My Notes on How to Start a Startup by YC(docs.google.com)
docs.google.com
My Notes on How to Start a Startup by YC
https://docs.google.com/document/d/1wkJ6Ruh2IiR-caT-PS3n5Yt5VKcmIsVhuQwjgqK7030/edit
85 comments
Starting a company requires a tolerance for ambiguity. If there were a rules based system for how to start a startup, then startups wouldn't exist: they'd be "innovation processes" at big companies, and your advisors would be your bosses
The existence of counterexamples and conflicting advice doesn't mean that advice isn't useful, conflicting advice is just a symptom of startups being uncertain. With a large enough sample size of advice, you can start to make sense of it, understand what's good and bad advice, understand how people's life experience and incentives may color their advice etc. this makes it much easier for you to turn that advice into decisions and actionable steps
If you think about it this way then more advice is better. It's just up to you to synthesize that advice and decide what to do with it
The existence of counterexamples and conflicting advice doesn't mean that advice isn't useful, conflicting advice is just a symptom of startups being uncertain. With a large enough sample size of advice, you can start to make sense of it, understand what's good and bad advice, understand how people's life experience and incentives may color their advice etc. this makes it much easier for you to turn that advice into decisions and actionable steps
If you think about it this way then more advice is better. It's just up to you to synthesize that advice and decide what to do with it
Then instead of saying “start simple” and “be difficult to replicate”, why not suggest something more like “your goal might be to build something as quickly as possible, but must be sufficiently non-trivial to build. Time to build isn’t always an indicator of simplicity, [blah blah blah].”
I guess what I’m saying is embrace ambiguity in the advice more clearly. Don’t say “Do X” and “Do the opposite of X”, which together give you no ground to “synthesize”.
Another approach is to describe the effect of “Doing X”. Maybe building fast means you can get to market faster. Maybe building something nontrivial means your competition won’t gobble up your market. But you, the founder, are the arbiter of that decision/tradeoff.
ISTM that many startup-advice-givers like to create these short memorable platitudes instead of actually describing tradeoffs and decisions that the founder must make.
I guess what I’m saying is embrace ambiguity in the advice more clearly. Don’t say “Do X” and “Do the opposite of X”, which together give you no ground to “synthesize”.
Another approach is to describe the effect of “Doing X”. Maybe building fast means you can get to market faster. Maybe building something nontrivial means your competition won’t gobble up your market. But you, the founder, are the arbiter of that decision/tradeoff.
ISTM that many startup-advice-givers like to create these short memorable platitudes instead of actually describing tradeoffs and decisions that the founder must make.
Another way to read "Difficult to replicate" would be "Use a skill most of the market doesn't have or doesn't have the tolerance/patience to use." Simple doesn't mean trivial.
> The problem is that there are so many blatant counterexamples and contradictory narratives that the advice ceases to be helpful.
Because there's no set of instructions that will work for sure.
What one needs to success with a startup is several of these: work hard, work smart, connections, piles of money, idea, marketing, good timing and luck.
You can have most of them and not triumf, you can have only a pair and succeed. With none it's not possible. The ones that seem to matter the most are the ones you come with (money/connections) and the ones that you can't affect much (good timing/luck).
Because there's no set of instructions that will work for sure.
What one needs to success with a startup is several of these: work hard, work smart, connections, piles of money, idea, marketing, good timing and luck.
You can have most of them and not triumf, you can have only a pair and succeed. With none it's not possible. The ones that seem to matter the most are the ones you come with (money/connections) and the ones that you can't affect much (good timing/luck).
This is a great comment.
I’m not sure marketing belongs in the list though. It’s critical but it’s a part of execution and overlaps with several other items on the list. Just stood out to me.
I’d also challenge the last paragraph. I don’t think anything on this list matters as much as working hard. Literally every single successful business owner I’ve ever known has worked their ass off, usually for many years. For me the correlation is 100%. That’s not to say it’s sufficient but it seems necessary and the most equalizing force on your list [1]
1. Although I sometimes think in our fetishization of hard work, we ignore the fact that not everyone can grind away for years on a speculative venture even if they wanted to. I know many wonderful people who just don’t have that personality. Telling them to “outwork their competition” makes as much sense as telling someone to change their favorite color or decide to love a food they hate. It’s just not how they’re wired and that’s OK.
I’m not sure marketing belongs in the list though. It’s critical but it’s a part of execution and overlaps with several other items on the list. Just stood out to me.
I’d also challenge the last paragraph. I don’t think anything on this list matters as much as working hard. Literally every single successful business owner I’ve ever known has worked their ass off, usually for many years. For me the correlation is 100%. That’s not to say it’s sufficient but it seems necessary and the most equalizing force on your list [1]
1. Although I sometimes think in our fetishization of hard work, we ignore the fact that not everyone can grind away for years on a speculative venture even if they wanted to. I know many wonderful people who just don’t have that personality. Telling them to “outwork their competition” makes as much sense as telling someone to change their favorite color or decide to love a food they hate. It’s just not how they’re wired and that’s OK.
IMHO working hard (or sometimes just working smart) is a prerequisite for a startup to be great. But it's one of the things that matter less.
