Startup Idea Evaluation

Startup Idea Evaluation

Evaluate startup ideas using Paul Graham's framework for organic ideas, problem-founder fit, and market potential.

When to Use

• Evaluating your own startup idea before committing
• Assessing a potential co-founder's idea
• Reviewing pitch decks or investment opportunities
• User asks "Is this a good startup idea?" or "Would this pass YC?"
• Deciding whether to pivot or persist with a current idea

Inputs

Paul Graham's Idea Evaluation Framework

The Core Question

"Is this something people want?" Not "will people use it?" but "do people urgently need this, and is nothing else solving it well?"

Key Evaluation Dimensions

1. Organic vs Sitcom

• Organic: Ideas that emerge from personal experience. The founders themselves have the problem.
• Sitcom: Ideas that sound plausible but come from abstract thinking, not lived frustration.
• Test: Would the founders build this even if it couldn't be a startup?

2. Problem-Founder Fit

• Do the founders have the problem themselves?
• Do they have unusual insight into the problem space?
• Is there domain expertise that gives them an edge?
• "The component of entrepreneurship that really matters is domain expertise."

3. The Why Now Question

• What's changed that makes this possible or necessary now?
• New technology? Regulatory change? Behavioral shift?
• If this is such a good idea, why doesn't it exist already?

4. Market Size

• Big markets are forgiving. Small markets are not.
• But: Big markets disguised as small markets are best.
• "It's better to have a small number of users who love you than a large number who are ambivalent."

5. The Schlep Factor

• What tedious, unsexy work does this idea require?
• Are the founders willing to do it?
• Often valuable ideas are hiding behind schlep others avoid.

6. Frighteningly Ambitious

• The best ideas seem crazy at first.
• Does this idea make the founders a little scared of failure?
• But: Fear should be about execution, not about seeming stupid.

7. Competition

• Crowded market can mean validated demand, or it can mean you're too late.
• Key question: Why will you win? What do you see that others don't?
• "Startups don't win by attacking. They win by transcending."

Red Flags

Green Flags

Workflow

Step 1: Gather and Review Inputs

Collect all relevant information:

• Review the provided data and context
• Identify key parameters and constraints
• Clarify any ambiguities or missing information
• Establish success criteria

Step 2: Analyze the Situation

Perform systematic analysis:

• Identify patterns and relationships
• Evaluate against established frameworks
• Consider multiple perspectives
• Document key findings

Step 3: Generate Recommendations

Create actionable outputs:

• Synthesize insights from analysis
• Prioritize recommendations by impact
• Ensure recommendations are specific and measurable
• Consider implementation feasibility

Output Format

## Startup Idea Evaluation

### The Idea
[Restate the idea clearly in one sentence]

### Organic or Sitcom?
**Assessment:** [Organic / Sitcom / Mixed]
[Explain why - where does this idea come from? Is there real experience behind it?]

### Problem-Founder Fit
**Assessment:** [Strong / Moderate / Weak]
[Do the founders have the problem? Do they have domain expertise? What insight do they have that others don't?]

### Why Now?
**Assessment:** [Clear / Unclear / Missing]
[What's changed that makes this possible? Why doesn't this exist already?]

### Market Analysis
**Initial Market:** [Description]
**Expansion Path:** [How could this grow?]
**Assessment:** [Big disguised as small / Genuinely big / Genuinely small / Unclear]

### Schlep Assessment
[What tedious work does this require? Are the founders prepared?]

### Competition
[Who else is doing this? Why would this team win?]

### Red Flags Detected
- [List any red flags present]

### Green Flags Detected
- [List any green flags present]

### Hard Questions to Answer
1. [Specific question the founders must answer]
2. [Another hard question]
3. [Another hard question]

### The Verdict
**Overall Assessment:** [Promising / Needs Work / Probably Not]

[2-3 sentences with the honest assessment. What would you tell the founders?]

### What to Do Next
[Specific recommendations for next steps]

Outputs

Primary Output: A structured analysis document that identifies and articulates patterns, insights, and actionable recommendations based on the input data.

