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Lecture 2: How to Start a Startup

362 points by gatsby 12y ago

timr 12y ago
The advice about burnout isn't so helpful. Yes, perseverance is important (particularly for undergrads, who have probably never worked on a project with a time horizon longer than a semester), but you can't fix burnout just by lowering your head and trudging forward like a packhorse. I don't know if there's a single, quick fix for burnout, but taking a vacation is definitely a good idea -- even if it's only a few days. And if you can't take your mind off of what you're doing for a few days, something else is wrong. Usually when people say "I can't take a break" they're engaging in catastrophic thinking. If for some reason they really can't take a break, it's time to take a good, hard look at how you're doing things, and see what it is that's causing that situation. In my experience, the root to your burnout will often lie in an honest exploration of that question, alone. It's incredibly helpful to get an outside perspective on your situation when you feel this way -- this is what counseling is for. If you can't afford that, talk honestly with a friend you can trust -- a friend who has no personal interest in the outcome. That's critical. If you ask your co-founder what you should do, you have to realize that s/he'll be biased.
- hkmurakami 12y ago
  Agreed. "Work smart, not hard" is very cliche by now, but it very much rings true. Working blindly burning the midnight oil is the easy way out with suspended thought. As my friend says, "If you can't take a few days off at a startup, you're doing something wrong. Yes you need to work hard, but honestly not that hard." Great point about talking to someone with no vested interest.
  - McDoku 12y ago
    I am quoting way to much Clausewitz on HN lately...but “Two qualities are indispensable: first, an intellect that, even in the darkest hour, retains some glimmerings of the inner light which leads to truth; and second, the courage to follow this faint light wherever it may lead.” ―Carl von Clausewitz It is like the navy SEALS. You can ring the bell any time to end hell week. Don't ring that bell. Stress like dehydration is a self inflicted wound. I have found myself coping with extreme stress using meditative practice to manage when I get to far but forgetting it in the good times. That is definitely a sin of mine. You gotta manage your 'chi'. I mean that as a metaphor of life energy and that is 100% real. It is like your mana in an MMO. It is morale, it is rest, it is breathing right, it is exercise, it emotional connectedness, it is appreciation, it is respect...it is letting go and moving with the wave. Not recognizing a point of diminishing returns happens to most of us. And it is good to know your limits and recognize the signs. Overworking yourself once intentionally ( when it will not do damage). Get a spotter(weight lifting) even. It is good to know your points of failure. Then build and expand those limits. Learn to recognize the signs in yourself and in others.
- ub 12y ago
  Usually, I have found that taking a step back and understanding that the startup is a part of your life, and not your entire life (even though it may feel like it consumes you),helps in preventing burnout. Having friends and family around or even a hobby can help. The other tip I have discovered is looking at the burnout as a problem solving exercise. Think of why everything seems hard, why you're not motivated, figure out which parts you can solve and which you can't, and solve the parts you can, piece by piece.
  - prawn 12y ago
    And do that away from and without your computer. Pencil and paper in the back yard, or a short drive away, if you can't take a proper holiday.
- jonalmeida 12y ago
  It's odd to stay, but taking a break is also needs to be done correctly. You need to find the best way to completely free your find of the project. Simply not working on it at the moment isn't enough. When I had a short burnout, I tried playing games in order to help, but my mind was still on the project so time passed and still I just couldn't get back to it.
- graycat 12y ago
  "Burn out" can be serious stuff. Often it has the clinical description of depression or even clinical depression, and the second of these two can be life threatening. E.g., stress is a common cause of depression, and a startup CEO under constant, severe stress is at risk of depression. One issue is, too many high achievers actually have a case of perfectionism and/or obsessive-compulsive disorder (OCD), and those conditions can lead to stress, depression, clinical depression, and suicide. Treating OCD is not easy. How do I know? I learned the hard way and "paid full tuition". The OCD case was not me but was my wife. Trust me; I know far too well just what the heck I'm talking about.
- DenisM 12y ago
  Marissa Mayer on burnout: "Burnout is about resentment," she said. "It's about knowing what matters to you so much that if you don't get it that you're resentful." http://www.cnbc.com/id/49060108# http://www.cnbc.com/id/49060108#.
  - timr 12y ago
    Maybe for her.
    - pandler 12y ago
      Is that not true for any piece of advice or introspection?
      - timr 12y ago
        Some advice is more generalizable than others.
  - dlss 12y ago
    There's a literature on burnout. Burnout is the qualitative word for stress induced sterility -- ie "Things are so bad that having a child right now would be disastrous" (ie people reporting burnout are usually temporarily sterile, people who are "stressed but happy" are usually not sterile) This is why burnout correlates so strongly with being overworked. Your body is rightly concluding it can't reproduce in your current situation, and gives you a strong prod toward fixing the problem. Apparently Marissa's "resentful meter" correlates strongly with her body's "I can't reproduce in this situation meter". I don't think this is true for most people.
    - DarkIye 12y ago
      That's a very interesting theory, but quick googling doesn't bring up anything relating to this correlation you suggest. Do you have any evidence to back up your claim?
      - 12y ago
- jkaunisv1 12y ago
  I was surprised that was his answer to burnout. I read The Power of Full Engagement (http://www.amazon.com/dp/0743226755 http://www.amazon.com/dp/0743226755) and it really helped frame the problem for me. Taking vacations is definitely going to be difficult for a founder, but you can build recovery into your daily schedule and it really really helps. Meditating, playing an instrument, making art, exercising and playing sports, lunch with a friend - you can do these for half an hour, an hour a day and they yield results.
startupfounder 12y ago
Lecture 2 Slide Deck PDF: https://www.dropbox.com/s/f1xgbo6c976di06/Lecture2.pdf?dl=0 https://www.dropbox.com/s/f1xgbo6c976di06/Lecture2.pdf?dl=0
smaili 12y ago
Does anyone know if non-Stanford students can drop in or is this for students only?
- tedsanders 12y ago
  The lecture hall seats are for enrolled Stanford students only.
- deleted 12y ago
  [deleted]
bramgg 12y ago
I'm loving these. How many lectures will there be in total?
- namenotrequired 12y ago
  It seems 20. http://startupclass.samaltman.com/ http://startupclass.samaltman.com/
- ecesena 12y ago
  20 - http://startupclass.samaltman.com http://startupclass.samaltman.com
7Figures2Commas 12y ago
In response to a question about identifying fast-growing markets: "The good news about this is that this is one of the big advantages students have. You should just trust your instincts on this. Older people have to basically guess about the technologies...that young people are using. Because young people get older and become the dominant market. But you can just watch what you're doing and what your friends are doing and you will almost certainly have better instincts on fast-growing markets than anybody older than you." Vivek Wadhwa conducted a fairly large study[1] on successful technology company founders and discovered that the median age when they started their companies was close to 40. This seems to be in direct conflict with Altman's statements, so I wonder what statistics he has to back them up. Also, for all the talk about fast-growing markets and building huge companies, it's somewhat useful to look at who is actually making money and how much. In 2009, just 3% of all taxpayers who earned $1 million or more were under the age of 35 and of those reporting more than $10 million in adjusted gross income, only 409 were under 35[2]. Since a significant percentage of million dollar-plus earners are self-employed business owners, a lot of old farts running businesses are doing something right even if, according to Sam Altman, they have a harder time spotting fast-growing markets. [1] http://www.washingtonpost.com/national/on-innovations/the-case-for-old-entrepreneurs/2011/12/02/gIQAulJ3KO_story.html http://www.washingtonpost.com/national/on-innovations/the-ca... [2] http://taxfoundation.org/article/who-are-americas-millionaires http://taxfoundation.org/article/who-are-americas-millionair...
- sama 12y ago
  actually i think younger founders have a lot more disadvantages, so it's very important to be aware of the advantages they do have. spotting market trends, stamina, and a relatively distraction-free life are at the top of the list.
  - 7Figures2Commas 12y ago
