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How to Start a Startup
21 hours ago
- A successful startup requires three things: good people, a product customers actually want, and minimal spending.
- A brilliant initial idea is not necessary; the key is to make something better than what exists, as Google did with search.
- Most startups fail because customers don't want the product, not due to lack of funding—funding issues are a symptom.
- Get a prototype out quickly and refine it based on user feedback; rapid prototyping is essential.
- Founders should include technical people who understand users; business skills can be learned on the job.
- Target niche markets first, as they offer better odds and allow you to grow slowly and learn.
- Raise seed money from angels, avoid IP problems by checking founders' history, and negotiate with VCs carefully.
- Spend money slowly, hire minimally, and cultivate a culture of cheapness to extend runway and focus on product.
- Ideal startup founders are good hackers aged 23–38, willing to compress their working life into a few intense years.
Why Smart People Have Bad Ideas
21 hours ago
- The Summer Founders Program experiments with funding younger founders, including college students.
- Many applicants have promising people but unpromising ideas, similar to the 'Artix phase' where founders start with a bad idea before finding a viable one.
- The 'still life effect' causes founders to plunge into the first idea and then stick with it due to sunk time.
- Common mistakes include choosing the first idea, prioritizing coolness over profitability, and avoiding competition by targeting impoverished markets.
- The key lesson is to 'make something people want' and to focus on solving real problems that customers will pay for.
- Hackers can learn to understand customer needs without business people, as shown by successful startups like Google and Viaweb.
The Hardest Lessons for Startups to Learn
21 hours ago
- Release a minimal version 1 quickly to get user feedback, then improve it based on reactions.
- Continuously add features and improvements to keep users engaged and attract new ones.
- Prioritize user happiness by making a great product and explaining its value clearly.
- Focus on real threats like other startups and internal issues, not big companies or minor disasters.
- Determination is the most important quality for startup founders; be flexible but committed.
- There's always room for innovation; don't assume any field is tapped out.
- Manage optimism by being realistic about deals and external factors, but stay focused on building for users.
A Student's Guide to Startups
21 hours ago
- Graduates now have a third option beyond jobs and grad school: starting a startup, which may become as popular as grad school.
- Starting a startup in college has a built-in 'escape hatch' that reduces motivation; graduation removes this excuse, making failure more significant.
- Peer opinion is a powerful motivator for startup founders, often stronger than the goal of getting rich.
- Graduation changes the 'prevailing winds' of peer pressure, making it harder to start a startup later due to increased stakes.
- Young founders have advantages: stamina, poverty, rootlessness, colleagues from school, and ignorance that can lead to innovation.
- Poverty allows founders to live cheaply and think cheaply, which is critical for startup survival and evolution.
- Rootlessness enables mobility, which is important as many startups require moving to startup hubs like the Bay Area.
- Undergrads have an edge in finding co-founders because they are surrounded by ambitious, technically minded peers in school.
- Ignorance can be useful as it prevents intimidation and can lead to innovative reinventions, as seen with Steve Wozniak.
- Young founders often build 'class projects' that lack iterative problem definition and intensity, which are key in real startups.
- Work experience teaches the elimination of the 'flake reflex' and the harsh reality of the work-money relationship.
- To prepare for a startup in college, learn from startups by observing or working at one, build skills like user understanding, and leverage the co-founder-rich environment.
The 18 Mistakes That Kill Startups
21 hours ago
- The fundamental mistake that kills startups is not making something users want.
- Single Founder: Startups are too hard for one person; co-founders provide support, brainstorming, and morale.
- Bad Location: Startups thrive in hubs like Silicon Valley; location affects access to experts and talent.
- Marginal Niche: Avoid small, obscure niches; face competition by pursuing good ideas.
- Derivative Idea: Don't copy existing companies; solve a personal problem or unsolved need.
- Obstinacy: Be flexible and pivot when needed; most successful startups change their original plan.
