Startup advice of Y Combinator founder Paul Graham

 

You don't need to be a 'startup expert':

Startup doesn't require you to be an expert. it means you don't have to be a startup expert to be successful. Mark Zuckerberg is a startup expert, so he didn't make Facebook a success.

He was a complete novice to startups. Nevertheless, he succeeded. Because Zuckerberg understood his users very well. Larry Page was a search engine expert, not a startup expert.

 

Many founders play 'startup play house':

 

I think learning the mechanics of the process of starting a startup is not simply unnecessary, but rather risky.

I don’t look at college students I know well, such as convertible bonds or shareholder agreements, and think, ‘I think this friend is going to do well.

’ Rather, I am wary. Because when you learn to start up, you pretend to be a startup. It’s a mistake many young entrepreneurs make.

First I come up with a plausible idea. I get the investment at a good valuation. I have a nice office in downtown San Francisco. And I hire a bunch of people (mostly friends).

If you learn a startup by scratching it, you know that it is a startup. But slowly, you realize how much you've become. I call this 'Startup Playing House'. Do you know why it's called 'Playing House'? Because on the surface they did everything a startup does, but they neglected the one most important thing. It’s ‘Make something people want.

Don't look for tips, they doesn't work for startups:

 

I think people need to know some trick or trick to do a successful IPO or high-value exit. But startups are a world where the tricks don't work.

If you're a big company, you can succeed with the tricks. You just have to stand in line and pay a good job. But that doesn't work in startups.

In startups, you don't have a boss to fool you. It's just the users. You know what the one thing users are interested in? Whether you're selling a product that helps them or not.

 

An investor can cheat once or twice. You can get a pretty decent investment. But in the end, if you can't do the most important thing, 'create something the user wants,' it's all bullshit.

So, don't look for tricks, tricks, or shortcuts. Don't complicate things unnecessarily. Solutions to real problems are ten times more important.

Understand your users and create products that users want:

[caption id="attachment_5746" align="alignright" width="268"] User standing[/caption]

The best way to get an investment is to build a fast-growing company. It's about making something people want.

It’s not about learning how to start a business, But understand your users first. Let's say the value of your startup is square.

The size of the rectangle is:

1) the number of users multiplied by

2) how much you improved their lives.

Do things that don't scale:

This is the advice YC gives us the most. Startups don't succeed on their own. Some founders think that if they make a good product, people will come naturally. Successful startups start with the founder's 'labor'.

If you have to do manual work or manual sales, customer service, or product assembly to get your users and make them happy, do it. Working, in the beginning, is not just a necessary evil. It will completely change the DNA of the company.

Go out and bring your users:

The founders don't think they can bring many users with sitting around. Successful startups have to serve a large number of users, and I don’t think there is ever going to be a way to start.

But the successful startups we saw in YC didn’t just sit and wait for users to come. They went out and aggressively brought in users.

Stripe founder Patrick Collison met people and explained the product, and then he didn't say, 'I'll send you a link, give it a try.

Do the work that makes users happy:

 

Founders have to work not only to get their users but to make them happy. Wufoo wrote and sent new users a handwritten letter.

For a surprisingly long time. If it's something you can do that makes users happy, do it until you get too many users to do it. You can do it for a lot longer than you think.

Satisfying users is ingrained into the company culture by then. A service like Woofu’s handwritten letter is something that you cannot do if you are a large company.

You can do it because it is a small startup. Do the work that makes the user happy.

Engage directly with users and get feedback:

 

Making a direct relationship with users is an essential part of making a product good. The first version can never be good. Especially in software, it's great to get your product to market as quickly as possible and see how users use it. Perfectionism is an excuse for procrastination.

Engaging with users too directly (over-engaging)And watch their actions and reactions and get feedback. It's the best feedback you can get as a founder. You can't do that later when you grow up. You'll miss the days when you could go to your home or work and see it.

