21 ms·

Startup Playbook

1202 points by sama 11y ago

webmasterraj 11y ago
> an even bigger problem is that once you have a startup you have to hurry to come up with an idea, and because it’s already an official company the idea can’t be too crazy. You end up with plausible sounding but derivative ideas. This is the danger of pivots. A great point, that I haven't seen in too many places. I sometimes feel like we're seeing too many people who "want to have a startup" for the supposed fame and fortune, and not enough who are truly passionate about an idea. Believing in an idea will get you through, not dreams of gold coins. Sam, I noticed you didn't mention watching cash burn or unit economics. Is that a later section you might add? Too many founders don't realize the importance of that until it's too late (speaking from personal experience)
- sama 11y ago
  Yes I'm adding something on that.
- sreyaNotfilc 11y ago
  Its not even just passion that should drive a startup/business. Success it not just a matter of gaining X amount of emails and signups on your site. Its also not all about trying to think of the next thing to keep people on. I think to really succeed at a startup is to make a product that is needed and that can be sustained throughout the years. To do so, you have to think long term. Its ok to add the "new hotness" to your business as well, but it shouldn't be what the core business is about. Facebook's success was not because they added photos, IM, pokes, likes, it was because there was a solid platform to find people. Sure those other features helped promote and enhance the product, but without the focus on the #1 goal (making it easier to connect the world) that platform could have easily gone by the wayside.
- birken 11y ago
  As a counterpoint, the founders of Thumbtack started a startup before they had an idea, picked a very "derivative idea" and still did (and are doing) pretty well. If I had to quantify the motivation of the early team, it was much more about the company being successful than everybody being super passionate about the idea. As long as you can out-execute your competitors and people want your product, it doesn't really matter what your motivation is.
cmstoken 11y ago
Wow, this is fantastic! The little animations give it a playful vibe too.
davidu 11y ago
A resource like this is terrific. Would be great to see it in github so you can solicit the occasional outside contribution. I've always found that even the best teams still need to constantly explore and add new tools in the toolbox in order to execute effectively and achieve success. (In fact, it's not that even the best teams need to still do this, the best teams actively go out and do this, which likely contributes to them being a high-performing team.)
lukasm 11y ago
Love it. What is missing is some information about technicalities e.g. Want to rise money in US? You probably need a Delaware S-corp (Github repo maybe better for it)
- gkanai 11y ago
  Agreed that there needs to be clarifications around how most international startups are funded (i.e. Delaware Corp takes the funding and holds the non-US entity as sub.)
- _pius 11y ago
  Just as a point of information: you generally do not want an S corporation for this purpose.
- tptacek 11y ago
  A DE S corp? You sure you don't mean C?
- 2arrs2ells 11y ago
  (C-corp, not S-corp! https://www.quora.com/Should-a-tech-startup-incorporate-as-an-LLC-a-C-Corp-or-an-S-Corp-If-so-why https://www.quora.com/Should-a-tech-startup-incorporate-as-a...)
- kevinwong 11y ago
  Agreed on the technicalities. The easiest way to capture the 80% of technicalities that prospective founders care most about might be to have FAQ section where YC portfolio companies can weigh in on things like "Wish I knew to [take certain action] [during time period]. Here's a resource I found [link]".
sama 11y ago
(This got published a little early because it got indexed. I'm still going through and fixing some typos and will maybe add a few other things.)
- ilurk 11y ago
  I'm just curious. Does the playbook have any game-changing ideas from what was told at the Startup Class videos? And BTW, thanks for all the info YC has been putting out there for free.
  - sama 11y ago
    No.
  - joshmlewis 11y ago
    This seems to be most of the content found in the Startup Class videos in written form.
- revorad 11y ago
  Can you please get the designer of this playbook and ycombinator.com to redesign HN too?
  - IanMikutel 11y ago
    And Craigslist. And ReadMe.io.
    - sharemywin 11y ago
      facebook just redeisgned craigslist for them...lol.
    - pkrumins 11y ago
      And RFCs.
    - something123 11y ago
      but Craigslist's anachronistic static-HTML feel is so charming...
djhn 11y ago
This is a welcome synthesis of a lot of great info. It's also a more attractive and credible way to introduce fast-growing technology startups* to the uninitiated than just saying, "oh, just read this bunch of blog posts by this guy called 'pg' who you've never heard of, no, no, trust me, it's reaaally good, he founded YC, which you've also never heard of, but trust me, they're like, the real deal". *YC-style/SV-type, even if some of the advice is more general, and the definition of 'YC-style' is quickly expanding and loosing meaning.
petecooper 11y ago
I am very much liking the CSS animations.
pavornyoh 11y ago
Very detailed and good information to have. Thank you Sama.
orliesaurus 11y ago
@Greg I can see the Rick and Morty influence on some of the art ;) ;)
taylorwc 11y ago
> Thanks to Paul Buchheit, Erica Carpenter, Brian Chesky, Adam D’Angelo, Drew Houston, Justin Kan, Matt Krisiloff, Aaron Levie, Gabriel Leydon, Jessica Livingston, Dustin Moskovitz, David Rusenko and Colleen Taylor for contributing thoughts to this. ^ this group + @sama... wow. Terrific advice from an amazing list of credible people.
- jMyles 11y ago
  To be honest, I don't think I know a single one of them. Who are they and how can I learn more about what they do and how they formulate such great content?
  - duggan 11y ago
    I think if you Google many of those names, the first thing that will come up is a Wikipedia article about them.
  - gkoberger 11y ago
    * Sam Altman – Y Combinator President * Paul Buchheit - YC Partner, Gmail founder * Erica Carpenter - Y Combinator * Brian Chesky - AirBnb * Adam D’Angelo – Quora, ex-CTO of FB * Drew Houston – Dropbox founder * Justin Kan – YC Partner, Twitch, Justin.tv, Socialcam * Matt Krisiloff – Y Combinator * Aaron Levie – Box founder * Gabriel Leydon – Machine Zone founder * Jessica Livingston – YC Founder * Dustin Moskovitz – Facebook cofounder * David Rusenko – Weebly founder * Colleen Taylor – Y Combinator
    - sethd 11y ago
      "Gmail founder" sounds a little funny to me. If I am employed as a developer in a company on a new product, am I then a founder of that product? It just seems like the word founder just keeps being used more liberally as time goes on.
      - joshmlewis 11y ago
        I think it's appropriate in this case. Paul started Gmail inside of Google as a side project. At first most people were not a supporter, including Marissa Mayer and other peers. He was scratching an itch though and eventually got Larry and Sergey on board which helped the cause and eventually grew into what it is today. So with that, there are a lot of similarities into what we'd call a founder today. While financially there wasn't a big risk, it was still a product he was passionate about and created from nothing.
jMyles 11y ago
> Startups are the point in your life when tricks stop working. Awesome thesis, hidden in the middle of the text. In some ways, this is a great single sentence answer to the question, "What is a startup, really?"
- webmasterraj 11y ago
  This is the tldr of the whole thing
- sama 11y ago
  http://www.amazon.com/Persecution-Art-Writing-Leo-Strauss/dp/0226777111 http://www.amazon.com/Persecution-Art-Writing-Leo-Strauss/dp...
  - rfrey 11y ago
    You're going to have me counting the words in the sentences.
  - nbashaw 11y ago
    Ha, it's amazing to see a Leo Strauss reference in a HN thread! I majored in Political Theory at Michigan State, and the department was full of Straussians. Worlds colliding.
- jrauser 11y ago
  For more on this idea, have a look at pg's Before the Startup: "So this is the third counterintuitive thing to remember about startups: starting a startup is where gaming the system stops working." http://www.paulgraham.com/before.html http://www.paulgraham.com/before.html
- tertius 11y ago
  That's great. This has been my life, finding the easy wins, and when they stop working, moving on to the next. This is one of the points that characterize me as soft.
  - 11y ago
t23 11y ago
Great stuff. Also love the UI. Thank you, Sama!
libertymcateer 11y ago
I have a really hard time buying a lot of this about how novelty and monopoly are keys to a successful company. If you look at the really successful startups, especially unicorns, almost none of them are actually monopolies or new ideas. The vast, vast majority are old products done right, and almost all of them have very substantial competition. This attitude is, in fact, encompassed in the near footnote-like section entitled "Competition." That section sums it all up: success is determined with obsessively improving the company. Competition isn't what kills, it is failure to keep on improving. https://www.cbinsights.com/research-unicorn-companies https://www.cbinsights.com/research-unicorn-companies There is the list of current Unicorns. I can't think of one of them that doesn't have very, very substantial competition or is a genuinely novel product. All of them ventured into highly competitive, well-worn fields and what set them apart was quality of service, ease of use, and responsivity. Very few of them made conceptual leaps in the underlying product - they mostly made leaps in lowering activity energy to use products or solving associated logistical problems. Sorry Sam, I have to politely disagree with you on this one. Lord knows you are the one with the resume and authority on this, but I am a startup lawyer and work with clients on this stuff all day, so I am not totally unqualified. I do defer to your judgment, obviously, on companies that you want to fund, and your track record more than speaks for itself. However, what I want to know is if there isn't some disconnect between the companies you do fund and the attitude that is expressed in this post. I would love to hear your insights or opinions on whether you feel that I have this wrong, and if you think that the next generation of unicorns are going to be novel monopolies, or that maybe I am misreading the characteristics of current successful startups.