Format:

## Analysis: [Topic]

### Key Findings
- [Finding 1]
- [Finding 2]
- [Finding 3]

### Recommendations
1. [Action 1]
2. [Action 2]
3. [Action 3]

Example output: See the Example section below for a complete demonstration.

Constraints

• Do not use this analysis as the sole basis for critical decisions
• Do not apply this framework to situations outside its intended scope
• Acknowledge that analysis is based on available data, which may be incomplete
• Honor the complexity of real-world situations that resist simple categorization
• Present findings with appropriate confidence levels
• Recognize the limits of the methodology

Example

Input: "An AI tool that automatically generates social media posts for small businesses based on their products and brand voice."

Output:

Why this works:

This example demonstrates the key principles of the skill in action. The approach is effective because:

• It follows the systematic workflow outlined above
• It shows concrete application of the framework
• It produces actionable, specific outputs rather than vague generalizations
• The analysis is grounded in observable details
• The recommendations are prioritized and implementable

Alternative applications:

This same approach can be applied to:

• Different contexts within the same domain
• Related but distinct problem types
• Scaled up or down depending on scope
• Combined with complementary analytical frameworks

Startup Idea Evaluation

The Idea

AI-powered social media content generation for small businesses based on their products and brand voice.

Organic or Sitcom?

Assessment: Likely Sitcom

This sounds like an idea generated from "AI can write now, what should it write?" rather than from running a small business and desperately needing this. The tell: it's described in terms of the technology ("AI tool") rather than the problem ("I spend 10 hours a week on social media and it's killing my business").

Hard question: Do the founders run a small business? Have they tried existing tools?

Problem-Founder Fit

Assessment: Unknown / Likely Weak

Without knowing the founders' backgrounds, this raises concerns. The best social media tools have been built by people who managed social media at scale. If the founders are ML engineers who had this idea because they can build it, that's a red flag.

Why Now?

Assessment: Clear but Crowded

LLMs have made this technically possible. That's real. But it means hundreds of other teams are building similar things right now. The "why now" is obvious to everyone, which is dangerous.

Market Analysis

Initial Market: Small businesses actively posting on social media Expansion Path: Agency tools, enterprise, content beyond social Assessment: Genuinely big, but extremely competitive

Small business software is a massive market. But it's competitive, and small businesses are hard to sell to (low budgets, high churn).

Schlep Assessment

Two big schleps:

1. Sales: Small businesses are hard to reach. CAC will be high.
2. Quality: AI content that's actually good enough to post without editing is hard. Founders must be willing to obsess over output quality.

Competition

Buffer, Hootsuite, Later all have AI features. Jasper, Copy.ai focus on AI content. Canva is adding AI content to visual tools. You're entering a market with well-funded incumbents adding this feature.

Red Flags Detected

• "AI tool" framing (tech-first, not problem-first)
• Crowded space with incumbents adding AI
• Small business sales are expensive
• Likely sitcom idea without founder experience

Green Flags Detected

• Real market need (small businesses do struggle with content)
• Clear "why now" with LLM capabilities
• If founders have domain expertise, this changes significantly

Hard Questions to Answer

1. Have you run a small business and managed its social media yourself? For how long?
2. Why would someone choose this over the AI features being added to Buffer, Hootsuite, and Canva?
3. What makes your AI output actually good enough to post without editing?
4. How do you plan to acquire customers profitably?

The Verdict

Overall Assessment: Needs Work

This idea isn't wrong, but in its current form it's a feature, not a company. The market is being addressed by incumbents adding AI to existing products. To make this work, you need either:

• Deep domain expertise that reveals an angle others miss
• A specific niche to dominate (one industry, one platform, one use case)
• A 10x better product that's defensible

What to Do Next

1. If you don't have small business experience, spend a month managing social media for 3-5 local businesses. Feel the pain yourself.
2. Use every competitor product. Where are they failing?
3. Find the niche. "Social media AI for restaurants" is more interesting than "social media AI for everyone."
4. Talk to 20 potential customers before writing more code. Do they want this? Would they pay? Why aren't they using existing tools?

Integration

This skill is part of the Paul Graham expert persona. Use it to get honest, rigorous feedback on startup ideas before committing time and resources.