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<html lang="en" xmlns="http://www.w3.org/1999/xhtml">
<head>
<meta name="generator" content=
"HTML Tidy for Linux (vers 25 March 2009), see www.w3.org" />
<meta charset="utf-8" />
<title>Startup Playbook</title>
<link href="/img/facebook.png" rel="image_src" />
<meta name="description" content=
"To have a successful startup, you need: a great idea, a great market, a great team, a great product, and great execution." />
<meta property="og:title" content="Startup Playbook" />
<meta property="og:site_name" content="Sam Altman" />
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</head>
<body id="home">
<div class="container-content">
<div class="text-center">
<h1>Startup Playbook</h1>
<h2>Written by Sam Altman · Illustrated by Gregory Koberger · <a href=
"https://platzi.com/startup-playbook/">Spanish translation</a></h2>
</div>
<p>We spend a lot of time advising startups. Though one-on-one advice will always be
crucial, we thought it might help us scale Y Combinator if we could distill the most
generalizable parts of this advice into a sort of playbook we could give YC and YC
Fellowship companies.</p>
<p>Then we thought we should just give it to everyone.</p>
<p>This is meant for people new to the world of startups. Most of this will not be
new to people who have read a lot of what YC partners have written—the goal is
to get it into one place.</p>
<p>There may be a part II on how to scale a startup later—this mostly covers
how to start one.</p>
</div>
<div id="toc">
<ul class="toc">
<li>
<a href="#idea" class="idea"></a>
<div class="icon"></div><span>Part I:</span> The Idea
</li>
<li>
<a href="#team" class="team"></a>
<div class="icon"></div><span>Part II:</span> A Great Team
</li>
<li>
<a href="#product" class="product"></a>
<div class="icon"></div><span>Part III:</span> A Great Product
</li>
<li>
<a href="#execution" class="execution"></a>
<div class="icon"></div><span>Part IV:</span> Great Execution
</li>
<li>
<a href="#closing" class="closing"></a>
<div class="icon"></div>Closing Thought
</li>
</ul>
<div class="toc-arrow">
<ul class="toc sub">
<li>
<a href="#growth" class="growth"></a>
<div class="icon"></div>Growth
</li>
<li>
<a href="#focus" class="focus"></a>
<div class="icon"></div>Focus & Intensity
</li>
<li>
<a href="#ceo" class="ceo"></a>
<div class="icon"></div>Jobs of the CEO
</li>
<li>
<a href="#hiring" class="hiring"></a>
<div class="icon"></div>Hiring & Managing
</li>
<li>
<a href="#competition" class="competition"></a>
<div class="icon"></div>Competitors
</li>
<li>
<a href="#money" class="money"></a>
<div class="icon"></div>Making Money
</li>
<li>
<a href="#fundraising" class="fundraising"></a>
<div class="icon"></div>Fundraising
</li>
</ul>
</div>
</div>
<div class="container-content">
<p>Your goal as a startup is to make something users love. If you do that, then you
have to figure out how to get a lot more users. But this first part is
critical—think about the really successful companies of today. They all started
with a product that their early users loved so much they told other people about it.
If you fail to do this, you will fail. If you deceive yourself and think your users
love your product when they don’t, you will still fail.</p>
<p>The startup graveyard is littered with people who thought they could skip this
step.</p>
<p>It’s much better to first make a product a small number of users love than a
product that a large number of users like. Even though the total amount of positive
feeling is the same, it’s much easier to get more users than to go from like to
love.</p>
<p>A word of warning about choosing to start a startup: It sucks! One of the most
consistent pieces of feedback we get from YC founders is it’s harder than they
could have ever imagined, because they didn’t have a framework for the sort of
work and intensity a startup entails. Joining an early-stage startup that’s on
a rocketship trajectory is usually a much better financial deal.</p>
<p>On the other hand, starting a startup is not in fact very risky to your
career—if you’re really good at technology, there will be job
opportunities if you fail. Most people are very bad at evaluating risk. I personally
think the riskier option is having an idea or project you’re really passionate
about and working at a safe, easy, unfulfilling job instead.</p>
<p>To have a successful startup, you need: a great idea (including a great market), a
great team, a great product, and great execution.</p>
</div>
<div id="idea" class="anchor"></div>
<div class="mobile-wrapper">
<div class="bg-idea bg">
<div class="bg-inside">
<h3><span>Part I</span><strong>The Idea</strong></h3>
<div class="mouth"></div>
<div class="apple-shadow"></div>
<div class="apple">
<div class="apple-spin"></div>
</div>
</div>
</div>
</div>
<div class="top">
<a href="#toc"></a>
<div class="fa fa-arrow-up"></div>Table of Contents
</div>
<div class="container-content">
<p>One of the first things we ask YC companies is what they’re building and
why.</p>
<p>We look for clear, concise answers here. This is both to evaluate you as a founder
and the idea itself. It’s important to be able to think and communicate clearly
as a founder—you’ll need it for recruiting, raising money, selling, etc.
