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Y Combinator's Idea Framework
Y Combinator's Idea Framework can help you figure out which idea to double-down on and when to pivot.
Jacky Wong
February 22, 2024
Dalton Caldwell (Y Combinator) has an idea framework. This idea framework can be useful to help people decide what idea to double-down on, when to pivot and how to evaluate various ideas.
Criteria | Definition |
|---|---|
How big it seems | Market TAM? |
Founder/Market Fit | How much experience does the founder have in this market? |
How easy to get started | Honest assessment of founder strengths/weaknesses and attempt to find something with better founder market-fit. |
Early market feedback | It’s often best to find something easy to get started and validate market feedback. |
So when’s the best time to pivot? When one of these happen:
You have launched and have been trying to get users for weeks or months and it feels hopeless
When the idea is impossible to get started on because it takes years of building or too much capital etc
You know in your heart it’s not going to work
How easy is it to get started on the idea?
Examples:
Brex’s VR Headset Hardware
Size | Score |
|---|---|
How big | 5/10 |
Founder/market fit | 1/10 - They were fintech software people but didn’t know how to code. |
How easy to get started | 2/10 - Needed millions of dollars |
Early market feedback | 2/10 - No one knew how to use it |
Brex’s Credit Card for Startups Pivot
Size | Score |
|---|---|
How big it seems | 10/10 - lots of startups |
Founder/market fit | 10/10 - they had a tonne of pre-existing relationships in the fintech space they could leverage |
How easy to get started | 3/10 - they could leverage their pre-existing relationships and could ask a lot of startups. |
Early market feedback | 8/10 - lots of people wanted it (mainly asked Y Combinator startups) |
Example 2:
Retool - prepivot: Venmo for UK
Size | Score |
|---|---|
How big it seems | 7/10 - Venmo and UK are both big |
Founder/market fit | 3/10 - Founders knew nothing about fintech. |
How easy to get started | 7/10 - they already launched and had a lot of users |
Early market feedback | 3/10 - no one wanted to pay and they were losing money on every transaction |
This was “enough” traction to decide to give up on it.
Retool post-pivot: No-code internal tools builder
Size | Score |
|---|---|
How big it seems | 10/10 - lots of companies build internal tools |
Founder/market fit | 10/10 - Had a good idea of what the product should be |
How easy to get started | 7/10 - Built it in 2 weeks and got started |
Early market feedback | 5/10 - Not a lot of people wanted to trust a new start-up |
Patrick Collison’s Advice On Idea
But while the above was a great framework - Patrick Collison also gave the following advice.
You can tell the future of an idea roughly twice as long as you’ve been working on it. For example - someone who’s been working on an idea for 2 weeks can likely tell where it will go in the next 4 weeks. Someone who’s been working on an idea for 4 years will likely tell where it will go in the next 8 years.