Startups : Insights from the 20 Stanford-YCombianator classes.
A 20 minutes digest from the (nearly) 20 hours classes.
I took some notes on my Iphone while listening to the popular Y-Combinator-Stanford lectures. Here is the result.
Feel free to share if you enjoy it. Thank you again Stanford & YC for this amazing content.
1. Idea and Why start a startup ?
By : Sam Altman (Y Combinator) & Dustin Moskovitz (Facebook, Asana).
Notes : Have a mission oriented idea.
It takes at least 10 years to build a startup : 10 years if it goes well, 5 years if it doesn’t go well, 3 years to realize it. Ideal : Idea that sounds bad but with a good vision / beliefs (ex: Google) You need to know something that others don’t. What’s your “Secret” ? The key insight of your market. Why now ? (Sequoia Capital question) Build something you use. One sentence to explain.
Build something people want. Not something people like.
Think like this : 1. Idea — 2. Product — 3. Company.
2. Team and Execution
By : Sam Altman (Y-Combinator)
Notes : Know your co-founders. You need James Bond profiles.
Be proud to have few employees. In early times : do not hire — just necessary. Later : learn how to hire on scalable. Need the same culture, values. Be part of the Family. Mission. Employ the best people. 5–10 first people. Look for referrals.
Experience not the most important value. Aptitude is better. Look for 3 things : 1. Smart people/ 2. “Get things done” guys/ 3. spend time around with them. Work on a small project instead of an interview. Also : communicate. Try to describe your employees like animals. Fire fast.
Whatever the founders do, it becomes the culture. Focus on 2/3 things at a time. Smalls little goals that everyone knows. Get excited by growth , not PR. Keep momentum. Alway look for little winnings.
3. Before Startup ?
By : Paul Graham (Y Combinator)
Notes : Don’t drop college. You cant be a start-upper and and a student in the same time. One will take over the other one quickly.
Do counterintuitive things. Like ski. Go against your intuitions. But trust your intuition about people. You’ve done it right until now, so continue :) You don’t need expertise about startups, but about what your users wants (Zuckerberg — Facebook).
In startup there is no boss to trick. Just work and get users satisfied. Starting a startup consume. Even in Larry Page world shit happens, he can’t show a signal of weakness, specially if you are a billionaire, you’ll never have some compassion ! Its like having kids, when you press the button, you can’t go back.
But in the same time, its an amazing aventure. Its something you cant learn with books or college, you need to do it. The only other intuitive thing to do : work on things that interest you.
4. Building a Product, Talking to Users, and Growing.
By : Adora Cheung (HomeJoy)
Notes : If its a side project, better work 2h on a weekly basis, than work and study in an unstructured way.
Choose a problem that is a really passion. Something you may be a user. Which industry you want to Disrupt ? Get 3/ 4 month immersion in it, theory and practice. If you build a cleaning booking platform : Get à job as cleaner in a existing company. Read financial documents about competitors.
Storyboard you user expérience. MVP : what is the minimal feature that could solve your users problem ? When you look for first users, look where they are, where is the trafic. (ex: offer bottle of water on a hot day and ask for à sign-up). Build a feed-back cycle. But most important : go away from your desk, talk to users, you’ll get the best feed-back. Online feed-back you will just get the people who love your product or hate it. Track your retention monthly. Ask review if its to hard to calculate: how much they will recommend to friends. Perfection is irrelevant, dont do everything they ask for, but first worry why they are asking it, what does it mean. Imitation is cheaper than innovation.
Growth : execute on one channel at a time, focus one week at least. Keep it until it works and change fast. Itirate. Find the little things that works, and just do that. 3 growth tactics : 1/ Sticks growth (retention) ; 2/ viral growth ; 3/ Payed growth : calculate your cost of acquisition and LTV. Good experience is key (2/3 of the tactics!).