There are plenty of people working as hard as they can, that doesn't mean their starup will work out. They might be working on the wrong problem, they might have bad sales/virality, they might be doing a great product but too soon/late for the market, someone bigger might be fighting for the same market, they might just be unlucky.
Without the hard work there is no startup, for sure. But fetishizing it leads to the whole "you were not working enough/you didn't want it enough" toxic concept of people only getting what they deserve. Life is not fair, good people have bad things happen to them from time to time, bad people sometimes have good things happen to them, hard working people don't always succeed.
There are plenty of people working as hard as they can, that doesn't mean their starup will work out. They might be working on the wrong problem, they might have bad sales/virality, they might be doing a great product but too soon/late for the market, someone bigger might be fighting for the same market, they might just be unlucky.
Without the hard work there is no startup, for sure. But fetishizing it leads to the whole "you were not working enough/you didn't want it enough" toxic concept of people only getting what they deserve. Life is not fair, good people have bad things happen to them from time to time, bad people sometimes have good things happen to them, hard working people don't always succeed.
I felt this way going through YC - sometimes different partners gave conflicting advice, and that felt confusing. It took a while for me to look back on the experience and realize it was a feature not a bug.
[edit - disclosure: I was one of the presenters in this series.]
[edit - disclosure: I was one of the presenters in this series.]
I feel like this needs a lot more elaboration :)
What’s the point of having access to a ton of great advisors if they’re constantly all telling you conflicting things? Is the answer just to go with your gut? If so, why do you need the advisors? Is it more to prime your decision making with possibilities? Or is it more for tactical execution advice once you decide on a direction? Or something else?
What’s the point of having access to a ton of great advisors if they’re constantly all telling you conflicting things? Is the answer just to go with your gut? If so, why do you need the advisors? Is it more to prime your decision making with possibilities? Or is it more for tactical execution advice once you decide on a direction? Or something else?
> What’s the point of having access to a ton of great advisors if they’re constantly all telling you conflicting things?
Here’s my conflicting bit of advice. ;)
The point is to get the best head start you can, and to get it by knowing many ways other people succeeded. They will share some common themes on how to succeed, and maybe more importantly, common themes on how to accidentally fail.
You’ll always get conflicting advice no matter what the context is. The same thing happened to me before and after getting my startup funded- advice was all over the map. And it has also happened in academics and at jobs and among my friends and family. Ask 5 people anything, you’ll get 5 answers. People simply have different points of view, and there are usually multiple right answers.
It’s a feature because it’s important to understand that there isn’t a right answer but a continuum of possibilities that you get to influence. It’s important to understand how people construct and use narratives about their successes. It’s important to see clearly that there’s some luck involved, even if nobody admits it.
Customers, by the way, will give even more wildly conflicting information, so being able to sift through conflicting information is a good skill to have.
Going with your gut will only work if your gut knows how to make good business decisions, which a few people have but not everyone. Software engineers, for example, have guts that tell them that writing awesome software is the one thing that will do the trick, the product will sell itself. Advisors will all tell them that marketing is more important, but they will all disagree on how & where to do the marketing.
There are other side benefits to advisors, including: having influential people rooting for you publicly, having help meeting new investors, getting tactical advice on business and management problems, having a support group of people who’ve gone through some of tough things you’re going through because friends and family don’t understand. I think there’s more but you get where I’m going...
Here’s my conflicting bit of advice. ;)
The point is to get the best head start you can, and to get it by knowing many ways other people succeeded. They will share some common themes on how to succeed, and maybe more importantly, common themes on how to accidentally fail.
You’ll always get conflicting advice no matter what the context is. The same thing happened to me before and after getting my startup funded- advice was all over the map. And it has also happened in academics and at jobs and among my friends and family. Ask 5 people anything, you’ll get 5 answers. People simply have different points of view, and there are usually multiple right answers.
It’s a feature because it’s important to understand that there isn’t a right answer but a continuum of possibilities that you get to influence. It’s important to understand how people construct and use narratives about their successes. It’s important to see clearly that there’s some luck involved, even if nobody admits it.
Customers, by the way, will give even more wildly conflicting information, so being able to sift through conflicting information is a good skill to have.
Going with your gut will only work if your gut knows how to make good business decisions, which a few people have but not everyone. Software engineers, for example, have guts that tell them that writing awesome software is the one thing that will do the trick, the product will sell itself. Advisors will all tell them that marketing is more important, but they will all disagree on how & where to do the marketing.
There are other side benefits to advisors, including: having influential people rooting for you publicly, having help meeting new investors, getting tactical advice on business and management problems, having a support group of people who’ve gone through some of tough things you’re going through because friends and family don’t understand. I think there’s more but you get where I’m going...
It’s important to talk to people who actually had success summoning the airplanes and getting them to bring food. Otherwise you’ll just guessing. Amalgamating and synthesizing that advice will maximize your odds of a successful airplane summon.
Soliciting advice and feedback from different sources, and then synthesizing and sifting through that sometimes conflicting feedback to make your own conclusions, is a very common and useful "business" skill
It's how investors do technical diligence, it's how executives of large companies make decisions, it's a part of the peer review process in science.