Ideas in general need to be clear to spread, and complex ideas are almost always a
sign of muddled thinking or a made up problem. If the idea does not really excite at
least some people the first time they hear it, that’s bad.</p>
<p>Another thing we ask is who desperately needs the product.</p>
<p>In the best case, you yourself are the target user. In the second best case, you
understand the target user extremely well.</p>
<p>If a company already has users, we ask how many and how fast that number is
growing. We try to figure out why it’s not growing faster, and we especially
try to figure out if users really love the product. Usually this means they’re
telling their friends to use the product without prompting from the company. We also
ask if the company is generating revenue, and if not, why not.</p>
<p>If the company doesn’t yet have users, we try to figure out the minimum
thing to build first to test the hypothesis—i.e., if we work backwards from the
perfect experience, we try to figure out what kernel to start with.</p>
<p>The way to test an idea is to either launch it and see what happens or try to sell
it (e.g. try to get a letter of intent before you write a line of code.) The former
works better for consumer ideas (users may tell you they will use it, but in practice
it won’t cut through the clutter) and the latter works better for enterprise
ideas (if a company tells you they will buy something, then go build it.)
Specifically, if you are an enterprise company, one of the first questions
we’ll ask you is if you have a letter of intent from a customer saying
they’ll buy what you’re building. For most biotech and hard tech
companies, the way to test an idea is to first talk to potential customers and then
figure out the smallest subset of the technology you can build first.</p>
<p>It’s important to let your idea evolve as you get feedback from users. And
it’s critical you understand your users really well—you need this to
evaluate an idea, build a great product, and build a great company.</p>
<p>As mentioned earlier, startups are really hard. They take a very long time, and
consistent intense effort. The founders and employees need to have a shared sense of
mission to sustain them. So we ask why founders want to start this particular
company.</p>
<p>We also ask how the company will one day be a monopoly. There are a lot of
different terms for this, but we use Peter Thiel’s. Obviously, we don’t
want your company to behave in an unethical way against competitors. Instead,
we’re looking for businesses that get more powerful with scale and that are
difficult to copy.</p>
<p>Finally, we ask about the market. We ask how big it is today, how fast it’s
growing, and why it’s going to be big in ten years. We try to understand why
the market is going to grow quickly, and why it’s a good market for a startup
to go after. We like it when major technological shifts are just starting that most
people haven’t realized yet—big companies are bad at addressing those.
