Takeaways from YC's Startup School
Over winter break, I went through Startup School for fun. These were my notes. (Part 1)
"I learned that starting a startup is the hardest, most rewarding thing you can do in your professional career. It's hard in almost every way you can think of, but perhaps, mostly because there are so many possible answers to every single question you'll have. But the joy of taking on and overcoming such epic challenges makes the struggle worthwhile and the journey priceless. I've also learned that every version of that journey is unique and there's no strict formula." - Geoff Ralston
Why to Not Not Start a Startup (Paul Graham)
you can fail and still be successful (Justin Kan and Emmett Shear of Twitch)
“The closest to a traumatic failure was Kiko, whose founders kept working on their startup for a whole year before being squashed by Google Calendar. But they ended up happy. They sold their software on eBay for a quarter of a million dollars. After they paid back their angel investors, they had about a year's salary each. Then they immediately went on to start a new and much more exciting startup, Justin.TV.”
“What really convinced me of this was the Kikos. They started a startup right out of college. Their inexperience caused them to make a lot of mistakes. But by the time we funded their second startup, a year later, they had become extremely formidable. They were certainly not tame animals. And there is no way they'd have grown so much if they'd spent that year working at Microsoft, or even Google. They'd still have been diffident junior programmers.”
if you're too inexperienced to start a startup, what you should do is start one
you can be (wise) beyond your years; Sam Altman was 19 when YC funded him
adults, by definition, are not allowed to flake.
when you hear "that's a stupid idea," look the other person in the eye and say "Really? Why do you think so?"
solve problems / make what people want
“Find something that's missing in your own life, and supply that need—no matter how specific to you it seems. Steve Wozniak built himself a computer; who knew so many other people would want them? A need that's narrow but genuine is a better starting point than one that's broad but hypothetical.”
“The way to succeed in a startup is not to be an expert on startups, but to be an expert on your users and the problem you're solving for them.”
the ultimate reason to found a startup is to create seismic shifts through tech
“Startups aren't interesting just because they're a way to make a lot of money. I couldn't care less about other ways to do that, like speculating in securities. At most those are interesting the way puzzles are. There's more going on with startups. They may represent one of those rare, historic shifts in the way wealth is created.”
“That's ultimately what drives us to work on Y Combinator. We want to make money, if only so we don't have to stop doing it, but that's not the main goal. There have only been a handful of these great economic shifts in human history. It would be an amazing hack to make one happen faster.”
Before the Startup (Paul Graham)
the commonality between startups and children: once you push the button, "there are a lot of things that are easier to do before you have them than after."
there’s a striking similarity between startups + public service - must understand people's most pressing needs and solve problems
know that even startup success comes with its own set of issues:
"Facebook is running [Zuck] as much as he's running Facebook. And while it can be very cool to be in the grip of a project you consider your life's work, there are advantages to serendipity too, especially early in life. Among other things it gives you more options to choose your life's work from."
on predicting grit/success: "I've read that the same is true in the military — that the swaggering recruits are no more likely to turn out to be really tough than the quiet ones. And probably for the same reason: that the tests involved are so different from the ones in their previous lives."
Stanford incubates successful startup founders because it incubates intellectual curiosity above all else:
"So strangely enough the optimal thing to do in college if you want to be a successful startup founder is not some sort of new, vocational version of college focused on "entrepreneurship." It's the classic version of college as education for its own sake. If you want to start a startup after college, what you should do in college is learn powerful things. And if you have genuine intellectual curiosity, that's what you'll naturally tend to do if you just follow your own inclinations."
How to Get Startup Ideas (Jared Friedman)
How can you find an idea for a startup? What if you have an idea but you're not sure if it's the one you want to stick with?
Avoid common mistakes founders make when coming up with startup ideas
You don't need an amazing idea to get started. What made Google/Facebook successful wasn't a brilliant initial idea, but a good enough idea and great execution.
Think of your initial idea as a good starting point. Startup ideas morph over time (e.g. Airbnb from airbed rental to all vacation rentals). If you have a good starting point, you can tweak your idea and continue.
Start with a problem, not a solution.
Startup ideas are easy to find because there are many problems to be solved in the world.
Evaluating startup ideas
How big is this idea? How big could it be?
Are there existing companies that do something similar?
Is there a chance that this market will grow in the future? (e.g. Coinbase and the ascent of BitCoin)
Founder/market fit
Are the founders experts in the field?
