I like lists like this because they're so quick and easy to read, you only have to learn 1 or 2 new things to get great ROI.
For me, the items fall into 4 categories:
1. Go without saying, but need to be said anyway:
- Real businesses have customers
- It gets harder, not easier
- Investors are normal people too
2. Interesting observation:
- Being committed in the face of contrary evidence can sometimes be a game-maker. Generally though it’s just stupid.
- Even very successful people frequently misunderstand their own success
- There is no one thing that makes a company work.
3. Sound important, but really aren't:
- Everyone is basically scared of everyone else at first
- Bring a notebook; don’t take notes on your phone. People think you are tweeting or something.
- People without life responsibility (kids, wife, etc) are at a serious advantage in the beginning stages
- Every guy has thought about starting a dating site
4. Insightful:
- If it seems hard but important and you try to outsource it, you'll probably get screwed. Potentially for a long time.
- The more stability the rest of your life has, the easier it’ll be to deal with the massive instability of a startup
- Small problems between team members will become big problems given time
- Stop dancing around the thing and say the thing (I love this one.)
I think it's partly to do with the fact that in a complex system it's sometimes pretty difficult to clearly identify lines of cause and effect, but most smart people will think about it until they've satisfied themselves that they have figured it out.
This is why I'm not so sold on advice given by 'one-hit wonders,' people who scored big with a startup and are now seen as gurus because of it. I'm interested to hear what they say, but I'm skeptical.
No, I think Amir is suggesting something different here.
I suspect what Amir is saying is that some successful people attribute their success to one thing, but that may not be the actual reason.
As an example - where the successful person has been clever enough to recognise their initial hypothesis for their success may have had flaws - many early Paul Graham essays credited the success of his Viaweb startup to the use of Lisp[1], while now most of his advice doesn't touch on a specific technology stack at all[2].
From my experience the things successful people credit for their success are infrequently wrong, but very often incomplete.
Frequently YC’s advice is applicable at the aggregate but not individual level. Like in the grand scheme the biggest number of successful startups would be produced if all of them followed this advice, but you personally would not have your YC Expected Value maximized by following it.
This is the most interesting and counter-intuitive point, I think.
That's the most important point about how to take advice if you put it in a formula, it's basically the mathematical explanation.
The way it has been phrased on numerous other blog post was to take advice not literally, but to see where the other person is coming from and how the advice is applicable to your startup specifically.
My most favourite way to phrase it is to try to find the 10% of advice out of the 100% that the person gave you, that is valuable for your startup.
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."
I never liked that guideline, partially because it's mis-stated. In "10 Ways To Do X" there is no gratuitous adjective.
I actually like the number being there- it helps prepare me for what's in the article. It also kind of helps my bs detector. I do prefer, however, that the gratuitous adjective be dropped.
That's a pretty good list, actually. Thanks for posting this, I'm sure that any start-up could do a lot worse than to print this out in big type and staple it to their wall.
One thing that bothers me with advices like this is the overall negativity. Yes, we all know creating a profitable startup isn't easy, but hearing over and over again "You will fail many times", "Its get harder not easier" and so on is really demotivating. Seriously, are there no entrepreneur stories that had a great idea from the beginning, executed them smoothly without any outside financing and achieved success? And by success I mean satisfying income that allows them to work full-time on their startup and live on a decent level. Not everyone wants to build The Next Great Thing, acquire hundreds of thousands users, generate mutli-million revenue and so on.
Seriously, are there no entrepreneur stories that had a great idea from the beginning, executed them smoothly without any outside financing and achieved success?
Of course there are, but what use is telling people that they can execute smoothly and be successful (without outside funding) and everything will be great when this isn't how it works for the majority of people. I understand that being told that its hard and you will fail is demotivating, but telling people otherwise isn't going to help them because it is hard and most people will fail many times before they become successful. Maybe it should be seen as a perseverance test - if you can still stay motivated after being told these demotivational things, then its an indicator that you might just have what you need to persevere and make it.