If you are a hardware startup, assemble the product yourself:

 

There's one job a hardware startup has to do. YC calls it a Meraki .It takes at least hundreds of millions of dollars to produce hardware. It is a cost burden in the initial stage.

So I tell startups to assemble the product themselves if possible. Pebble, which makes smartwatches, is a good example. Pebble built hundreds of early versions by themselves.

 

If Pebble hadn’t gone through that stage, it wouldn’t have been able to generate $10 billion in sales on Kickstarter.

 

As much as working hard on the initial customer, creating the initial product yourself is a very valuable experience. Pebble's Eric Migicovsky said assembling the product, "I learned how important it is to get good screws. Who would have known that?

Don't be afraid to work manually:

Don't be afraid of the manual work that goes into the back of the product. If you have few users, you could be the software yourself. If you can provide a good experience, do as much as you can, even manually.

You can do it by hand first and then automate it later because getting to market quickly is important. In the beginning, Stripe was able to ‘join immediately’ because it wasn’t software, but the founders signed up for them directly behind the scenes.

It can be a little intimidating to solve a user’s problem without automating it. But I think it's much more terrifying if you've done automation and you're not solving anyone's problems.

A startup is a company designed to grow rapidly: 

Not all startups are startups. It’s not about being a startup because of technology-based, VC funding, or ‘exit’. The essence of a startup is ‘growth.’ A startup is a company designed to grow rapidly.

The expression 'design' means two things. It has the meaning of 'intention' to grow rapidly, and it also has the meaning of being different from birth (because not everyone can grow quickly).

Google is fundamentally different from the hit hair salon. It doesn't matter if it's successful or not. If you want to design to be successful quickly, you need to be able to sell your product to a very large market.

For that to happen, two conditions are necessary: ​​1) make something that a lot of people want 2) be able to serve all of them.

If it's a hair salon, you'll be satisfied with No. 1, but not satisfied with No. 2, because there are local limitations. If you make an app to learn Tibetan in Hungarian, you will be satisfied with number two but not satisfied with number one. But if you make an app to learn English in Chinese, that's a startup.

If the growth rate is 5-7%, It can be considered rapid growth:

How fast does a startup have to grow? Of course, there is no right answer, because startups are a pole rather than a specific threshold. But if you know how fast startups are growing on average, you'll know if you're on the right track.

At YC, we measure growth weekly, because we need to deliver and improve in a short amount of time. On average in YC, 5-7% weekly growth in the growth phase is good. If it's 10%, you're doing great. If it's 1%, then we haven't made a product that users want yet.

The weekly target growth rate is startup's compass:

A clearly defined weekly target growth rate reduces a lot of confusion and troubles in doing business. It’s kind of a compass.

 

Set the target growth rate as the criterion for all decision making. 'Can this work achieve the target growth rate?'

 

If you say ‘yes’, you do. Should I attend a two-day conference? Should I hire a single programmer?

Should I focus more on marketing? Should I spend more time selling a large customer? Should I add a specific feature? Do anything that helps you achieve your target growth rate.

Pursuing short-term growth, in theory, risks staying in partial optimization. But that's not the case in reality. Aiming for a weekly growth rate makes founders 'act'. It's almost certainly useless to sit at your desk and plan long-term strategies.

On the other hand, our intuition about what we need to do to reach our target growth rate right now is much more accurate than we think.

If You want to start a startup, first understand the growth:

The essence of startups is growth. If you want to understand startups, first understand growth. Growth is the driving force that drives the startup world Growth is the reason that most startups are related to technology.

Everyone has already come up with ideas for rapid growth. So, you need to find a field that is rapidly changing. Usually, the source of rapid change is technology.

Growth is the reason why startups are economically rational. Rapid growth provides a big reward for choosing a startup, even considering the high risk.

Growth is the reason VCs invest in startups, not only because startups have a high return on investment, but also because making money on capital gains is easier than making money with dividends.

