January 2020 Summaries

In September, the author's team was iterating on ideas for a startup. They developed a 2-day invalidation process to ensure they didn't waste time on bad ideas. One idea that couldn't be disqualified after two days was an integrated banking, accounting, and tax service for gig economy workers, with revenue coming from credit card interchange fees. The market size was large, but the challenge was consistent messaging across multiple verticals. They decided to start with drivers due to significant opportunities in tax cuts through mileage deductions. After a week of trying to disqualify the idea, they applied to Y Combinator (YC) before the deadline. They continued their invalidation process by talking to industry people and even Uber and Lyft drivers. However, they received discouraging information from insiders at both companies about similar fintech products being developed for free with the same business model. The team decided to withdraw their YC application three days before the interview. They returned to iterating on ideas and eventually found another idea that couldn't be disqualified: taking on operational complexity in data exchanges between a data provider and consumer. After three weeks, they applied again to YC and got accepted with this new idea. YC accepts "pre-idea projects" as there is a high chance the ideas will evolve during their program. They focus more on the team's experience, ability to build products autonomously, and how they iterate and learn fast. The author emphasizes that perseverance and quick iteration can be important factors in getting accepted into YC.

The authors share their journey of iterating and sorting through 10 ideas for a new startup within the first month of working together. They emphasize the importance of focusing on the problem being solved rather than the solution, and suggest a two-day process to help determine whether an idea is good or bad with as much objectivity as possible. The process involves listing known unknowns and verifying them through interactions with knowledgeable people. Out of their initial ideas, 40% were filtered out after the first day, and another 50% were winnowed out after the second day.