Advisors don't exist to tell you how to do your job. If that was the case they'd be your boss, not your advisor. They are there to help you see the full picture, and assess different perspectives, and challenge your thinking. But ultimately you make the call
It's how investors do technical diligence, it's how executives of large companies make decisions, it's a part of the peer review process in science.
Advisors don't exist to tell you how to do your job. If that was the case they'd be your boss, not your advisor. They are there to help you see the full picture, and assess different perspectives, and challenge your thinking. But ultimately you make the call
"Assigning single factor causation to the output of complex adaptive system is a triumph of hope over experience."
This is a quote from Tren Griffin about the stock market but it holds true for startups as well. Successful people who help out entrepreneurs often take their survivorship bias'd situations and assign single factor causation to them. Thus you end up with conflicting advice because "sometimes it works and sometimes it doesn't".
Generic advice is not hurtful, it's just not contextual. It's your job (the founder) to decide whether it can fit your context or not.
This is a quote from Tren Griffin about the stock market but it holds true for startups as well. Successful people who help out entrepreneurs often take their survivorship bias'd situations and assign single factor causation to them. Thus you end up with conflicting advice because "sometimes it works and sometimes it doesn't".
Generic advice is not hurtful, it's just not contextual. It's your job (the founder) to decide whether it can fit your context or not.
In the end, the best way to learn how to start a startup is to ignore everything and just do it. Other people will tell you the best way to have started their company. No one is going to be able to teach you how to start yours.
To be clear, I'm not saying that there's not good advice floating around. There is. The trick is knowing how to separate the bad from the good, and as someone who's new to the startup world, that's pretty hard (impossible?) to do.
To be clear, I'm not saying that there's not good advice floating around. There is. The trick is knowing how to separate the bad from the good, and as someone who's new to the startup world, that's pretty hard (impossible?) to do.
There are counter examples to everything, that doesn’t make it bad advice.
Some people smoke cigarettes their whole life and live until old age without ever getting cancer. Should we conclude smoking does not cause cancer just because there are counter examples?
As you said, the advice is meant to maximize the chance of success. It is still not sufficient or without exceptions.
In the end, advice is only valuable if you put it through your own filter and use your own judgement to make the best decision.
Some people smoke cigarettes their whole life and live until old age without ever getting cancer. Should we conclude smoking does not cause cancer just because there are counter examples?
As you said, the advice is meant to maximize the chance of success. It is still not sufficient or without exceptions.
In the end, advice is only valuable if you put it through your own filter and use your own judgement to make the best decision.
This is definitely something I was thinking about a lot of as I compiled these notes. To be fair, each lecture was a standalone by a different speaker, with different backgrounds, experiences and skills. I'm not surprised that there are some contradictions. Like other commenters have pointed out, YMMV depending on a gazillion unknown factors.
Perhaps here's a meta-lesson to be learned for a right mindset: there are many ways to start (a good news i presume) but less and less ways to grow in a sustainable fashion as your business matures (YC or others can help you with that).
Monopoly is good - except Google.
- Peter Thiel
- Peter Thiel
There is some kind of kind of logic in this, Google, is more than a Search monopoly, or Maps, or Gmail, or Google Play, or Google Ads, or presence on very large number of website through Ads, Analytics, ReCaptcha, and lord knows what. Google is not a monopoly, it is more than that.
Because he own Facebook. Monopoly is not good ever.
>> Slack was a pivot
Youtube was a hard pivot from a video dating site.
Youtube was a hard pivot from a video dating site.
My biggest problem with the advice from YC and Startup school notes like this is that they pretend they're the first to ever discover these ideas or principles. They have experience with many start-ups over the last decade, which is true, but the concepts and ideas here are very old. They're rediscovering the Polio vaccine.
Furthermore, they are extremely biased towards start-ups, which is understandable. You could not easily make a worse financial decision, statistically speaking. But they need most of us to do it for them to stay in business.
Furthermore, they are extremely biased towards start-ups, which is understandable. You could not easily make a worse financial decision, statistically speaking. But they need most of us to do it for them to stay in business.
Just sharing the notes I compiled while watching the online sessions @ https://startupclass.samaltman.com/. I've been sitting on this for about half a year, and almost forgot I'd compiled it.
I hope some of you find this useful (:
I hope some of you find this useful (:
Probably you should also look at "Disciplined Entrepreneurship"
https://medium.com/west-stringfellow/disciplined-entrepreneu...
Many suggestions are practical with case studies.
Many suggestions are practical with case studies.
Thank you! This looks like a great resource :)
Thanks for this. How has it worked for you?
I'm still early days with my startup, but some of the stuff on here has come in useful. It's a document that attempts to span the whole lifecycle of a startup, and some parts don't apply right now. Definitely something to refer back to now and again.
I am not in the startup scene but why cant one of the best reason to start a company be to make more MONEY. Why is it always about changing the world and the universe needs me type of stuff. This is too SV cartoonish for me.
The argument against this is that founding a startup, when factoring in the incredibly low success rate, may not be the best strategy to gain money. Joining an early stage startup (with equity) that's clearly on a growth path, or even working for a Google, Facebook, etc. is a much better bet for making money.
Also, startups, where startup means creating a new unproven solution intended to achieve exponential growth, are unfathomably hard. It's hard (in my experience) to stay motivated in the face of startup hardships when one's primary objective is money.