    Market trends? The meaningful market trends that offer entrepreneurs realistic, actionable opportunities are typically industry-specific. It's not "Hey, everybody is sexting so let's build an iPhone app to share pictures that self-delete." It's more like, "Hey, consumers are increasingly showing an interest in unbundling financial services, so there may be an opportunity to do x better than the large banks that have historically dominated the market." How do you spot those kind of market trends if you have never worked in an industry? You typically don't. Stamina? What is that supposed to mean? That 35 year-old entrepreneurs are in bed by 9:00 pm? Distraction-free life? You know what's distracting? Not knowing where the money to pay your rent and buy groceries is going to come from. Starting a business when you have stable finances and the moral support of a spouse is very helpful. Interestingly, many of the things that Silicon Valley pop culture tells us are distractions (like family, homeownership, etc.) are ironically correlated with wealth. For instance, well over 90% of millionaire households in the US are made up of married couples.
staunch 12y ago
Now that the knowledge of how to start a high growth startup has become so well distributed it's amazing how few seed deals Silicon Valley firms actually do. Even YC only invests in dozens of companies per year. Only a tiny fraction of would-be founders actually attempt to jump through the hoops to raise money. Only a fraction of those succeed. And yet just about any team of hungry and determined tech workers has a chance at creating something of immense value in the world. Advances in technology have created many more opportunities than we can deal with. A single VC firm could fund 10,000 teams at $100k/each reasonably easily. Based on something as simple as LinkedIn profiles maybe.
- mattmanser 12y ago
  A single VC firm could drop 10 billion dollars? I think you've put a few too many zeros...
  - tatterdemalion 12y ago
    It's actually only 1 billion, not that that or "managing 10,000 investments at once" is actually reasonable.
- TimPC 12y ago
  Think the series A crunch is bad now, imagine if a fund did this clearing out its entire capital with no ability to follow-on...
  - staunch 12y ago
    The "series A crunch" suggests that VCs don't have enough money to invest in all the startups that they want to. But almost all VCs have much more money than they know what to do with. They raise huge funds to rake in millions per year through management fees. The problem is that traditional VCs can't manage very many investments. So only a handful of series A VC deals can happen per year. But there is a nearly infinite supply of money just waiting for another way to invest in startups that isn't VC. Things like Kickstarter from the bottom up and AngelList from the top down are the harbingers of doom for most VCs.
zkirill 12y ago
Did anyone else feel sad when Sam skipped over two pages of notes? I hope we'll get a chance to read them or hear them in a future lecture.
- sama 12y ago
  sorry about that. going to try to add to the last lecture of the course.
thu 12y ago
Why is it so bad to have a bad employee among the first employees ? I don't understand why it is that bad because it seems that if he/she is bad, you'll notice quickly and then can just fire him/her. Even here in Belgium where employee contracts protect more the employees than the company (at least that's the theory), at the starting period, firing can be done very quickly and I think it can be done even more easily in the US. Also I think the best way to see if someone's good or bad is to put that person to work. This would e.g. mean that if you have filtered out candidates to 8 persons, you could get the one you prefer to work for 1 week. If your choice was bad, you try the second. In the worst case, you have made a very deep assessment of 8 candidates in two months. I mean that I don't understand the point of recruitment processes that take weeks with all kind of proxy metrics for how a candidate would fit in a very small team. If you can't find out in a week that the person is bad, how can a recruitment process be better ? Edit: I'm surprised by how the 1 (paid, in my mind) work week is perceived in the (so far) 3 answers below. It happens all the time to have phone interviews, HR interviews, technical interviews, possibly pseudo-psychological tests, and technical tests in a recruitment process. All that time without being paid (sometimes well before you know what the salary could be). It's all about trade-off, I'm not talking about ditching the selection process and instead hire-and-fire liberally. My question was really just about why is it so damageable to get a bad hire.
- mattmanser 12y ago
  You'd be surprised at how hard it is to mentally get yourself in the position to fire one of your early employees. Also, I've seen founders delude themselves over someone's competence for months. Hiring and firing willy nilly is also very, very bad for morale. And those people you interviewed two weeks ago will be starting a job for someone else and you'll have to start hiring all over again.
  - danielweber 12y ago
    I saw a start-up go years without firing[1] a guy with an extremely shitty attitude. But he was a old friend of the CEO who wanted to "fix" him. That place was like a kindergarten. It wasn't a bunch of kids, either: most people were in their 30s. [1] dumb typo
reduce 12y ago
Burnout: Whatever you do, constantly be looking for ways to actively mitigate it. Just working less is NOT the only way to prevent it. Everyone has had times when they've worked long hours on something, and still felt great. Think about what was special in those situations. Ideas: 1) Play a sport. 2) Party hard, roughly 1 night per week, maybe Friday. This works well for many extremely hard working professionals in NYC. Not sure how well it would work in SV... 3) When coding, try to break up tasks into self-contained chunks that you can start and finish within one day. Accomplishing a new tangible goal each day can have a great mental effect. Catching up on big half-finished tasks from the previous day can be stressful and mentally draining. 4) Be around people you love being around. You'll feel less stressed about escaping the office if the people you're looking forward to being around are inside instead of outside the office. 5) Notice how it's so hard to focus late into the evening at the office, but once you're home you feel awake again and can work? For the earliest stage startup, consider making your work environment more like a home, or literally work out of your home with your cofounder. Your girlfriend/boyfriend may look down at you for doing this, get used to it. Partners hate startups. 6) Go for walks twice per day, preferably outdoors, in a place where you're surrounded by lots of people - or alone in nature, whatever you feel like you're missing. 7) Kick out whining people, immediately.
- Ologn 12y ago
  > 2) Party hard, roughly 1 night per week, maybe Friday. This works well for many extremely hard working professionals in NYC. Not sure how well it would work in SV... Probably one of the best comments I've seen on HN on some of the benefits of NYC over SV. Back in 1999 my company needed servers set up at a colo in Sunnyvale, so I flew out to the Bay Area. Saturday evening I head over to Fry's Electronics, and unexpectedly run into a friend of mine who had moved out to the Bay Area. We agree to meet later for dinner, then he says let's head back to his office. We walk in to his office at 9 PM and Saturday. The entire office is there, sitting at their desks. 90% male, if not more. This was their life. The thing though was - this was not Facebook, this was not Google. I can see doing that amount of work in some years in order to get a payoff. This was a company which it was obvious to me at the time, was going nowhere. It raised about $60 million from Kleiner Perkins in 2000, and has hobbled along since then, with another $30 million of Kleiner money in subsequent years. Last year the New York Times said the company and business "remains something of a work in progress", was "lagging many earlier expectations" and was still a small business. I could easily foresee this at the time. It's one of the problems. People at Facebook, Google etc. worked all hours in the early years, so every company feels they have to emulate that. But Google's don't come around every day - I was sending e-mail's to Google asking them to employ me back when they were still hosted at Stanford. It's obvious that many people would trade a few years of very hard work for the spigot of money early Facebook and Google employees got. But between such black swans, you want to have the ability to make a decent living working 40 hours a week, and live in a community where you can have a life beyond your tech job. It's not working hard versus having a life, it's not wanting to work 60+ hours a week when you're just spinning wheels. I've worked at companies where people started staying until 6, 7, 8 PM for no real reason. Then I learn there is trouble at home with their marriage, they often get a divorce. They stay at work because they don't want to go home and spend time with their spouse. It's what bothers me about SV, work for works sake, everything beyond focused on tech. If you catch a ride on a black swan it's a great thing, but if you don't, there's not much good about it.
philipDS 12y ago