Growth is the reason startups get invested by VCs. Capital is the fuel that enables faster growth. Growth is the reason startups get acquisition offers because fast-growing companies are not only extremely valuable but also risky to incumbents.

Startup ideas:

 

Don't try to come up with it. The best way to get startup ideas is not to try to think of startup ideas.
There are two kinds of startup ideas.

(1) Organic ideas that came naturally from one's life,

(2) It’s a made-up idea that I consciously worked on and came up with, ‘someone needs something like this.

It’s not a straightforward distinction, but the best startup ideas usually fall into #1.Microsoft, Apple, Yahoo, Google, and Facebook were all number one. Steve Wozniak wanted his computer and could build it.

So Apple was born. Larry Page and Sergey Brin wanted to search the web. They had expertise in search engines, and they came up with ideas to improve search quality.

So we created Google .Idea #2 is mostly a bad idea. Not only is it bad, but it also sounds plausible that it's bad. It makes you waste a lot of time until you know it's bad.

Take a step back. Instead of trying to come up with a startup idea, you have to subconsciously come up with it.

A good start-up idea was a multi-site project:

 

The best startups start with side projects. Because a great startup idea is an outlier that your rational censors will say, This isn’t a business idea.

Microsoft started as a basic interpreter for machines used by just a few thousand people around the world. Facebook started as a site where Harvard college students stalk each other.

Start with the little things that you can convince yourself of and that work. Even if it doesn’t seem like a huge startup idea.

learn skills:

Startup ideas arise where there is rapid change. Technology is changing what we can do and allowing us to solve existing problems differently.

Those who learn and understand technology are better able to see new solutions to problems. I wrote to learn the craft, but Airbnb's Brian Chesky and Joe Gebbia weren't engineers.

 

They were good at design, and even better, they were good at organizing people and getting things done. It doesn't have to be a skill. Learn important skills to solve problems.

Dig into an interesting problem:

I started YC because I thought it was an interesting project. Do your research with intellectual curiosity. Successful startups don’t come from taking ‘Entrepreneurship’ classes. To start a startup, you have to learn other important things.

More importantly, Domain Knowledge. Again, Larry Page is a search expert, not a startup expert. It was his intellectual curiosity that led him to become an expert in search, not because he wanted to be successful in business.

It's best to start a startup out of curiosity. There is only one story I want to tell to college students who want to start a startup. Just Learn

You have to try to know if you can start a startup:

I said it like startups are very difficult? If not, I'll stress it again. Starting a startup is, really, really difficult. How do you know you're ready to take on such a difficult challenge? Can you start a startup?

The answer is ‘no one knows. When you start a startup, you're going to change a lot. So if you want to be good at startup, you have to know not only who you are, but also how you'll change. Who can do that?

For nine years, I’ve been ‘guessing’ whether this person is going to start a successful startup. It's easy to look at a person for 10 minutes and see how smart he is. But more importantly and more difficult is to see how tough and ambitious this person can be in the future.

I don't know who's going to be a star. If you're really scared of starting a startup, you shouldn't do it. But if you want to start a startup and you don’t know if you can do it well, you have no choice but to try.

 

 

Things we talked about in this article:

1. You don't need to be a 'startup expert'
2. Many founders play 'startup play house'
3. Don't look for tips, they doesn't work for startups
4. Understand your users and create products that users want
5. Do things that don't scale
6, Go out and bring your users
7. Do the work that makes users happy
8. Engage directly with users and get feedback
9. If you are a hardware startup, assemble the product yourself
10. Don't be afraid to work manually
11. A startup is a company designed to grow rapidly
12. If the growth rate is 5-7%, It can be considered rapid growth
13. The weekly target growth rate is startup's compass
14. If You want to start a startup, first understand the growth
15. Startup ideas
16. A good start-up idea was a multi-site project
17. Learn skills
18. Dig into an interesting problem
19. You have to try to know if you can start a startup