- Hiring Bad Programmers: Non-technical founders must find good programmers; bad hires kill startups.
- Choosing the Wrong Platform: Technical decisions matter; let good programmers choose platforms.
- Slowness in Launching: Launch quickly to force completion and get user feedback.
- Launching Too Early: Don't ruin reputation; launch a minimal useful core that can be expanded.
- Having No Specific User in Mind: Build for yourself or find real users; understand the problem.
- Raising Too Little Money: Need enough runway to reach the next milestone (prototype, launch, growth).
- Spending Too Much: Avoid excessive hiring; pay with equity, keep costs low.
- Raising Too Much Money: Large investments can lead to loss of focus, pressure, and difficulty pivoting.
- Poor Investor Management: Manage investors but don't let them run the company; focus on product.
- Sacrificing Users to Profit: Prioritize making something users want over business model initially.
- Not Wanting to Get Your Hands Dirty: Founders must do business tasks, like user acquisition and deals.
- Fights Between Founders: Choose co-founders carefully; vesting helps handle departures.
- Half-Hearted Effort: Most failures are due to not trying hard enough; consider quitting day job.
Why There Aren't More Googles
21 hours ago
- Startups that reject acquisition offers often achieve greater success, with larger offers or IPOs later.
- Google and Facebook stayed independent because acquirers underestimated their value, not just idealism.
- Venture capitalists are overly conservative, driven by consensus, and miss truly bold innovative ideas.
- There is a funding gap between early seed rounds (e.g., $20k) and large VC rounds (e.g., $2M), leaving promising startups needing ~$200k underserved.
- The declining cost of startups creates an opportunity for new investors to fill this gap by making smaller, bolder investments.
- VC firms resist adapting to smaller investments, but evolving models could produce more breakthrough companies like Google.
Be Good
21 hours ago
- Combining 'make something people want' with downplaying business models initially describes a charity, yet many successful startups start this way.
- Benevolence helps startups in three ways: improves morale, attracts help, and serves as a decision-making compass.
- The 'tamagotchi effect' shows that user dependence motivates founders to persist through difficult times.
- Being good attracts idealistic top talent and investors, as people rally around benevolent missions.
- Adopting 'Don't be evil' as a corporate policy can prevent laziness and ensure long-term success.
The Pooled-Risk Company Management Company
21 hours ago
- David Heinemeier Hansson suggested startup founders should live off revenues rather than sell stock in a liquidity event.
- Running a business requires constant attention, offering neither freedom nor security.
- The ideal scenario is to hire a professional manager or a management company to run the business for you.
- A management company could pool risks from multiple companies, providing insurance against market failures.
- Such pooled-risk management companies exist in the form of acquisitions by public companies.
- Public acquirers are fickle, but over a long enough period (e.g., five years), average behavior is like a pooled-risk manager.
- Startups must be profitable to wait for favorable acquisition cycles.
- Selling a company is actually the optimal version of living off its revenues.
Startups in 13 Sentences
21 hours ago
- Pick good cofounders: they are the most critical factor for startup success, similar to location in real estate.
- Launch fast: launching early teaches you what to build and engages users, even if the initial product is imperfect.
- Let your idea evolve: treat a startup as iterative, like an essay, where most ideas emerge during implementation.
- Understand your users: the key to creating wealth is improving users' lives, and the hardest part is knowing what they need.
- Better to make a few users love you than a lot ambivalent: focus on deep satisfaction of a subset before expanding.
- Offer surprisingly good customer service: go beyond expectations to make users happy, which also helps you learn.
- You make what you measure: tracking metrics like user numbers naturally improves them, but be careful what you measure.
- Spend little: being cheap prevents running out of money and enables rapid iteration, keeping the startup agile.
- Get ramen profitable: achieve just enough revenue to cover living expenses, changing your relationship with investors.
- Avoid distractions: day jobs, consulting, and fundraising can derail focus; minimize them to stay on track.
- Don't get demoralized: startup pressure is heavy; consciously manage morale to avoid failure.