And somewhat counterintuitively, the best answer is going after a large part of a
small market.</p>
<p>A few other thoughts on ideas:</p>
<p>We greatly prefer something new to something derivative. Most really big companies
start with something fundamentally new (one acceptable definition of new is 10x
better.) If there are ten other companies starting at the same time with the same
plan, and it sounds a whole lot like something that already exists, we are
skeptical.</p>
<p>One important counterintuitive reason for this is that it’s easier to do
something new and hard than something derivative and easy. People will want to help
you and join you if it’s the former; they will not if it’s the
latter.</p>
<p>The best ideas sound bad but are in fact good. So you don’t need to be too
secretive with your idea—if it’s actually a good idea, it likely
won’t sound like it’s worth stealing. Even if it does sound like
it’s worth stealing, there are at least a thousand times more people that have
good ideas than people who are willing to do the kind of work it takes to turn a
great idea into a great company. And if you tell people what you’re doing, they
might help.</p>
<p>Speaking of telling people your idea—while it’s important the idea
really excites some people the first time they hear it, almost everyone is going to
tell you that your idea sucks. Maybe they are right. Maybe they are not good at
evaluating startups, or maybe they are just jealous. Whatever the reason is, it will
happen a lot, it will hurt, and even if you think you’re not going to be
affected by it, you still will be. The faster you can develop self-belief and not get
dragged down too much by haters, the better off you’ll be. No matter how
successful you are, the haters will never go away.</p>
<p>What if you don’t have an idea but want to start a startup? Maybe you
shouldn’t. It’s so much better if the idea comes first and the startup is
the way to get the idea out into the world.</p>
<p>We once tried an experiment where we funded a bunch of promising founding teams
with no ideas in the hopes they would land on a promising idea after we funded
them.</p>
<p>All of them failed. I think part of the problem is that good founders tend to have
lots of good ideas (too many, usually). But an even bigger problem is that once you
have a startup you have to hurry to come up with an idea, and because it’s
already an official company the idea can’t be too crazy. You end up with
plausible sounding but derivative ideas. This is the danger of pivots.</p>
<p>So it’s better not to try too actively to force yourself to come up with
startup ideas. Instead, learn about a lot of different things. Practice noticing
problems, things that seem inefficient, and major technological shifts. <a href=
"http://blog.samaltman.com/projects-and-companies">Work on projects you find
interesting</a>. Go out of your way to hang around smart, interesting people. At some
point, ideas will emerge.</p>
</div>
<div id="team" class="anchor"></div>
<div class="mobile-wrapper">
<div class="bg-team bg">
<div class="bg-inside">
<div class="bottom">
<div class="bottom-arm"></div>
<div class="bottom-arm-right"></div>
</div>
<div class="top"></div>
<div class="top-leg"></div>
<h3><span>Part II</span><strong>A Great Team</strong></h3>
</div>
</div>
</div>
<div class="top">
<a href="#toc"></a>
<div class="fa fa-arrow-up"></div>Table of Contents
</div>
<div class="container-content">
<p>Mediocre teams do not build great companies. One of the things we look at the most
is the strength of the founders. When I used to do later-stage investing, I looked
equally hard at the strength of the employees the founders hired.</p>
<p>What makes a great founder? The most important characteristics are ones like
unstoppability, determination, formidability, and resourcefulness. Intelligence and
passion also rank very highly. These are all much more important than experience and
certainly “expertise with language X and framework Y”.</p>
<p>We have noticed the most successful founders are the sort of people who are
low-stress to work with because you feel “he or she will get it done, no matter
what it is.” Sometimes you can succeed through sheer force of will.</p>
<p>Good founders have a number of seemingly contradictory traits. One important
example is rigidity and flexibility. You want to have strong beliefs about the core
of the company and its mission, but still be very flexible and willing to learn new
things when it comes to almost everything else.</p>
<p>The best founders are unusually responsive. This is an indicator of decisiveness,
focus, intensity, and the ability to get things done.</p>
<p>Founders that are hard to talk to are almost always bad. Communication is a very
important skill for founders—in fact, I think this is the most important
rarely-discussed founder skill.</p>
<p>Tech startups need at least one founder who can build the company’s product
or service, and at least one founder who is (or can become) good at sales and talking
to users. This can be the same person.</p>
<p>Consider these criteria when you’re choosing a cofounder—it’s
one of the most important decisions you’ll make, and it’s often done
fairly randomly. You want someone you know well, not someone you just met at a
cofounder dating thing. You can evaluate anyone you might work with better with more
data, and you really don’t want to get this one wrong. Also, at some point, the
expected value of the startup is likely to dip below the X axis. If you have a
pre-existing relationship with your cofounders, none of you will want to let the
other down and you’ll keep going. Cofounder breakups are one of the leading