- sharemywin 11y ago
  look at Microsoft and apple both of their real winners were after the fact. Office and the ipod/iphone. Also, I think anything that makes money is a win. Not just unicorns. If YC wants export to the rest of the country it needs to shoot for more base hits. I think in SV people have already self selected to follow cray ideas. but the rest of the country if you want to get the best candidate show them something with the best odds of not failing.
  - 11y ago
gozo 11y ago
If this is something that is expected to be around for awhile I recommend talking to an editor. Friends are good to check for overall content and typos, but they are too familiar with the subject to check how well you convey something and too nice to really tear through the text objectively.
- sharemywin 11y ago
  he commented that it was released early.
  - gozo 11y ago
    He said that he would fix typos and add some stuff, not anything that will make the text itself necessarily better. His writing just isn't that good for something that will be handed out to a lot of people and were there a very real purpose of them understanding it. But as most thing coming out of YC I guess it's more marketing material for the people who buy into a lot of the SV stuff. Maybe he should talk less about "things" and more about ethics, seems like that is something YC companies have become known to fail at recently.
m_fayer 11y ago
I wish there was a similar level and quality of resources for what I think are called lifestyle businesses. By that, I mean product-based businesses with at most a few million in revenue, a 5ish person team, a solid sustainable market position, and no desire to revolutionize any unicorns. I know a lot of people attempting this and they mostly seem to be flying under the radar, or at least have nowhere near the cachet of a startup. They are often bootstrapped, frequently for lack of other options. For those of us who don't want to be in the pressure cooker or are turned off by the hype machine, these businesses are a viable alternative route toward independence and possibly achieving a significant impact. The fact that they have become as attainable as they are is I think also something quite remarkable.
- gkoberger 11y ago
  Try Getting Real and Rework by 37 Signals. https://gettingreal.37signals.com/ https://gettingreal.37signals.com/
- ska 11y ago
  By that, I mean product-based businesses with at most a few million in revenue, a 5ish person team, a solid sustainable market position, and no desire to revolutionize any unicorns. I believe this used to just be called "a small business". Not a terribly new idea, but being rediscovered perhaps by tech people?
  - vdaniuk 11y ago
    A small business is fundamentally different from lifestyle tech business or a bootstrap. There could be hundreds and thousands of small businesses, say in a certain FMCG market in different local ares. A tech market with hundreds or thousands product businesses catering to a same target audience, probably, doesn't exist at all. Product companies tend to either grow or whither. Centralization is the norm. Building a lifestyle business mostly rules out services as most desired lifestyle business model is some sort of passive income scheme. Content oriented monetization models are being slowly, but surely killed by ad blockers. An innovative product tailored to the needs of a small, well defined audience seems to be a best bet for a lifestyle business and that's very different from a classical SME.
pbreit 11y ago
Wow. Sounds grandiose but this is an epic piece of writing by one of the smartest guys in the field. Required reading.
colund 11y ago
My impression is that anything related to YCombinator gets huge upvote bias.
sharjeel 11y ago
""" Bandwidth Limit Exceeded The server is temporarily unable to service your request due to the site owner reaching his/her bandwidth limit. Please try again later. """ Any mirrors?
- deleted 11y ago
  [deleted]
- alexmuro 11y ago
  here is a link to the google cache. http://webcache.googleusercontent.com/search?q=cache:d0Df-gFG1KoJ:playbook.samaltman.com/+&cd=17&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:d0Df-gF...
jedberg 11y ago
> On the other hand, starting a startup is not in fact very risky to your career—if you’re really good at technology, there will be job opportunities if you fail. Most people are very bad at evaluating risk. It's true that career risk is low, but opportunity cost could be high. If you're well into your career, taking a few years off to work at a startup that might fail could really be a million dollar tradeoff. So you really gotta believe in your startup. (Note: I left my comfortable high paying job earlier this year to start a startup)
- stevesearer 11y ago
  That is the calculation I used over the course of a few months to switch from being a teacher to going all-in on my office design website. At the time I was pretty burnt out from teaching, ended up moving to a new city and was doing a few temp jobs to make some extra cash. The risk was low enough at that point that the website was almost a no brainer. I'm pretty confident that had I been in a good spot career-wise at the time, I would likely have either never kept my side project going.
vrnayini 11y ago
I really like the illustrations. Any idea what tools were used for the animations? Thanks!
- gkoberger 11y ago
  I did them by hand with CSS.
kilimchoi 11y ago
Has anyone been able to get a letter of intent with just an idea? Is that even possible?
- jedberg 11y ago
  Second time founders get this sometimes, if their first startup was a success. Basically, they've already proven they can execute.
- mbesto 11y ago
  Yes.
  - kilimchoi 11y ago
    would you like to share your story of how you did it?
    - mbesto 11y ago
      There's no real "how you do it" other than having friends with money. I've seen LOIs with an idea range anywhere from $10k to $1M.
0xCMP 11y ago
Oh darn... Bandwidth exceeded.
Bouncingsoul1 11y ago
"One important counterintuitive reason for this is that it’s easier to do something new and hard than something derivative and easy. People will want to help you and join you if it’s the former; they will not if it’s the latter." So Google didn't invent the Internet Search it was a derivative but not easy. Facebook didn't invent the SocialNetwork and actually made it easier than e.g. MySpace. Amazon was not the first online retailer but made it better, more reliable. WhatsApp? we knew how to send textmessages for a while but well they made it more convient. So a good idea must not be something unique new but something which makes the product better than the rest.
mrdrozdov 11y ago
This is great! Why no anchor tags? :(
- gkoberger 11y ago
  There are; they just aren't linked. http://playbook.samaltman.com/#money http://playbook.samaltman.com/#money
6stringmerc 11y ago
Okay, I've been researching and reaching out to various entities for, well, going on a couple years now regarding my "start-up" concept of a company that creates some inventions, brings to market, and licenses technology as another revenue stream. Yes, it's not a software-oriented business, but it's a viable entity with multiple prospects. Thus, the following line doesn't really ring true to me: >One important counterintuitive reason for this is that it’s easier to do something new and hard than something derivative and easy. People will want to help you and join you if it’s the former; they will not if it’s the latter. In every single instance where I actually get a response, there's a consistent chorus of "this doesn't fit the model of what we support" and, basically, I chalk it up to an investment environment that actually, truly targets the derivative and easy moreso than the unique and difficult. That's why I'm still slogging along in the self-directed patent process. Nobody is interested in helping (beyond some constructive comments I've received here from community members - thank you!), and certainly not in contributing financial backing. It is what it is...but that claim? I don't really buy it.
- ThomPete 11y ago
  I think the point is that if the problem is interesting you can get people onboard helping you as ex. tech founders. But if your problem is trivial (build a en ecommerce website) then they want you to pay them hard cash. I agree though that some problems might be hard to articulate and so you end up with having a problem getting people to believe in your project. I personally was trying to convince developers to join me on a venture I wanted to do and had no luck. Then I decided to just pay someone to do a small fraction of what I wanted to do and which I knew I could pay for and now that developer I paid to do my first project is now partnering with me in my next project. Sometimes you have to look at your idea and see if you can create a much smaller product from what you want so you can get started on someting at least. Then if it's successful you will have people wanting to join you.
  - 6stringmerc 11y ago
