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 small