5. Competion is for loosers.
By : Peter Thiel (Paypal, & facebook first investor)
Notes : Think Monopoly.
If you start, it should be your goal. What makes a business valable ? **1/ Build an amount of value (dollars). 2/ Capture the traction of the value you’ve created. (both variable are independent) **
If you mesure revenue : US air travel industry ( 95 billion dollars revenue) is bigger than search service (Google : 50 billion) but profit margin is much smaller. It’s counterintuitive. You need to see beyond. Search is instead much valuable. There 2 kind of business in the world : Monopoly and competitive business. This is miss understood because people lie. People who have Monopoly says they dont, because they dont want governments regulation. People who have incredibly competitive business, will pretend they are unique and there is not much players in they playground. Everyone lies so there is a distorsion of reality.
Start to Monopoly a small market. You’ll expand later. Facebook took over the Harvard market of 10 000 people, but they took 60% of it in 10 days. Be a small fish in a big pond. In the tech world, the big movements happens only once, the next Zuckerberg will not build a social network, the next Larry Page will not build à search engine, the next Bill Gates will not build an operating business. No need to copy them. You want to be the last mover of your own market.
6. Growth ?
By : Alex Schultz (Facebook)
Notes : Retention is the most important thing.
It gives you market fit. Startup story : 1. Idea, 2. Product, 3. Team, 4. Execution.
When you are a startup, you don’t need a growth hacker, everyone in the team should work on that ! Hire if you want to scale. Good retention ? choose your key metric. (ex: facebook : number of active users ; whatt’s app : message sent by day ; Airbnb : reservation comparaison with hotels in a town) the CEO choose its north star. Everyone in the company should know what the north star is.
Magic moment ? What is the “Wow” moment in the experience of your product/service ? Identify it and work on it. Facebook : when you see a picture of your friend, so we focused on getting 10 friends in 14 days. E-Bay was when people get payed. Choose notification instead of newsletter. Segment your notifications based on your users behaviors: email, push, sms. Today’s good execution is better than tomorrow perfection.
7. How to Build Products Users Love ?
By : Kevin Hale (Woofu, Y Combinator)
Notes : Focus on the reason you get your first dollar and scale from there.
Think your product like real life : in dating, relationship first impression is key. Everyone talks about first kiss, met, propose, people to tell this story. Over and over. First login, first interaction with customer support, first email. They are all opportunity for an amazing first impression. Put some magic.
Make users think : “hey I like the people behind this”. On feed-back, super important : everyone should be involved in customer support, so all the team is on page and is aware of bugs or users needs. Iterate and redesign even the FAQ/ Help pages. Build an awesome culture. Keep show people you care about them. Build a “hey look of what we’ve done since you were gone” once the user log in after long a moment.
8. How to Get Started, Doing Things that Don’t Scale, & Press ?
By : Stanley Tang (Doordash), Walker Williams (Teespring), Justin Kan (TwitchTV, Y Combinator)
Notes : Test your hypothesis. Just start with a landing page. Test your value proposition. Wait for calls and emails.
If it works : start execute on a non- scalable way. You’ll found a way to scale later. Use free tools from big tech company like Google. Apple , square, dropbox. Manually email your custmer. Ask them how was their experience. Create a relationship. Creates your first retention out of scaling.
A startup is the only moment when you can do things that dont scale. There is no miracles of dream growth courbe. That´s unicorn. When you start you suck at selling your product. First users are hard to get, but its ok. Don’t give your product for free, so you make sure your users mesure your product value. Find some “champions users”. Talk to them. Even if its not scalable. The faster your talk to users, the faster you scale. Look at social media. In startups you leave in “dog years”, dont loose time ! Develop fast. Started a startup because nothing matched with my needs. Then you need to test.