    Thanks for your response and reasoning as to the circumstance, I follow what you're pointing out. Your last line, about getting started, is the reality I've decided to deal with - enough with dreaming of getting a jump start from anybody else. A co-worker of mine obtained a device patent and has been very encouraging that I pursue the same route - if the idea is to be as successful as intuition and market review indicate, then might as well reap all the rewards first and foremost. I guess I'm just rather frustrated at the "start up culture" of claiming to invest in new things, in risk-to-reward principles, while in practice it's a lot more akin to the RIAA big-label approach of "we'll give you money only because we know you'll make us more money in this proven areana of pop/country/rap/etc" in a lot of respects.
vijayr 11y ago
Anyone knows what software Sam is using for his blog?
- gkoberger 11y ago
  For the startup playbook, I just built it with static HTML (glued together with gulp). (For his actual blog, he uses Posthaven: https://posthaven.com/ https://posthaven.com/)
dsugarman 11y ago
>It’s important that you distort reality for others but not yourself. I would love to see more content and discussion around this. I understand clearly why it is important to pitch who you will be not who you are when recruiting and raising money but when it comes to day to day, doesn't this contradict what you had said earlier about sharing all of the good and bad with your employees? Replacing your water jugs with Kool-Aid at the office just seems evil to me. I'm not sure if that is really what you are saying or not but it seems synonymous with unicorn culture. I see a lot of positives to creating a culture masked with illusion, but in my head, all of the value seems short-term.
- ThomPete 11y ago
  You can be transparent. The trick is how you interpret the facts.
- seiji 11y ago
  Replacing your water jugs with Kool-Aid at the office just seems evil to me. Founder/VC/moneyhat friendly isn't always employee friendly. Employees exist to be exploited so the founders and VCs become extremely wealthy. The best way to drive productivity is to convince your employees there's a vague "external enemy" they've gotta beat. Turn it into mental cult gymnastics. Bind their self worth to the success of the company. Grow at all costs. There are circles of belief though. You should always know the truth yourself (founder), then you decide which lies to tell the board, then which lies to tell your management, then which lies to tell your employees, then which lies to tell the media/public/world. (where "lies" also equals "putting a spin on the truth" or selectively withholding information (hiding faults in the hopes of improving them before failing completely, etc).)
SocksCanClose 11y ago
@sama have you thought about running a kickstarter to publish a hard copy version?
lemevi 11y ago
I feel like this needs a "when to give up" section. Like at some point it's obvious right. When is that point. Should you just destroy your entire life and never give up no matter how long since it's been since you've had steady growth? I've seen startups struggle for years with average growth or really slow linear growth where real profitability was years away. Do they just continue? Is that the advice? What about their employees who are being paid less than market value?
kefka 11y ago
Maybe you all can help me, but I've just agreed to do a Startup Weekend. I did an "Ask HN" ( https://news.ycombinator.com/item?id=10515984 https://news.ycombinator.com/item?id=10515984). Any ideas, including what I've asked?
billmalarky 11y ago
"We once tried an experiment where we funded a bunch of promising founding teams with no ideas in the hopes they would land on a promising idea after we funded them. All of them failed." I was under the impression Reddit fell within this category. I recall a PG quote that went something like "we [Y combinator] hate your idea, but we like you [Alexis and Steve]" in reference to reddit's initial YC funding. I know Reddit isn't considered a smashing success by VC standards (originally sold for roughly 15-20 MM), but I certainly wouldn't call it a failure.
- tptacek 11y ago
  He's referring to a YC batch in which founders were specifically offered the option of applying with no idea (that's not what Reddit's founders did).
  - Schwolop 11y ago
    I had assumed they'd all failed, but don't remember seeing any discussion of it from sama. Was there ever a public post (other than this playbook) that announced the failure of that experiment, and any take-aways beyond the obvious?
thadd 11y ago
Well this looks quite nice. Bookmarked for later. Thank you!
deleted 11y ago
[deleted]
jpwagner 11y ago
From the section on competition: "But 99% of startups die from suicide, not murder." and more precisely, from David Packard: "More organizations die of indigestion than starvation."
- senderista 11y ago
  Like Packard's own company.
jjoe 11y ago
Word Occurrences Frequency Rank you 196 4.2% 1 your 74 1.6% 2 company 60 1.3% 3 it's 59 1.3% 3 great 56 1.2% 4 product 52 1.1% 5 people 51 1.1% 5 get 44 0.9% 6 founders 42 0.9% 6 good 40 0.9% 6
_s 11y ago
I don't suppose I could make a small request - could we have a print stylesheet that does page breaks on the headers? I'd love to be able to print it out and go through it :)
Sevzinn 11y ago
Why is the title in orange? Color does not convey logical information when used in text.
latenightcoding 11y ago
Great stuff, thanks
squidlogic 11y ago
> You want to start with something very simple—as little surface area as possible—and launch it sooner than you’d think Honest question: does this model apply when your product can't at any point be, for lack of a better word, half-baked? Say you're making a security product or working on control code for rocket thrusters.
- tonyarkles 11y ago
  Sure! Small and simple doesn't have to mean janky and shitty. You reduce scope, not reduce quality. To carry on with your two examples, I'll make up a security product and a product related to control code for rocket thrusters. For the security product, let's do a "secure storage on Dropbox" product. Version 1, you do as much as you can with with existing libraries and pieces. Use OpenSSL to handle the crypto bits. The UI has two options: the passphrase for the encrypted storage, and the path to the encrypted directory (and a system tray icon). Right away, I can think of all kinds of features that would be cool to add to this product, but DON'T build them out for V1. Eventually, you can add PKI so that you can have different keys on different devices and selectively revoke them. And build out the mobile app so that you can access your encrypted stuff on the go. And bake in crypto libraries so that you're not just calling out to openssl.exe. Etc etc. That's V2, V3, V4... For rocket thruster control code... You're going to need a way to test it. Start with a thruster simulator. You're going to probably need a FEA model and a numeric solver. It's not going to be "simple" as in "I banged it out in a week", but it's way less scope than building and testing thruster control code. Once you've got the simulator built out and working reliably, start selling the simulator while you build out your own control code. Hell, if you want to keep it super simple, start out by only simulating solid fuel model rocket engines. You can use that to bootstrap the verification process (compare simulation results against measured results for a couple bucks/launch)
  - squidlogic 11y ago
    Thanks, good thoughts!
dools 11y ago
"Most really big companies start with something fundamentally new" urr that's not even remotely true. Stopped reading at this point.
glxc 11y ago
what about YC Research?
tradeupofficial 11y ago
Awesome article. Great clear and concise points!!!
graycat 11y ago
Nice essay. IMHO the contents are (1) Common, good advice. (2) Good data from Sam's excellent experience. (3) Some not so good advice and attitudes. Scope: The essay seems aimed mostly at current Silicon Valley (SV) style, mostly consumer, information technology startups. Okay, but that's not all of business or even all of startups. Yes, YC is pursuing much more, e.g., some shoe company in Pakistan, still, the essay is SV style and there, mostly Web and mobile. Fine with me, because that's what I'm doing, be we should understand this point about scope. And, as below, we should understand this scope and style because IMHO it's time for SV style of consumer Internet to borrow from some of the rest of technology and business. Broad Point: As we all can see, all heard from Mark Andreessen, etc., and see from Sam, " ... investors’ returns are dominated by the big successes, ... " The Exceptional: So, from this Broad Point, the goal is something exceptional. From that, we have to suspect that we won't always be following the common and ordinary, some extensive experience and observations from the past, or even "big successes" from the past, and, instead, should be willing to consider some exceptions in order to be exceptional. Users' Love: > "Your goal as a startup is to make something users love." Yup. Now, can we, please, have some more guidance on just how the heck to do that? And, please, don't ask me to draw from Snapchat or Homejoy. And I'm concerned about http://koltai.co/notebook/the-risky-business-of-entrepreneurship-y-combinators-stellar-success-rate-shows-1-in-200-win http://koltai.co/notebook/the-risky-business-of-entrepreneur... with: "However, these statistics also reveal a grimmer reality: 93 percent of the 511 companies accepted by Y-Combinator have failed. Even more alarming, only 3 to 5 percent of the companies that apply to Y-Combinator are even accepted, meaning that only one in every 200 companies that applies to Y.C. eventually succeeds." And, I'm concerned about the low ROI of venture capital as in http://www.avc.com/a_vc/2013/02/venture-capital-returns.html#disqus_thread http://www.avc.com/a_vc/2013/02/venture-capital-returns.html... and http://www.kauffman.org/newsroom/2012/07/institutional-limited-partners-must-accept-blame-for-poor-longterm-returns-from-venture-capital-says-new-kauffman-report http://www.kauffman.org/newsroom/2012/07/institutional-limit... Instead, for history with some good examples, there have been many amazing projects, some astoundingly innovative, that worked