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How and Why to Start a Startup: class 1

April 12, 2017

CliffsNotes + commentary on Startup School

The 1st class starts off answering the question of why you should start a startup and other fundamentals of getting started.

I highly encourage everyone to watch the full lecture (44 mins, link at end of this post), but if you are just curious or want a 5 minute refresher, here we go:

part 1 — Dustin Moskovitz:

There are many bad reasons to start a startup and only one really good one.

Only 1% of seed funded companies reach a very large financial outcome and that result takes a great idea, exceptional execution, and just plain luck that may be out of your control.

The 3 common bad reasons to start a company are 1) get rich, 2) have a big impact, and 3) be your own boss.

  1. Get rich—founders can easily end up with nothing (or close to it) financially if things don’t work out and most of the time investors and VCs receive any financial windfall before founders and employees do.

The 100th person at Facebook had a better financial outcome than the average venture-backed CEO.

2. Have a big impact—you can have an impact at a growing company. If you create Gmail within Google or the Like button within Facebook, you can impact a billion people fairly quickly. It’s hard to create that scale of impact with a startup.

3. Be your own boss — as a startup founder, you won’t be your own boss. Everyone else will be your boss — your customers, your investors, your employees will all need your time, energy, enthusiasm, attention and vision.

Myth versus Reality: it’s not glamorous

The only good reason to start a startup is if you can’t NOT do it.

That means you are both incredibility passionate about (read: obsessed with) an idea/problem/product and have the right aptitude based on your knowledge and skillset to tackle the company.

You have to make sure that both the idea is valuable and that you are the right person — the founding team is the right team — to execute on this.

Li: I think it’s too easy to look at what the media is pumping out and other sources that make entrepreneurship look glamorous, but really think about would you enjoy the day-to-day work (read: grind). Make a list of all the worst problems you could face starting this company and if you think you’d still want to do it and can solve all those problems, then go for it.

Dustin’s Q&A:

It has become harder to scale a company — costs of retaining talented people is rising, incumbent tech giants are more competitive, even housing is becoming a real problem. All of those factors means you should start a company if you think it can keep your attention and energy for 10 to 20 years. Having great co-founders is extremely important.

part 2 — Sam Altman:

Silicon Valley “works” because of our relentless belief of the future, a high density of people working on startups and the culture of paying it forward.

Find the small number of people in your life who will support you working on a startup — this is not the default state as most people are skeptical.

Idea

Execution might be crucial, but the idea really matters.

The breakout startup ideas are original thought, not a copy of something. Start by noticing problems in your own life and work, those are areas where a new product could come to life.

It is the great technology waves and rapid changes that make category-leading startups possible.

Ask yourself what is the big tectonic shift that makes my startup possible as this moment in history?

1990s: The Internet enabled Google, Amazon,

2000s: Mobile enabled Facebook, Twitter, Snapchat, Lyft, Airbnb, etc.

2017: Machine Learning enables…

The big “secret” when it comes to startup ideas is that it’s easier to start a hard company than an easy company because working on a hard problem inspires the most passionate and ambitious people.

Co-founders

Having great co-founders is really important. Focus on values first, then aptitude, and finally skills. Most people do this backwards. You are looking for people with determination, dogged persistence, and is in it for the long haul.

Product & Users

There are 5 lectures devoted to building a great product so more on this to come.

Start with building something a small number of users love. Look at the retention and frequency of use — those are more important than the raw number of users/sign-ups.

There are 4 general ways to get your first 100 users, ranked from best to worst: 1/email people you know 2/research people who might use your product and ask them to try it 3/social media, press 4/ buy ads on Facebook and Google.

Go talk to your users and do effective user interviews. Don’t ask general questions. Try to be as specific as possible. Ask them, “have you paid?”, “have you recommend this to someone else?” If not, why not?

Company

Get to know your users, sit in their office, live with them, build that feedback into your product, get it back in front of them, and repeat the cycle.

Aim to be the fastest iterating company the world has ever seen.

Think about building your company as a 10-year project. Almost no one makes that level of commitment so if you do you can make radically different (read: long-term healthier) decisions for your startup.

Stay lean until everything is working well. Either be in product creation and development mode or be in hypergrowth mode. Even when everything is going really well, only hire great people and never compromise on quality.

The team you build is the company you build.

— Vinod Khosla

Dustin spends 40–50% time on recruiting for Asana.

Li: Sam’s reaction in the video says it all. It was like “holy crap, Dustin is worth a bigillion dollars yet he spends like HALF of his time at Asana just on recruiting?!?”

Focus on relentless execution and care about every experience in your product. If you do that, the score will take care of itself.

Develop a clear mission early on and become a great evangelist for this mission, always.

Sam’s Q&A:

Practice thinking about ideas and tell people about them. Good ideas are not a solo endeavor. Ideas are very fragile, so find good people who will help you build on your ideas not shoot them down when they first hear them.

Watch the full video:

 


Li: I hope you enjoyed this. Remember: The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it.

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