Journalist are not looking for great story. It’s not based on meritocracy. First : set your media Goals. News is good for your mum, but probably not to get your users. Look for place where your industry spend time reading. It’s a sales process to sell your story. PR : it’s like everything in startups. You first want to do it yourself before hire someone. Press is a vanity metric. Good for the first hundreds users. Press is not a scalable users acquisition. Keep good relationship with reporters. Help others entrepreneurs : pay it forward.
9. How to Raise Money ?
By : Marc Andreessen (Netscape, Andreessen Horowitz), Ron Conway (SV Angel), Parker Conrad (Zenefits).
Notes : Before investing in a company, we invest in people.
Is this person a leader ? Is this person obsessed with the product ? First question asked to founders : “ What inspires you to invent this product ? “ hope it’s a personal problem. Communication skills, is a born leader ? 15 company on 400 hundred investment will be a billion dollar company.
Invest in strength against weakness : When you invest you check boxes. It’s better to invest in startup with extreme strength and some weakness than all average good. Be able to say in one sentence what your product does. So the investor can picture what you do. Procrastination is devil. Keep moving. Make decision. Bootstrap as long as you can. If you don’t need money its even more awesome. Most of the thing you are going to do next, is going to be harder to raise money. In meetings take notes. Remind investors key facts about meetings. Send emails.
Process of an investment ? VC receive files. Make some research. Vote for phone calls. If if goes well : Meeting, at this point it means they are going to invest. Although something goes really wrong. The only Time VC goes directly to round A), is when an experienced entrepreneur and team jump again in a new project after a successful exit.
All the ideas seems dumb at the beginning : Google and page rank when there where not that much web-pages. Airbnb ; go to people house ? Crazy. But the vision and the team made the difference. All 3 founders were as good as each one, which is really rare. The anomaly is Mark Zuckerberg, which has an amazing team but was alone. Building an amazing startup will take 10–15 years, which is more than the average of an américain mariage ! So be careful when you choose your partners.
Investor invest for life in an entrepreneur. First criteria are always the team and founders.
10. Building a culture ?
By : Bryan Chesky (Airbnb), Alfred Lin (Zappos, Sequoia Capital).
Notes : What’s your company values ? IWhich mission do you pursue ?
What are your values as a founder ? Who are the kind of people you like to work with ? Your value need to support your mission. It could take 1 year to define that. Company first, then your team, then your department. Everyone wants a good culture, but you need to make it a daily habit.
Founders need to work together, they should be an exemple, as parents. employee are the children, don’t argue in front of them. Product changes, but never values. Design your culture. Found 3–4 unique things about you. Build habits, rituals. When you hire, dont look for people who looking for jobs, but a calling. It’s : Missionary VS Mercenary.
There is no bad or good culture. There are weak or strong cultures. CEO role : articulate the vision. If you have the right vision, the right strategy, the right people. You win.
It’s better to have 100 people that love you than 1 million people that just like you (Paul Graham). You need to reach that 100 people that love you by doing things that dont scale. Spend time with users. Then you will scale. Don’t do both in the same time. We started to go to people house, take photos.
11. Hiring and Culture ?
By : John Collison (Pinterest), Patrick Collison and Ben Silberman (Stripe).
Notes : What do you choose to celebrate every day ?
Culture is what you want to maintain in your team so you don’t need to be involved in every decisions.
How to hire your first 10 employee ? Looked for people you want to work with, look ourselves, creative, work hard, crazy hobbies. Wanted to build something big. Very long period. Recommendation, friends of friends. Found undiscovered talents, from others cool companies. Genuine people. Like to get things done. Have an elevator pitch for hiring.
Hiring process ? Ask questions : if you had a question in your area who would you ask ? Where does it work ? Is the person is in the right place (for the job) ? Work with them. Ask for recommendation. After 30 days, make sure the person knows the basic of the company (architecture, manager…)
Make things transparent. Open emails, internal chat. Maximum open stuff, shared knowledge. Motivate people : Even the iPhone, wasn’t the iPhone until it was done. It was just a potential. Startup wisdom only works if your context fit it.
