Y Combinator chief on the best startup ideas

The worst plans are from "young founders making things they think other people will want."

Paul Graham, founder of seed-stage venture fund Y Combinator, has seen a lot of startup ideas. Since its founding in 2005, the fund has reviewed hundreds of business plans in their very earliest stages, and helped many ideas grow into Series A-worthy investments. Its alumni include Reddit (acquired by Conde Naste), Justin.tv and Scribd. Graham is also from out East (originally England and later Boston), which means his bs tolerance level is a little lower than your average Californian. When Graham offers advice to the entrepreneurial ecosystem, as he did Thursday morning in a blog post, it's worth paying attention.

Graham’s basic insight is not mind-blowing novel—we’ve heard it before from another seasoned seed-stage investor—but in a world of information overload, repetition from credible sources helps emphasize the signal from the noise.

Graham’s insight is this: build something you personally need. This is particularly important if you are a young founder, since predicting what others need takes years of experience in a sector.

The worst ideas we see at Y Combinator are from young founders making things they think other people will want.

One clue you’re on the right track is if your idea doesn’t seem like a startup concept at first. Graham points to Mark Zuckerberg’s “project” of putting undergraduate profiles online:

When Mark spoke at a YC dinner this winter he said he wasn't trying to start a company when he wrote the first version of Facebook. It was just a project. So was the Apple I when Woz first started working on it. He didn't think he was starting a company.

Graham could just as well have pointed to YouTube, a case Ron Conway uses to illustrate the same point: YouTube was born out of the founders' frustration at a party when they had technical difficulties trying to show a video that was hosted online.

While young founders are at a disadvantage when coming up with made-up ideas, they're the best source of organic ones, because they're at the forefront of technology. They use the latest stuff. […] And because they use the latest stuff, they're in a position to discover valuable types of fixable brokenness first.

So there you have it: fix stuff that’s broken. It’s not hot breaking news, but as with startup ideas, so with blog posts: sometimes the most useful service you can provide is to pursue the obvious.

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