YC Partner: Avoid These Tempting Startup Ideas - Tarpit Ideas | VC Remote Jobs & More
Understanding Founder-Ideas, Supply-Demand Curve To Build Great Startups.
👋 Hey, Sahil here! Welcome to this bi-weekly venture curator newsletter. Each week, I tackle questions about building products, startups, growth, and venture capital! In today’s newsletter, we dive into -
Today At Glance
Deep Dive: YC Partner: Avoid These Tempting Startup Ideas; Understand Supply-Demand Curve of Founders & Ideas To Build Great Startups.
Featured Post: Don’t Waste Time Chasing Investors. Do This Instead.
Major News In Ecosystem: Figma's Valuation Reduced to $10B, Apple Postpones Car Release & Google's X Lab Firing Dozens of Employee
Must Read on Startups, Venture Capital & Technology
VC Jobs & Internships: From Scout to Partner
FROM OUR PARTNER
Get Your MVP In 15 Days
Have an Idea? Turn your idea into Reality. Move fast before your competitors.
Build your MVP in 15 days with experienced builders in tech and design who have created various SaaS products with an ARR of $1 million.
Limited spots are available to build your MVP.
🤝 PARTNERSHIP WITH US!
Want to promote your startup to our community of 21,500+ entrepreneurs and investors? Fill out the form, our team will reach out to you.
🎉Get A Discount of 20% For Multiple Ads
TODAY’S DEEP DIVE
YC Partner: Avoid These Tempting Startup Ideas - Tarpit Ideas!
These types of ideas refer to those with an oversupply of founders relative to market demand.
“If you're focusing on these types of ideas, you're wasting your time and resources. It’s not going to be worth it!” YC Partner.
These types of ideas may seem promising at first, but eventually, you'll realize it's not.
By then, most founders have already invested a lot of money and resources, leading to a disaster. So, let's figure out which ideas to steer clear of, and if you're already working on one, how to avoid the pitfalls before it's too late.
These types of ideas are known as “Tarpit Ideas”.
I know, most of you heard about bad ideas, and there are always suggestions that stay away from bad ideas. But ‘Tarpit Ideas’ are way worse than bad ideas as such types of ideas may seem promising at first, but eventually, you'll realize it's not and it’s difficult to find whether it’s a tarpit idea at first.
So what’s this Tarpit idea about, how can the founder identify whether they are working on the Tarpit idea? let’s deep dive into it:
What’s The ‘Tarpit Idea’?
Before that let’s understand what’s the word “Tarpit” means.
A Tarpit, in nature, is where petroleum seeps through the Earth. It's a hotbed for finding fossilized remains like dinosaurs because animals mistake the tar pits for freshwater ponds. They step in, get stuck due to the sticky tar, and unfortunately perish. The scent attracts more animals, creating a domino effect.
Interestingly, this mirrors a phenomenon in the startup world
Where some ideas lure entrepreneurs in, but the challenges and failures cascade, trapping them in a cycle much like the unsuspecting animals in a tar pit.
How’s This Related To the Startup World?
Tarpits in the startup world lure founders with seemingly brilliant and unexplored ideas.
The absence of famous companies tackling these issues makes them even more attractive. It's like discovering a pristine freshwater pool that appears wide open for success. However, beneath the surface lies a hidden danger.
A lot of startup founders unintentionally get stuck in a tricky situation, like a hidden pit of failures that's not easy to see right away. Knowing about this problem is important because being aware of it makes your startup more likely to succeed. Basically, not falling for tempting but misleading ideas can help your entrepreneurial journey be successful instead of failing.
Interesting Fact - Consumer startups are the biggest tarpits.
People often lean towards consumer ideas because, well, we're all consumers!
From the products marketed to us throughout our lives, our problems and interests naturally revolve around things we use or think our friends would.
Most startup stories we hear are about consumer successes like Steve Jobs or Mark Zuckerberg, creating a default association between startups and consumer-focused ventures.
Unlike the consumer realm, it's rare to find someone head over heels for enterprise solutions like Cisco or Oracle. Essentially, our familiarity and exposure make consumer ideas the default go-to when diving into the startup world.
The most interesting thing is that - most consumer-based idea seems to be so simple but it’s really difficult to build a good startup.