causes of death for early startups, and we see them happen very, very frequently in
cases where the founders met for the express purpose of starting the company.</p>
<p>The best case, by far, is to have a good cofounder. The next best is to be a solo
founder. The worse case, by far, is to have a bad cofounder. If things are not
working out, you should part ways quickly.</p>
<p>A quick note on equity: the conversation about the equity split does not get
easier with time—it’s better to set it early on. Nearly equal is best,
though perhaps in the case of two founders it’s best to have one person with
one extra share to prevent deadlocks when the cofounders have a fallout.</p>
</div>
<div id="product" class="anchor"></div>
<div class="mobile-wrapper">
<div class="bg-product bg">
<div class="bg-inside">
<div class="box">
<div class="blocker"></div>
<div class="blocker2"></div>
</div>
<div class="machine"></div>
<h3 class="right"><span>Part III</span><strong>A Great Product</strong></h3>
</div>
</div>
</div>
<div class="top">
<a href="#toc"></a>
<div class="fa fa-arrow-up"></div>Table of Contents
</div>
<div class="container-content">
<p>Here is the secret to success: have a great product. This is the only thing all
great companies have in common.</p>
<p>If you do not build a product users love you will eventually fail. Yet founders
always look for some other trick. Startups are the point in your life when tricks
stop working.</p>
<p>A great product is the only way to grow long-term. Eventually your company will
get so big that all growth hacks stop working and you have to grow by people wanting
to use your product. This is the most important thing to understand about
super-successful companies. There is no other way. Think about all of the really
successful technology companies—they all do this.</p>
<p>You want to build a “product improvement engine” in your company. You
should talk to your users and watch them use your product, figure out what parts are
sub-par, and then make your product better. Then do it again. This cycle should be
the number one focus of the company, and it should drive everything else. If you
improve your product 5% every week, it will really compound.</p>
<p>The faster the repeat rate of this cycle, the better the company usually turns
out. During YC, we tell founders they should be building product and talking to
users, and not much else besides eating, sleeping, exercising, and spending time with
their loved ones.</p>
<p>To do this cycle right, you have to get very close to your users. Literally watch
them use your product. Sit in their office if you can. Value both what they tell you
and what they actually do. You should not put anyone between the founders and the
users for as long as possible—that means the founders need to do sales,
customer support, etc.</p>
<p>Understand your users as well as you possibly can. Really figure out what they
need, where to find them, and what makes them tick.</p>
<p>“Do things that don’t scale” has rightfully become a mantra for
startups. You usually need to recruit initial users one at a time (Ben Silbermann
used to approach strangers in coffee shops in Palo Alto and ask them to try
Pinterest) and then build things they ask for. Many founders hate this part, and just
want to announce their product in the press. But that almost never works. Recruit
users manually, and make the product so good the users you recruit tell their
friends.</p>
<p>You also need to break things into very small pieces, and iterate and adapt as you
go. Don’t try to plan too far out, and definitely don’t batch everything
into one big public release. You want to start with something very simple—as
little surface area as possible—and launch it sooner than you’d think. In
fact, simplicity is always good, and you should always keep your product and company
as simple as possible.</p>
<p>Some common questions we ask startups having problems: Are users using your
product more than once? Are your users fanatical about your product? Would your users
be truly bummed if your company went away? Are your users recommending you to other
people without you asking them to do it? If you’re a B2B company, do you have
at least 10 paying customers?</p>
<p>If not, then that’s often the underlying problem, and we tell companies to
make their product better. I am skeptical about most excuses for why a company
isn’t growing—very often the real reason is that the product just
isn’t good enough.</p>
<p>When startups aren’t sure what to do next with their product, or if their
product isn’t good enough, we send them to go talk to their users. This
doesn’t work in every case—it’s definitely true that people would
have asked Ford for faster horses—but it works surprisingly often. In fact,
more generally, when there’s a disagreement about anything in the company, talk
to your users.</p>
<p>The best founders seem to care a little bit too much about product quality, even
for seemingly unimportant details. But it seems to work. By the way,
“product” includes all interactions a user has with the company. You need
to offer great support, great sales interactions, etc.</p>
<p>Remember, if you haven’t made a great product, nothing else will save
you.</p>
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<h3 class="right"><span>Part IV</span><strong>Great Execution</strong></h3>
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<p>Although it’s necessary to build a great product, you’re not done
after that. You still have to turn it into a great company, and you have to do it
yourself—the fantasy of hiring an “experienced manager” to do all