The 90% of startups failing thing is true - I see it all around me, I even experienced it myself. You may think it doesn't apply to you (as I did in my previous startup), but chances are it does. I think its best to prepare people for this reality and help them persevere and learn and become stronger. Even if its demotivating...
In my view, being told "it get's harder" and "you will fail" etc is the opposite of demotivating. When things are going great, what use is motivation anyway?
When things are tough is when you need motivation. And the type of motivation you need is motivation to be stoic. That's exactly what this type of advice is.
It would be a very tough world for founders if "great ideas", smoothly executed, led to living at a decent level. Startups make sense because of the chance of a 10000x outcome. Otherwise, it's a losing proposition to begin with, there are much much better ways of living at a "decent level".
Of course that's only the financial part of it. There are other, better reasons to do a startup.
I don't think this is intended as negativity, even if it comes across that way from the outside. I'm the founder of a company that meets the criteria you've outlined: we're bootstrapped, profitable, and I pay myself enough to live on a decent level.
Before we hit profitability, I thought "If only we can hit profitability, it will be smooth sailing - all our problems will go away." It's anything but. Two things do change: the type of problem changes (often to bigger, scarier problems), and you start facing more and more problems you can't talk about publicly.
I wish I had heard other entrepreneurs say "It gets harder not easier" when I was in some of my darker times. It would have raised my spirits to know that I wasn't alone in feeling like things kept getting harder when I thought they should keep getting easier.
Starting companies is very hard. Even overnight success stories have had many dark hours. If you're going to YC and asking for outside money from people looking for home runs, by definition you are going to have push very very hard.
If you want stories about small businesses that don't require outside funding, the articles about the YC experience probably aren't for you. (Nothing is wrong with small self funded businesses, it's just a different genre)
Actually, in your case you still have competition - You're competing against the desktop-based tool. People coming to your service will be choosing between your tool, and the desktop-based variant.
In regards to the original statement -- if there's no competition there's a possible risk that there's no market. It's not always the case (once in a while you really did create something that nobody knew they needed until you give it to them), but it can be dangerous to delude yourself into thinking you came up with that one product.
More often, no competition means no market and no market means it doesn't matter how good your product is -- nobody wants it.
Also beware of situations where there are a number of small competitors but none of them are making money.
A number of my startup ideas when I was younger surrounded areas that were technologically very cool and got a bunch of hype around smart young technologists, but weren't really something the mainstream needs (yet, I thought). I applied to YC in 2005 with an idea that was basically Google Wave, and I applied again in 07-08 for a game creation site. Both of these had a number of competitors at the time which I took to be market validation. In both cases, there was no market, and all of the competitors failed too.
Ideally you want to be in a situation where there is a big, dumb, rich company making a lot of money solving a problem that you solve better. The big company is your prey; you can then focus on how to win their market bit by bit without worrying about the much larger (and usually intractable) problem of how to create a market.
It could be that there is no market per se, but it can be more subtle than that.
There could be an easily identifiable market that is big enough to provide you with acceptable revenues... But it could be that this market is too difficult to satisfy! There could be any number problems:
- The solution they need is terribly complicated but their budget is pathetic and will never allow you to recoup your development costs.
- Or the problem they have is very convoluted but they expect your solution to be incredibly easy to use. Some markets are full of people who say things "this is too complicated/unfamiliar, I'll just do it on paper/FAX it to them/put it in Excel" or any other shockingly antiquated thinking.
- Or maybe the market looks to be uniform from the outside but once you dive in you realize that each customer in the market requires your solution to work in a different way, making it very hard to please even a subset of the market.
- It could be that the entire market needs your solution to interface with product-X, but that vendor won't even talk to you for any number of reasons (exclusive with someone else, they think you're a joke, or whatever).
I'd make a distinction between no market and no existing market. Generally creating markets is much harder and riskier but often more profitable if you succeed.
