Startup Idea Evaluation: Problem, Solution, and Insight Method

In this article, I will transform the content shared by Y Combinator in its Startup School programs into a series of written pieces. This is important because through these materials you can clearly understand how to build an idea and navigate its subsequent growth stages.

The program lasts ten weeks in total, with two sessions per week. In this first article, I will construct a simple framework based on Kevin Hale’s approach to evaluating startup ideas.

If you find yourself asking questions like: “How do you generate an idea?”, “Will investors like this idea?”, “Will it grow quickly?”, “Should I focus on the problem or the solution?”, then you are in the right place.

Y Combinator’s core philosophy is clear: a startup is a company created with the goal of achieving rapid growth. It is also positioned as a technology-based idea on global platforms. A business being technology-based is often an indicator of its potential for rapid growth.

From an investor’s perspective, “rapid growth” means:

• Attracting a large number of users
• Users engaging with the product frequently throughout the day
• Consistent revenue growth over time
• Solving the problem effectively (and demonstrating this early — this is critical)

If an idea lacks this growth potential, it often remains merely a “good business” rather than a startup. While this is a valid goal, the nature of startups is somewhat different.

Thinking of a startup idea as a hypothesis makes the process easier. Kevin Hale’s framework consists of three parts:

The problem is the heart of a startup. Without a real problem, no matter how “cool” the product is, the business idea dies. A good problem typically exhibits one or more of these characteristics:

• Popularity: Many people experience the same problem
• Growing market: The problem area is expanding
• Urgency: People want a solution immediately
• Pricing opportunity: There is revenue potential and room to establish a competitive advantage
• Necessity: A “must-have” need
• Frequency: The problem occurs often

The key point here: you do not need all of these simultaneously, but your solution must be strong in at least one. Among these, frequency is especially decisive because it directly triggers repeated usage and growth.

Additionally, a commonly used equation to explain user behavior is:
Behavior = Motivation + Ability + Trigger
That is, when users are given strong motivation (the problem), low friction (easy to use), and consistent triggers (notifications, emails, reminders), their repeat usage increases.

The solution section answers the question: “Which experiments will validate your hypothesis?” The most common mistake here is finding a solution first and then searching for a problem.

This trap is called: SISP (Solution In Search of a Problem).
Discovering a new technology and asking “Where can I apply this?” often leads to failure. The healthy flow is: problem first, then solution.

Insight answers the question: “Why will you win?” It explains your advantage over competitors. This is the part that impresses investors, because it clarifies what we call “unfair advantages”:

• Founder advantage: Expertise, domain knowledge, patents, or deep skills possessed by very few
• Market advantage: Positioning in a growing market (e.g., a field growing at 20% annually)
• Product advantage: A 10x better experience, speed, price, or quality
• Acquisition advantage: Growth at very low cost, especially through word of mouth
• Monopoly / network effect: Ownership of a market segment and long-term persistence through network effects

The goal here is not to be “generally good,” but to establish a clear and defensible advantage in one specific area.

A startup idea typically passes through two belief tests:

• Threshold: Can you actually deliver on what you promise?
• Miracle: Are investors expecting an extraordinary level of success from you despite having no evidence? (This is like a lottery ticket — investors rarely invest in such cases :) )

Therefore, the topic we will address in the second article is critical: turning your hypothesis into evidence. That means testing your intuitions, talking to users, and gathering real signals.

The core message of this first section is this: Do not view a startup idea as a “brilliant thought,” but as a hypothesis that enables growth. When selecting a problem, prioritize frequency. Avoid the SISP trap in your solution. And in the insight section, clearly define what sets you apart from competitors.