- Don't give up: persistence often overcomes challenges, especially with continuous idea evolution.
- Deals fall through: treat deals as background processes to avoid morale damage and improve chances of closing.
Relentlessly Resourceful
21 hours ago
- Being a good startup founder can be summarized as 'relentlessly resourceful', which combines persistence with adaptability.
- The opposite of a good founder is 'hapless', which implies passivity and being overwhelmed by circumstances.
- Resourcefulness is key because startup obstacles are often novel and external, requiring continuous trial of new approaches.
- This quality differs from success in fields like writing or painting, where internal obstacles require active curiosity.
- Relentless resourcefulness can be taught to many people, especially those free from authoritarian environments.
- The number of potential startups is limited by the pool of people who are naturally or latently relentlessly resourceful.
- Founders should self-assess or evaluate cofounders based on their relentless resourcefulness.
- The phrase 'Be relentlessly resourceful' serves as tactical guidance, complementing the goal of 'Make something people want'.
What We Look for in Founders
21 hours ago
- Determination is the most important quality in startup founders, as they must persist through many obstacles despite intelligence being a common myth for success.
- Flexibility is essential; founders need to adapt their dreams and pivot like a running back, combining determination with the ability to change direction.
- Imagination matters more than quick problem-solving; good startup ideas often seem initially bad, requiring the ability to generate surprising new ideas.
- Naughtiness: successful founders often have a piratical gleam, breaking unimportant rules, which may be linked to imagination and creativity.
- Friendship: strong relationships between co-founders are crucial, as startups strain relationships; most successful startups have two or three founders who genuinely like each other.
Schlep Blindness
21 hours ago
- Schlep blindness is the unconscious avoidance of startup ideas that involve tedious, difficult tasks.
- Hackers especially dislike schleps but they are an inevitable part of building a company.
- This blindness causes founders to overlook valuable opportunities like fixing online payments (Stripe).
- Ambitious ideas have less competition because they intimidate other founders.
- Overcome schlep blindness through ignorance or by asking what problem you wish someone else would solve.
The Fatal Pinch
21 hours ago
- Startups often face a 'fatal pinch' with significant cash but high monthly losses, stagnant revenue, and about six months of runway, hoping to raise more funds.
- Founders overestimate investor interest for additional funding due to higher spending, stricter investor standards, and the company being perceived as a failure.
- The fatal pinch is self-reinforcing: founders slack on profitability, which further reduces fundraising chances.
- To avoid it, act as if current funding is the last; needing less investment makes it easier to obtain.
- If already in the fatal pinch, treat the probability of raising more money as zero. Options include shutting down, increasing revenue, or decreasing expenses.
- Shut down if certain failure; otherwise, fire underperformers, cut salaries, or focus on revenue generation.
- For revenue, pivot to selling, do consulting-like work tailored to high-paying customers, and be ruthless about cash while avoiding pure consulting pitfalls.
- Many successful startups have survived near-death experiences; awareness of the fatal pinch is key.
The Airbnbs
21 hours ago
- Airbnb founders were exceptionally earnest and energetic, taking notes and implementing ideas immediately.
- Despite being on the verge of failure with maxed-out credit cards, they persisted because they believed in the value of their concept.
- They discovered a new way for hosts to earn money and guests to travel, which was better than hotels in many ways.
- During Y Combinator, they focused on ramen profitability of $4000/month, achieved by concentrating on the hottest market: New York City.
- They personally visited hosts in New York, took professional photos, and learned hosts needed the money during the recession.
- Their growth started in early 2009, leading to ramen profitability by February, with a commitment to keep pushing forward.

startup

How to Start a Startup

Why Smart People Have Bad Ideas

The Hardest Lessons for Startups to Learn

A Student's Guide to Startups

The 18 Mistakes That Kill Startups

Why There Aren't More Googles

Be Good

The Pooled-Risk Company Management Company

Startups in 13 Sentences

Relentlessly Resourceful

What We Look for in Founders

Schlep Blindness

The Fatal Pinch

The Airbnbs