How to Start a Startup — W01

Idea, Product, Team and Execution

Here are a few takeaways from Stanford/Y Combinator CS183b — How to Start a Startup — Week 1 lectures.

Lecture 1 Ideas, Products, Teams and Execution Part I Sam Altman, President, Y Combinator

Lecture 2 Why to Start a Startup Dustin Moskovitz, Cofounder, Facebook, Cofounder, Asana, Cofounder, Good Ventures

Idea

“Market matters most; neither a stellar team nor fantastic product will redeem a bad market. Markets that don’t exist don’t care how smart you are.” — Marc Andreessen

• Idea comes first and the startup comes next. Wait to start a startup until you find an idea compelling enough to explore.
• Why now? Most successful startups always have a great answer to this question.
• Think big market. You want an idea that turns into a monopoly. Need a market that is going to be big in 10 years.
• What does your startup do? All startup ideas should be easy to explain and understand in one sentence.
• Execute, execute, execute. That said, great execution is 10 times more important and 100 times harder than a good idea.

Product

“Very few startups die from competition; most die from failure to make something that users love.” Sam Altman

• Measure the right things. A company is built on whatever the CEO decides to measure.
• Build for love. It is better to build something that a small number of users love than what a large number of users like. If you don’t have early organic growth then your product is not good enough yet.
• Simple is good. It forces you to do one thing extremely well and you need to do that to build products that users love.
• Tight feedback loop. Build a system to transforms user feedback into product decisions. Great founders don’t put anyone between them and their users.
• Iterate rapidly. If your product gets 10% better every week that compounds rapidly.

Team

Cofounders

Don’t

• Choose a random co-founder.
• Choose someone that you don’t have a long history with.
• Choose someone that you are not friends with.

Do

• Choose a co-founder who is ‘relentlessly resourceful.’
• Choose James Bond — unflappable, tough, decisive, creative, ready for anything and acts quickly.

Hiring

• Rule 1. Don’t Hire.
• Rule 2. Don’t Hire.
• Rule 3. Don’t Hire yet.
• Be patient. Hiring the right people takes time. A single mediocre hire in the first 5 employees will often kill the startup.
• Personal Referrals are the trick to hiring. Great companies in tech have been built by personal referrals for the first 100 employees.
• Would you work for him/her? — Zuckerberg’s framework for hiring: Would you be fine working for him/her if the roles were reversed?

Retaining

• Be generous with equity. Give roughly 10% of the equity to the first 10 of your employees. Employees add more value over time than investors so fight with investors and be as generous as you can be to employees.
• Praise your team. Let your team get credit for all the good and take responsibility for all the bad stuff.
• Let your team grow. Give people new areas of responsibility continuously.

Firing

• Fire fast. Every first time founder waits too long hoping that an employee will turn around. Don’t.
• Fire those who create office politics.
• Fire those who are persistently negative.

Execution

Focus — Figure out what to do

If you work really hard on the wrong things you will still fail and no one will care.

• Prioritize effectively. Identify the top 3 work on those and ignore, delegate or defer the rest.
• Say “No” a lot. Founders get excited a lot about starting new things. Resist the temptation. Just say No.
• Communicate. Everyone in the company should be able tell what are the key goals that week and should execute based on that.
• Repeat Repeat Repeat. Best founders repeat these goals over and over far more often than they need to — on walls, in meetings, etc.
• Don’t drink your own Kool-Aid. Don’t let the company get distracted or excited by things like your own PR.

Intensity — Get it done

“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.” -Henry Ford.

• Relentless rhythm. Biggest advantages of startups is execution speed. You need to develop a relentless operating rhythm.
• Speed and quality. It is easy to move fast or be obsessed with quality. In a startup you need to do both.
• Save the vision speeches for when the company is winning. Speeches don’t get the momentum back. Figure out how to get small wins and get them done.
• Indecisiveness is a startup killer. Develop a bias towards action.
• Sales fixes everything.

*Photo by: Focus -Nina Matthews Photography, Grow: Chiot’s run