Also, startups, where startup means creating a new unproven solution intended to achieve exponential growth, are unfathomably hard. It's hard (in my experience) to stay motivated in the face of startup hardships when one's primary objective is money.
Starting a business is one of the best paths to make a lot of money in a short time period though.
And it all depends on your financial goals.
Want low 6-figures a year? Get a career.
Want medium 6-figures a year? Bootstrap a business.
Want 7-figures a year? Take VC money.
And yes, the success rates get progressively worse, but if your goal is to average $500k-$1M+/year over the next 5 years, your chances of making that as an employee are probably far less than your chances of making that owning a startup.
And it all depends on your financial goals.
Want low 6-figures a year? Get a career.
Want medium 6-figures a year? Bootstrap a business.
Want 7-figures a year? Take VC money.
And yes, the success rates get progressively worse, but if your goal is to average $500k-$1M+/year over the next 5 years, your chances of making that as an employee are probably far less than your chances of making that owning a startup.
> if your goal is to average $500k-$1M+/year over the next 5 years, your chances of making that as an employee are probably far less than your chances of making that owning a startup
Exactly. Startup is the only way to make money, while being reliably preserved from management errors which you can't prevent or compensate for.
You can join an early Facebook, but that's a luck game, not a systematic approach where you'll actually influence chances.
Exactly. Startup is the only way to make money, while being reliably preserved from management errors which you can't prevent or compensate for.
You can join an early Facebook, but that's a luck game, not a systematic approach where you'll actually influence chances.
A lot of people wouldn't call a company that is never destined to grow overall a few million $$$ turnover a startup.
It's a term without a strict definition.
It's a term without a strict definition.
"You’re not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom." - Naval[1]
[1] https://twitter.com/naval/status/1002103670400417792
[1] https://twitter.com/naval/status/1002103670400417792
Because most employees assume money is a given, and they align with a mission instead. It is also not socially acceptable to be in something just for the money unless it is wall street.
What type of mission would that be? Selling ads, gathering your private data? Can we get real please? Time to stop villianizing WS, SV is just modern day WS with more greed. ( Sometimes more useful though. )
"It is also not socially acceptable to be in something just for the money unless it is wall street."
I'm not sure if I can agree with that. In general that may be true, but I would have to say most people do something they don't like 'just for the money' at some point in their life. Something like working as a kid for minimum wage in a store. It's most likely that you are just working there for money.
I'm not sure if I can agree with that. In general that may be true, but I would have to say most people do something they don't like 'just for the money' at some point in their life. Something like working as a kid for minimum wage in a store. It's most likely that you are just working there for money.
I recently started out on this road as a solo founder [0], and out of all the given pieces of advice that YC gives, two things are the most conflicting for me:
- This pressure to have a co-founder. I see that quoted as a major reasons for why startups go bust but also necessary for doing anything meaningful. I can imagine there being truth to both statements. I've seen startups go bust in my own network on both sides of the divide. But I feel there isn't enough advice out there for folks who are doing it Solo - that's still a valid design pattern for many startups in the past or present.
- The whole idea of go big or go home - lot of the advice seems to assume you want to be really big one day. There doesn't seem to be enough advice for someone wanting to be a 10M-100M dollar business as their main milestone, not as a path to hit a billion dollar valuation. That kind of assumption results in very different kinds of design patterns, often borrowed from other billion dollar startups that may not make sense to your own little venture in the beginning.
I wish startup advice wasn't universal as every author or speaker would like you to believe - there could be a system where it was doled out based on the current phase and situation, or at least recognizing the fact that there isn't one size fits all for something as varied as starting your own venture.
[0] https://stockquanta.com
- This pressure to have a co-founder. I see that quoted as a major reasons for why startups go bust but also necessary for doing anything meaningful. I can imagine there being truth to both statements. I've seen startups go bust in my own network on both sides of the divide. But I feel there isn't enough advice out there for folks who are doing it Solo - that's still a valid design pattern for many startups in the past or present.
- The whole idea of go big or go home - lot of the advice seems to assume you want to be really big one day. There doesn't seem to be enough advice for someone wanting to be a 10M-100M dollar business as their main milestone, not as a path to hit a billion dollar valuation. That kind of assumption results in very different kinds of design patterns, often borrowed from other billion dollar startups that may not make sense to your own little venture in the beginning.
I wish startup advice wasn't universal as every author or speaker would like you to believe - there could be a system where it was doled out based on the current phase and situation, or at least recognizing the fact that there isn't one size fits all for something as varied as starting your own venture.
[0] https://stockquanta.com
The old "Business of Software" forums, part of joelonsoftware.com, had lots of good advice for single founders. The term micro-ISV (independent software vendor) was very popular there. Unfortunately, it got shut down few years back.
YC advice isn't optimizing to help founders at all. It's optimizing for their business model.
I don't know why people think otherwise. Do you think venture capitalists are your friends? Pretty sure they're not!
I don't know why people think otherwise. Do you think venture capitalists are your friends? Pretty sure they're not!
The best VCs optimize for the founder + the business thriving together as the ideal package unit.