the first time with high probability, e.g., for a picture: http://iliketowastemytime.com/sites/default/files/sr71_blackbird_leaking_fuel_cell19.jpg http://iliketowastemytime.com/sites/default/files/sr71_black... IMHO, here is a better approach: (1) Find a problem that huge number of potential users/customers believe or can come to believe is really important to have solved. E.g., want, say, 1+ billion people with Internet access, if only from a smartphone. (2) Find a solution that is much better than anything else and difficult to duplicate or equal. (3) Make sure that for the target customers right away or soon the solution will be seen as a must have and not just a nice to have. Want no doubts here; do not want to have to depend on gossip and fads from notoriously flighty teenage girls. One of the best examples would be a single pill, safe, effective, cheap, to cure any cancer. (4) Deliver the product, easy to use at a very attractive price. (5) Make sure the revenue covers all expenses and yields a fantastic margin, e.g., pre-tax margin 90%. (6) For that solution, do some good original research with powerful, valuable results in the STEM fields. (7) Offer the solution as a Web site, i.e., exploit software, Moore's law, and the Internet. (8) Be a solo founder until at least $10 million a year in after tax earnings. Difficulty: > "A word of warning about choosing to start a startup: It sucks! One of the most consistent pieces of feedback we get from YC founders is it’s harder than they could have ever imagined, because they didn’t have a framework for the sort of work and intensity a startup entails." There's something wrong here: All across the US, east to west, north to south, cross roads to the largest cities, millions of sole proprietors do startups and are successful enough to buy houses, support families, and get the children through college. All the larger bodies of water in and around the US have boats and yachts, and nearly all the owners are just such entrepreneurs. Maybe they own 10 fast food restaurants, are big in asphalt paving, are a manufacturer's representative for some great lines, run five new car dealerships, own and manage 2000 units of rental property, have a private label line of industrial floor cleaning supplies in a mid-size Midwestern state, did a rollup of dry cleaning stores, are the main beer distributor for half of a state, are a leader in design and construction of custom tanks on truck frames for hauling liquids, etc. But, a startup that exploits information technology, software, Moore's law, and the Internet should have some advantages and generally be less difficult. Idea: > "Remember that at least a thousand people have every great idea." Maybe true with SV style, but more generally, no, and a thousand times no. Instead, since so many startups fail, we want some advantages and definitely can get a lot of advantage from having a genuinely new idea. People who wrote a Ph.D. dissertation that was supposed to be "an original contribution to knowledge worthy of publication" and "new, correct, and significant" will quickly appreciate the importance of a unique idea and a lot about how to construct such. Here SV style is seriously lacking and, as above, needs to borrow from outside. As in Sam's > "Remember that at least a thousand people have every great idea." I believe that SV style nearly trivializes the idea and, to raise the success rate, very much needs to go much deeper into the idea and associated considerations of user need, market size, meeting the user need, and new, proprietary technology to meet the user need especially well with a product difficult to duplicate or equal, and protected intellectual property that supplies a barrier to entry. In some places such unique intellectual property is taken very seriously, with laws, contracts, national security classification, etc. For higher success rates, SV style needs to do better with such intellectual property. Several good examples of a such intellectual property and its power are in the picture http://iliketowastemytime.com/sites/default/files/sr71_blackbird_leaking_fuel_cell19.jpg http://iliketowastemytime.com/sites/default/files/sr71_black... This is another case of where SV style needs to borrow from outside. Team: Once again, over again, one more time, yet again, we come to the issue of team. Again we learn that it's tough to get a good co-founder; co-founder disputes are a major cause of startup failure; it's tough to hire good staff; it's difficult to keep the staff well involved; being a good leader and manager and learning to do so is a lot of work, and BoD members rarely know much about the details of the business, likely much less if some new, unique, powerful, valuable crucial, core technology is key to the business. So, with all those clear dangers to the startup, we begin to conclude: Be a solo founder, get to earnings ASAP, grow organically, well into very good profitability hire no one, and from the start carefully plan never but never to accept equity funding or report to a BoD. Or, follow the example of Markus Frind and his romantic match making Web site Plenty of Fish, initially, just one guy, two old Dell servers, ads just from Google, $10 million a year in revenue, and recently sold for $575 million in cash. Understand the Users: > "... it’s critical you understand your users ..." Right. And for making, say, really nice seat cushions for the driver's seats of Rolls Dropheads with owners in the Chablis and Brie set in the Hamptons, sure. But in consumer Internet, for a big success, there will millions, maybe billions of users, and about all that can be said about those users is that they are a not very special cross section of humanity. So, really just have to understand the pair of the product and the ordinary man on the street.
dawie 11y ago
"There may be a part II on how to scale a startup later" - I would love a part II
sobinator 11y ago
Peter Thiel's 'Zero to One' should be what anyone looking for more of this kind of reading should look into.
Animats 11y ago
That's not a startup playbook. That's an app playbook.
vuyani 11y ago
"If the idea does not really excite at least some people the first time they hear it, that’s bad." Reconsider(https://medium.com/@dhh/reconsider-41adf356857f https://medium.com/@dhh/reconsider-41adf356857f)
atatus 11y ago
Invaluable advise..
scriptstar 11y ago
The website is looking cool. Anyone know which CMS Sam used? Guess?
shardinator 11y ago
Not sure if it's right to post this. Small typo in Making Money section: ... if your product if your product is easy to sell. Should be ... if your product is easy to sell.
sebak 11y ago
Basically they're saying: "To succeed you need to have an awesome idea that hasn't been done before. You need a great team and build a great product your users will love". Wow, thanks for the advice, why didn't I think of that.
SarahofGaia 11y ago
So is this like an online "textbook" for how to do startups or something?
ryporter 11y ago
Entrepreneurs need to be very careful when developing self-belief in their idea. As Sam points out, the people telling you that you are crazy "may be right." I've started angel investing, and it really pains me to see people who have quit their job and devoted years of their life to a business that (in my opinion) has no chance of succeeding. Yes, I may well be wrong about some of them, but the entrepreneur needs to be able to articulate why they think everyone else is wrong. Self-belief in a crazy idea is not enough. Obviously Sam wouldn't disagree with this sentiment, but many entrepreneurs seem to omit the step of proving to themselves that their idea is not crazy, or they suffer from confirmation bias.
michmeagher 11y ago
Seems like a lot of the pushback on this is about whether in releasing this playbook @sama and YC are (i) making a value judgment on unicorn startups vs other businesses, and (ii) serving their own agenda. Personally I don't understand either of these positions. On (i) it's like attacking someone for releasing a book of muffin recipes by saying "you think muffins are the best food in the world! I only bake cookies -- do you think you're better than me?!". In fact they just like muffins, they have a lot of experience in baking muffins, and instead of keeping their recipes secret they want to help other people bake the best muffins in the world. On (ii), again my personal reaction, I don't care if it's self-serving. It also happens to be very helpful to me. Small businesses, large businesses, "lifestyle" businesses, unicorns -- they all take a lot of effort, not to speak of other life commitments. In fact there is a maximum amount of time they can take (24 hours minus a few hours for sleep per day) and depending on your personality you will likely dedicate more or less of this time regardless of the scale of the venture. I don't think whether it's a $10m business or $100m business or more is a choice based on personal preference, it's based on the nature of the idea you find yourself compelled to pursue. For example, I used to be an antitrust lawyer. I was often in the office until 5am, and that was as an employee. I worked HARD. I thought I wanted to work less so I quit my job to start a small business. But it turns out that the idea that I have been excited about for the last few years is not a small business, it could never be one even if I wanted it to be. It's the kind of idea that will either be huge or it will be nothing. When you are standing on the brink of that kind of endeavour a few helpful words, a playbook if you will, from someone who knows how it's done can be very helpful indeed.
deleted 11y ago
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horsingaround 11y ago
A lot of nonsense fluff in this article.
LordRaven69 11y ago
This has been the single most useful article Ive read all year. There is much to be said about setting up an unknowing amount of companies with the lessons needed to essentially, NOT MESS THIS UP. Thanks for this StepUp, Stand Out _E L E V /A\ T E D_

