Team and Execution (Sam Altman)
Sam Altman starts the second lecture by answering students’ questions. The first question was really interesting for me, however I think the answer might generate disagreements and can even be considered as being irrelevant.
How do I identify if a market has a fast growth rate now and also for the next ten years?
Sam answered to this advising that students can just trust their instincts, while older people have to guess about the technologies young people are using. However I disagree with this view, as I believe that middle-aged or older people can also participate in startups and they actually do(e.g. Elon Musk ). There are many sources using which everyone can find information about the preferences of youngsters. Besides this, not only educational environment gives an opportunity to stay informed, it is possible in a working environment as well.
Furthermore, I do believe that as an answer of this question he could offer/ mention techniques for identifying growing markets. It seems to me like he is just trying to encourage students to set up a startup, instead of directly answering the question. Nevertheless I can’t disagree with his point that we need to think about what we are doing more, what we are using, what we are seeing people our age using, because it will almost certainly be the future. Yes, this is right and there are plenty of examples that make us believe this(take the creation of Dropbox as an example).
After answering one more question, Sam continued to introduce the remaining two determinants of startup success: that is the great team and the great execution. He emphasized the importance of choosing right cofounders who are relentlessly resourceful(with whom you are acquainted for years), which I also consider a vital issue: one should be able to find people who are full of passion towards the thing he/she undertakes and whose qualities and skills will supplement that of his/her(which is not actually as straightforward as it seems).
Turning to the qualities of the cofounders, he brings the example of James Bond as one who is unflappable, resilient, knows what to do in every situation , acts quickly,who is decisive, creative and ready for anything.
Software people should really be starting software companies.
This is how Sam thinks, but I don’t agree with it fully. There are many founders who aren’t from the field however they manage to found and run successful businesses(Alibaba).
The second part of how to hire: try not to hire unless you have to.
And if you have to, it should be done in a slow pace, as hiring slowly ensures that everyone believes in the mission.( Twenty-five percent of your time should be given to hiring). There is another great point here. That is “Mediocre people at huge companies will cause some problems, but it won’t kill the company. A single mediocre hire within the first five will often in fact kill a startup”. So at first we shouldn’t give up on searching for the best people, no matter how much effort and time it requires.
You need people that believe in it almost as much as you do(Airbnb)
It’s necessary to hire those who will stay with you till the end and will do everything to avoid facing the end.
By the way, that’s my number one piece of advice if you’re going to join a startup, is pick a rocketship. Pick a company that’s already working and that not everyone yet realizes that, but you know because you’re paying attention, that it’s going to be huge. And again, you can usually identify these.
Sam states that he hires people dependent on the fact if they are smart, if they get things done, and if he wants to spend a lot of time around them. To my mind, all of these are vital, especially the second and the last one. And the best way to learn about these things is trying to work on a project together instead of an interview.
For early employees you want someone
1.who has somewhat of a risk-taking attitude
2.who is maniacally determined
3.would feel comfortable reporting to them
Employee equity:
Aim to give about ten percent of the company to the first ten employees, as they’re going to increase the value of the company way more than that. Your employees, not the investors, are really the ones that build the company over years and years. Therefore you have to make sure your employees are happy and feel valued.
Afterwards Sam offers to fire fast those who are bad at their job, who are creating office politics, and who are continuously negative, as they can be detrimental for the startup.
Sam states that soon after starting working together co-founders should decide on the equity split and it should be near equal. Then he describes the normal way of spliting equity in Silicone Valley when one of cofounders leaves(by the way I didn’t know about this before).
After on, Sam interestingly persuades that in the early days of a startup it’s not good to have remote cofounders.
The way to have a company that executes well is you have to execute well yourself.
Yeah that’s the reality. Founders are the formal managers and if they want to turn into informal ones and make people behave in the way they want, they should lead by their example.
Execution gets divided into two key questions:
- Can you figure out what to do?
- Can you get it done?
Two parts of getting it done:
2.1.focus- figure out the most important things
2.2.intensity
the momentum and growth are the lifeblood of startups.
So a good way to keep momentum is to establish an operating rhythm at the company early.
Sam tells taht one thing that often disrupts momentum and really shouldn’t is competitors. There is no need to worry, until competitors actually beat yo with real, shipped product.
And finally Sam finishes the lecture with this great quote from Henry Ford love: “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.”