Some notes I made. Might include minor errors or misinterpretation on my side. -> how do you identify markets that are growing quickly? trust your instincts students: watch what you're doing or your friends are doing -> how do you deal with burnout as a founder? it's real life. you just have to get through it. canonical advice: go on a vacation. almost never works for a founder. you just keep going. you rely on people. you need a support network. address the challenges and things that are going wrong. 3. Team A. Co-Founders -> Co-Founder relationships are among the most important in a company. #1 cause for early death: co-founder blowups. -> Choosing a co-founder is a very important decision -> Do not choose a random co-founder or someone who you're not friends with. -> YC batch where 9 startups choose a random co-founder and all 9 fell apart -> A good way to meet a co-founder is in college. Next best thing is to work at an interesting company (e.g. Facebook/Google) -> It's better to have no co-founder than having a bad co-founder -> Top 20 most valuable YC companies: all have at least 2 co-founders -> "Be relentlessly resourceful" - look for this in potential co-founders. You need someone that behaves like James Bond. Smart, tough and calm -> You really want a technical co-founder -> Software companies should be started by software people. Not great non-technical managers. -> 2 or 3 co-founders is ideal B. Try not to hire -> Try not to hire. It sucks to have a lot of employees (high burn-rate, complexity, tension, slow decision making, ...) -> Be proud of what you can do what a small number of employees -> In the early days, only hire when you desperately need to C. Get the best people -> AirBnB spent 5 months hiring before they hired a person. Brian Chesky: "Would you take the job if you had a medical diagnosis that says you only have a year left to live?" - culture of extremely dedicated people -> Make sure everyone believes in your mission -> Pick a company that's already working, but that not everyone has noticed yet. Breakout trajectory. -> Spend about 25% of your time hiring, once in hiring mode -> "Mediocre engineers do not build great companies". A few bad hires can kill your startup -> Get person referrals to hire -> Look outside of the valley -> For most of the early hires, experience does not matter that much. Go for aptitude -> Are they smart, do they get things done, do I wanna spend a lot of time around them? -> Try to work together on a project, instead of doing a formal interview -> Care about projects and focus on references -> Look for good communication skills, manic determination, animal test and someone you'd feel comfortable reporting to if the roles were reversed (Mark Zuckerberg) D. Keep the best people around -> Aim to give 10% of the company to the first 10 employees. Vested over 4 years. If they're successful, they'll increase the company by way more than that -> Fight with investors to reduce the amount of equity given. Be generous with employees -> Don't tell your employees they're fucking up every day, cause they will leave. -> Give your team all the credit for all the good stuff. Take responsibility for the bad stuff that happens. -> Daniel Pink: "Autonomy, mastery and purpose" E. Fire Fast -> Fire fast. Everyone hopes that an employee will turn around. -> How do you balance firing people fast and making employees feel secure? Everyone will screw up once, twice or more. You should be very loving, not take it out on them. If someone is getting every decision wrong, that's when you need to act. It'll be painfully aware to everyone. -> When should co-founders decide on equity split? Not a discussion that gets easier with time. Set this very soon after you start working together. -> How do you know if someone is not going to scale up to a role if they're inexperienced? Smart people almost always will find a role within the company. -> What happens when the relationship with your co-founder falls apart? Every co-founder (including yourself) has to have vesting. You pre-negotiate what happens when someone leaves. Normal is 4 years. Try to prevent dead weight. -> What about co-founders not working in the same location? Don't do it. Skeptical about remote teams in general. Communication and speed outweigh everything else. Video-conferencing and calls don't work that well. 4. Execution -> Being a founder means signing up for this years long grind on (good) execution. Everyone gets modeled after the founders. Work hard, be frugal, focus on customers, etc. -> Only executing well is what adds/creates value -> 5 jobs for a CEO: Set the vision, Raise money, Evangelize, Hire and manage, Make sure the entire company executes -> 1. "Can you figure out what to do?" 2. "Can you get it done?" -> Focus. One of the hard things about being a founder: 100 important things to do every day. A lot of things that look important do not matter. Identify the two or three most important things and do these. Say no a lot (97 out of 100 times). -> Set overarching goals for the company. Everyone in the company should know these. These are the key goals. Repeat them. Put them up on the walls. Talk about them in meetings. -> Communicate. You can't be focused without great communication. -> Meet every week. Focus on growth and momentum. Have to right metrics. Don't let the company get distracted by other things. You can easily get excited by your own PR. -> Be in the same space with your co-founder. -> The secret to startup success is extreme focus and extreme dedication. Not the best choice for work/life balance. Outwork your competitors -> Have a high execution speed. But be obsessed with quality at the same time. Focus on quality for everything you do (e.g. buying computers/gear). -> Be biased towards action. "I could do this great thing". Every time you talk to the best founders, they have done something new. -> Do huge things in small incremental pieces. There's almost always a way to break complexity down into smaller projects. -> Be quick, do whatever it takes, show up a lot, don't give up and be courageous. -> "When I was running my own company, we felt we were about to lose a deal. Critical deal for first customer in the space. We called them saying we had a better project/deal. We drove to the airport and showed up in person. We got to their office at 6am. They told us to go away. Junior guy wanted to meet. Then senior guy wanted to meet. Within a week, we had an agreement." -> Always keep momentum in growth. It's the lifeblood of startups. You want your company to be winning all the time. A winning team feels good and keeps winning. -> If you lose momentum, most founders try to get it back in the wrong way (rally troops with speeches). You have to save the vision speeches for when you're winning. Sales fixes everything in a startup. Figure out where you can get small wins. -> Fights will break out when losing momentum. -> When Facebook's growth slowed down: Mark created a growth group. Small fixes got the curb pack up. Most prestigious group. One of Facebook's best innovations that turned around the dynamic. -> Ship product, launch new features, review metrics and milestones -> Do not care about competitor noise in the press. Don't worry about them at all until they're beating you with a real shipped product.
timtamboy63 12y ago
Notes: http://chintanparikh.github.io/blog/2014/09/25/how-to-start-a-startup-lecture-2-notes/ http://chintanparikh.github.io/blog/2014/09/25/how-to-start-...
graycat 12y ago
One short remark: There was a lot of good in that lecture. But generally the theme is, that when have 2-3 founders and are growing to 10-15 people, the situation is, in just one word, desperate. Let's consider that: Yes, the subject is a startup that is intended to grow to be worth $1+ billion. The field is information technology. Okay, but at 2-3 people up to 15, whatever the potential is, what is there is, in two words, still a small business. Now, what can we say about starting and running a small business? Well, the US, coast to coast, border to border, in cross roads and villages up to the largest cities, is just awash in small businesses. We know about many of them quite well, e.g., grass mowing (the guys that mow grass in my neighborhood arrive with about $70,000 in capital equipment and 3-4 people), pizza shops, Chinese carry out shops, red/white checkered table cloth, red sauce Italian-American restaurants, auto body shops, auto repair shops, barber shops, kitchen remodeling, residential construction general contractors, suburban paving, masonry, a dental practice, a family medical practice, an independent insurance company, a SOHO law firm, a CPA accounting firm, and, actually, many more that are B2B and less well known, e.g., wholesale plumbing, manufacturer's representative, electrical engineering, and more generally a huge range of big truck/little truck businesses. With this background, I come to the main Point: Now these businesses are often sole proprietorships, file taxes as a Subchapter S, are not Delaware C corporations, do not have a board of directors, have no one with an MBA, and have never watched a lecture such as Altman's. And, commonly they stay in business. And mostly there is usually no air of being desperate. E.g., for one point of difference with Altman's lecture, one bad hire does not kill the company. And hiring a good person does not take nearly as long as a year. Okay, once a company has done well and grown to, say, 10-15 people, fine; if then the company has promise of growing to $1+ billion and many employees, terrific; then let the growth begin. But first step, make it through the stage of a small business, and that should not necessarily be wildly different from running, say, a pizza shop. So, since I'm eager to learn, where is this little point wrong?
- rgbrgb 12y ago
  You're making a mistake Sam talked about in his lecture: measuring a company by the number of employees. Software scales in a way that other businesses do not. Instagram got millions of downloads and a $1B acquisition with 13 employees.
gatsby 12y ago
"Don't lose momentum." So glad Sam brought this up. Whether it's selling, shipping, or hitting deadlines, it's really difficult to keep moving fast if the energy is low and momentum slows.
AndrewKemendo 12y ago
Enjoying seeing these lectures. One thing sticks in my craw that Sam mentioned as common with these young founder startups: "Learning just a little bit of management skill, which first time CEO's are terrible at goes a long way" Sam goes on to discuss how shit management is kind of par for the course in young startups. It seems to me like getting this part wrong would be the death knell for any company and Sam went on to mention an example of someone who had multiple turnovers/"massive team churn." As someone who has been a front line supervisor for almost 7 years these are absolutely basic fundamental day 1 skills that any manager should have, like giving credit and taking blame. Yet investors don't give a shit about these types of things and basically assume they don't matter - until they are causing problems. I guess I just find it frustrating that teams with this management dynamic are getting serious money, especially with all we know about management.