1202 points by sama 11y ago

> an even bigger problem is that once you have a startup you have to hurry to come up with an idea, and because it’s already an official company the idea can’t be too crazy. You end up with plausible sounding but derivative ideas. This is the danger of pivots. A great point, that I haven't seen in too many places. I sometimes feel like we're seeing too many people who "want to have a startup" for the supposed fame and fortune, and not enough who are truly passionate about an idea. Believing in an idea will get you through, not dreams of gold coins. Sam, I noticed you didn't mention watching cash burn or unit economics. Is that a later section you might add? Too many founders don't realize the importance of that until it's too late (speaking from personal experience)

sama 11y ago
Yes I'm adding something on that.
sreyaNotfilc 11y ago
Its not even just passion that should drive a startup/business. Success it not just a matter of gaining X amount of emails and signups on your site. Its also not all about trying to think of the next thing to keep people on. I think to really succeed at a startup is to make a product that is needed and that can be sustained throughout the years. To do so, you have to think long term. Its ok to add the "new hotness" to your business as well, but it shouldn't be what the core business is about. Facebook's success was not because they added photos, IM, pokes, likes, it was because there was a solid platform to find people. Sure those other features helped promote and enhance the product, but without the focus on the #1 goal (making it easier to connect the world) that platform could have easily gone by the wayside.
birken 11y ago
As a counterpoint, the founders of Thumbtack started a startup before they had an idea, picked a very "derivative idea" and still did (and are doing) pretty well. If I had to quantify the motivation of the early team, it was much more about the company being successful than everybody being super passionate about the idea. As long as you can out-execute your competitors and people want your product, it doesn't really matter what your motivation is.

cmstoken 11y ago

Wow, this is fantastic! The little animations give it a playful vibe too.

davidu 11y ago

A resource like this is terrific. Would be great to see it in github so you can solicit the occasional outside contribution. I've always found that even the best teams still need to constantly explore and add new tools in the toolbox in order to execute effectively and achieve success. (In fact, it's not that even the best teams need to still do this, the best teams actively go out and do this, which likely contributes to them being a high-performing team.)

lukasm 11y ago

Love it. What is missing is some information about technicalities e.g. Want to rise money in US? You probably need a Delaware S-corp (Github repo maybe better for it)

gkanai 11y ago
Agreed that there needs to be clarifications around how most international startups are funded (i.e. Delaware Corp takes the funding and holds the non-US entity as sub.)
_pius 11y ago
Just as a point of information: you generally do not want an S corporation for this purpose.
tptacek 11y ago
A DE S corp? You sure you don't mean C?
2arrs2ells 11y ago
(C-corp, not S-corp! https://www.quora.com/Should-a-tech-startup-incorporate-as-an-LLC-a-C-Corp-or-an-S-Corp-If-so-why https://www.quora.com/Should-a-tech-startup-incorporate-as-a...)
kevinwong 11y ago
Agreed on the technicalities. The easiest way to capture the 80% of technicalities that prospective founders care most about might be to have FAQ section where YC portfolio companies can weigh in on things like "Wish I knew to [take certain action] [during time period]. Here's a resource I found [link]".

sama 11y ago

(This got published a little early because it got indexed. I'm still going through and fixing some typos and will maybe add a few other things.)

ilurk 11y ago
I'm just curious. Does the playbook have any game-changing ideas from what was told at the Startup Class videos? And BTW, thanks for all the info YC has been putting out there for free.
- sama 11y ago
  No.
- joshmlewis 11y ago
  This seems to be most of the content found in the Startup Class videos in written form.
revorad 11y ago
Can you please get the designer of this playbook and ycombinator.com to redesign HN too?
- IanMikutel 11y ago
  And Craigslist. And ReadMe.io.
  - sharemywin 11y ago
    facebook just redeisgned craigslist for them...lol.
  - pkrumins 11y ago
    And RFCs.
  - something123 11y ago
    but Craigslist's anachronistic static-HTML feel is so charming...

djhn 11y ago

This is a welcome synthesis of a lot of great info. It's also a more attractive and credible way to introduce fast-growing technology startups* to the uninitiated than just saying, "oh, just read this bunch of blog posts by this guy called 'pg' who you've never heard of, no, no, trust me, it's reaaally good, he founded YC, which you've also never heard of, but trust me, they're like, the real deal". *YC-style/SV-type, even if some of the advice is more general, and the definition of 'YC-style' is quickly expanding and loosing meaning.

petecooper 11y ago

I am very much liking the CSS animations.

pavornyoh 11y ago

Very detailed and good information to have. Thank you Sama.

orliesaurus 11y ago

@Greg I can see the Rick and Morty influence on some of the art ;) ;)

taylorwc 11y ago

> Thanks to Paul Buchheit, Erica Carpenter, Brian Chesky, Adam D’Angelo, Drew Houston, Justin Kan, Matt Krisiloff, Aaron Levie, Gabriel Leydon, Jessica Livingston, Dustin Moskovitz, David Rusenko and Colleen Taylor for contributing thoughts to this. ^ this group + @sama... wow. Terrific advice from an amazing list of credible people.

jMyles 11y ago
To be honest, I don't think I know a single one of them. Who are they and how can I learn more about what they do and how they formulate such great content?
- duggan 11y ago
  I think if you Google many of those names, the first thing that will come up is a Wikipedia article about them.
- gkoberger 11y ago
  * Sam Altman – Y Combinator President * Paul Buchheit - YC Partner, Gmail founder * Erica Carpenter - Y Combinator * Brian Chesky - AirBnb * Adam D’Angelo – Quora, ex-CTO of FB * Drew Houston – Dropbox founder * Justin Kan – YC Partner, Twitch, Justin.tv, Socialcam * Matt Krisiloff – Y Combinator * Aaron Levie – Box founder * Gabriel Leydon – Machine Zone founder * Jessica Livingston – YC Founder * Dustin Moskovitz – Facebook cofounder * David Rusenko – Weebly founder * Colleen Taylor – Y Combinator
  - sethd 11y ago
    "Gmail founder" sounds a little funny to me. If I am employed as a developer in a company on a new product, am I then a founder of that product? It just seems like the word founder just keeps being used more liberally as time goes on.
    - joshmlewis 11y ago
      I think it's appropriate in this case. Paul started Gmail inside of Google as a side project. At first most people were not a supporter, including Marissa Mayer and other peers. He was scratching an itch though and eventually got Larry and Sergey on board which helped the cause and eventually grew into what it is today. So with that, there are a lot of similarities into what we'd call a founder today. While financially there wasn't a big risk, it was still a product he was passionate about and created from nothing.

jMyles 11y ago

> Startups are the point in your life when tricks stop working. Awesome thesis, hidden in the middle of the text. In some ways, this is a great single sentence answer to the question, "What is a startup, really?"

webmasterraj 11y ago
This is the tldr of the whole thing
sama 11y ago
http://www.amazon.com/Persecution-Art-Writing-Leo-Strauss/dp/0226777111 http://www.amazon.com/Persecution-Art-Writing-Leo-Strauss/dp...
- rfrey 11y ago
  You're going to have me counting the words in the sentences.
- nbashaw 11y ago
  Ha, it's amazing to see a Leo Strauss reference in a HN thread! I majored in Political Theory at Michigan State, and the department was full of Straussians. Worlds colliding.
jrauser 11y ago
For more on this idea, have a look at pg's Before the Startup: "So this is the third counterintuitive thing to remember about startups: starting a startup is where gaming the system stops working." http://www.paulgraham.com/before.html http://www.paulgraham.com/before.html
tertius 11y ago
That's great. This has been my life, finding the easy wins, and when they stop working, moving on to the next. This is one of the points that characterize me as soft.
- 11y ago

t23 11y ago

Great stuff. Also love the UI. Thank you, Sama!

