TL;DR: I spent years mistakenly thinking I understood what Paul Graham meant. I'm trying something slightly different now.
I prefer a different wording of Paul Graham's advice for startups.
Build What They Want makes the precedence obvious: before you start, you have to find out who they are, and what they want.
It’s not about building what you want.
Paul Graham starts with “build something”, and that’s what hits your subconscious first, allowing the “something” to remain ambiguous. I'd prefer to start with “build what”, so you’re forced to evaluate the “what”. The original wording lets you think that you can build something and convince people to want it later (once you show them and tell them how great it is, and all the important features it has...).
This changes everything.
My problem is that I find it too easy to imagine things that I could build, and once I’ve imagined something, I struggle to not want to build it exactly that like. Because I enjoy the process of building.
Building is a wonderful thing to enjoy. If you want to start a businesss, just do it differently.
Instead of applying imagination to products, apply imagination to companies. What company could exist if someone (you) went and built it? What excites you? A company is built on something that people want.
How do you know what people want?
Talk to people. Understand them. Ask questions.
Choose who you talk to. Talk to people who you think might want something that you would be excited to build. Don’t imagine the product though. Imagine the kind of change you could make in their lives.
They probably won’t be able to describe exactly what they want; the skill you must develop is in spotting the unexpressed (or inexpressible) want.
But whatever you do, your goal must be to build something they want.
This is strongly related to jobs to be done. The things they want will always be related to the things they already do. Find that link.
Last year I built something that I wanted to build. I only partly wanted the final product. Mostly, I wanted the experience of building it. And actually that turned out to be extremely valuable, though it wasn’t the right way to build a business.
Then again, it’s important to geek out and build interesting things without immediate value. Contribute something novel, and maybe one day it will be useful to someone else (even just as prior art).
And if you’re going to build something for the love of building, you should definitely do so in public. You’ll make new friends and learn much more. So publish your code, get a website up, and tell people what you're doing.
You can start by telling me.