By Charles Wong

https://linkedin.com/in/charles-wong-zx/

https://twitter.com/charleswongzx

https://github.com/charleswongzx

Chapter 1: Foundation (Sam Altman)

Why Should You Start a Startup?

* Reality isn’t so glamorous

* Stressful

* Always on call

* Hunched over tables

* Founder depression

* * Mark and friends @ FB

* You’ll be the boss?

* Everyone else is your boss

* CEOs report to everyone

* If you want power and authority, join the army

* Flexibility?

* You’ll be able to work any 24 hours a day you want!

* You’ll make more and have more impact?

* Joining as an employee at mid-early stage growing startup can be worth millions on its own

* As a founder, you need to be wildly successful for that to make sense

* Adding a late-stage feature to an established company is a force multiplier

* Employee #1500 at Google made Maps

* Employee #250 at FB made the like button

* The best reasons for starting a company are:

* You need to do it

* The world needs you to do it

* The world needs it

* The world needs you

* The world needs you somewhere - find where

* Recommended reading list:

* Hard thing about hard things

* Zero to one

* Facebook effect

* The Tao of leadership

* The 13 commitments of conscious leadership

* Nonviolent communication

Core Principles

Success = Idea * Product * Team * Execution * Luck (where luck is any number between 0-10000)

Idea

General Guidelines

* It’s become cool to not spend too much time here and just begin building

* A bad idea is still bad

* Pivots are fine, but most good companies start with a great idea, not a pivot

* Airbnb started because founder couldn’t pay rent

* If this works out, you’re going to be working on this for 10 years

* So think long and hard if this is something you want

* Plans themselves are worthless, but the act of planning is important

* You need a nice kernel to start with

* You need to build something that’s difficult to replicate

* IDEA FIRST, STARTUP SECOND

* Company should feel like an important mission

* Mission-oriented to get people to rally and be productive around it

* Hard ideas are easier to garner support for than a derivative easy one

* Your first idea does not need to sound and seem big/visionary

Market Size and Growth

* Must think about size, growth of the market, defensibility of the idea

* You CANNOT create a market that doesn’t exist

* Monopoly in a large market when you start is impossible

* Find monopoly in a small market and then quickly expand

* This is why some great ideas look terrible in the beginning

* “I know this sounds like a bad idea, but here’s why it’s a great one���

* You need a market size that will be big in 10 years

* Think about what your target market will look like in a decade AND what will cause it to plateau

* How do you tell which markets are growing fastest?

* Use instincts as a young student

Timing

* Why now? Why is this a good time to start this particular company?

* Why couldn’t it have been done 2 years ago, and why is 2 years in the future too late?

Customer Needs

* Best to build something you yourself need

* Building your first version for a customer who isn’t yourself is hard

* Idea should be easy to explain and understand

* If takes more than a sentence, it’s too complex

* Try to avoid derivative ideas like:

* X for red wine lovers

* Y for dog owners

* Begin with the audience - start with their demands, while you create the supply

Product

Love

* When turning a great idea into a great product:

* Build something a small number of users love

* LOVE. Not like or want a medium amount.

* Talk to users

* Eat

* Sleep

* Exercise

* Law of conservation of love

* * A key indication of true love is spread by word of mouth (organic growth)

* Best way to achieve this is to start with something simple

* Even if your eventual plans are complex, begin with as little surface area as possible

* Fanatical commitment to the product helps building great products

Learning From Customers

* Recruit initial users by hand

* Anywhere in the world

* By any means possible

* Understand that group extremely well

* Do anything to make them love you

* Product building feedback loop

* Make this loop as tight as possible

* Show product to users

* What do they like?

* What would they pay for?

What would make them recommend it?

* Make product decisions

Metrics

* Focus on growth

* Company will build whatever the CEO decides to measure

* Active users

* Activity levels

* Retention

* Revenue

* Net promoter score

Team

Co-founders

* No. 1 cause for death is co-founder blowups

* Most important decision as a startup

* Top 20 YC companies have more than 2 founders

* Best is tight group of friends with shared history

* Not good is solo founder

* Worst is random pairings

* A good model for a co-founder is James Bond

* Relentlessly resourceful

* Unflappable

* Creative

* Decisive

* When should co-founders decide on equity split?

* Lots of people put this off for way too long

* Should be done as early as possible

* If you don't want to give you cofounder even split, think about whether you want this person as a co-founder or not

* How to deal with co-founders leaving?

* Vesting

* n/4 of the promised equity where n is number of years worked

* Don’t work remotely with your co-founders

Hiring

* Try not to hire

* People tend to judge how real or cool your startup is by your team size

* It sucks to have lots of employees

* Low employee count is great

* Low burn rate

* Less management

* Lean, agile

* Clear direction

* The cost of getting an early hire wrong is VERY HIGH

* Bad hires can kill the company

* Airbnb took 5 months to hire their first employee

* Airbnb CEO came up list of key culture attributes early hires had to have

* He asked “if u were diagnosed with 1 year left to live, would you work at airbnb?”

* A bit crazy, but point was made

* Recruiting is HARD

* Great people have lots of great options

* Long process of convincing that your mission is most important

* That’s why product is most important

* People wanna join a rocket ship

* How much time to dedicate to hiring?

* Either 0% or 25%

* Biggest block of time spent, or not at all

* How to find the best?

* Personal referrals build the first 100 people

* It’s weird to call every great person you met, and ask your team to do the same, but these network effects are most important

* Look beyond your local community

* Does experience matter?

* It matters for some roles

* E.g., someone who runs a large dept or organisation

* For most early roles, not really

* Go for aptitude

* Things to look for in a hire

* Are they smart?

* Do they get things done?

* Do I want to spend lots of time with them?

* Do they have good communication skills?

* What projects have you worked on? (Take a deep, deep dive into this)

* Are they tolerant to risk?

* Are they maniacally determined?

* Animal test

* You need to be able to describe someone as an animal

* Ala they need to have a defining characteristic

* Would you be comfortable reporting to this person if the roles were reversed?

* Try to work on a project together instead of an interview

* Employee equity

* Aim to give 10% to first 10 employees

* Be stingy with investors, generous with employees

* Employee retention

* Praise your team, give them credit

* Take responsibility for bad stuff

* Give them increasing responsibility

* Autonomy + purpose

* Fire fast

* You want to fire people who

* Create office politics

* Persistently negative

* How to keep existing employees feel secure?

* Usually fires are constantly making poor decisions

* Their bad performance is painfully obvious to all

* Execution

Jobs of the CEO

* Set the vision

* Raise money

* Evangelise

* Hire and manage

* Make sure everyone executes

Focus

* What are you spending time and money on?

* What are 2 or 3 of the MOST important things?

* If you cannot distill and act on these things, you will not be effective

* Say no a lot

* Set clear overarching goals

* Communicate

* Maintain growth and momentum

* Don’t get distracted

* Work locally together

* Intensity

* Focus and dedication

* Relentless operating rhythm

* Obsession with quality

* Bias towards action, keep moving

* Do huge things in incremental pieces

Momentum and Growth

* Never take your foot off the gas pedal

* Keep accumulating wins

* Software

* Keep growing

* Hardware

* Don’t slip up on ship dates

* Save the grand vision speeches for when the company is winning

* When the company is losing momentum, focus on smal