libertymcateer 11y ago

I have a really hard time buying a lot of this about how novelty and monopoly are keys to a successful company. If you look at the really successful startups, especially unicorns, almost none of them are actually monopolies or new ideas. The vast, vast majority are old products done right, and almost all of them have very substantial competition. This attitude is, in fact, encompassed in the near footnote-like section entitled "Competition." That section sums it all up: success is determined with obsessively improving the company. Competition isn't what kills, it is failure to keep on improving. https://www.cbinsights.com/research-unicorn-companies https://www.cbinsights.com/research-unicorn-companies There is the list of current Unicorns. I can't think of one of them that doesn't have very, very substantial competition or is a genuinely novel product. All of them ventured into highly competitive, well-worn fields and what set them apart was quality of service, ease of use, and responsivity. Very few of them made conceptual leaps in the underlying product - they mostly made leaps in lowering activity energy to use products or solving associated logistical problems. Sorry Sam, I have to politely disagree with you on this one. Lord knows you are the one with the resume and authority on this, but I am a startup lawyer and work with clients on this stuff all day, so I am not totally unqualified. I do defer to your judgment, obviously, on companies that you want to fund, and your track record more than speaks for itself. However, what I want to know is if there isn't some disconnect between the companies you do fund and the attitude that is expressed in this post. I would love to hear your insights or opinions on whether you feel that I have this wrong, and if you think that the next generation of unicorns are going to be novel monopolies, or that maybe I am misreading the characteristics of current successful startups.

sharemywin 11y ago
look at Microsoft and apple both of their real winners were after the fact. Office and the ipod/iphone. Also, I think anything that makes money is a win. Not just unicorns. If YC wants export to the rest of the country it needs to shoot for more base hits. I think in SV people have already self selected to follow cray ideas. but the rest of the country if you want to get the best candidate show them something with the best odds of not failing.
- 11y ago

gozo 11y ago

If this is something that is expected to be around for awhile I recommend talking to an editor. Friends are good to check for overall content and typos, but they are too familiar with the subject to check how well you convey something and too nice to really tear through the text objectively.

sharemywin 11y ago
he commented that it was released early.
- gozo 11y ago
  He said that he would fix typos and add some stuff, not anything that will make the text itself necessarily better. His writing just isn't that good for something that will be handed out to a lot of people and were there a very real purpose of them understanding it. But as most thing coming out of YC I guess it's more marketing material for the people who buy into a lot of the SV stuff. Maybe he should talk less about "things" and more about ethics, seems like that is something YC companies have become known to fail at recently.

m_fayer 11y ago

I wish there was a similar level and quality of resources for what I think are called lifestyle businesses. By that, I mean product-based businesses with at most a few million in revenue, a 5ish person team, a solid sustainable market position, and no desire to revolutionize any unicorns. I know a lot of people attempting this and they mostly seem to be flying under the radar, or at least have nowhere near the cachet of a startup. They are often bootstrapped, frequently for lack of other options. For those of us who don't want to be in the pressure cooker or are turned off by the hype machine, these businesses are a viable alternative route toward independence and possibly achieving a significant impact. The fact that they have become as attainable as they are is I think also something quite remarkable.

gkoberger 11y ago
Try Getting Real and Rework by 37 Signals. https://gettingreal.37signals.com/ https://gettingreal.37signals.com/
ska 11y ago
By that, I mean product-based businesses with at most a few million in revenue, a 5ish person team, a solid sustainable market position, and no desire to revolutionize any unicorns. I believe this used to just be called "a small business". Not a terribly new idea, but being rediscovered perhaps by tech people?
- vdaniuk 11y ago
  A small business is fundamentally different from lifestyle tech business or a bootstrap. There could be hundreds and thousands of small businesses, say in a certain FMCG market in different local ares. A tech market with hundreds or thousands product businesses catering to a same target audience, probably, doesn't exist at all. Product companies tend to either grow or whither. Centralization is the norm. Building a lifestyle business mostly rules out services as most desired lifestyle business model is some sort of passive income scheme. Content oriented monetization models are being slowly, but surely killed by ad blockers. An innovative product tailored to the needs of a small, well defined audience seems to be a best bet for a lifestyle business and that's very different from a classical SME.

pbreit 11y ago

Wow. Sounds grandiose but this is an epic piece of writing by one of the smartest guys in the field. Required reading.

colund 11y ago

My impression is that anything related to YCombinator gets huge upvote bias.

sharjeel 11y ago

""" Bandwidth Limit Exceeded The server is temporarily unable to service your request due to the site owner reaching his/her bandwidth limit. Please try again later. """ Any mirrors?

deleted 11y ago
[deleted]
alexmuro 11y ago
here is a link to the google cache. http://webcache.googleusercontent.com/search?q=cache:d0Df-gFG1KoJ:playbook.samaltman.com/+&cd=17&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:d0Df-gF...

jedberg 11y ago

> On the other hand, starting a startup is not in fact very risky to your career—if you’re really good at technology, there will be job opportunities if you fail. Most people are very bad at evaluating risk. It's true that career risk is low, but opportunity cost could be high. If you're well into your career, taking a few years off to work at a startup that might fail could really be a million dollar tradeoff. So you really gotta believe in your startup. (Note: I left my comfortable high paying job earlier this year to start a startup)

stevesearer 11y ago
That is the calculation I used over the course of a few months to switch from being a teacher to going all-in on my office design website. At the time I was pretty burnt out from teaching, ended up moving to a new city and was doing a few temp jobs to make some extra cash. The risk was low enough at that point that the website was almost a no brainer. I'm pretty confident that had I been in a good spot career-wise at the time, I would likely have either never kept my side project going.

vrnayini 11y ago

I really like the illustrations. Any idea what tools were used for the animations? Thanks!

gkoberger 11y ago
I did them by hand with CSS.

kilimchoi 11y ago

Has anyone been able to get a letter of intent with just an idea? Is that even possible?

jedberg 11y ago
Second time founders get this sometimes, if their first startup was a success. Basically, they've already proven they can execute.
mbesto 11y ago
Yes.
- kilimchoi 11y ago
  would you like to share your story of how you did it?
  - mbesto 11y ago
    There's no real "how you do it" other than having friends with money. I've seen LOIs with an idea range anywhere from $10k to $1M.

0xCMP 11y ago

Oh darn... Bandwidth exceeded.

Bouncingsoul1 11y ago

"One important counterintuitive reason for this is that it’s easier to do something new and hard than something derivative and easy. People will want to help you and join you if it’s the former; they will not if it’s the latter." So Google didn't invent the Internet Search it was a derivative but not easy. Facebook didn't invent the SocialNetwork and actually made it easier than e.g. MySpace. Amazon was not the first online retailer but made it better, more reliable. WhatsApp? we knew how to send textmessages for a while but well they made it more convient. So a good idea must not be something unique new but something which makes the product better than the rest.

mrdrozdov 11y ago

This is great! Why no anchor tags? :(

gkoberger 11y ago
There are; they just aren't linked. http://playbook.samaltman.com/#money http://playbook.samaltman.com/#money

6stringmerc 11y ago

Okay, I've been researching and reaching out to various entities for, well, going on a couple years now regarding my "start-up" concept of a company that creates some inventions, brings to market, and licenses technology as another revenue stream. Yes, it's not a software-oriented business, but it's a viable entity with multiple prospects. Thus, the following line doesn't really ring true to me: >One important counterintuitive reason for this is that it’s easier to do something new and hard than something derivative and easy. People will want to help you and join you if it’s the former; they will not if it’s the latter. In every single instance where I actually get a response, there's a consistent chorus of "this doesn't fit the model of what we support" and, basically, I chalk it up to an investment environment that actually, truly targets the derivative and easy moreso than the unique and difficult. That's why I'm still slogging along in the self-directed patent process. Nobody is interested in helping (beyond some constructive comments I've received here from community members - thank you!), and certainly not in contributing financial backing. It is what it is...but that claim? I don't really buy it.

