Map of startup ideas

Thoughts after reading Paul Graham’s Making Startups Powerful.

In this article there are multiple examples of which startup ideas can have bigger leverage and be awesome. Based on that you can create simple tool for evaluating the startup idea. You can imagine multiple dimensions by which you can evaluate an idea.

The tool

First four dimensions are time or distance related: earlier/closer vs later/further.

Distance from the money source: Supplying services to other software companies vs All the money flows through you

When you own relationship with the customer, money usually flows through you to other suppliers. So you scale with the size of the customer base. On the other hand, if you are just component supplier, you get constant fee. Examples of companies directly interacting with customers:

1. Marketplaces:
   1. Buyer -> Uber -> Driver
   2. Buyer -> AirBnB -> Host
   3. Buyer -> AppStore -> Developer
2. Buyer -> Stripe -> Provider
3. Company → Outsourcing company → Engineering service

Distance from the customer: Providing tools vs Solving problem completely for customer

Do you provide tool for writing the code or do you provide working software? Do you provide excel or provide accounting services? Do you provide self-driving cars software or do you provide transport services?

Stage of the potential buyer: Early stage startup or person vs Big enterprise

Early stage startups makes decision faster and more based on the meritocratic arguments. Big enterprise might be more about politics and contacts. Startups pay less because has fewer customers, but you can grow together with them. How big a customer must be before buying the product?

Position in the data lifecycle: Supporting beginning of the lifecycle vs Supporting end stage

Imagine device or employee lifecycle. Would you start from software for onboarding or software for decommissioning?

The remaining 4 dimensions are more about binary characteristics of the idea.

Having a network effect: Users are not aware of other users vs More users means more value for every user

Marketplace is an example where more suppliers attracts more customers and provides better prices for them, as well as more customers means more suppliers willing to be onboarded.

Is the market dominated by mafia: Yes or No

Are the best solution chosen in this market or is it steered by a mafia?

Helping users make money: Yes or No

Users will pay a lot for product that helps them make money.

Potential to share with community: Yes or No

Would it be possible to open-source some components or expose API for other developers for free? Thanks to that you can become a standard or create bigger ecosystem.

Example usage

Recently I was thinking about creating the system for parking lot places sharing in the Urban areas but on the peer to peer bases instead of B2C. So for example if you can one parking space, and you are going for holidays, or you don’t need it in the evening you can share that space in this short time period. In this example

1. money could flow from the person renting the space directly to the system or the system could just pair two people, and they would set up payment themselves.
2. System could be just for renting space in the specific building or could generally solve the problem of finding parking space in the city.
3. Customer would be just the person not the company.
4. System could just allow for publishing offers at the beginning.
5. There would be a network effect,
6. mafia probably does not exist for this market,
7. it helps make money for people,
8. and it would be possible to open source the code or create an API for this.

I think that this tool definitely helps to see broader perspective and evaluate the idea from different angles.