this work is both extremely prevalent and a graveyard for failed companies. You
cannot outsource the work to someone else for a long time.</p>
<p>This sounds obvious, but you have to make money. This would be a good time to
start thinking about how that’s going to work.</p>
<p>The only universal job description of a CEO is to make sure the company wins. You
can do this as the founder even if you have a lot of flaws that would normally
disqualify you as a CEO as long as you hire people that complement your own skills
and let them do their jobs. That experienced CEO with a fancy MBA may not have the
skill gaps you have, but he or she won’t understand the users as well,
won’t have the same product instincts, and won’t care as much.</p>
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<h3 class="right"><span>Part IV: Execution</span><strong>Growth</strong></h3>
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<p>Growth and momentum are the keys to great execution. Growth (as long as it is not
“sell dollar bills for 90 cents” growth) solves all problems, and lack of
growth is not solvable by anything but growth. If you’re growing, it feels like
you’re winning, and people are happy. If you’re growing, there are new
roles and responsibilities all the time, and people feel like their careers are
advancing. If you’re not growing, it feels like you’re losing, and people
are unhappy and leave. If you’re not growing, people just fight over
responsibilities and blame.</p>
<p>Founders and employees that are burnt out nearly always work at startups without
momentum. It’s hard to overstate how demoralizing it is.</p>
<p>The prime directive of great execution is “Never lose momentum”. But
how do you do it?</p>
<p>The most important way is to make it your top priority. The company does what the
CEO measures. It’s valuable to have a single metric that the company optimizes,
and it’s worth time to figure out the right growth metric. If you care about
growth, and you set the execution bar, the rest of the company will focus on it.</p>
<p>Here are a couple of examples.</p>
<p>The founders of Airbnb drew a forward-looking graph of the growth they wanted to
hit. They posted this everywhere—on their fridge, above their desks, on their
bathroom mirror. If they hit the number that week, great. If not, it was all they
talked about.</p>
<p>Mark Zuckerberg once said that one of the most important innovations at Facebook
was their establishment of a growth group when growth slowed. This group was (and
perhaps still is) one of the most prestigious groups in the company—everyone
knew how important it was.</p>
<p>Keep a list of what’s blocking growth. Talk as a company about how you could
grow faster. If you know what the limiters are, you’ll naturally think about
how to address them.</p>
<p>For anything you consider doing, ask yourself “Is this the best way to
optimize growth?” For example, going to a conference is not usually the best
way to optimize growth, unless you expect to sell a lot there.</p>
<p>Extreme internal transparency around metrics (and financials) is a good thing to
do. For some reason, founders are always really scared of this. But it’s great
for keeping the whole company focused on growth. There seems to be a direct
correlation between how focused on metrics employees at a company are and how well
they’re doing. If you hide the metrics, it’s hard for people to focus on
them.</p>
<p>Speaking of metrics, don’t fool yourself with vanity metrics. The common
mistake here is to focus on signups and ignore retention. But retention is as
important to growth as new user acquisition.</p>
<p>It’s also important to establish an internal cadence to keep momentum. You
want to have a “drumbeat” of progress—new features, customers,
hires, revenue milestones, partnerships, etc that you can talk about internally and
externally.</p>
<p>You should set aggressive but borderline achievable goals and review progress
every month. Celebrate wins! Talk internally about strategy all the time, tell
everyone what you’re hearing from customers, etc. The more information you
share internally—good and bad—the better you’ll be.</p>
<p>There are a few traps that founders often fall into. One is that if the company is
growing like crazy but everything seems incredibly broken and inefficient, everyone
worries that things are going to come unraveled. In practice, this seems to happen
rarely (Friendster is the most recent example of a startup dying because of technical
debt that I can point to.) Counterintuitively, it turns out that it’s good if
you’re growing fast but nothing is optimized—all you need to do is fix it
to get more growth! My favorite investments are in companies that are growing really
fast but incredibly un-optimized—they are deeply undervalued.</p>
<p>A related trap is thinking about problems too far in the future—i.e.
“How are we going to do this at massive scale?” The answer is to figure
it out when you get there. Far more startups die while debating this question than
die because they didn’t think about it enough. A good rule of thumb is to only
think about how things will work at 10x your current scale. Most early-stage startups
should put “Do things that don’t scale” up on their wall and live
by it. As an example, great startups always have great customer service in the early
days, and bad startups worry about the impact on the unit economics and that it
won’t scale. But great customer service makes for passionate early users, and
as the product gets better you need less support, because you’ll know what
customers commonly struggle with and improve the product/experience in those areas.