ThomPete 11y ago
I think the point is that if the problem is interesting you can get people onboard helping you as ex. tech founders. But if your problem is trivial (build a en ecommerce website) then they want you to pay them hard cash. I agree though that some problems might be hard to articulate and so you end up with having a problem getting people to believe in your project. I personally was trying to convince developers to join me on a venture I wanted to do and had no luck. Then I decided to just pay someone to do a small fraction of what I wanted to do and which I knew I could pay for and now that developer I paid to do my first project is now partnering with me in my next project. Sometimes you have to look at your idea and see if you can create a much smaller product from what you want so you can get started on someting at least. Then if it's successful you will have people wanting to join you.
- 6stringmerc 11y ago
  Thanks for your response and reasoning as to the circumstance, I follow what you're pointing out. Your last line, about getting started, is the reality I've decided to deal with - enough with dreaming of getting a jump start from anybody else. A co-worker of mine obtained a device patent and has been very encouraging that I pursue the same route - if the idea is to be as successful as intuition and market review indicate, then might as well reap all the rewards first and foremost. I guess I'm just rather frustrated at the "start up culture" of claiming to invest in new things, in risk-to-reward principles, while in practice it's a lot more akin to the RIAA big-label approach of "we'll give you money only because we know you'll make us more money in this proven areana of pop/country/rap/etc" in a lot of respects.

vijayr 11y ago

Anyone knows what software Sam is using for his blog?

gkoberger 11y ago
For the startup playbook, I just built it with static HTML (glued together with gulp). (For his actual blog, he uses Posthaven: https://posthaven.com/ https://posthaven.com/)

dsugarman 11y ago

>It’s important that you distort reality for others but not yourself. I would love to see more content and discussion around this. I understand clearly why it is important to pitch who you will be not who you are when recruiting and raising money but when it comes to day to day, doesn't this contradict what you had said earlier about sharing all of the good and bad with your employees? Replacing your water jugs with Kool-Aid at the office just seems evil to me. I'm not sure if that is really what you are saying or not but it seems synonymous with unicorn culture. I see a lot of positives to creating a culture masked with illusion, but in my head, all of the value seems short-term.

ThomPete 11y ago
You can be transparent. The trick is how you interpret the facts.
seiji 11y ago
Replacing your water jugs with Kool-Aid at the office just seems evil to me. Founder/VC/moneyhat friendly isn't always employee friendly. Employees exist to be exploited so the founders and VCs become extremely wealthy. The best way to drive productivity is to convince your employees there's a vague "external enemy" they've gotta beat. Turn it into mental cult gymnastics. Bind their self worth to the success of the company. Grow at all costs. There are circles of belief though. You should always know the truth yourself (founder), then you decide which lies to tell the board, then which lies to tell your management, then which lies to tell your employees, then which lies to tell the media/public/world. (where "lies" also equals "putting a spin on the truth" or selectively withholding information (hiding faults in the hopes of improving them before failing completely, etc).)

SocksCanClose 11y ago

@sama have you thought about running a kickstarter to publish a hard copy version?

lemevi 11y ago

I feel like this needs a "when to give up" section. Like at some point it's obvious right. When is that point. Should you just destroy your entire life and never give up no matter how long since it's been since you've had steady growth? I've seen startups struggle for years with average growth or really slow linear growth where real profitability was years away. Do they just continue? Is that the advice? What about their employees who are being paid less than market value?

kefka 11y ago

Maybe you all can help me, but I've just agreed to do a Startup Weekend. I did an "Ask HN" ( https://news.ycombinator.com/item?id=10515984 https://news.ycombinator.com/item?id=10515984). Any ideas, including what I've asked?

billmalarky 11y ago

"We once tried an experiment where we funded a bunch of promising founding teams with no ideas in the hopes they would land on a promising idea after we funded them. All of them failed." I was under the impression Reddit fell within this category. I recall a PG quote that went something like "we [Y combinator] hate your idea, but we like you [Alexis and Steve]" in reference to reddit's initial YC funding. I know Reddit isn't considered a smashing success by VC standards (originally sold for roughly 15-20 MM), but I certainly wouldn't call it a failure.

tptacek 11y ago
He's referring to a YC batch in which founders were specifically offered the option of applying with no idea (that's not what Reddit's founders did).
- Schwolop 11y ago
  I had assumed they'd all failed, but don't remember seeing any discussion of it from sama. Was there ever a public post (other than this playbook) that announced the failure of that experiment, and any take-aways beyond the obvious?

thadd 11y ago

Well this looks quite nice. Bookmarked for later. Thank you!

deleted 11y ago

[deleted]

jpwagner 11y ago

From the section on competition: "But 99% of startups die from suicide, not murder." and more precisely, from David Packard: "More organizations die of indigestion than starvation."

senderista 11y ago
Like Packard's own company.

jjoe 11y ago

Word Occurrences Frequency Rank you 196 4.2% 1 your 74 1.6% 2 company 60 1.3% 3 it's 59 1.3% 3 great 56 1.2% 4 product 52 1.1% 5 people 51 1.1% 5 get 44 0.9% 6 founders 42 0.9% 6 good 40 0.9% 6

_s 11y ago

I don't suppose I could make a small request - could we have a print stylesheet that does page breaks on the headers? I'd love to be able to print it out and go through it :)

Sevzinn 11y ago

Why is the title in orange? Color does not convey logical information when used in text.

latenightcoding 11y ago

Great stuff, thanks

squidlogic 11y ago

> You want to start with something very simple—as little surface area as possible—and launch it sooner than you’d think Honest question: does this model apply when your product can't at any point be, for lack of a better word, half-baked? Say you're making a security product or working on control code for rocket thrusters.

tonyarkles 11y ago
Sure! Small and simple doesn't have to mean janky and shitty. You reduce scope, not reduce quality. To carry on with your two examples, I'll make up a security product and a product related to control code for rocket thrusters. For the security product, let's do a "secure storage on Dropbox" product. Version 1, you do as much as you can with with existing libraries and pieces. Use OpenSSL to handle the crypto bits. The UI has two options: the passphrase for the encrypted storage, and the path to the encrypted directory (and a system tray icon). Right away, I can think of all kinds of features that would be cool to add to this product, but DON'T build them out for V1. Eventually, you can add PKI so that you can have different keys on different devices and selectively revoke them. And build out the mobile app so that you can access your encrypted stuff on the go. And bake in crypto libraries so that you're not just calling out to openssl.exe. Etc etc. That's V2, V3, V4... For rocket thruster control code... You're going to need a way to test it. Start with a thruster simulator. You're going to probably need a FEA model and a numeric solver. It's not going to be "simple" as in "I banged it out in a week", but it's way less scope than building and testing thruster control code. Once you've got the simulator built out and working reliably, start selling the simulator while you build out your own control code. Hell, if you want to keep it super simple, start out by only simulating solid fuel model rocket engines. You can use that to bootstrap the verification process (compare simulation results against measured results for a couple bucks/launch)
- squidlogic 11y ago
  Thanks, good thoughts!

dools 11y ago

"Most really big companies start with something fundamentally new" urr that's not even remotely true. Stopped reading at this point.

glxc 11y ago

what about YC Research?

tradeupofficial 11y ago

Awesome article. Great clear and concise points!!!