Overwhelmingly the greatest outcomes are produced by companies with founders at the helm for long periods of time. The best VCs in the industry know this well, with few exceptions. If you're dealing with VCs that routinely like to replace or marginalize founders, you're dealing with either a subpar firm or one of the couple old bureaucratic dinosaur firms that occasionally are prone to 'IBM thinking.'
Examples: Amazon, Microsoft, Apple, Google, Facebook, Alibaba, Tencent, Baidu, Netflix, Salesforce, Qualcomm, HP, Dell, nVidia, Sony, Intel, Oracle, Airbnb, Twitter. Even IBM, at its most successful it was run by the Watsons.
Overwhelmingly the greatest outcomes are produced by companies with founders at the helm for long periods of time. The best VCs in the industry know this well, with few exceptions. If you're dealing with VCs that routinely like to replace or marginalize founders, you're dealing with either a subpar firm or one of the couple old bureaucratic dinosaur firms that occasionally are prone to 'IBM thinking.'
Examples: Amazon, Microsoft, Apple, Google, Facebook, Alibaba, Tencent, Baidu, Netflix, Salesforce, Qualcomm, HP, Dell, nVidia, Sony, Intel, Oracle, Airbnb, Twitter. Even IBM, at its most successful it was run by the Watsons.
Yeah, but without entrepreneurs, VC's have no opportunity to invest in the next Uber, etc.
It's in their interest to be both nice to you, and strike a good deal with you, if they want to do business with you at all.
I wouldn't want to work with a VC who couldn't be nice to me. To be firm or offer pointed criticism is fine.
It's in their interest to be both nice to you, and strike a good deal with you, if they want to do business with you at all.
I wouldn't want to work with a VC who couldn't be nice to me. To be firm or offer pointed criticism is fine.
I dunno bro, did you read anything I said?
In business people can be perfectly nice and at the same time completely ruin your life. In fact, that's standard practice.
I'm telling you to be wary of VC advice on how to start a startup, basically because VC advice is entirely self serving; it's not designed to help you. It's designed to help them.
In business people can be perfectly nice and at the same time completely ruin your life. In fact, that's standard practice.
I'm telling you to be wary of VC advice on how to start a startup, basically because VC advice is entirely self serving; it's not designed to help you. It's designed to help them.
> I dunno bro, did you read anything I said?
This type of comment isn't really productive to make. Yes, I read what you said. Because I replied to it.
My point is that I wouldn't work with somebody who wouldn't treat me reasonably-- I wouldn't accept their VC money.
I don't understand how VC advice can be self-serving, though, since in order for them to get a return on their money, your business has to take off. And you don't give up 100% of the company. So you win too. I view it as mutual, in that regard.
If you lose, they lose money. If they invest in you, they don't want to lose.
This type of comment isn't really productive to make. Yes, I read what you said. Because I replied to it.
My point is that I wouldn't work with somebody who wouldn't treat me reasonably-- I wouldn't accept their VC money.
I don't understand how VC advice can be self-serving, though, since in order for them to get a return on their money, your business has to take off. And you don't give up 100% of the company. So you win too. I view it as mutual, in that regard.
If you lose, they lose money. If they invest in you, they don't want to lose.
You tell me
> I don't understand how VC ...
And you also tell me you don't like being told that you don't understand. Which one is it? Go read what I said again. Now read the following.
You are one of N (N being large) investments by VC. Your utility function is to increase your probability of getting rich. Their utility function is to increase their probability of making bonus. How on earth can you assume you are optimizing the same thing? You are not. You're just one of 100 or 200 dice they're rolling. Your success is completely meaningless to them; they want the loaded die, and they want to be able to identify it and bet the house on it. You might have a great idea for a business which makes YOU rich, but if it doesn't fit their model, you're SOL with VC. You may even have a great idea which makes the VC rich. They're not optimizing for your wealth here either: they are optimizing for THEIR wealth, and they will happily take your company, your idea, and all your profit and leave you with jack shit. As such, taking advice from a venture capitalist is like taking advice from a financial advisor that works in a boiler room. Guess what? They don't have your best interests in mind either! They just want to make bonus. Just like the VC. You are product to them.
If you've been around the block a few times, you'd know this. I'm trying to tell you how it works, but you keep telling me VCs are your friend and everything they tell you is the truth. They're not! They're almost all scumbags! You should use them to achieve your goals, and that's it! And only a fool takes what they have to say about founding a startup as some kind of revealed truth. It's just propaganda to make their job easier.
> I don't understand how VC ...
And you also tell me you don't like being told that you don't understand. Which one is it? Go read what I said again. Now read the following.
You are one of N (N being large) investments by VC. Your utility function is to increase your probability of getting rich. Their utility function is to increase their probability of making bonus. How on earth can you assume you are optimizing the same thing? You are not. You're just one of 100 or 200 dice they're rolling. Your success is completely meaningless to them; they want the loaded die, and they want to be able to identify it and bet the house on it. You might have a great idea for a business which makes YOU rich, but if it doesn't fit their model, you're SOL with VC. You may even have a great idea which makes the VC rich. They're not optimizing for your wealth here either: they are optimizing for THEIR wealth, and they will happily take your company, your idea, and all your profit and leave you with jack shit. As such, taking advice from a venture capitalist is like taking advice from a financial advisor that works in a boiler room. Guess what? They don't have your best interests in mind either! They just want to make bonus. Just like the VC. You are product to them.