There is a reason why there is no solution for a particular simple idea that you can think of -
The Challenges with Consumer Startups
It’s tough for two reasons -
First, many underestimate the high bar set by successful consumer products. They often don't realize how good those products are and how many others have tried and failed.
Second, timing is crucial in the consumer space. Sometimes, founders do understand when the timing is in their favour or working against them. Additionally, existing big players have an edge, creating an almost unfair advantage.
For instance, imagine someone with an idea for an un-launched consumer social network. They might believe it's groundbreaking without knowing the real standards.
Let's take Google & Facebook as an example to understand the high bar – it wasn't just about launching; it was about creating something so exceptional that users couldn't resist.
Google:
In its early days, there was no advertising or growth hacking – just a website. They relied on incredible word of mouth. Users had to manually discover it, often through internet forums like Slashdot.
Without spending on user acquisition, branding, or marketing, Google attracted millions of users daily. The product's quality was so high that people not only wanted it but evangelized it.
The founders initially weren't keen on running a startup; they even tried to sell the technology. However, the demand was so intense that they got pulled into the startup world.
This highlights a key aspect of successful consumer ideas – creating something people are obsessed with and of exceptional quality, so much so that users pull the founders into the journey.
The same case with the facebook…
Facebook
Facebook's journey mirrors Google's success. Within 48 hours of its Harvard release, 75% of the campus was using it.
Investors like Peter Thiel and Reed Hoffman witnessed users spending an average of two hours daily on the site.
The striking part? No money was spent on marketing or growth hacking.
The truth about these iconic consumer companies is often overlooked. They started with excited users who pulled the product themselves. Users were passionate, even demanding the product at their universities.
The lesson here is clear: successful consumer companies have in common genuinely enthusiastic users. They didn't rely on aggressive marketing tactics but rather created products that people became obsessed with early on. This sets a high bar for what defines a compelling consumer idea.
And with high bars - Timing is also important, why?
If you look closely into the data…
Making a consumer or mobile company in the mid-2000s and early 2010s was easier due to specific circumstances. During the 2000s, many people had broadband and computers, and the lack of competition for attention made launching something cool quite successful.
For instance, Facebook gained traction without battling numerous social networks. In the smartphone era, having an app store and the novelty of mobile apps meant even basic creations could attract users.
Back in college, everyone had a computer screen, and with limited TVs, people were more engaged with computers. The absence of major web incumbents and the dominance of TV in entertainment created a sweet spot for web-based startups. Similarly, the early smartphone era allowed for simpler apps to thrive, unlike today's highly competitive app landscape.
The key takeaway?
Success often depends on being in the right place at the right time.
But nowadays, those ideas which build on these principles generally fall into Tarpet ideas traps which seem to be interesting at first but it’s not.
So - How To Identify Tarpit Ideas?
Ideas that have survivor bias:
user’s problems that may look solvable from a posterior, results-oriented perspective. For example, discovery problems help people find new restaurants to try and new places to go.
Ideas that are second-order on widely adopted innovations.
Innovations that have step function improvements bring many low-hanging second-order opportunities. For example, in today's environment, a "social network for X" might be a Tarpit Idea. If you want a real startup example - I can give several examples for this….Ideas that are more difficult for startups to scale.
For example, hardware start-ups require a lot of funding before seeing the first results, and although they can scale eventually, they require the right approach.
Some tarpit ideas might not be so with the right founders and business model. At the same time, good ideas that were launched years ago might be a tarpit idea now.
But, Based on the above factors, If you find that you are targeting Tarpit Ideas? Then as a founder How can you make the great Pivote?
Before understanding - how can someone make a great pivot? Let’s understand a concept called - Supply-Demand in Founders & Ideas.
Some ideas attract a large pool of founders (more supply) due to their appeal—think partying with celebrities. On the flip side, ideas like building open-source developer orchestration tools have a lower supply because of the specific skills required.
The demand side is crucial too. Unlaunched, undifferentiated social apps face minimal demand in a saturated market. On the other hand, there's a high demand for high-quality software that solves significant business problems, making companies more efficient.
In essence, tarpit ideas refer to those with an oversupply of founders relative to market demand.
