YC's Approach to Finding Startup Ideas

Hey y’all — here’s today at a glance:

🔗 Houck’s Picks

My favorite finds of the week.

Founder Mode

Paul Graham’s new essay, “Founder Mode,” is one of his best ever. A must read on why traditional management advice fails founders and their startups (Link)

• Brian Chesky elaborating on when he first realized he needed to operate differently than traditional advice (Link)

• And also on the three unique things founders have that mangers don’t (Link)

• Hiten Shah with a contrasting opinion based on his own experience (Link)

• Tobi Lutke mentioned the idea has been around since the 1940’s (Link)

• Why it’s the opposite of what business schools say (Link)

• Shreyas Doshi on how to work in Founder Mode the right way (Link)

• Jason Lemkin on why it may not quite work in sales orgs (Link)

• Kaari Saarinen on how he’s tried to build Linear this way (Link)

• Siqi Chen on why founder mode isn’t micromanagement (Link)

Fundraising

• What VCs who passed on Shopify got wrong (Link)

• Sequoia’s Pat Grady shares the behind-the-scenes story of ServiceNow (Link)

Growth

• The playbook for taking your mobile app from $0-$5M MRR (Link)

• And the playbook to get a microSaaS to $10k/mo quickly (Link)

• A founder’s advantages (other than speed) (Link)

• Learnings on go-to-market (Link)

ICYMI

• Lessons this founder learned getting to $6M ARR in 19 months (Link)

• The #1 rule when conducting user research (Link)

• Good story of bootstrapping success (Link)

• A good reminder to just keep going as a founder (Link)

• Jensen Huang’s leadership style (Link)

💡 Opportunity: Stripe Atlas for Incorporating Offshore

Incorporating your startup anywhere but Delaware as a C-Corp has historically raised a red flag.

It’s the de facto standard, and there aren’t many (if any) material benefits to doing it anywhere else so, if you do choose to investors will wonder… why?

It’s not a deal breaker — you can certainly secure investment even with a crazy complicated corporate entity structure, but you’re just making it harder on yourself and there’s not really any good reason to do that.

For example, here’s FTX’s:

But that may be changing.

After Elon’s board-approved compensation plan was initially nullified by a judge in Delaware, the state suddenly seems much less friendly for founders.

And, now, there are very real proposals to tax unrealized capital gains that Kamala’s crew will attempt to push through if she’s elected.

It’s unclear if she’d be successful, but it’s a scary thought and would be devastating to founders if implemented. Even the discussion of it in Norway has been a factor in wealth leaving the country in recent years.

For example, founders would owe taxes on the value of their company before they’ve sold any shares — which would basically force them to sell shares before they want to, just to cover the cost of the taxes.

In case that does become a reality, most founders will want to immediately look at incorporating or re-incorporating their startups in other countries that don’t have this tax.

The problem is that operating in the US as a “foreign” startup is more complicated.

But if a company specialized in making that process simple, just like Deel did for hiring international employees as a US-based company, it could be more realistic.

🧠 Framework: YC Approach to Finding Startup Ideas

Y Combinator’s Jared Friedman shared his framework on finding (and evaluating) startup ideas.

I’m including the full video of him walking through it, but also a big shoutout to Ben Lang for compiling it into these bullet points below.

📈 Trend: Tech to Retail

I’m going to Montana later this month for a small summit hosted by my friend Scot Chisholm, who founded Classy.

Scot raised hundreds of millions and had a successful exit.

And now, among some other projects like Highland (worth checking out if you’re looking to become a better CEO), he’s opened a retail store called Haskill Creek in his small town in Montana.

I imagine some people would be surprised to hear a successful tech startup founder is launching a retail store.

But the truth is Scot is just one example of a trend of founders moving towards ventures that require minimal (if any) software.

Founders who do this know trading scalability for impact in their local community, or personal passion.

Maybe they have a previous exit like Scot, or maybe they see it as a more defensible model in a world where Claude and Cursor are enabling people to create entire products in 67 minutes and taking a step towards commoditizing software development:

💬 Quote: Don’t Price Based on Costs

Founders often struggle with pricing their product correctly early on.

I wrote here about why I encourage “unreasonable” pricing to start off with.

But no matter what you do, don’t set your prices based on your costs.

Non-software startups tend to do this, and it can actually sound like a good idea.

You know how much it costs to maintain or deliver your product per customer, so if you just charge some amount more than that you’re good, right?

It’s not that simple:

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