Dixon argues that ideas that seem obviously good are often already being pursued by large companies, governments, or academics. That leaves entrepreneurs and investors to look for ideas others dismiss. Google’s focus on excellent search results seemed commercially risky to portals that wanted users to stay on their sites and see more ads.
Chris Dixon at Startup School 2013
Speaker
Chris Dixon, a venture capitalist and startup founder, explains how entrepreneurs find promising startup ideas at Y Combinator’s Startup School.
Dixon uses “secret” to mean a belief that most people do not share. Founders can develop one by knowing a technology, a problem, or a community better than outsiders. Dropbox stood out in a crowded cloud storage market because Drew Houston understood that storage had to work like a local hard drive; Kickstarter grew from Perry Chen’s experience organizing arts events and understanding patronage.
Dixon says influential people often dismiss new products as toys when early technology cannot yet meet established expectations. Western Union underestimated the telephone, while early concerns about Skype included microphone access, call quality, and broadband adoption. He also describes how startups can unbundle an institution’s functions one at a time, as online services did with newspapers.
Dixon says engineers often signal future opportunities by spending their own time on hobbies and open source projects. He points to the Homebrew Computer Club, blogs, Git, and GitHub as examples of ideas or work practices that moved from hobbyist communities into broader use. Airbnb, eBay, Flickr, and Facebook also challenged expectations about sharing, selling, or making information public.
Looking back at thousands of pitches and dozens of investments, Dixon says founder expertise or direct experience was his strongest predictor of a promising idea. He encourages entrepreneurs to start with what they know about a technology, a problem, or a community. He contrasts that approach with copying abstract trends or applying formulas such as “Uber for X.”
Takeaways
- Study a problem firsthand before deciding whether a market is attractive.
- Use a crowded market as a reason to examine how existing products actually work.
- Treat hobbyist projects as clues to tools and work practices that may spread.
- Break institutions into their component functions to spot opportunities for focused products.
- Compare what you have learned directly with conventional wisdom to find overlooked ideas.
Mentioned in this talk
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What was claimed 17
- foundedPierre Omidyar founded
eBayFounder“the founder, Pierre Omidyar”
YouTube Verified2 sources· Talk, Web· archived
- launched
Google: Search engine“back in, I think, 1998, when Google first launched”
YouTube Unverified1 source· Talk
- featureGoogle: Search results were so good that users quickly left the website
“so incredibly good at finding the right search results that people would immediately leave the website”
YouTube Unverified1 source· Talk
- feature
Airbnb: Home sharing“Who’s going to stay on someone else’s couch?”
YouTube Unverified1 source· Talk
- featureeBay: Online auctions and sales
“sell them online”
YouTube Unverified1 source· Talk
- featurePeter Thiel: Defines a secret as something you believe that most other people do not believe
“something you believe that most other people don’t believe”
YouTube Unverified1 source· Talk
- feature
Dropbox: Handles NAT hole punching and syncing under adverse conditions“You have to handle NAT hole punching and syncing”
YouTube Unverified1 source· Talk
- featureDropbox: Cloud storage designed to feel like a local hard drive
“to do it right, it had to feel like a local hard drive”
YouTube Unverified1 source· Talk
- ceo ofPerry Chen CEO of Kickstarter
“The founder and CEO, Perry Chen”
YouTube Unverified1 source· Talk
- featureKickstarter: Coordinates project creators and backers
“that’s the kind of thing Kickstarter does”
YouTube Unverified1 source· Talk
- foundedChris Dixon founded C Adviser
“I started a company called C Adviser back in 2004”
YouTube Unverified1 source· Talk
- featureC Adviser: Approached security as a consumer internet user experience problem
“create a better user experience using whatever means necessary”
YouTube Unverified1 source· Talk
- featureWestern Union: Used telegraph systems for communication, primarily for railroads
“used telegraph systems primarily for people like railroads”
YouTube Unverified1 source· Talk
- featureSkype: Internet calling; call quality improved as bandwidth improved
“call quality was lower. Of course, that got better as bandwidth improved”
YouTube Unverified1 source· Talk
- invested inChris Dixon invested in Udacity
“We’re investors in Udacity”
YouTube Unverified1 source· Talk
- built
“GitHub is literally based on the open-source project Git”
YouTube Unverified1 source· Talk
- featureFlickr: Photos defaulted to public
“One of the key ones was that it defaulted photos to being public”
YouTube Unverified1 source· Talk