Example: BuddyMedia created the social media management tools market; hundreds of startups are now in that market.
You're right. After I posted my response I was thinking of making that distinction and actually talk about the idea of first mover disadvantage (HBR covers it well : http://hbr.org/2001/10/first-mover-disadvantage/ar/1)
IMHO, every dollar that a customer gives you could have gone somewhere else. If you can't figure out where the consumer would spend that money if you weren't around, you probably don't understand your customer very well.
If you think there are no competitors, you are probably missing something.
2) You could just think you have no competition but just be uninformed
3) You could think you have no competition but have tons of non-obvious competition.
Either way if the need exists people are solving it somehow currently even if it's a kludge. That kludge is your competition.
If there is no kludge exists and no real competition exists, then does the need even exist? (Probably not)
FWIW most of these lessons I learned the hard way so try not to take them as saintly advice delivered from on high. I just screwed up and wrote down how I screwed up and then later read the notes.
> If there is no kludge exists and no real competition exists, then does the need even exist? (Probably not)
And even if the need exists, people probably don't think of it as the kind of problem that has a solution ... the hardest part may be getting them to realize that a solution could exist.
I interpreted that as concerning two different domains with respect to a Start Up (or any immature business, really).
With respect to stability: Persons with lots of frequently changing variables in their lives (e.g. frequent beginnings/endings to relationships, moving around, etc.) have less stability. Adding the instability that comes with a turbulent, chaotic tech start up just compounds the issue and taxes one's resilience even more, because inevitably one will have to pay attention to instabilities other than business related ones.
With respect to responsibility: having kids, a spouse and other similar obligations (can) act as a tether and definitely act as dividers of attention. A spouse and children necessarily require attention that could otherwise be focused on the business. This is really much more of a problem for individuals who aren't already financially secure and depend on some relatively secure, stable income to support their lives.
The common element in both cases is time and attention: living an unstable life increases the probability of something other than the business acting as competition for attention, and living a life with other responsibilities "baked in" guarantees competition for attention.
If your spouse is a source of drama, chaos, and fights, then it will detract from your startup goals. If your spouse is highly supportive, hard working, and believes in your startup, then it will assist your startup goals.
If you're single and have a reasonable social life, it can add to your startup goals. If you're single and out closing down the bar every night, then it will subtract from your startup goals.
I think the point is that people without 'life responsibility' find it easier to have a 'stable' life. E.g. When you don't have a wife and kids to care for and spend time with the balancing act you have to maintain to have a stable life is much easier.
I'm not convinced thats a contradiction. Being single does allow for you to kind of.. put relationships on hold for awhile to push hard for your business. I'm not sure thats wise in general, but it seems advantageous in certain scenarios.
"The best companies didn't have political alliances because their product was awesome and they mostly knew it. The second best companies had fantastic political alliances and an okay product / traction."
Political alliances with whom exactly?
"Every guy has thought about starting a dating site."
That one cracked me up.
"If there is no competition you’re probably screwed."
Maybe, but if the second best will be close in quality to the best one in your vertical, you won't have a very valuable company. See Peter Thiel's comments in his PandoMonthly interview.
"It gets harder, not easier"
Can you give some examples? Being able to build a team should make things easier on the founders, as they no longer have to be great at everything. I've seen founders get more relaxed as the business matured.
"All the technology heavy startups wanted to try to somehow outsource their marketing or customer acquisition"
Talking shit about people's rarely a good idea. Even if you're right people are going to be wondering what you're saying behind their backs. A lot of political advice just boils down to what your mum probably told you in primary school: If you can't say something nice, don't say anything at all. Just trying to be a nice person to everyone will take you miles.
Clearly not. It means that a team who is doing the YC activities and working hard always has a chance even if they don't appear to have found a market.
I think there is an important reason why people keep starting dating sites, and a good one. One of the things you should always have when starting a company is a way to make money (no matter how far in the future, speculative, or whatever, there should be some possibility of making money). What is something that humans have shown a willingness to pay for since the dawn of time?