(By the way, this is a really important example—have great customer
support.)</p>
<p>There’s a big catch to this—”Do things that don’t
scale” does not excuse you from having to eventually make money. It’s ok
to have bad unit economics in the early days, but you have to have a good reason for
why the unit economics are going to work out later.</p>
<p>Another trap is getting demoralized because growth is bad in absolute numbers even
though it’s good on a percentage basis. Humans are very bad at intuition around
exponential growth. Remind your team of this, and that all giant companies started
growing from small numbers.</p>
<p>Some of the biggest traps are the things that founders believe will deliver growth
but in practice almost never work and suck up a huge amount of time. Common examples
are deals with other companies and the “big press launch”. Beware of
these and understand that they effectively never work. Instead get growth the same
way all great companies have—by building a product users love, recruiting users
manually first, and then testing lots of growth strategies (ads, referral programs,
sales and marketing, etc.) and doing more of what works. Ask your customers where you
can find more people like them.</p>
<p>Remember that sales and marketing are not bad words. Though neither will save you
if you don’t have a great product, they can both help accelerate growth
substantially. If you’re an enterprise company, it’s likely a requirement
that your company get good at these.</p>
<p>Don’t be afraid of sales especially. At least one founder has to get good at
asking people to use your product and give you money.</p>
<p>Alex Schultz <a href="http://startupclass.samaltman.com/courses/lec06/">gave a
lecture on growth for consumer products</a> that’s well worth watching. For B2B
products, I think the right answer is almost always to track revenue growth per
month, and remember that the longer sales cycle means the first couple of months are
going to look ugly (though sometimes selling to startups as initial customers can
solve this problem).</p>
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<h3><span>Part IV: Execution</span><strong>Focus & Intensity</strong></h3>
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<p>If I had to distill my advice about how to operate down to only two words,
I’d pick focus and intensity. These words seem to really apply to the best
founders I know.</p>
<p>They are relentlessly focused on their product and growth. They don’t try to
do everything—in fact, they say no a lot (this is hard because the sort of
people that start companies are the sort of people that like doing new things.)</p>
<p>As a general rule, don’t let your company start doing the next thing until
you’ve dominated the first thing. No great company I know of started doing
multiple things at once—they start with a lot of conviction about one thing,
and see it all the way through. You can do far fewer things than you think. A very,
very common cause of startup death is doing too many of the wrong things.
Prioritization is critical and hard. (Equally important to setting the
company’s priorities is setting your own tactical priorities. What I’ve
found works best for me personally is a pen-and-paper list for each day with ~3 major
tasks and ~30 minor ones, and an annual to-do list of overall goals.)</p>
<p>While great founders don’t do many big projects, they do whatever they do
very intensely. They get things done very quickly. They are decisive, which is hard
when you’re running a startup—you will get a lot of conflicting advice,
both because there are multiple ways to do things and because there’s a lot of
bad advice out there. Great founders listen to all of the advice and then quickly
make their own decisions.</p>
<p>Please note that this doesn’t mean doing everything
intensely—that’s impossible. You have to pick the right things. As Paul
Buchheit says, find ways to get 90% of the value with 10% of the effort. The market
doesn’t care how hard you work—it only cares if you do the right
things.</p>
<p>It’s very hard to be both obsessed with product quality and move very
quickly. But it’s one of the most obvious tells of a great founder.</p>
<p>I have never, not once, seen a slow-moving founder be really successful.</p>
<p>You are not different from other startups. You still have to stay focused and move
fast. Companies building rockets and nuclear reactors still manage to do this. All
failing companies have a pet explanation for why they are different and don’t
have to move fast.</p>
<p>When you find something that works, keep going. Don’t get distracted and do
something else. Don’t take your foot off the gas.</p>
<p>Don’t get caught up in early success—you didn’t get off to a
promising start by going to lots of networking events and speaking on lots of panels.