If you've been around the block a few times, you'd know this. I'm trying to tell you how it works, but you keep telling me VCs are your friend and everything they tell you is the truth. They're not! They're almost all scumbags! You should use them to achieve your goals, and that's it! And only a fool takes what they have to say about founding a startup as some kind of revealed truth. It's just propaganda to make their job easier.
I actually boot-strap my own projects. So in a sense, you're right. I probably never would take VC funding. I don't think terribly highly of them, but I do think it would be naive for them to not want you succeed.
Thank you for finally highlighting something pivotal in our discussion: the shared interest (or lack thereof) in your success. Like I said, it doesn't totally add up to me. If you remain majority shareholder in your business, it seems hard for them to walk off with more than you would at the liquidity event (e.g, your company is acquired, an IPO, etc).
The truth is probably somewhere in the middle. They're not 100% against your interests, but not necessarily 100% for them, either.
Thank you for finally highlighting something pivotal in our discussion: the shared interest (or lack thereof) in your success. Like I said, it doesn't totally add up to me. If you remain majority shareholder in your business, it seems hard for them to walk off with more than you would at the liquidity event (e.g, your company is acquired, an IPO, etc).
The truth is probably somewhere in the middle. They're not 100% against your interests, but not necessarily 100% for them, either.
Sure, sometimes VC align with your interests. But I'm just trying to make the point that taking their advice without thinking about it is ... inadvisable.
I've seen super terrible things happen to people. Sometimes you have to jump up and down and make a lot of noise that "notes on how to start a startup by YC" should be taken with much salt.
Anyway :allies:
I've seen super terrible things happen to people. Sometimes you have to jump up and down and make a lot of noise that "notes on how to start a startup by YC" should be taken with much salt.
Anyway :allies:
That's fascinating for me. It certainly comes across like "best for all parties" kind of advice, but only magnifies the need for clear separation of business advice that is fully aligned towards founders.
The two things you cite are great examples of pieces of advice oriented to VCs rather than founders, and you should congratulate yourself for recognizing this.
They want two cofounders to test for sociability like they say, but also because it lowers their risk (if one develops problems or is a loser, the other can step up), and actually increases their leverage over the founders. I mean, one founder can always be some stubborn type who says "no." It's easier to get to "yes" when you have two people making choices -this is basically an algorithm. The sociability thing is reasonable and a good test in many ways, but I know about as many solo founders who made it as I know founder-teams, so the advice is obviously wrong for some. Distribution is about what you see in big firms: plenty of Zucks and Bezoses out there to balance out the famous dyads.
The "go for unicorn" thing should be familiar to you as a trend follower. I believe the old Turtle systems would have a majority of initiated trades as expected to lose money (aka start up failures -most of them fail!). You make up for the losing trades by doubling up and riding the winners. It's also vastly lower risk to do it this way than try to get a lot of medium sized deals/trades: the longer the trend rolls, the more you are certain the trend is real. The only way to make money on lots of little/medium moves is stat arb; a trading strategy where you can hedge, and VCs can't hedge.
The founder's utility function is vastly different from that of a VC. VCs optimize their utility; not yours. You're just one of many dice they roll.
If you want founder advice, get it from non-VC founders who succeeded at something, or people who have tried to do what you're doing. Otherwise: you are the product.
They want two cofounders to test for sociability like they say, but also because it lowers their risk (if one develops problems or is a loser, the other can step up), and actually increases their leverage over the founders. I mean, one founder can always be some stubborn type who says "no." It's easier to get to "yes" when you have two people making choices -this is basically an algorithm. The sociability thing is reasonable and a good test in many ways, but I know about as many solo founders who made it as I know founder-teams, so the advice is obviously wrong for some. Distribution is about what you see in big firms: plenty of Zucks and Bezoses out there to balance out the famous dyads.
The "go for unicorn" thing should be familiar to you as a trend follower. I believe the old Turtle systems would have a majority of initiated trades as expected to lose money (aka start up failures -most of them fail!). You make up for the losing trades by doubling up and riding the winners. It's also vastly lower risk to do it this way than try to get a lot of medium sized deals/trades: the longer the trend rolls, the more you are certain the trend is real. The only way to make money on lots of little/medium moves is stat arb; a trading strategy where you can hedge, and VCs can't hedge.
The founder's utility function is vastly different from that of a VC. VCs optimize their utility; not yours. You're just one of many dice they roll.
If you want founder advice, get it from non-VC founders who succeeded at something, or people who have tried to do what you're doing. Otherwise: you are the product.
I think Calacanis said it best: https://calacanis.com/2019/02/11/what-is-a-startup-vs-a-life...
VCs are optimizing for the unicorn, and there is nothing wrong going for the non unicorn either. It's just you shouldn't go for VC financing. If you make a business that hires 50 people and throws off $10 million a year to you, you'll probably make more than most founders ever will anyway after 3 years of that business.
VCs are optimizing for the unicorn, and there is nothing wrong going for the non unicorn either. It's just you shouldn't go for VC financing. If you make a business that hires 50 people and throws off $10 million a year to you, you'll probably make more than most founders ever will anyway after 3 years of that business.