I did a Startup Weekend a few months ago and the biggest lesson I learnt there was "Listen, listen, listen!" as well as "Ask for help, you don't have all the answers".
The peopl are there to help and they are either volunteering their time to do so. Take full advantage of that.
"The best companies didn't have political alliances because their product was awesome and they mostly knew it"
Even if you have a great product, some industries, like advertising or public sector, are an order of magnitude harder to sell to if you're not really well connected.
It seems like this is largely the point of a startup accelerator. In exchange for equity you get cash, advice, and introductions to investors who have connections in the relevant area.
Nice list! Some solid bits of advice there. I've been working over a year with a buddy on something we're looking to release before the new year. As the last couple weeks count down, I wish I had that advice e-mail address lol.
Old people have got to get over this stigma of taking notes on electronic devices. It's the 21st century, and we have the technology, but everyone wants to be a hipster and it's just stupid.
Whether you have someone's attention is obvious regardless of what they're holding, so I don't care about that. If someone is rude enough to give only partial attention while they tweet through a conversation, that's fine and I'll deal with it as appropriate.
That said, I have noticed a high correlation between taking notes on a phone and taking really shitty notes - a few characters instead of a sentence, no connections between related ideas that came up at different times, no drawings, interruptions for futzing with the lackluster select/editing tools on touch devices.
But maybe all that doesn't matter and it's not the tool at all. Maybe it's that the only people who try it don't know how to take notes while being engaged in a conversation.
I laughed at this too, as a few years back at a startup program (hard to describe, not quite hackathon, really idea lab) I spent a weekend working on the exact same idea as Grouper (3 on 3 dates). We didn't keep going as the founder lost interest when some advisors told him online dating was over (in the disruption sense).
More advice from a failed YC company (an acquhire is not a success). I understand the desire to salvage something from the experience, but I only take advise from those more successful than I am. There are so many of those.
Actually Amir's company is still operating. But even if it weren't, you'd be mistaken. People who fail have some of the most valuable insights. I learned YC's motto "Make something people want" from failing to do it myself.
I agree. However, people who fail also have terrible insights; for some, that contributed to their failure. And there's no reason to believe the specific reasons for their failure will be applicable to you. In the NFL, teams which lose tend to keep losing even though they have plenty of opportunity to learn. Teams are salary capped, so there is no intrinsic advantage.
All successful companies are alike. Each failure fails in its own way.
I really disagree. I think people learn more from failures. In many cases it seems the successful ones don't really truly know why they were successful.
Of course they did a lot of things right and it's worthwhile to listen to how they accomplished that, but if you were to duplicate exactly what they did you wouldn't necessarily be successful. So clearly there is something more to it.
In any case, there will be bad advice coming from both successes and failures. To eliminate all the "failures" as having "terrible insights" is short-sighted.
PS: I'm NOT a YC alum. And my bootstrapped company is running with revenues.
I think people learn more from success than from failure, but they learn more from failure than from doing nothing. Since typically your choice is between trying and not trying and not between succeeding and failing, your dominant strategy should be to try and let the cards fall where they may.
Aside from that, most of the people reading are in the "doing nothing" category (I'm largely in this category myself when it comes to startups, though I have tried and failed before), and so it behooves them to listen to the failures. :-)
It seems like you haven't talked to many "successful" people yet, because if they become successful too early/easily, they forget all the lessons and think they became successful because they are so smart.
If you really want to get in-depth wisdom, you need to talk to a founder who has previously failed trying to do something awesome that no one has ever managed to do before.
The secret lessons can only be found at rock-bottom. They are just lying around there, because no one can be bothered going there and picking them up. So, go there.
For me, the items fall into 4 categories:
1. Go without saying, but need to be said anyway:
2. Interesting observation: 3. Sound important, but really aren't: 4. Insightful: Great list! Thanks for sharing, Amir.