- jkaunisv1 12y ago
  I think shit management is kind of par for the course in a lot of businesses all over the place, from small startups to medium sized businesses to large corporations to government.
howradical 12y ago
Timestamped notes for lecture 2: https://timelined.com/how-to-start-a-startup/lecture-2-how-to-start-a-startup https://timelined.com/how-to-start-a-startup/lecture-2-how-t...
lowglow 12y ago
I'm sorry, everyone in this god damn thread is stupid if you think there is a recipe for this shit. This is all part of the propaganda machine to make YC relevant. This is just a warning. Down-vote me to heaven.
- robg 12y ago
  YC has exactly shown there is a recipe. And that goes back before they were popular - the very first class in fact. After all this time of YC doing things, why don't you have have actual criticism, instead of ad hominem. So why troll?
  - bdcravens 12y ago
    Read my response: I think the point is that a recipe implies perfect ingredients + perfect preparation = predictable results, which is far from true. You can follow the recipe to the letter and still fail. You can't judge a recipe by successes, but by its repeatability (I don't care about someone else's feast when I'm trying to make MY meal based on the recipe they followed)
    - dlss 12y ago
      Lecture one starts with Sam saying ``idea * execution * luck == results and the luck term is a random number between 0 and 10,000`` Deterministic recipes don't exist anywhere outside the hard sciences (and even there it's not really deterministic -- chemical synthesis and experimental physics have an art to them) Stochastic recipes on the other hand do exist. I think YC's recipe is quite good. Thiel's is cooler though :p
- gokhan 12y ago
  One size does not fits all since all the companies and their businesses are different. But that does not mean there are tested practices going well with most cases. Take, for example, the required reading from 1st lesson, Do things that don't scale [1]. And I know Brian Chesky and Joe Gebbia didn't feel like they were en route to the big time as they were taking "professional" photos of their first hosts' apartments. They were just trying to survive. But in retrospect that too was the optimal path to dominating a big market. I remember reading somewhere that PG advised the photo thing to AirBnB, I might be wrong, to see if better photos is good for business (it appears it is). Now we have the same advice though a required reading link in the lesson. This does not mean your startup may benefit from such actions that don't scale but it's a good advice nevertheless. And being a long time lurker on HN, I'm sure I have heard most of the advice here and there but it's great for me to get them at home from thousand of kilometers away in a totally different country. [1] http://paulgraham.com/ds.html http://paulgraham.com/ds.html
mustardgas 12y ago
Start up. Cash in. Sell out. Bro Down.
malthaus 12y ago
as someone geographically & logically outside of the silicon valley bubble, working in the 'real economy' and a bit older than the y combinator target group it hurts me to see those kind of lectures / advice on startups. from my perspective it all seems like one big circle jerk, especially considering the hive-mind mentality here on hackernews where working 80hours+ / week for some fun app startup seems like good guidance for young people and something to strive for. the goal of a startup is to make money, not raising money. the SV scene seems to be concentrating on the latter since its influenced & guided completely by venture capitalists and their interests instead of market opportunities. to be provocative: just throw thousands of teenagers at random things, give them some pocket money and hope something sticks. motivate them by giving them some grand illusion of being an independent entrepreuner. burnout is just something that comes with the game. give them lectures to clone them into perfect worker bees for VCs as traditional education would clone them into perfect big corp employees. my advice to young people with drive is: go travel, see the world first. solve real problems. starting your typical SV startup is mostly an illusion and a bad proposition for you. young age is certainly good for coming up with disrupting ideas, but execution profits heavily from life experience - think of survivorship bias and don't be fooled by the few success stories.
- pratyushag 12y ago
  It often takes leaving SV to understand what you're saying here.
- gloverkcn 12y ago
  I don't think you're being that provocative. I think you should change teenagers to dreamers, and random things to whatever was funded last week by the other VC. People who are convinced they have an idea for a billon dollar startup idea(no matter how unrealistic) are far more willing to sign lopsided deals, and destroy themselves trying to make it happen. They are so tunnel vision that they just refuse to acknowledge what a 90% failure rate means.
  - trendyy 12y ago
    I think you should let people dream. Very few people start billion dollar start-ups - but there are skills and insight being provided here that is highly transferable. Start-ups are frequently on the cutting edge of business practices - the ideas that are generated here often have impact for people working in big business as well.
Fede_V 12y ago
I found this lecture much more helpful than the first one - the first one had some good content, but seemed very generic without specific advice. Here there was some incredibly useful, detailed advice, for example: - Even for really complex projects, break them down into chunks - Don't worry about PR/marketing/word of mouth - Management is an important skill and not easy for technical people Those are maybe obvious no brainers for people with more start up experience, but from someone who is outside the bubble, there was a lot of very good stuff.
lukasm 12y ago
Way better than the previous one. I really like the fact he has statistics. I wish YC would publish it.
pptr1 12y ago
I understand the cynicism about YC and silicon valley. I think it's great to have some critical thoughts about the why and how. However these lectures are pretty good. I would highly recommend to watch them even if your skeptical about all things silicon valley. Some of the lessons and points of Lecture 2 about focus and intensity also apply to small businesses and large businesses as well. I thought the ending quote from Henry Ford was great. "The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time"
adotjdotr 12y ago
This advice is honestly unappealing. I genuinely expected to hear some new insights or information. Instead this is ALL re-purposed information. Nothing new here folks. I certainly will not be listening anymore of these lectures. I'm very disappointed.
nxh 12y ago
What should I do if I think I am just a mediocre engineer? Just working for well established companies?
- analog31 12y ago
  I'd apply the same principles if it's a start-up or an established company: The nature of the job, work environment, wages, benefits, etc. What I would take away from the lecture is not to weed yourself out of the market because you perceive yourself to be mediocre. Instead, I'd consider what common threads seem to run among companies that perceive themselves to be start-ups and decide if you'd enjoy working in that kind of environment. Note in particular the comment that start-up founders tend to be terrible managers. Also, "startup" is a buzzword, and any small company could call itself one. This is another reason to carefully consider the particulars of each situation.
rdlecler1 12y ago
Some comments on conferences. When Sam talks about founders spending all of their time at conferences, I assume he means attending conferences rather than speaking/moderating, because these have totally different dynamics. We have an investment marketplace for agriculture & agtech (AgFunder) and so our success is measured by having thousands of investors rather than millions of users. For these kind of high-touch clients, speaking/moderating at conferences is the best way we've found to source new deal flow, investors (our customers), and potential channel partners outside of having major media coverage. Our deal team gets crushed when I return from a run of back-to-back conferences. I could imagine it would be the same thing for enterprise sales and healthcare IT. In cases like ours, if you can speak/moderate at a conference you have the social proof to pitch to your customers horizontally rather than pitching up. Moreover, once you get one or two speaking/moderating gigs under your belt it's really easy to get more (Point to previous track record) as conference organizers are typically sourcing speakers/moderators from previous conferences. I also watch for new conferences like a hawk, and fire off emails offering to speak/moderate for anything that looks like it will have our audience. And the best thing about it is that you won't have to pay. Final tip, if you have a content marketing channel (We created AgFunderNews.com) you can offer to promote the conference in exchange for some media placement of your own. Again, a big $$ saver.
rock57 12y ago
Just in case, here is a fully annotated Lecture 2: Ideas, Products, Teams and Execution Part II http://tech.genius.com/Sam-altman-lecture-2-ideas-products-teams-and-execution-part-ii-annotated http://tech.genius.com/Sam-altman-lecture-2-ideas-products-t...
stephengoodwin 12y ago
My favorite line from this lecture: A major indicator for a successful startup is "Every time you talk to them, they've gotten new things done."

