants this right now? Who wants this so much that they’ll use it even when it’s a crappy version one made by a two-person startup they’ve never heard of? If you can’t answer that, the idea is probably bad. [3]

In all honesty, this is enough to make you stop and nod your head ‘Yes!’. After 4 years running two startup groups here in Chicago, I got tired of saying this exact phrase. If you want to start a company, find someone already solving a problem they have, but doing it poorly. That’s really it. Of course, never confuse simple with easy.

Otherwise, you have to convince them that a) they have the problem, b) they should spend money to solve it and c) you’re the one to solve it. That’s a tough thing to do.

How about the incumbents you’re trying to displace?

When startups consume incumbents, they usually start by serving some small but important market that the big players ignore. It’s particularly good if there’s an admixture of disdain in the big players’ attitude, because that often misleads them.

Make no mistake, someone is making money “solving” the problem you’re trying to solve with your startup. This isn’t kindergarden. You’re trying to take money that would otherwise go to them. They’re not gonna like that. You have to move quick, fight dirty & scrappy and use your quickness to your advantage. It’s up to you to figure out exactly how to do that, otherwise, you’re screwed. Don’t whine if you can’t understand why you just can’t catch a break. Nobody is owed a business model.

Lastly, on idea sexiness:

In fact, one strategy I recommend to people who need a new idea is not merely to turn off their schlep and unsexy filters, but to seek out ideas that are unsexy or involve schleps. Don’t try to start Twitter. Those ideas are so rare that you can’t find them by looking for them. Make something unsexy that people will pay you for.

There are so many ideas out there just waiting to be implemented. The problem is that they’re not sexy enough. They’re not going to make the WSJ or NYT. They are micro-opportunties & little buckets of gold just waiting for someone to pickup and run with. Find your flywheel

The “Jobs Creation” Fallacy

Felix Salmon chimes in on the Startup Act 3.0 in his latest post. The focus is on the so called immigrant-entrepreneur visa:

One is the immigrant-entrepreneur visa; the second is the idea of giving green cards to up to 50,000 foreign students who graduate from an American university with an advanced degree in science, technology, engineering, or mathematics — so long as they remain in that field for five consecutive years.

This is a very very very good thing. Our bleed to other countries in technical fields is quickly turning into a hemorrhage. However, he also makes a assumption that trips up most people: the lure of Job Creation.

And of course — by definition — it would create jobs. The Kauffman foundation’s math is solid, here: they conservatively estimate job creation at somewhere between 500,000 and 1.6 million new jobs after ten years, and possibly substantially more. (Those estimates don’t include jobs created by the new firms after they’ve left the program, for instance.)

Now, some of these entrepreneurs will start companies in the classics: education, healthcare, manufacturing, etc.. However, the majority will be tech related startups. And here’s the rub: the required employees of tech startups are not the ones sitting around unemployed. There’s a major shortage in knowledge workers of all kinds, from engineers on down. So simply creating more available jobs is not actually going to help out of work people get work. They already have work.

This visa does nothing to stimulate the creation of supply for these jobs, only demand. In a way, this will actually hurt the economy a bit because you’re adding to the price war going on for technical workers. This drives prices up to levels only large companies can afford, pushing out the smaller, scrappy entrepreneurs. The rich get richer.

If the government really wants to stimulate job creation, in addition to the above visa, they should work on increasing supply. But how? Simple: subsidize the education ( college or otherwise ) of anyone getting a degree / certification in a field that’s among the highest demand for the past 3-5 years. Computer Science, Electrical Engineering, Software Development, etc..

With the sky rocketing costs of tuition, people are facing the choice of education or no education. By offering them alternative situation ( Major in communications and take out loans or Major in Technical Writing and go for free ) you’re also reducing the debt load of an entire generation of teenagers who would otherwise die in debt.