12. Building for the Enterprise ?
By : Aron Levie (Box)
Notes : Build an entreprise software company. When we started we didn’t know we wanted to build that. (2005) Later, for consumer consumption was simple and amazing (lots of fun), for entreprise market wasn’t enough (much harder).
How do you get people to pay for your product ? One day you will have to answer to this question.
So you look at the figures : Where is the money ? Spent on consumers market : 30 billion dollars on mobile apps/year. Digital advertisng 150 billions dollars. However : on entreprises : 3.7 trillions dollars spent on IT (services , servers…) !
But, for Entreprises : sales and product building is very long.
13. How to be a Great Founder ?
By : Reid Hoffman (Linkedin, Greylock Partners)
Notes : Co — founders are perceive as super-heroes able to do anything, and the truth is more they are super-heroes good at very specific points. It’s impossible to be good at everything.
Location is super important, they are business you can build in Silicon valley , and no where else to be fast and successful. Because of the concentration of people and money. Proximity is key. Some business in others City : Chicago, Paris, Milan (fashion…)
Should you be contrarian ? Look for the good idea that looks as a bad idea. What’s the secret of your market ? What you know and others people dont. You should have an investment thesis. And asking yourself : Is my thesis increasing or decreasing confidence with the data I see ? Your thesis will help to know if you need pivoting or persist.
Should you make décision with data or vision ? On Short term focus on only 1 Thing : solve a problem. Skills of great founder : how do you evaluate yourself ? Recognize if you are on track or not. Be honest to yourself. Connect networks around you. Advice : If you want to reach an investor, come through a recommandation. (ex : AirBnB early investment at YC) That’s super important.
14. How to Operate ?
By : Keith Rabois (Square, Khosla Ventures)
Notes : After building a product, you need to build a company.
People are irrationals. When you translate theory in practice, its not always what you think. Warren Buffet said : “Build a company that idiots can run, cause one day they may”. Mesure progress. It should feel like every day is a problem.
Am I an “editor” of a “writer” in the company ? Editor : simplify, simplify, clarify the “writer” work. Editor should ask the good questions. So you don’t get distracted by irrelevant stuff. Allocate ressources. Your goal is : diminuante the corrections of the writers. (diminish the red ancre) You want it feels is run by one person. Every web page, writing, experience. As editor you delegates. You are responsable for everything.
How delegate ? Task relevant maturity : the more the person knows about the task so you don’t need to explain. Adapt your management to the level of your team. If the context is good, let people do the mistakes. They will learn a lot and they’ll get so much exited about your company.
How to identify leaders in your company ? Start by giving a little task and see if the person handle it. (example of the Intern and the smoothie) Expand the scope of responsibility of your team progressively. Also look if people often go to speak to a particular person for questions in the open space.
Focus on One problem only. (Peter Thiel thesis) Master it, conquer it. Even if it’s frustrating not do many others things. Create tools to make decisions : dashboard. Made by founders. Intuitive. Every employee should use it.
Transparency : Write notes after each meeting, and make them available. glass meeting- rooms. Because : Walls = people worrying. Get away things that distract people : food for exemple, laptops. Provide good stuff so people don’t talk about it, and focus in their job. Get an office. No managers, the head of managers is just the best engineer. No frustration. 1 and 1 talks every 2 weeks, with 3–4 points.
If you are an investor : Ask for to an entrepreneur to writes his priorities on a piece of paper, then ask him to show his calendar and look if it matches. (Never does)
15. How to manage ?
By : Ben Horowitz (Andreessen Horowitz)
Notes : Easy to say, difficult to master.
About raises of salary and shares : be formal. Save your culture. Have a process, so it’s fair. No politics, no frustration. Most of the shares and stock in the startup world : they give your interesting option, if you leave the company before expected, and cannot buy your options (ex: buy 2 millions dollars your 10 millions stocks value), you loose all the stocks.