Startup founders who start to have initial success have a choice of two paths: either
they keep doing what they’re doing, or they start spending a lot of time
thinking about their “personal brand” and enjoying the status of being a
founder.</p>
<p>It’s hard to turn down the conferences and the press profiles—they
feel good, and it’s especially hard to watch other founders in your space get
the attention. But this won’t last long. Eventually the press figures out who
is actually winning, and if your company is a real success, you’ll have more
attention than you’ll ever want. The extreme cases—early-stage founders
with their own publicists—that one would think only exist in TV shows actually
exist in real life, and they almost always fail.</p>
<p>Focus and intensity will win out in the long run. (Charlie Rose once said that
things get done in the world through a combination of focus and personal connections,
and that’s always stuck with me.)</p>
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<h3 class="right"><span>Part IV: Execution</span><strong>Jobs <em>of the</em>
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<p>Earlier I mentioned that the only universal job description of the CEO is to make
sure the company wins. Although that’s true, I wanted to talk a little more
specifically about how a CEO should spend his or her time.</p>
<p>A CEO has to 1) set the vision and strategy for the company, 2) evangelize the
company to everyone, 3) hire and manage the team, especially in areas where you
yourself have gaps 4) raise money and make sure the company does not run out of
money, and 5) set the execution quality bar.</p>
<p>In addition to these, find whatever parts of the business you love the most, and
stay engaged there.</p>
<p>As I mentioned at the beginning, it’s an intense job. If you are successful,
it will take over your life to a degree you cannot imagine—the company will be
on your mind all the time. Extreme focus and extreme intensity means it’s not
the best choice for work-life balance. You can have one other big thing—your
family, doing lots of triathlons, whatever—but probably not much more than
that. You have to always be on, and there are a lot of decisions only you can make,
no matter how good you get at delegation.</p>
<p>You should aim to be super responsive to your team and the outside world, always
be clear on the strategy and priorities, show up to everything important, and execute
quickly (especially when it comes to making decisions others are blocked on.) You
should also adopt a “do whatever it takes” attitude—there will be
plenty of unpleasant schleps. If the team sees you doing these things, they will do
them too.</p>
<p>Managing your own psychology is both really hard and really important. It’s
become cliché at this point, but it’s really true—the emotional
highs and lows are very intense, and if you don’t figure out how to stay
somewhat level through them, you’re going to struggle. Being a CEO is lonely.
It’s important to have relationships with other CEOs you can call when
everything is melting down (one of the important accidental discoveries of YC was a
way for founders to have peers.)</p>
<p>A successful startup takes a very long time—certainly much longer than most
founders think at the outset. You cannot treat it as an all-nighter. You have to eat
well, sleep well, and exercise. You have to spend time with your family and friends.
You also need to work in an area you’re actually passionate about—nothing
else will sustain you for ten years.</p>
<p>Everything will feel broken all the time—the diversity and magnitude of the
disasters will surprise you. Your job is to fix them with a smile on your face and
reassure your team that it’ll all be ok. Usually things aren’t as bad as
they seem, but sometimes they are in fact really bad. In any case, just keep going.
Keep growing.</p>
<p>The CEO doesn’t get to make excuses. Lots of bad and unfair things are going
to happen. But don’t let yourself say, and certainly not to the team, “if
only we had more money” or “if only we had another engineer”.
Either figure out a way to make that happen, or figure out what to do without it.
People who let themselves make a lot of excuses usually fail in general, and startup
CEOs who do it almost always fail. Let yourself feel upset at the injustice for 1
minute, and then realize that it’s up to you to figure out a solution. Strive
for people to say “X just somehow always gets things done” when talking
about you.</p>
<p>No first-time founder knows what he or she is doing. To the degree you understand
that, and ask for help, you’ll be better off. It’s worth the time
investment to learn to become a good leader and manager. The best way to do this is
to find a mentor—reading books doesn’t seem to work as well.</p>
<p>A surprising amount of our advice at YC is of the form “just ask them”
or “just do it”. First-time founders think there must be some secret for
when you need something from someone or you want to do some new thing. But again,
startups are where tricks stop working. Just be direct, be willing to ask for what
you want, and don’t be a jerk.</p>
<p>It’s important that you distort reality for others but not yourself. You
have to convince other people that your company is primed to be the most important
startup of the decade, but you yourself should be paranoid about everything that
could go wrong.</p>
<p>Be persistent. Most founders give up too quickly or move on to the next product
too quickly. If things generally aren’t going well, figure out what the root
cause of the problem is and make sure you address that. A huge part of being a
successful startup CEO is not giving up (although you don’t want to be
obstinate beyond all reason either—this is another apparent contradiction, and
a hard judgment call to make.)</p>
<p>Be optimistic. Although it’s possible that there is a great pessimistic CEO
somewhere out in the world, I haven’t met him or her yet. A belief that the
future will be better, and that the company will play an important role in making the
future better, is important for the CEO to have and to infect the rest of the company
with. This is easy in theory and hard in the practical reality of short-term
challenges. Don’t lose sight of the long-term vision, and trust that the
day-to-day challenges will someday be forgotten and replaced by memories of the
year-to-year progress.</p>
<p>Among your most important jobs are defining the mission and defining the values.