362 points by gatsby 12y ago

timr 12y ago

The advice about burnout isn't so helpful. Yes, perseverance is important (particularly for undergrads, who have probably never worked on a project with a time horizon longer than a semester), but you can't fix burnout just by lowering your head and trudging forward like a packhorse. I don't know if there's a single, quick fix for burnout, but taking a vacation is definitely a good idea -- even if it's only a few days. And if you can't take your mind off of what you're doing for a few days, something else is wrong. Usually when people say "I can't take a break" they're engaging in catastrophic thinking. If for some reason they really can't take a break, it's time to take a good, hard look at how you're doing things, and see what it is that's causing that situation. In my experience, the root to your burnout will often lie in an honest exploration of that question, alone. It's incredibly helpful to get an outside perspective on your situation when you feel this way -- this is what counseling is for. If you can't afford that, talk honestly with a friend you can trust -- a friend who has no personal interest in the outcome. That's critical. If you ask your co-founder what you should do, you have to realize that s/he'll be biased.

hkmurakami 12y ago
Agreed. "Work smart, not hard" is very cliche by now, but it very much rings true. Working blindly burning the midnight oil is the easy way out with suspended thought. As my friend says, "If you can't take a few days off at a startup, you're doing something wrong. Yes you need to work hard, but honestly not that hard." Great point about talking to someone with no vested interest.
- McDoku 12y ago
  I am quoting way to much Clausewitz on HN lately...but “Two qualities are indispensable: first, an intellect that, even in the darkest hour, retains some glimmerings of the inner light which leads to truth; and second, the courage to follow this faint light wherever it may lead.” ―Carl von Clausewitz It is like the navy SEALS. You can ring the bell any time to end hell week. Don't ring that bell. Stress like dehydration is a self inflicted wound. I have found myself coping with extreme stress using meditative practice to manage when I get to far but forgetting it in the good times. That is definitely a sin of mine. You gotta manage your 'chi'. I mean that as a metaphor of life energy and that is 100% real. It is like your mana in an MMO. It is morale, it is rest, it is breathing right, it is exercise, it emotional connectedness, it is appreciation, it is respect...it is letting go and moving with the wave. Not recognizing a point of diminishing returns happens to most of us. And it is good to know your limits and recognize the signs. Overworking yourself once intentionally ( when it will not do damage). Get a spotter(weight lifting) even. It is good to know your points of failure. Then build and expand those limits. Learn to recognize the signs in yourself and in others.
ub 12y ago
Usually, I have found that taking a step back and understanding that the startup is a part of your life, and not your entire life (even though it may feel like it consumes you),helps in preventing burnout. Having friends and family around or even a hobby can help. The other tip I have discovered is looking at the burnout as a problem solving exercise. Think of why everything seems hard, why you're not motivated, figure out which parts you can solve and which you can't, and solve the parts you can, piece by piece.
- prawn 12y ago
  And do that away from and without your computer. Pencil and paper in the back yard, or a short drive away, if you can't take a proper holiday.
jonalmeida 12y ago
It's odd to stay, but taking a break is also needs to be done correctly. You need to find the best way to completely free your find of the project. Simply not working on it at the moment isn't enough. When I had a short burnout, I tried playing games in order to help, but my mind was still on the project so time passed and still I just couldn't get back to it.
graycat 12y ago
"Burn out" can be serious stuff. Often it has the clinical description of depression or even clinical depression, and the second of these two can be life threatening. E.g., stress is a common cause of depression, and a startup CEO under constant, severe stress is at risk of depression. One issue is, too many high achievers actually have a case of perfectionism and/or obsessive-compulsive disorder (OCD), and those conditions can lead to stress, depression, clinical depression, and suicide. Treating OCD is not easy. How do I know? I learned the hard way and "paid full tuition". The OCD case was not me but was my wife. Trust me; I know far too well just what the heck I'm talking about.
DenisM 12y ago
Marissa Mayer on burnout: "Burnout is about resentment," she said. "It's about knowing what matters to you so much that if you don't get it that you're resentful." http://www.cnbc.com/id/49060108# http://www.cnbc.com/id/49060108#.
- timr 12y ago
  Maybe for her.
  - pandler 12y ago
    Is that not true for any piece of advice or introspection?
    - timr 12y ago
      Some advice is more generalizable than others.
- dlss 12y ago
  There's a literature on burnout. Burnout is the qualitative word for stress induced sterility -- ie "Things are so bad that having a child right now would be disastrous" (ie people reporting burnout are usually temporarily sterile, people who are "stressed but happy" are usually not sterile) This is why burnout correlates so strongly with being overworked. Your body is rightly concluding it can't reproduce in your current situation, and gives you a strong prod toward fixing the problem. Apparently Marissa's "resentful meter" correlates strongly with her body's "I can't reproduce in this situation meter". I don't think this is true for most people.
  - DarkIye 12y ago
    That's a very interesting theory, but quick googling doesn't bring up anything relating to this correlation you suggest. Do you have any evidence to back up your claim?
    - 12y ago
jkaunisv1 12y ago
I was surprised that was his answer to burnout. I read The Power of Full Engagement (http://www.amazon.com/dp/0743226755 http://www.amazon.com/dp/0743226755) and it really helped frame the problem for me. Taking vacations is definitely going to be difficult for a founder, but you can build recovery into your daily schedule and it really really helps. Meditating, playing an instrument, making art, exercising and playing sports, lunch with a friend - you can do these for half an hour, an hour a day and they yield results.

startupfounder 12y ago

Lecture 2 Slide Deck PDF: https://www.dropbox.com/s/f1xgbo6c976di06/Lecture2.pdf?dl=0 https://www.dropbox.com/s/f1xgbo6c976di06/Lecture2.pdf?dl=0

smaili 12y ago

Does anyone know if non-Stanford students can drop in or is this for students only?

tedsanders 12y ago
The lecture hall seats are for enrolled Stanford students only.
deleted 12y ago
[deleted]

bramgg 12y ago

I'm loving these. How many lectures will there be in total?

namenotrequired 12y ago
It seems 20. http://startupclass.samaltman.com/ http://startupclass.samaltman.com/
ecesena 12y ago
20 - http://startupclass.samaltman.com http://startupclass.samaltman.com

7Figures2Commas 12y ago

In response to a question about identifying fast-growing markets: "The good news about this is that this is one of the big advantages students have. You should just trust your instincts on this. Older people have to basically guess about the technologies...that young people are using. Because young people get older and become the dominant market. But you can just watch what you're doing and what your friends are doing and you will almost certainly have better instincts on fast-growing markets than anybody older than you." Vivek Wadhwa conducted a fairly large study[1] on successful technology company founders and discovered that the median age when they started their companies was close to 40. This seems to be in direct conflict with Altman's statements, so I wonder what statistics he has to back them up. Also, for all the talk about fast-growing markets and building huge companies, it's somewhat useful to look at who is actually making money and how much. In 2009, just 3% of all taxpayers who earned $1 million or more were under the age of 35 and of those reporting more than $10 million in adjusted gross income, only 409 were under 35[2]. Since a significant percentage of million dollar-plus earners are self-employed business owners, a lot of old farts running businesses are doing something right even if, according to Sam Altman, they have a harder time spotting fast-growing markets. [1] http://www.washingtonpost.com/national/on-innovations/the-case-for-old-entrepreneurs/2011/12/02/gIQAulJ3KO_story.html http://www.washingtonpost.com/national/on-innovations/the-ca... [2] http://taxfoundation.org/article/who-are-americas-millionaires http://taxfoundation.org/article/who-are-americas-millionair...