Story of Toussaint L’Ouverture (26:30–37:00 ): Born a slave in Haïti with a vision of : End slavery, take over the country and make it prosper. How ? Worth listen. Conclusion of the story : Consider maximum perspectives.
If you have to fire someone, admit to the employee you have failed in hiring and integration. It’s not true that’s it’s only the employee fault. You both are responsible. Keep people dignity.
How to be a great CEO ? Supportive wife :) and focus on “What you can do” instead of “What is happening”.
Today business : design the firm and its organisation to help the founder / CEO express his vision. Yesterday businesses : just hire a guy to run the company. If you don’t know something, say you need a pause and think about it and you will get back to him/ her. Fix problems now , until it becomes something huge.
16. How to Run a User Interview ?
By : Emmett Shear (Justin TV, Twitch)
Notes : Identify who are the people who most likely are going to buy your app ? Who spends money on your market ?
Users dont really know what they want, even if they think they do. Stay away from features. Even if it’s difficult to say no.**
People who know your product and your competitors have a huge value in feedbacks. Talk to people who never used your product so you can expand your market. Talk to people with different backrounds.
Don’t show people your mockups or ask them if a feature is good, they answer has few value. Instead, put the product in their hands.
Don’t talk to available people, but people important for you. Ask people if they would pay for your product. Record the interview (really) live or skype interview.
Which channels to talk to users ? Intern of your app if it exist (inbox), mail , or events of your industry. Compensation ? We don’t.
17. How to Design Hardware Products ?
By : Hosain Rahman (Jawbone)
Notes : In the hardware cycle you can’t move fast and iterate, you need to take your time.
Validate some concept, ship and iterate. Demo fridays, showcase your work, get feedbacks. Watch how people interact with your product. Product experience team : graphic designers, engineers…
Whats the most important thing in the product ? Why is that very different from anything else. Roadmap your vision, the market extension. The launch. The software development. What you can do. What you can’t. What are your “Hero features” ? Continue innovation.
The framework ? Start with the “why’s?” Wireless speakers in 2010 : 0% of the speakers market. In 2013: 70% ! Have a vision. Ask : Where is the market today ? Where it can go ? Where you wish it could go ?
We are an experience company. Not an hardware company. Hardware it’s just a way. We also use software. In focus group don’t ask : are you ready to pay for this of this ? Ask : how you live ? How you listen to music ? Alone ? With friends ? Etc get informations how people live. Apple asked for the Ipod: “how awesome would be if you have 1K songs in your pocket that you can take anywhere ?” Not : “we have built digital portable music player”.
Some products (distribution channels) don’t have the same cycle of platform : phone is every year, tablet isn’t, and your Nest is a 15 years installation.
18. Legal and Accounting Basics for Startups
By : Kirsty Nathoo, Carolynn Levy (Y-Combinator)
Notes : As a founder you dont need to know the details about this.
Your company is not related to your personal banking account. If you are in the US : chose the “Delaware Corporation” (C-Corp ≠ LCC), easiest structure. Familiar for investor. Clerky is an exemple of a “vanilla” tool that set up everything smoothly.
Ideas have no value. Everything is execution. Allocation of shares : privilege people who will execute. Vesting : you own your shares for a period of time. Usually 4 years with 25% after 1 year you started. And then every month it’s increasing. It exist so that founders maintain involved in the company.
Rise money : paper work , a two way transaction. That´s when valuation enter in : in early stage investors can have privileged price per shares for a futur Serie A. Little investors make trouble. They dont understand the long term game. Keep it as simple as possible. Board seat ? Be careful. Look for valuable profile. Choose wisely. Adviser ? So many wants to be, but so few advices are really valuable. Updates with investors ? Good every month. But not too much, be careful.