How sure are you that this is solving an acute problem?
Do you have a unique insight?
e.g. Most people thought it was dangerous to host strangers; founders of Airbnb invited Internet strangers to stay with them and thought it was fun
Score each out of 10, and then average for an overall score.
Other questions to ask:
Are you making something you personally want to have?
Are you working with a technology that only recently became available?
Bad excuses for rejecting great ideas:
It's too hard to build. (e.g. Stripe and web credit card payment integration)
It's in a boring space. (e.g. Gusto and payroll software)
It's too ambitious. (but these companies have the potential to turn big!)
There are existing competitors. But it's okay as long as you come up with a better solution. (e.g. Facebook and Napster/MySpace, Dropbox)
How to generate startup ideas:
Get a job at the forefront of some field so that you'll see good startup ideas before other people
Start with what your team is especially good at, and think of ideas that you would have an unfair advantage in executing
Are there things your company builds in-house that other companies might need?
What do you wish someone else would build for you? (ex. DoorDash)
What would you be excited to work on for 10 years, even if it didn't succeed?
Look for things that have changed in the world recently and are now possible because of this change (ex. invention of the iPad and PlanGrid, an app that put construction blueprints on tablets)
Look for variants of recently successful companies (ex. Amazon Go and Standard Cognition)
Crowdsource by asking others what problems they want to be solved
Look for industries that seem broken
How to Get Startup Ideas (Paul Graham)
Build a) something you want b) something you can make c) something few others realize is worth doing
"Maybe that's something I could use" leads to zero net users; you must have at least some users who really need what you're making, not just people who could see themselves using it someday
Either build something a large number of people want a small amount, or something a small number of people want a large amount (latter preferred)
Ask: Who wants this right now? Who wants this so much that they would use a crappy beta version?
Live in the future, then build what's missing; learn to hack / code so that you can implement your ideas
How to Talk To Users (Eric Migicovsky)
Make sure that the founders and the core members of your company are the ones who develop the skills for talking to users — this is work you do not want to outsource
YC’s core teachings: 1) code 2) talk to users
The Mom Test and 3 common errors to avoid in user interviews
Do not spend time pitching your idea; the goal is to extract data to improve your positioning - talk about specifics around the problem area you’re trying to solve.
Do not talk about hypotheticals (would you be interested in this feature?); ask the user about their life in broader ways to extract context to learn about how they arrived at this problem.
Restrain your interest in talking and listen. Take notes and listen to what the user is saying.
Five questions to ask your user:
What is the hardest part about doing the thing that you're trying to solve?
Ex. Drew and Dropbox - you’re sitting next to a friend and want to learn more about how people are sharing files --> ask: “What is the hardest part about working on a group project on school computers?” Begin an open-ended conversation to understand the user’s pain points.
The best startups are working on problems that are painful enough to be solving.
Tell me about the last time you encountered this problem.
Ex. Ask for a specific timeframe; Dropbox example - was this a computer science problem? An English paper?
Now, you can reference real-life examples of past problems potential users face.
Why was this hard?
Different users encounter different pain points, so the answers to this question can help you figure out how to market your product.
What, if anything, have you done to try to solve this problem?
If users have already started brainstorming potential solutions, that means the problem is important enough to be solved. Also, you can gain a better grasp of competitors in the market and the solutions they are creating from this question.
What don't you love about the solutions that you've already tried?
Users suck at identifying potential features they would want, but they can give feedback about existing solutions that they've already tried.
How should companies conduct user interviews at different stages?
Pre-idea: find people who are interested in the problem you’re solving / first users
Just show up - find your potential users and talk to them; attend industry events; take detailed notes
Post-idea, pre-launch (working prototype): figure out who will be your best first customer, and extract numerical answers
How much does this problem cost them today?
How much money would they spend on solving this problem?
How frequently does the user encounter this problem? (hourly, daily, weekly, etc.) -> the more frequent the user encounters the problem, the more pertinent your startup will be
Post-launch: iterate towards product-market fit
ex. Superhuman: measure the number of users who would be very disappointed if your product went away on a weekly basis; if > 40%, your product will grow exponentially
Use this framework to evaluate features you’ve launched in the previous week; ask for a phone number during sign up and actually talk with users
Discard bad data: generic, non-tactical feedback (“This is useful”) or hypotheticals (“I would love this potential feature”)