sama 12y ago
actually i think younger founders have a lot more disadvantages, so it's very important to be aware of the advantages they do have. spotting market trends, stamina, and a relatively distraction-free life are at the top of the list.
- 7Figures2Commas 12y ago
  Market trends? The meaningful market trends that offer entrepreneurs realistic, actionable opportunities are typically industry-specific. It's not "Hey, everybody is sexting so let's build an iPhone app to share pictures that self-delete." It's more like, "Hey, consumers are increasingly showing an interest in unbundling financial services, so there may be an opportunity to do x better than the large banks that have historically dominated the market." How do you spot those kind of market trends if you have never worked in an industry? You typically don't. Stamina? What is that supposed to mean? That 35 year-old entrepreneurs are in bed by 9:00 pm? Distraction-free life? You know what's distracting? Not knowing where the money to pay your rent and buy groceries is going to come from. Starting a business when you have stable finances and the moral support of a spouse is very helpful. Interestingly, many of the things that Silicon Valley pop culture tells us are distractions (like family, homeownership, etc.) are ironically correlated with wealth. For instance, well over 90% of millionaire households in the US are made up of married couples.

staunch 12y ago

Now that the knowledge of how to start a high growth startup has become so well distributed it's amazing how few seed deals Silicon Valley firms actually do. Even YC only invests in dozens of companies per year. Only a tiny fraction of would-be founders actually attempt to jump through the hoops to raise money. Only a fraction of those succeed. And yet just about any team of hungry and determined tech workers has a chance at creating something of immense value in the world. Advances in technology have created many more opportunities than we can deal with. A single VC firm could fund 10,000 teams at $100k/each reasonably easily. Based on something as simple as LinkedIn profiles maybe.

mattmanser 12y ago
A single VC firm could drop 10 billion dollars? I think you've put a few too many zeros...
- tatterdemalion 12y ago
  It's actually only 1 billion, not that that or "managing 10,000 investments at once" is actually reasonable.
TimPC 12y ago
Think the series A crunch is bad now, imagine if a fund did this clearing out its entire capital with no ability to follow-on...
- staunch 12y ago
  The "series A crunch" suggests that VCs don't have enough money to invest in all the startups that they want to. But almost all VCs have much more money than they know what to do with. They raise huge funds to rake in millions per year through management fees. The problem is that traditional VCs can't manage very many investments. So only a handful of series A VC deals can happen per year. But there is a nearly infinite supply of money just waiting for another way to invest in startups that isn't VC. Things like Kickstarter from the bottom up and AngelList from the top down are the harbingers of doom for most VCs.

zkirill 12y ago

Did anyone else feel sad when Sam skipped over two pages of notes? I hope we'll get a chance to read them or hear them in a future lecture.

sama 12y ago
sorry about that. going to try to add to the last lecture of the course.

thu 12y ago

Why is it so bad to have a bad employee among the first employees ? I don't understand why it is that bad because it seems that if he/she is bad, you'll notice quickly and then can just fire him/her. Even here in Belgium where employee contracts protect more the employees than the company (at least that's the theory), at the starting period, firing can be done very quickly and I think it can be done even more easily in the US. Also I think the best way to see if someone's good or bad is to put that person to work. This would e.g. mean that if you have filtered out candidates to 8 persons, you could get the one you prefer to work for 1 week. If your choice was bad, you try the second. In the worst case, you have made a very deep assessment of 8 candidates in two months. I mean that I don't understand the point of recruitment processes that take weeks with all kind of proxy metrics for how a candidate would fit in a very small team. If you can't find out in a week that the person is bad, how can a recruitment process be better ? Edit: I'm surprised by how the 1 (paid, in my mind) work week is perceived in the (so far) 3 answers below. It happens all the time to have phone interviews, HR interviews, technical interviews, possibly pseudo-psychological tests, and technical tests in a recruitment process. All that time without being paid (sometimes well before you know what the salary could be). It's all about trade-off, I'm not talking about ditching the selection process and instead hire-and-fire liberally. My question was really just about why is it so damageable to get a bad hire.

mattmanser 12y ago
You'd be surprised at how hard it is to mentally get yourself in the position to fire one of your early employees. Also, I've seen founders delude themselves over someone's competence for months. Hiring and firing willy nilly is also very, very bad for morale. And those people you interviewed two weeks ago will be starting a job for someone else and you'll have to start hiring all over again.
- danielweber 12y ago
  I saw a start-up go years without firing[1] a guy with an extremely shitty attitude. But he was a old friend of the CEO who wanted to "fix" him. That place was like a kindergarten. It wasn't a bunch of kids, either: most people were in their 30s. [1] dumb typo

reduce 12y ago

Burnout: Whatever you do, constantly be looking for ways to actively mitigate it. Just working less is NOT the only way to prevent it. Everyone has had times when they've worked long hours on something, and still felt great. Think about what was special in those situations. Ideas: 1) Play a sport. 2) Party hard, roughly 1 night per week, maybe Friday. This works well for many extremely hard working professionals in NYC. Not sure how well it would work in SV... 3) When coding, try to break up tasks into self-contained chunks that you can start and finish within one day. Accomplishing a new tangible goal each day can have a great mental effect. Catching up on big half-finished tasks from the previous day can be stressful and mentally draining. 4) Be around people you love being around. You'll feel less stressed about escaping the office if the people you're looking forward to being around are inside instead of outside the office. 5) Notice how it's so hard to focus late into the evening at the office, but once you're home you feel awake again and can work? For the earliest stage startup, consider making your work environment more like a home, or literally work out of your home with your cofounder. Your girlfriend/boyfriend may look down at you for doing this, get used to it. Partners hate startups. 6) Go for walks twice per day, preferably outdoors, in a place where you're surrounded by lots of people - or alone in nature, whatever you feel like you're missing. 7) Kick out whining people, immediately.

Ologn 12y ago
> 2) Party hard, roughly 1 night per week, maybe Friday. This works well for many extremely hard working professionals in NYC. Not sure how well it would work in SV... Probably one of the best comments I've seen on HN on some of the benefits of NYC over SV. Back in 1999 my company needed servers set up at a colo in Sunnyvale, so I flew out to the Bay Area. Saturday evening I head over to Fry's Electronics, and unexpectedly run into a friend of mine who had moved out to the Bay Area. We agree to meet later for dinner, then he says let's head back to his office. We walk in to his office at 9 PM and Saturday. The entire office is there, sitting at their desks. 90% male, if not more. This was their life. The thing though was - this was not Facebook, this was not Google. I can see doing that amount of work in some years in order to get a payoff. This was a company which it was obvious to me at the time, was going nowhere. It raised about $60 million from Kleiner Perkins in 2000, and has hobbled along since then, with another $30 million of Kleiner money in subsequent years. Last year the New York Times said the company and business "remains something of a work in progress", was "lagging many earlier expectations" and was still a small business. I could easily foresee this at the time. It's one of the problems. People at Facebook, Google etc. worked all hours in the early years, so every company feels they have to emulate that. But Google's don't come around every day - I was sending e-mail's to Google asking them to employ me back when they were still hosted at Stanford. It's obvious that many people would trade a few years of very hard work for the spigot of money early Facebook and Google employees got. But between such black swans, you want to have the ability to make a decent living working 40 hours a week, and live in a community where you can have a life beyond your tech job. It's not working hard versus having a life, it's not wanting to work 60+ hours a week when you're just spinning wheels. I've worked at companies where people started staying until 6, 7, 8 PM for no real reason. Then I learn there is trouble at home with their marriage, they often get a divorce. They stay at work because they don't want to go home and spend time with their spouse. It's what bothers me about SV, work for works sake, everything beyond focused on tech. If you catch a ride on a black swan it's a great thing, but if you don't, there's not much good about it.