Expenses : use your company Bank account. It’s not your money. Really ! Keep your recipes seriously. Founder breakup ? Founders are employee. Happen a lot. It becomes dramatic when there are unpaid founders. Avoid problems by doing things clean from the beginning. Zen payroll tool, for payroll provider. Firing ? Go fast. Toxic employees are dangerous. Communicate, be clear, dont be sorry. Face to face. Pay legal fees. Cut digital password. Buy back his/ her shares.
As a founder : Know your key metrics anytime.
19. Sales and Marketing & How to Talk to Investors ?
By : Tyler Bosmeny (Clever), Michael Seibel (Justin TV, Socialcam, Y Combinator), Dalton Caldwell (App.net, Y Combiantor), Qasar Younis (Talkbin, Y Combiantor).
Notes : Clever founder : sales starts with all the co-founders. Talking to users.
In prospection starts with innovators (2.5%) mean a lot of calls. Where ? 1. Personal circle 2. Conférences (little one) — the greatest channel but organise it well 3. Emails — build a framework .
When you are on the phone ? Shut up. Listen to people. Its normal to be proud, but not useful in the sales.
Once they say “Yes”. Follow up. Always get closer. Below, it’s what happens when it’s quite good… ! Don’t desperate.
Get yes or no quickly. “Maybe” is worst than a “no” because it wont allows you to move on. People saying “I will use your product of there is one more feature” , move away. Same for free trial. Prefer : annual agreement with a 60 days free, and retirement whenever they want.
How to improve your pitch ? Improve your company, it will be much easier !
Create a pitch for different situation. 30 sec pitch : Assume people nothing. 1rst sentence: “Your mum sentence.” Basic language. What so you so ? 2 nd sentence : How is big your market ? 3rd sentence : How much traction do you have ? Show you move fast.
2 min speech : deeper, investor for exemple. 4 Things : 1- unique insight : “wow moment”(two sentence) something they don’t know / 2- how you Earn money ? Say it and move away. / 3 — team , what you did in the past if it is impressive, how Many engineers, how Many you know each-others /4- the big ask : how much money you need, precisely.
Don’t stay to long on the things that didn’t worked out, it will sound too bad. Create a situation where you are strong and investor are weak. Be confident, you don’t need them. How ? Have a B) plan to reach the market without money. Or say you’ll meet others investors.
Have an introduction to have a meeting. Ask for ALL the meetings the same week. Fundraising should be a sprint, not marathon. Ask for meetings in 3 weeks. Plus : you will look good.
The more you talk , the more chances you have to say something irrelevant. Be concise.
At 35:00 — Listen to an useful investor/ founder virtual meeting.
20. Later-stage Advice
By : Sam Altman (Y Combinator)
Notes : About the things to think after the “market fit” momentum. When your startup is starting to scale.
Management : at the beginning, it doesn’t exist, and its good, before 25 employee, everyone should refer to the CEO. Dont try to innovate on that.
Focus on building a great product. 3 common early mistakes : 1. / hire senior people ( valuable when it scales); 2. / hire people; 3. / kill yourself at work. Delegation is important, trust people and let them tell you what they have finally decided = maximum responsibilization.
Write down “Why” you are building a company and “How” (like Airbnb). Do it at the beggining, so every employee can read it. Super important. HR: performance feedbacks. Simple one, to employee. Salary: keep things fair, early, anticipate : junior, senior… etc. Equity : give a lot stocks to employee.
Diversity on a team : hire different profile. Diversity of background, but a commun vision. What happen to early employee ? Talk to them, look what they want to do.
Productivity : goes down with the intensity of employee. Keep the entire company on the same level of information. Clear goals. Focus on the product. Weekly meetings reporting about what people are doing. Monthly meetings about the objectives of the company with figures.
Rising money ? Get your documents / contracts checked, and completed, signed before next round. Full time fundraiser ? After a B) round, it might be a good idea.
As the years go, founder psychology get worst. A lot of exposition = people who don’t like you. Most important thing : focus on your business.
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