I have a pal who made a Unicorn. He got a nice condo out of it! His next one was a non-unicorn and he made vastly more when he sold it, as he had most of the equity.
That's pretty astute. I would say VCs do hedge their risk by allocating in many options, sometimes by investing in multiple startups in the same domain or even different/opposite approaches to the same goal. But that could be classified as diversifying their risk too.
Personally I don't mind the idea of going lean in the beginning, which I think applies fairly well to early founders. The current Silicon Valley notion of throwing money at it to generate enough revenue + growth, without potentially having profit for a long time is a bit uncomfortable to me. I have a hard time distinguishing between businesses that are re-investing their income for growth and no profits (like Amazon) vs. those subsidizing their growth from VC money and having little chance of being self-sustainable in the long run (e.g. I don't know where Uber will land).
Ideally, I would like to do a venture where profits do come in even at smaller unit sizes and you can test that before you decide to go big. I am not sure if there is a term for that or if anyone thinks like that.
PS: like your blog and background.
Personally I don't mind the idea of going lean in the beginning, which I think applies fairly well to early founders. The current Silicon Valley notion of throwing money at it to generate enough revenue + growth, without potentially having profit for a long time is a bit uncomfortable to me. I have a hard time distinguishing between businesses that are re-investing their income for growth and no profits (like Amazon) vs. those subsidizing their growth from VC money and having little chance of being self-sustainable in the long run (e.g. I don't know where Uber will land).
Ideally, I would like to do a venture where profits do come in even at smaller unit sizes and you can test that before you decide to go big. I am not sure if there is a term for that or if anyone thinks like that.
PS: like your blog and background.
The "hedging" point is, VCs can't hedge away the risk of making 100 little bets which are only expected to make a mean profit of $10m each (private equity might). They need the triple bagger $1b unicorns to make up for all the firms who don't make it, or their business model falls apart. Just like with trend following. The game has negative expectations; it's only the bet sizing which makes it profitable.
I'll say it a different way: VCs don't give a shit about the company _ever_ making a profit. They give a shit about ther VC making a profit. It's not the same thing at all! VC makes a profit if they invest at good valuations and sell at much higher valuations when the company goes public. The company doesn't have to be profitable! For all they care it will never be profitable! Pets dot com made some VCs a bunch of money!
(thx for kind words -good luck with your startup!)
I'll say it a different way: VCs don't give a shit about the company _ever_ making a profit. They give a shit about ther VC making a profit. It's not the same thing at all! VC makes a profit if they invest at good valuations and sell at much higher valuations when the company goes public. The company doesn't have to be profitable! For all they care it will never be profitable! Pets dot com made some VCs a bunch of money!
(thx for kind words -good luck with your startup!)
There's a huge amount of survivorship bias in all such lists. Startups that succeed get analyzed a lot, those that did pretty much the same things but failed don't. To be rigorous about it, you'd have to define things like what's a startup, what constitutes success, what constitutes failure, far more carefully.
That's the good thing about lists that come from VCs. They analyze both the successes and failures, as well as things like risk level. YC also does a great job of not falling into the trap of copying the last superstar.
True but huge caveat: their idea of success and the founder’s idea of success may differ wildly. If a modest exit makes the founder a few million and the VC just gets a single digit multiple, that’s not the kind of success they’re going to gravitate towards in their analysis. They may not label it a failure but they won’t be trying to identify how to replicate more of those, even if it will have changed the founder’s life and family for generations.
Yes, that is true.
But so far this one has done a good job at that. The first thing they do is even try to convince you that entrepreneurship isn't the most profitable path. The statistically best path is to work at an early stage company. But if you have a certain kind of insane resolve, then they'll guide you down it.
I think 'partial' success does get celebrated though, sort of like Reddit. Again, this is something seed investors do far better than Series C investor types.
The patterns are still pretty similar, as a good deal of this covers the path from idea to "ramen profitable".
But so far this one has done a good job at that. The first thing they do is even try to convince you that entrepreneurship isn't the most profitable path. The statistically best path is to work at an early stage company. But if you have a certain kind of insane resolve, then they'll guide you down it.
I think 'partial' success does get celebrated though, sort of like Reddit. Again, this is something seed investors do far better than Series C investor types.
The patterns are still pretty similar, as a good deal of this covers the path from idea to "ramen profitable".
> The first thing they do is even try to convince you that entrepreneurship isn't the most profitable path. The statistically best path is to work at an early stage company.
That's just them, being self-interested since they need employees for their founders' startups more than they need new founders.
Realistically, the most profitable path statistically is to work at a FLNG or decacorn.
That's just them, being self-interested since they need employees for their founders' startups more than they need new founders.
Realistically, the most profitable path statistically is to work at a FLNG or decacorn.
Agreed. I'm completely skeptical that the expected return is higher for "early stage startup" vs large tech co or "decacorn" (love that term, btw) and investing in index funds and maybe some real estate.
Interesting: The title was changed ('57-Page' was removed) while the comment which classified the prior title as close to click-bait was downvoted.
I didn't know that users could change the title of their submission. How is this possible or is this actually a post by YC?
If latter, a hint would be great that this might be YC promoted content and not actual user content.
I didn't know that users could change the title of their submission. How is this possible or is this actually a post by YC?