philipDS 12y ago

Some notes I made. Might include minor errors or misinterpretation on my side. -> how do you identify markets that are growing quickly? trust your instincts students: watch what you're doing or your friends are doing -> how do you deal with burnout as a founder? it's real life. you just have to get through it. canonical advice: go on a vacation. almost never works for a founder. you just keep going. you rely on people. you need a support network. address the challenges and things that are going wrong. 3. Team A. Co-Founders -> Co-Founder relationships are among the most important in a company. #1 cause for early death: co-founder blowups. -> Choosing a co-founder is a very important decision -> Do not choose a random co-founder or someone who you're not friends with. -> YC batch where 9 startups choose a random co-founder and all 9 fell apart -> A good way to meet a co-founder is in college. Next best thing is to work at an interesting company (e.g. Facebook/Google) -> It's better to have no co-founder than having a bad co-founder -> Top 20 most valuable YC companies: all have at least 2 co-founders -> "Be relentlessly resourceful" - look for this in potential co-founders. You need someone that behaves like James Bond. Smart, tough and calm -> You really want a technical co-founder -> Software companies should be started by software people. Not great non-technical managers. -> 2 or 3 co-founders is ideal B. Try not to hire -> Try not to hire. It sucks to have a lot of employees (high burn-rate, complexity, tension, slow decision making, ...) -> Be proud of what you can do what a small number of employees -> In the early days, only hire when you desperately need to C. Get the best people -> AirBnB spent 5 months hiring before they hired a person. Brian Chesky: "Would you take the job if you had a medical diagnosis that says you only have a year left to live?" - culture of extremely dedicated people -> Make sure everyone believes in your mission -> Pick a company that's already working, but that not everyone has noticed yet. Breakout trajectory. -> Spend about 25% of your time hiring, once in hiring mode -> "Mediocre engineers do not build great companies". A few bad hires can kill your startup -> Get person referrals to hire -> Look outside of the valley -> For most of the early hires, experience does not matter that much. Go for aptitude -> Are they smart, do they get things done, do I wanna spend a lot of time around them? -> Try to work together on a project, instead of doing a formal interview -> Care about projects and focus on references -> Look for good communication skills, manic determination, animal test and someone you'd feel comfortable reporting to if the roles were reversed (Mark Zuckerberg) D. Keep the best people around -> Aim to give 10% of the company to the first 10 employees. Vested over 4 years. If they're successful, they'll increase the company by way more than that -> Fight with investors to reduce the amount of equity given. Be generous with employees -> Don't tell your employees they're fucking up every day, cause they will leave. -> Give your team all the credit for all the good stuff. Take responsibility for the bad stuff that happens. -> Daniel Pink: "Autonomy, mastery and purpose" E. Fire Fast -> Fire fast. Everyone hopes that an employee will turn around. -> How do you balance firing people fast and making employees feel secure? Everyone will screw up once, twice or more. You should be very loving, not take it out on them. If someone is getting every decision wrong, that's when you need to act. It'll be painfully aware to everyone. -> When should co-founders decide on equity split? Not a discussion that gets easier with time. Set this very soon after you start working together. -> How do you know if someone is not going to scale up to a role if they're inexperienced? Smart people almost always will find a role within the company. -> What happens when the relationship with your co-founder falls apart? Every co-founder (including yourself) has to have vesting. You pre-negotiate what happens when someone leaves. Normal is 4 years. Try to prevent dead weight. -> What about co-founders not working in the same location? Don't do it. Skeptical about remote teams in general. Communication and speed outweigh everything else. Video-conferencing and calls don't work that well. 4. Execution -> Being a founder means signing up for this years long grind on (good) execution. Everyone gets modeled after the founders. Work hard, be frugal, focus on customers, etc. -> Only executing well is what adds/creates value -> 5 jobs for a CEO: Set the vision, Raise money, Evangelize, Hire and manage, Make sure the entire company executes -> 1. "Can you figure out what to do?" 2. "Can you get it done?" -> Focus. One of the hard things about being a founder: 100 important things to do every day. A lot of things that look important do not matter. Identify the two or three most important things and do these. Say no a lot (97 out of 100 times). -> Set overarching goals for the company. Everyone in the company should know these. These are the key goals. Repeat them. Put them up on the walls. Talk about them in meetings. -> Communicate. You can't be focused without great communication. -> Meet every week. Focus on growth and momentum. Have to right metrics. Don't let the company get distracted by other things. You can easily get excited by your own PR. -> Be in the same space with your co-founder. -> The secret to startup success is extreme focus and extreme dedication. Not the best choice for work/life balance. Outwork your competitors -> Have a high execution speed. But be obsessed with quality at the same time. Focus on quality for everything you do (e.g. buying computers/gear). -> Be biased towards action. "I could do this great thing". Every time you talk to the best founders, they have done something new. -> Do huge things in small incremental pieces. There's almost always a way to break complexity down into smaller projects. -> Be quick, do whatever it takes, show up a lot, don't give up and be courageous. -> "When I was running my own company, we felt we were about to lose a deal. Critical deal for first customer in the space. We called them saying we had a better project/deal. We drove to the airport and showed up in person. We got to their office at 6am. They told us to go away. Junior guy wanted to meet. Then senior guy wanted to meet. Within a week, we had an agreement." -> Always keep momentum in growth. It's the lifeblood of startups. You want your company to be winning all the time. A winning team feels good and keeps winning. -> If you lose momentum, most founders try to get it back in the wrong way (rally troops with speeches). You have to save the vision speeches for when you're winning. Sales fixes everything in a startup. Figure out where you can get small wins. -> Fights will break out when losing momentum. -> When Facebook's growth slowed down: Mark created a growth group. Small fixes got the curb pack up. Most prestigious group. One of Facebook's best innovations that turned around the dynamic. -> Ship product, launch new features, review metrics and milestones -> Do not care about competitor noise in the press. Don't worry about them at all until they're beating you with a real shipped product.

timtamboy63 12y ago

Notes: http://chintanparikh.github.io/blog/2014/09/25/how-to-start-a-startup-lecture-2-notes/ http://chintanparikh.github.io/blog/2014/09/25/how-to-start-...

graycat 12y ago

One short remark: There was a lot of good in that lecture. But generally the theme is, that when have 2-3 founders and are growing to 10-15 people, the situation is, in just one word, desperate. Let's consider that: Yes, the subject is a startup that is intended to grow to be worth $1+ billion. The field is information technology. Okay, but at 2-3 people up to 15, whatever the potential is, what is there is, in two words, still a small business. Now, what can we say about starting and running a small business? Well, the US, coast to coast, border to border, in cross roads and villages up to the largest cities, is just awash in small businesses. We know about many of them quite well, e.g., grass mowing (the guys that mow grass in my neighborhood arrive with about $70,000 in capital equipment and 3-4 people), pizza shops, Chinese carry out shops, red/white checkered table cloth, red sauce Italian-American restaurants, auto body shops, auto repair shops, barber shops, kitchen remodeling, residential construction general contractors, suburban paving, masonry, a dental practice, a family medical practice, an independent insurance company, a SOHO law firm, a CPA accounting firm, and, actually, many more that are B2B and less well known, e.g., wholesale plumbing, manufacturer's representative, electrical engineering, and more generally a huge range of big truck/little truck businesses. With this background, I come to the main Point: Now these businesses are often sole proprietorships, file taxes as a Subchapter S, are not Delaware C corporations, do not have a board of directors, have no one with an MBA, and have never watched a lecture such as Altman's. And, commonly they stay in business. And mostly there is usually no air of being desperate. E.g., for one point of difference with Altman's lecture, one bad hire does not kill the company. And hiring a good person does not take nearly as long as a year. Okay, once a company has done well and grown to, say, 10-15 people, fine; if then the company has promise of growing to $1+ billion and many employees, terrific; then let the growth begin. But first step, make it through the stage of a small business, and that should not necessarily be wildly different from running, say, a pizza shop. So, since I'm eager to learn, where is this little point wrong?

rgbrgb 12y ago
You're making a mistake Sam talked about in his lecture: measuring a company by the number of employees. Software scales in a way that other businesses do not. Instagram got millions of downloads and a $1B acquisition with 13 employees.

gatsby 12y ago

"Don't lose momentum." So glad Sam brought this up. Whether it's selling, shipping, or hitting deadlines, it's really difficult to keep moving fast if the energy is low and momentum slows.