It's akin to the job market – having unique, differentiating skills sets you apart. The plea here is for experienced individuals who might not see themselves as startup material; if you've solved a niche problem or have industry insights, you could be a startup person. The startup world isn't limited to consumer apps or social networks; it embraces diverse perspectives to solve real-world problems.
So if you find that you are solving the Tarpit Problem and You want to pivot your business then follow this “Supply & Demand Rule”. How?
The best pivots occur when a founding team recognizes the supply and demand dynamics.
It involves moving from an idea with an oversupply of founders and low customer demand to an idea with a lower founder supply and higher customer demand.
Examples include Brex and Retool. Instead of heading to the easy freshwater pond, which is a trap, successful pivots lead toward less explored areas like the mountains or desert. It's about moving away from the common tar pit ideas and embracing challenges.
For aspiring founders, it's crucial to do thorough research, understand the bar for success, and consider the supply and demand aspect. Creating luck involves recognizing these dynamics and making strategic moves to increase the odds of success.
The advice is not about claiming to have all the answers but about sharing insights to help founders avoid common pitfalls and pave their unique path to success.
FEATURED POST
Don’t Waste Time Chasing Investors. Do This Instead.
If you’re chasing investors, you’ve already lost. Instead -
'... be chased' - Make them feel like they’re 'catching a deal.' Here are three ways shared by the founder who raised $15M:
Create a broader area for you and your company to be discovered.
VCs are much more receptive to intros from founders in their portfolios.
Don't seem desperate for funds, VCs like catching deals early…. Read More
Join 13,500+ Founders, Investors and Startup Enthusiasts Getting Tactics To Build, Learn and Implement About Startups and Venture Capital.
THIS WEEK’S NEWS RECAP
Major News In VC, Startup Funding & Tech
Google’s X labs fired dozens of employees and German Software Firm restructured 8000 roles. Read More
Plural launching its second €400M early-stage fund after 18 months of debut. Read More
MrBeast (aka Jimmy Donaldson) made approximately $263,000 from the first video he posted on X. Read More
OpenAI has banned a developer who created a ChatGPT-powered bot imitating Rep. Dean Phillip. Read More
AI Written Articles rank high in Google’s News results. Read More
→ Want to receive Daily Morning Venture Insights, Funding Updates And Startup Stories In Your Inbox? Subscribed To the Venture Daily Digest Newsletter and join 8500+ Avid Readers!
WHAT I READ THIS WEEK
Must Read on Startups & Venture Capital
Deep Dive: Artificial Intelligence by Chamath Palihapitiya Read Here
Exploring macro and strategic trends in the tech By Benedict Evans. Read Here
Don’t Waste Time Chasing Investors. Do This Instead. Read Here
What Does It Take To “Do Things That Don’t Scale” For Your Startup? Read Here (Startups)
Asking the wrong questions Benedict Evans. Read Here (Startups)
Ho to convince investors by Paul Graham. Read Here (Startups)
TODAY’S JOB OPPORTUNITIES
Venture Capital Jobs & Internships
Analyst - LDV Capital | USA - Apply Here
Private Equity / Growth Equity Intern - SF - Apply Here
Investment Analyst / Associate - Maven Capital Partner | UK - Apply Here
Investment Analyst - Peak XV Partners | India - Apply here
Principal / Growth Manager - Real Tech Holdings | Singapore - Apply Here
Intern- Investor Relations - Krystal Venture Studio| Bengaluru - Apply Here
VC Intern -Riverwalk Holding | India - Apply Here
Financial Analyst - Sentiem | UK - Apply Here
Investor Relations Manager - Frontline | UK - Apply Here
Associate - Frontline | UK - Apply Here
Intern - France | France - Apply Here
Investor Relations Manager - Cusp Capital - Apply Here
→ Want Daily Updates on VC Job Opportunities? Check out VC Crafter 👇
Join our 200+ VC Enthusiast Community - VC Crafters - To Access the VC Network, Job Opportunities, and Weekly events on understanding the VC Industry!
That’s It For Today! Will Meet You on Tuesday!
Happy Thursday! 🥂
Advertise || Investor Database || Break Into VC
✍️Written By Sahil R | Venture Crew Team