This can feel a little hokey, but it’s worth doing early on. Whatever you set
at the beginning will usually still be in force years later, and as you grow, each
new person needs to first buy in and then sell others on the mission and values of
the company. So write your cultural values and mission down early.</p>
<p>Another cliché that I think is worth repeating: Building a company is
somewhat like building a religion. If people don’t connect what they’re
doing day-to-day with a higher purpose they care about, they will not do a great job.
I think Airbnb has done the best job at this in the YC network, and I highly
recommend taking a look at their cultural values.</p>
<p>One mistake that CEOs often make is to innovate in well-trodden areas of business
instead of innovating in new products and solutions. For example, many founders think
that they should spend their time discovering new ways to do HR, marketing, sales,
financing, PR, etc. This is nearly always bad. Do what works in the well-established
areas, and focus your creative energies on the product or service you’re
building.</p>
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<h3 class="right"><span>Part IV: Execution</span><strong>Hiring &
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<p>Hiring is one of your most important jobs and the key to building a great company
(as opposed to a great product.)</p>
<p>My first piece of advice about hiring is don’t do it. The most successful
companies we’ve worked with at YC have waited a relatively long time to start
hiring employees. Employees are expensive. Employees add organizational complexity
and communication overhead. There are things you can say to your cofounders that you
cannot say with employees in the room. Employees also add inertia—it gets
exponentially harder to change direction with more people on the team. Resist the
urge to derive your self-worth from your number of employees.</p>
<p>The best people have a lot of opportunities. They want to join rocketships. If you
have nothing, it’s hard to hire them. Once you’re obviously winning,
they’ll want to come join you.</p>
<p>It’s worth repeating that great people have a lot of options, and you need
great people to build a great company. Be generous with equity, trust, and
responsibility. Be willing to go after people you don’t think you’ll be
able to get. Remember that the kind of people you want to hire can start their own
companies if they want.</p>
<p>When you are in recruiting mode (i.e., from when you get product-market fit to
T-infinity), you should spend about 25% of your time on it. At least one founder,
usually the CEO, needs to get great at recruiting. It’s most CEOs’ number
one activity by time. Everyone says that CEOs should spend a lot of their time
recruiting, but in practice, none but the best do. There’s probably something
to that.</p>
<p>Don’t compromise on the quality of people you hire. Everyone knows this, and
yet everyone compromises on this at some point during a desperate need. Everyone goes
on to regret it, and it sometimes almost kills the company. Good and bad people are
both infectious, and if you start with mediocre people, the average does not usually
trend up. Companies that start off with mediocre early employees almost never
recover. Trust your gut on people. If you have doubt, then the answer is no.</p>
<p>Do not hire chronically negative people. They do not fit what an early-stage
startup needs—the rest of the world will be predicting your demise every day,
and the company needs to be united internally in its belief to the contrary.</p>
<p>
Value aptitude over experience for almost all roles. Look for raw
intelligence and a track record of getting things done. Look for people you
like—you’ll be spending a lot of time together and often in tense
situations. For people you don’t already know, try to work on a project
together before they join full-time.</p>
<p>Invest in becoming a good manager. This is hard for most founders, and it’s
definitely counterintuitive. But it’s important to get good at this. Find
mentors that can help you here. If you do not get good at this, you will lose
employees quickly, and if you don’t retain employees, you can be the best
recruiter in the world and it still won’t matter. Most of the principles on
being a good manager are well-covered, but the one that I never see discussed is
“don’t go into hero mode”. Most first-time managers fall victim to
this at some point and try to do everything themselves, and become unavailable to
their staff. It usually ends in a meltdown. Resist all temptation to switch into this
mode, and be willing to be late on projects to have a well-functioning team.</p>
<p>Speaking of managing, try hard to have everyone in the same office. For some
reason, startups always compromise on this. But nearly all of the most successful
startups started off all together. I think remote work can work well for larger
companies but it has not been a recipe for massive success for startups.</p>
<p>Finally, fire quickly. Everyone knows this in principle and no one does it. But I
feel I should say it anyway. Also, fire people who are toxic to the culture no matter
how good they are at what they do. Culture is defined by who you hire, fire, and
promote.</p>
<p><a href="http://blog.samaltman.com/how-to-hire">I wrote a blog post with more
detail.</a></p>
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