AndrewKemendo 12y ago

Enjoying seeing these lectures. One thing sticks in my craw that Sam mentioned as common with these young founder startups: "Learning just a little bit of management skill, which first time CEO's are terrible at goes a long way" Sam goes on to discuss how shit management is kind of par for the course in young startups. It seems to me like getting this part wrong would be the death knell for any company and Sam went on to mention an example of someone who had multiple turnovers/"massive team churn." As someone who has been a front line supervisor for almost 7 years these are absolutely basic fundamental day 1 skills that any manager should have, like giving credit and taking blame. Yet investors don't give a shit about these types of things and basically assume they don't matter - until they are causing problems. I guess I just find it frustrating that teams with this management dynamic are getting serious money, especially with all we know about management.

jkaunisv1 12y ago
I think shit management is kind of par for the course in a lot of businesses all over the place, from small startups to medium sized businesses to large corporations to government.

howradical 12y ago

Timestamped notes for lecture 2: https://timelined.com/how-to-start-a-startup/lecture-2-how-to-start-a-startup https://timelined.com/how-to-start-a-startup/lecture-2-how-t...

lowglow 12y ago

I'm sorry, everyone in this god damn thread is stupid if you think there is a recipe for this shit. This is all part of the propaganda machine to make YC relevant. This is just a warning. Down-vote me to heaven.

robg 12y ago
YC has exactly shown there is a recipe. And that goes back before they were popular - the very first class in fact. After all this time of YC doing things, why don't you have have actual criticism, instead of ad hominem. So why troll?
- bdcravens 12y ago
  Read my response: I think the point is that a recipe implies perfect ingredients + perfect preparation = predictable results, which is far from true. You can follow the recipe to the letter and still fail. You can't judge a recipe by successes, but by its repeatability (I don't care about someone else's feast when I'm trying to make MY meal based on the recipe they followed)
  - dlss 12y ago
    Lecture one starts with Sam saying ``idea * execution * luck == results and the luck term is a random number between 0 and 10,000`` Deterministic recipes don't exist anywhere outside the hard sciences (and even there it's not really deterministic -- chemical synthesis and experimental physics have an art to them) Stochastic recipes on the other hand do exist. I think YC's recipe is quite good. Thiel's is cooler though :p
gokhan 12y ago
One size does not fits all since all the companies and their businesses are different. But that does not mean there are tested practices going well with most cases. Take, for example, the required reading from 1st lesson, Do things that don't scale [1]. And I know Brian Chesky and Joe Gebbia didn't feel like they were en route to the big time as they were taking "professional" photos of their first hosts' apartments. They were just trying to survive. But in retrospect that too was the optimal path to dominating a big market. I remember reading somewhere that PG advised the photo thing to AirBnB, I might be wrong, to see if better photos is good for business (it appears it is). Now we have the same advice though a required reading link in the lesson. This does not mean your startup may benefit from such actions that don't scale but it's a good advice nevertheless. And being a long time lurker on HN, I'm sure I have heard most of the advice here and there but it's great for me to get them at home from thousand of kilometers away in a totally different country. [1] http://paulgraham.com/ds.html http://paulgraham.com/ds.html

mustardgas 12y ago

Start up. Cash in. Sell out. Bro Down.

malthaus 12y ago

as someone geographically & logically outside of the silicon valley bubble, working in the 'real economy' and a bit older than the y combinator target group it hurts me to see those kind of lectures / advice on startups. from my perspective it all seems like one big circle jerk, especially considering the hive-mind mentality here on hackernews where working 80hours+ / week for some fun app startup seems like good guidance for young people and something to strive for. the goal of a startup is to make money, not raising money. the SV scene seems to be concentrating on the latter since its influenced & guided completely by venture capitalists and their interests instead of market opportunities. to be provocative: just throw thousands of teenagers at random things, give them some pocket money and hope something sticks. motivate them by giving them some grand illusion of being an independent entrepreuner. burnout is just something that comes with the game. give them lectures to clone them into perfect worker bees for VCs as traditional education would clone them into perfect big corp employees. my advice to young people with drive is: go travel, see the world first. solve real problems. starting your typical SV startup is mostly an illusion and a bad proposition for you. young age is certainly good for coming up with disrupting ideas, but execution profits heavily from life experience - think of survivorship bias and don't be fooled by the few success stories.

pratyushag 12y ago
It often takes leaving SV to understand what you're saying here.
gloverkcn 12y ago
I don't think you're being that provocative. I think you should change teenagers to dreamers, and random things to whatever was funded last week by the other VC. People who are convinced they have an idea for a billon dollar startup idea(no matter how unrealistic) are far more willing to sign lopsided deals, and destroy themselves trying to make it happen. They are so tunnel vision that they just refuse to acknowledge what a 90% failure rate means.
- trendyy 12y ago
  I think you should let people dream. Very few people start billion dollar start-ups - but there are skills and insight being provided here that is highly transferable. Start-ups are frequently on the cutting edge of business practices - the ideas that are generated here often have impact for people working in big business as well.

Fede_V 12y ago

I found this lecture much more helpful than the first one - the first one had some good content, but seemed very generic without specific advice. Here there was some incredibly useful, detailed advice, for example: - Even for really complex projects, break them down into chunks - Don't worry about PR/marketing/word of mouth - Management is an important skill and not easy for technical people Those are maybe obvious no brainers for people with more start up experience, but from someone who is outside the bubble, there was a lot of very good stuff.

lukasm 12y ago

Way better than the previous one. I really like the fact he has statistics. I wish YC would publish it.

pptr1 12y ago

I understand the cynicism about YC and silicon valley. I think it's great to have some critical thoughts about the why and how. However these lectures are pretty good. I would highly recommend to watch them even if your skeptical about all things silicon valley. Some of the lessons and points of Lecture 2 about focus and intensity also apply to small businesses and large businesses as well. I thought the ending quote from Henry Ford was great. "The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time"

adotjdotr 12y ago

This advice is honestly unappealing. I genuinely expected to hear some new insights or information. Instead this is ALL re-purposed information. Nothing new here folks. I certainly will not be listening anymore of these lectures. I'm very disappointed.

nxh 12y ago

What should I do if I think I am just a mediocre engineer? Just working for well established companies?

analog31 12y ago
I'd apply the same principles if it's a start-up or an established company: The nature of the job, work environment, wages, benefits, etc. What I would take away from the lecture is not to weed yourself out of the market because you perceive yourself to be mediocre. Instead, I'd consider what common threads seem to run among companies that perceive themselves to be start-ups and decide if you'd enjoy working in that kind of environment. Note in particular the comment that start-up founders tend to be terrible managers. Also, "startup" is a buzzword, and any small company could call itself one. This is another reason to carefully consider the particulars of each situation.

rdlecler1 12y ago

Some comments on conferences. When Sam talks about founders spending all of their time at conferences, I assume he means attending conferences rather than speaking/moderating, because these have totally different dynamics. We have an investment marketplace for agriculture & agtech (AgFunder) and so our success is measured by having thousands of investors rather than millions of users. For these kind of high-touch clients, speaking/moderating at conferences is the best way we've found to source new deal flow, investors (our customers), and potential channel partners outside of having major media coverage. Our deal team gets crushed when I return from a run of back-to-back conferences. I could imagine it would be the same thing for enterprise sales and healthcare IT. In cases like ours, if you can speak/moderate at a conference you have the social proof to pitch to your customers horizontally rather than pitching up. Moreover, once you get one or two speaking/moderating gigs under your belt it's really easy to get more (Point to previous track record) as conference organizers are typically sourcing speakers/moderators from previous conferences. I also watch for new conferences like a hawk, and fire off emails offering to speak/moderate for anything that looks like it will have our audience. And the best thing about it is that you won't have to pay. Final tip, if you have a content marketing channel (We created AgFunderNews.com) you can offer to promote the conference in exchange for some media placement of your own. Again, a big $$ saver.

rock57 12y ago

Just in case, here is a fully annotated Lecture 2: Ideas, Products, Teams and Execution Part II http://tech.genius.com/Sam-altman-lecture-2-ideas-products-teams-and-execution-part-ii-annotated http://tech.genius.com/Sam-altman-lecture-2-ideas-products-t...

stephengoodwin 12y ago

My favorite line from this lecture: A major indicator for a successful startup is "Every time you talk to them, they've gotten new things done."