How to Find a Good Idea

aH seeb Qureshi

The kernel of every startup is the idea.

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How does one nd a good idea?

There are two ways to nd an idea.

fiTop down ⬇ , and bottom up ⬆.

Top down ideation• What are the biggest problems in the industry? (Break it down byverticals!)• Ex: blockchain privacy, transaction monitoring, tax compliance• What is the total addressable market (TAM) for each problem?
• How crowded is the area?
• Are there recent innovations / breakthroughs that allow
technological improvements, or change the market structure?

Bottoms up ideation• What’s the area that you know best?
• (If you don’t know any area well, then go spend time in it!)• What feels like the biggest pain point there?
• What’s a product you wish you could use yourself?
• Can you actually build that? Play to your advantages!

What are the features of a good idea?

Good ideas:fi• Solve a big, clearly articulable problem• Are defensible—they possess a moat
• Easy to explain• Well-de ned customer/user• Have a “Why now?” (otherwise, why doesn’t this already exist?
• Strong value capture / business model (i.e., high margin)More on Solving a Problem• Why will users use this product? What problem does it solve,and for whom?

• If you cannot articulate both parts of this, you’re in trouble!

• How bad is that problem?
• Is this a “nice-to-have” or a “must-have”?
• Does it result directly in cost-savings for an individual or acompany? Or some other kind of utility?

More on Defensibility• What makes something defensible / gives you a moat 🏰?
• Competitors cannot easily enter the market or overtake yourmarket share• This usually entails a network e ect• Ex: Facebook, Ethereum, Binance• Other sources of defensibility: economy of scale, pricing power, rst-fiffmover advantage, cost of capital, access to talent, execution.

More on Value Capture• Don’t stress out about value capture too much in the beginning• The iron rule: the amount of value you capture is
proportional to amount of value you create• Tokens vs equity capture value in di erent ways
• Tokens can capture value in many ways (will discuss later)• Equity, there are many pricing models: value pricing, transaction
pricing, recurring SaaS (by seats or enterprises), services

ff• You don’t want commodity pricing (unbridled price competition)

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Credit: The Angel VC, http://christophjanz.blogspot.com/2014/10/ ve-ways-to-build-100-million-business.html

KShould you go for a moonshot 🚀 or a sure win?
• Startup returns are power law distributed. Almost all the returns
come from the moonshot successes.

• But the failure rates for moonshots are extremely high!
• Many ideas are OK, but are unlikely to become “venture scale.”• See: X on Y startup ideas• You can escape competition two ways—do something no one else isdoing or do it somewhere no one else is doing it. - Anthony Pompliano)

Moonshots tackle the biggest problems• Solana: the “fastest blockchain”• OpenSea: create liquidity for NFTs
• Uniswap: the best way to trade tokens• But most moonshots fail…

Before you commit to an idea, youneed to study the idea maze.

“A good founder is thus capable of anticipating which turns
lead to treasure and which lead to certain death. A bad
founder is just running to the entrance of (say) the ‘movies /music / lesharing / P2P’ maze or the ‘photosharing’ mazewithout any sense for the history of the industry, the players
in the maze, the casualties of the past, and the technologies
that are likely to move walls and change assumptions.”aafi

aa- B l ji Sriniv s nYour rst idea is usually not perfect.

fiIt’s okay to pivot. Happens all the time.

Pivoting• Pivoting is normal for a startup; you want to keep in mind thepossibility of a pivot.

• This should give you a strong bias toward reversible
decisions.

• Sometimes the rst idea will give you insight into the right way
to solve a problem.

• This is why it’s wise to ideate quickly, build quickly, andfi

disprove assumptions quickly!

The First Idea is Often Wrongfi• Mt. Gox ➜ originally a platform for Magic the Gathering cards• Polygon ➜ originally a Plasma implementation• Near Protocol ➜ originally an AI startup• OpenSea ➜ originally “Wi Coin”• Gnosis ➜ originally a prediction market• dYdX ➜ originally a web3 search engine

Common ideation mistakes:fl• Building for customers who don’t exist yet• Solving yesterday’s problems, rather than tomorrow’s problems• Blockchain for X (where X = advertising, oil, bananas, whatever)• Building in unfriendly regulatory jurisdictions• Building for crypto in uencers

Next, you need tovalidate your idea.

Talk to customers!

• Who will use your product? De ne your user.
• It often helps to have a stereotypical user in mind—namethem, give them real details.

• Interview customers, get a deep understanding of how they feel
about this problem, and how they are addressing it today.

• Know what other products they use, where they fall short.

• You can ask them “would you use this if I built it?” but it’s usuallyfimeaningless unless you actually make them pay.

Are you building the right thing?
• Build a proof of concept• Show it o online or at a hackathon—get people excited about
your work• Many of the greatest crypto projects were built this way:
• Uniswap, 1inch, and Instadapp were all hacked together
without fundingfiff• Talk to users, gure out their pain points

OK! Now go pick an idea. 👍Questions?