graycat 11y ago

Nice essay. IMHO the contents are (1) Common, good advice. (2) Good data from Sam's excellent experience. (3) Some not so good advice and attitudes. Scope: The essay seems aimed mostly at current Silicon Valley (SV) style, mostly consumer, information technology startups. Okay, but that's not all of business or even all of startups. Yes, YC is pursuing much more, e.g., some shoe company in Pakistan, still, the essay is SV style and there, mostly Web and mobile. Fine with me, because that's what I'm doing, be we should understand this point about scope. And, as below, we should understand this scope and style because IMHO it's time for SV style of consumer Internet to borrow from some of the rest of technology and business. Broad Point: As we all can see, all heard from Mark Andreessen, etc., and see from Sam, " ... investors’ returns are dominated by the big successes, ... " The Exceptional: So, from this Broad Point, the goal is something exceptional. From that, we have to suspect that we won't always be following the common and ordinary, some extensive experience and observations from the past, or even "big successes" from the past, and, instead, should be willing to consider some exceptions in order to be exceptional. Users' Love: > "Your goal as a startup is to make something users love." Yup. Now, can we, please, have some more guidance on just how the heck to do that? And, please, don't ask me to draw from Snapchat or Homejoy. And I'm concerned about http://koltai.co/notebook/the-risky-business-of-entrepreneurship-y-combinators-stellar-success-rate-shows-1-in-200-win http://koltai.co/notebook/the-risky-business-of-entrepreneur... with: "However, these statistics also reveal a grimmer reality: 93 percent of the 511 companies accepted by Y-Combinator have failed. Even more alarming, only 3 to 5 percent of the companies that apply to Y-Combinator are even accepted, meaning that only one in every 200 companies that applies to Y.C. eventually succeeds." And, I'm concerned about the low ROI of venture capital as in http://www.avc.com/a_vc/2013/02/venture-capital-returns.html#disqus_thread http://www.avc.com/a_vc/2013/02/venture-capital-returns.html... and http://www.kauffman.org/newsroom/2012/07/institutional-limited-partners-must-accept-blame-for-poor-longterm-returns-from-venture-capital-says-new-kauffman-report http://www.kauffman.org/newsroom/2012/07/institutional-limit... Instead, for history with some good examples, there have been many amazing projects, some astoundingly innovative, that worked the first time with high probability, e.g., for a picture: http://iliketowastemytime.com/sites/default/files/sr71_blackbird_leaking_fuel_cell19.jpg http://iliketowastemytime.com/sites/default/files/sr71_black... IMHO, here is a better approach: (1) Find a problem that huge number of potential users/customers believe or can come to believe is really important to have solved. E.g., want, say, 1+ billion people with Internet access, if only from a smartphone. (2) Find a solution that is much better than anything else and difficult to duplicate or equal. (3) Make sure that for the target customers right away or soon the solution will be seen as a must have and not just a nice to have. Want no doubts here; do not want to have to depend on gossip and fads from notoriously flighty teenage girls. One of the best examples would be a single pill, safe, effective, cheap, to cure any cancer. (4) Deliver the product, easy to use at a very attractive price. (5) Make sure the revenue covers all expenses and yields a fantastic margin, e.g., pre-tax margin 90%. (6) For that solution, do some good original research with powerful, valuable results in the STEM fields. (7) Offer the solution as a Web site, i.e., exploit software, Moore's law, and the Internet. (8) Be a solo founder until at least $10 million a year in after tax earnings. Difficulty: > "A word of warning about choosing to start a startup: It sucks! One of the most consistent pieces of feedback we get from YC founders is it’s harder than they could have ever imagined, because they didn’t have a framework for the sort of work and intensity a startup entails." There's something wrong here: All across the US, east to west, north to south, cross roads to the largest cities, millions of sole proprietors do startups and are successful enough to buy houses, support families, and get the children through college. All the larger bodies of water in and around the US have boats and yachts, and nearly all the owners are just such entrepreneurs. Maybe they own 10 fast food restaurants, are big in asphalt paving, are a manufacturer's representative for some great lines, run five new car dealerships, own and manage 2000 units of rental property, have a private label line of industrial floor cleaning supplies in a mid-size Midwestern state, did a rollup of dry cleaning stores, are the main beer distributor for half of a state, are a leader in design and construction of custom tanks on truck frames for hauling liquids, etc. But, a startup that exploits information technology, software, Moore's law, and the Internet should have some advantages and generally be less difficult. Idea: > "Remember that at least a thousand people have every great idea." Maybe true with SV style, but more generally, no, and a thousand times no. Instead, since so many startups fail, we want some advantages and definitely can get a lot of advantage from having a genuinely new idea. People who wrote a Ph.D. dissertation that was supposed to be "an original contribution to knowledge worthy of publication" and "new, correct, and significant" will quickly appreciate the importance of a unique idea and a lot about how to construct such. Here SV style is seriously lacking and, as above, needs to borrow from outside. As in Sam's > "Remember that at least a thousand people have every great idea." I believe that SV style nearly trivializes the idea and, to raise the success rate, very much needs to go much deeper into the idea and associated considerations of user need, market size, meeting the user need, and new, proprietary technology to meet the user need especially well with a product difficult to duplicate or equal, and protected intellectual property that supplies a barrier to entry. In some places such unique intellectual property is taken very seriously, with laws, contracts, national security classification, etc. For higher success rates, SV style needs to do better with such intellectual property. Several good examples of a such intellectual property and its power are in the picture http://iliketowastemytime.com/sites/default/files/sr71_blackbird_leaking_fuel_cell19.jpg http://iliketowastemytime.com/sites/default/files/sr71_black... This is another case of where SV style needs to borrow from outside. Team: Once again, over again, one more time, yet again, we come to the issue of team. Again we learn that it's tough to get a good co-founder; co-founder disputes are a major cause of startup failure; it's tough to hire good staff; it's difficult to keep the staff well involved; being a good leader and manager and learning to do so is a lot of work, and BoD members rarely know much about the details of the business, likely much less if some new, unique, powerful, valuable crucial, core technology is key to the business. So, with all those clear dangers to the startup, we begin to conclude: Be a solo founder, get to earnings ASAP, grow organically, well into very good profitability hire no one, and from the start carefully plan never but never to accept equity funding or report to a BoD. Or, follow the example of Markus Frind and his romantic match making Web site Plenty of Fish, initially, just one guy, two old Dell servers, ads just from Google, $10 million a year in revenue, and recently sold for $575 million in cash. Understand the Users: > "... it’s critical you understand your users ..." Right. And for making, say, really nice seat cushions for the driver's seats of Rolls Dropheads with owners in the Chablis and Brie set in the Hamptons, sure. But in consumer Internet, for a big success, there will millions, maybe billions of users, and about all that can be said about those users is that they are a not very special cross section of humanity. So, really just have to understand the pair of the product and the ordinary man on the street.

dawie 11y ago

"There may be a part II on how to scale a startup later" - I would love a part II

sobinator 11y ago

Peter Thiel's 'Zero to One' should be what anyone looking for more of this kind of reading should look into.

Animats 11y ago

That's not a startup playbook. That's an app playbook.

vuyani 11y ago

"If the idea does not really excite at least some people the first time they hear it, that’s bad." Reconsider(https://medium.com/@dhh/reconsider-41adf356857f https://medium.com/@dhh/reconsider-41adf356857f)

atatus 11y ago

Invaluable advise..

scriptstar 11y ago

The website is looking cool. Anyone know which CMS Sam used? Guess?

shardinator 11y ago

Not sure if it's right to post this. Small typo in Making Money section: ... if your product if your product is easy to sell. Should be ... if your product is easy to sell.

sebak 11y ago

Basically they're saying: "To succeed you need to have an awesome idea that hasn't been done before. You need a great team and build a great product your users will love". Wow, thanks for the advice, why didn't I think of that.

SarahofGaia 11y ago

So is this like an online "textbook" for how to do startups or something?

ryporter 11y ago

Entrepreneurs need to be very careful when developing self-belief in their idea. As Sam points out, the people telling you that you are crazy "may be right." I've started angel investing, and it really pains me to see people who have quit their job and devoted years of their life to a business that (in my opinion) has no chance of succeeding. Yes, I may well be wrong about some of them, but the entrepreneur needs to be able to articulate why they think everyone else is wrong. Self-belief in a crazy idea is not enough. Obviously Sam wouldn't disagree with this sentiment, but many entrepreneurs seem to omit the step of proving to themselves that their idea is not crazy, or they suffer from confirmation bias.

michmeagher 11y ago

Seems like a lot of the pushback on this is about whether in releasing this playbook @sama and YC are (i) making a value judgment on unicorn startups vs other businesses, and (ii) serving their own agenda. Personally I don't understand either of these positions. On (i) it's like attacking someone for releasing a book of muffin recipes by saying "you think muffins are the best food in the world! I only bake cookies -- do you think you're better than me?!". In fact they just like muffins, they have a lot of experience in baking muffins, and instead of keeping their recipes secret they want to help other people bake the best muffins in the world. On (ii), again my personal reaction, I don't care if it's self-serving. It also happens to be very helpful to me. Small businesses, large businesses, "lifestyle" businesses, unicorns -- they all take a lot of effort, not to speak of other life commitments. In fact there is a maximum amount of time they can take (24 hours minus a few hours for sleep per day) and depending on your personality you will likely dedicate more or less of this time regardless of the scale of the venture. I don't think whether it's a $10m business or $100m business or more is a choice based on personal preference, it's based on the nature of the idea you find yourself compelled to pursue. For example, I used to be an antitrust lawyer. I was often in the office until 5am, and that was as an employee. I worked HARD. I thought I wanted to work less so I quit my job to start a small business. But it turns out that the idea that I have been excited about for the last few years is not a small business, it could never be one even if I wanted it to be. It's the kind of idea that will either be huge or it will be nothing. When you are standing on the brink of that kind of endeavour a few helpful words, a playbook if you will, from someone who knows how it's done can be very helpful indeed.

deleted 11y ago

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horsingaround 11y ago

A lot of nonsense fluff in this article.

LordRaven69 11y ago

This has been the single most useful article Ive read all year. There is much to be said about setting up an unknowing amount of companies with the lessons needed to essentially, NOT MESS THIS UP. Thanks for this StepUp, Stand Out _E L E V /A\ T E D_