If latter, a hint would be great that this might be YC promoted content and not actual user content.
Hi there! I'm the OP. I'm not affiliated to YC, and I didn't even notice the change till you pointed it out. I haven't been contacted by an admin, so I'm just as in the dark as you are.
It is possible that an admin changed the title.
Folks probably downvoted you because they deemed your tone unwelcome here.
Folks probably downvoted you because they deemed your tone unwelcome here.
> It is possible that an admin changed the title
Still strange. Why should an admin change the submission of a random user if it doesn't breach any of HN's rules?
Maybe because it's not a random submission by a random user?
Guess I must be wrong but would love to hear what that admin who did the change has to say.
Still strange. Why should an admin change the submission of a random user if it doesn't breach any of HN's rules?
Maybe because it's not a random submission by a random user?
Guess I must be wrong but would love to hear what that admin who did the change has to say.
> If the original title begins with a number or number + gratuitous adjective, we'd appreciate it if you'd crop it. E.g. translate "10 Ways To Do X" to "How To Do X," and "14 Amazing Ys" to "Ys." Exception: when the number is meaningful, e.g. "The 5 Platonic Solids."
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
Admins change the title and even the link of a great many posts on HN, breaking rules or not, to “clarify” the topic.
Catchy title with strong words ('57-page', 'YC'), no real click-bait but close.
I skimmed the first pages and most of the advice is neither wrong or bad. Still, reading a lenghty 57-note in order to learn is wrong.
You learn by doing. If you want to start something stop procrastinating on HN and execute the first step: found the legal entity for your endeavor. This will keep you busy for the next days, and you learn.
Btw, you don't need to have a good or any idea or co-founder now. This will all come. Just start, make mistakes, stop reading random advice.
Edit: Don't downvote if you disagree, downvote if a comment doesn't add anything to the discussion.
I skimmed the first pages and most of the advice is neither wrong or bad. Still, reading a lenghty 57-note in order to learn is wrong.
You learn by doing. If you want to start something stop procrastinating on HN and execute the first step: found the legal entity for your endeavor. This will keep you busy for the next days, and you learn.
Btw, you don't need to have a good or any idea or co-founder now. This will all come. Just start, make mistakes, stop reading random advice.
Edit: Don't downvote if you disagree, downvote if a comment doesn't add anything to the discussion.
Don’t set up a legal entity.
Find the nugget of your idea. Do something to get market feedback.
Eg your idea is Uber for pet food - go interview people leaving a big pet food store and ask them if they’re interested. Old school market research.
Or say your idea is a sports news site for minor teams. Set up an MVP that serves for your local team and promote it, see how many many people go to the site. MVP could be a stream of article links from other sites, or perhaps better a newsletter via email. On site have sign up box for other teams.
Market feedback is key. Once you have a good signal, continue building and gather more feedback.
Find the nugget of your idea. Do something to get market feedback.
Eg your idea is Uber for pet food - go interview people leaving a big pet food store and ask them if they’re interested. Old school market research.
Or say your idea is a sports news site for minor teams. Set up an MVP that serves for your local team and promote it, see how many many people go to the site. MVP could be a stream of article links from other sites, or perhaps better a newsletter via email. On site have sign up box for other teams.
Market feedback is key. Once you have a good signal, continue building and gather more feedback.
While I agree with most what you wrote, I still think that setting up a legal entity is a good first step. Most wannabes struggle with starting. They wait for the perfect idea, the perfect team and so on. They never start. Even if you start with a crappy idea. Ideas will evolve, get pivoted, whatever. My message is about to start and not wasting your time with inactivity like reading random Google Docs by random dudes.
Google Docs is already showing "Some tools might be unavailable due to heavy traffic in this file."
I predict this posts hits 100 points and then it crashes. (Currently at 31.)
I predict this posts hits 100 points and then it crashes. (Currently at 31.)
At 47 and had issues loading it, so I printed to PDF and hosted a copy on Docdroid -- I hope that's ok. If not, I'll delete it.
https://docdro.id/tOVflQx
https://docdro.id/tOVflQx
Outlined the doc: https://outline.com/ntbkvW
Still works at 108 :p
"How do you tell which markets are growing fastest? Use instincts as a young student."
Welp, I'm over 22, guess I'm never starting a company.
Welp, I'm over 22, guess I'm never starting a company.
The Airbnb interview question “if u were diagnosed with 1 year left to live, would you work at airbnb?” sounds to me like "I want to date a stalker." No. No I don't. I don't want an insane employee who may go postal, either.
I like to read summaries. This is amazing, thanks for sharing.
wow, great stuff. i was starting to do the same after watching dozens of yc videos. you made it better :)
Thanks for the kind words! Hope it helps.
Nice job on the formatting. Looks great with an auto-outline.
Appreciate the share.
Appreciate the share.
Very welcome!
TY!
My point is that a lot of the advice I’ve heard about startups in general is framed (intentionally or unintentionally) as a series of directives that will optimize your chances of success. Moreover, no other additional context is provided to help you frame the advice, such that you can tell whether or not it’s applicable or appropriate advice to follow. The lack of context coupled with the existence of so many blatant counterexamples and contradictions prevents the advice from being useful.
(Note: I edited the last paragraph for clarity)