Some good ideas seem to lure people in troves to make a startup out of it. Only to consistently fail. 

Most have seen bright-eyed founders passionately pitching their latest idea—an idea that seems reasonable, gains some initial traction, and yet, somehow, never quite transforms into a sustainable business. The idea shows promise and a brilliant team worked hard on it, so why didn’t it work out?

Sometimes this can be a form of “tarpit idea”. This was made popular by (I think) YCombinator when trying to explain why some great ideas were not accepted. While there are some reasons why a tarpit idea fails, the most fundamental one I’ve encountered is the lack of exergy to support a business.

Tarpit Ideas

YCombinator, the famed startup accelerator, uses this term to describe startup ideas that seem good — almost too good to be true! — but have been tried by many founders before with little to no success.

They state that tarpit ideas are often not hard in obvious ways. They might seem so easy and good that it’s unbelievable that no one has done it — but when you look a bit deeper, you realize that they have been tried. Over, and over again. These ideas lure founders in with their promise, but much like a tarpit, they trap and bog them down, making progress slow and challenging.

Tarpit ideas often revolve around solving problems that, while real, cannot support a real business. This can happen for different reasons, but ultimately the result is a startup that might gain some initial interest—maybe even a few customers—but ultimately lacks the potential to grow into a thriving business.

Lack of Exergy

Exergy refers to the amount of usable energy within a system—energy that can be harnessed to do work. While there is no exergy without energy, you can have energy with low exergy. Thinking in business terms, you’ll be looking at a problem that while real and highly relatable, the value that your client gets is not enough to sustain your business.

Tarpit ideas with low exergy address problems with limited market demand, monetization potential, or scalability. I believe that this is the top reason why people get lured into the tarpit, as there is usually energy there and there is a strong conviction that they can in fact make it work. And sometimes, that is true – but think of what’s different now, the “Why now?” question.

Rule of thumb guidance

It’s not obvious to determine if this situation might apply to a given idea sometimes. So I’d summarize the top two predictors for when there might be an issue of lack of exergy.

Gold ingot on the street

It’s probably true that throughout history someone did find a gold ingot on the street. It is also probable that it was a very, very, very rare occurrence.

Some people will find themselves thinking that they have found a gold ingot on the street. They will usually be super jealous of telling their idea as if everybody else will just notice the ingot if pointed out by them.

It is usually the case that an idea has a lot of obvious exergy, someone else has already been trying to make it work – and probably successfully. That’s why most incubators will try to get you to understand your competitors. More often than not, good ideas will find exergy that it is just hard to get it work – good entrepreneurs will be hardworking and smart on how to achieve it.

Consumer products

I admire people who jump into this pool, so don’t let me dissuade you. How hard these things are! Founders are usually onto something, and they can identify themselves with the problem since they experience it themselves and can articulate solutions to it.

A lot has been written about B2C and its challenges, so I don’t want to be repetitive. In this context, I’d highlight the fact that sometimes a problem ranks differently for different people. Also, consumers usually have very limited money – so you’ll be facing strong price sensitivity. That’s why you might be faced with a great pool of clients, that can pay for your product an amount of money that even if you capture massive amounts of revenue, that does not cover the costs.

A closing note

One thing that I’m very hopeful about, is that AI and other productivity-changing technologies will tilt the ground differently in some places. That might end up making some previously identified tarpit ideas now feasible, which could unlock great potential.

This might pop out in the “Why now?” question when trying a new idea in a business.