by Andrea Martins, co-founder of GreenSocks
Have you ever fallen in love so passionately with someone or something that you find yourself addicted to their every tweet, video or Facebook update?
I have, thanks to Sam Altman, the President of Y Combinator.
Not that I fell in love with Sam himself. He may have been named by Silicon Valley thought leader Paul Graham as one of the five most interesting startup founders since 1979, but Sam’s curious penchant for wearing t-shirts over long-sleeve shirts suggests that he’s definitely too young for me.
What I fell in love with was Sam’s How To Start A Startup class at Stanford.
The interesting thing is that I’ve never even been to Stanford. I’ve been too busy working on a lawn mowing startup in Brisbane Australia, more than 7,000 miles away. Yet thanks to Sam’s free online lectures, I felt like I had a front-row seat at his 20-lecture Stanford course, which featured 1,000 minutes of collective wisdom from the founders of Airbnb, PayPal, Facebook, Pinterest, LinkedIn, Stripe, Jawbone and more.
If you’ve been too busy running your own startup to benefit from the advice of the luminary folk that Sam gathered, here’s a quick recap of some key messages:
Lecture 1: Why to Start a Startup. Ideas, Products, Teams and Execution – Part I.
Sam Altman, President, Y Combinator
Dustin Moskovitz, Co-founder Facebook, Asana and Good Ventures
It’s better to build something a small number of users love, than a large number of users like. Very few companies become super-successful without users loving their product.
Pay attention to your metrics, because a company will build what the CEO measures.
Lecture 2: Ideas, Products, Teams and Execution – Part II.
Sam Altman, President, Y Combinator
Mediocre results demotivate everyone, so founders need to focus on growth at all times.
The wrong first hire could kill a company, so apply the Mark Zuckerberg test: “Would I be comfortable reporting to this person if the roles were reversed? Would I like to socialize with this person?”
Lecture 3: Before The Startup
Paul Graham, Founder, Y Combinator
You can fool investors easier than you can fool users. You might win one or two rounds of funding, but if you’re not making something people want, your startup will fail. You need to become experts in your users, not experts in your startup.
Lecture 4: Building Product, Talking to Users, and Growing.
Adora Cheung, Co-founder, Homejoy
Don’t offer free services indefinitely. Get to get to a paid product as soon as possible, because paid users will give you honest feedback and this will help you improve your product faster.
Give customers some great reasons to switch from a competitor product. For Homejoy, it was next-day availability, the ability to reschedule easily, and a cashless system that didn’t require you to remember to leave money on the bench for your cleaner.
Lecture 5: Competition is For Losers.
Peter Thiel, Founder, PayPal, Palantir and Founders Fund
You want to be a monopoly – but not from day one. Start small and test your assumptions. Get a foothold and a customer base before people notice you. Remember that even Facebook only went after 10,000 students at first.
Lecture 6: Growth.
Alex Schultz, VP Growth, Facebook
Email is dead for people under 25. Use push-notifications instead.
Every good product has a “magic moment” – where users “get it” and want to use and share your product. Focus on getting your new users to that magic moment faster.
Move fast and don’t be afraid to break stuff. He paraphrased General Patton Jnr and said, “A good plan violently executed today is better than a perfect plan executed tomorrow”.
Lecture 7: How to Build Products Users Love.
Kevin Hale, Founder, Wufoo, and Partner, Y Combinator
The average startup raises about $25 million. The return for their investors is about 676%.
Wufoo raised about $118,000. Survey Monkey acquired them in 2011. Wufoo’s return to their investors was about 29,561%.
Why did Wufoo’s user base grow so fast?
To attract and retain users, their number one focus was to make everything simple to use and to seduce new users with memorable first impressions.
To get stuff done, Wufoo team members worked from home three days each week – with a rule that no internal phone call should go longer than 15 minutes.
To keep team members connected to their users, everyone did customer support one day a week. The side benefit of this was that when engineers got tired of answering customer service calls on a particular tech issue, they would fix the tech issue.
Lecture 8: Doing Things That Don’t Scale. PR. How to Get Started.
Walker Williams, Founder, Teespring
Justin Kan, Founder, Twitch, and Partner, Y Combinator
Stanley Tang, Founder, DoorDash
Turn your first users into champions by giving them an experience they’ll remember and talk about. Reach out and seek feedback personally. Never take users for granted.
Build, test and iterate fast. Your launch product will not be your scalable product.
Lecture 9: How to Raise Money.
Marc Andreessen, Founder, Netscape and Andreessen Horowitz
Ron Conway, Founder, SV Angel
Parker Conrad, Founder, Zenefits
Of the 4,000 fundable startups in the U.S. each year, only 200 will be funded by top-tier VCs and only 15 will make it to $100 million companies.
“Be so good they can’t ignore you,” quoting Steve Martin.
Lecture 10: Culture – Part I.
Alfred Lin, Former COO, Zappos, and Partner, Sequoia Capital
Brian Chesky, Founder, Airbnb
Airbnb knew their first employee would be critical to their culture, so to find their first engineer they conducted hundreds of interviews over four to six months.
One of their filter questions was, “If you only had one year to live, what would you be doing?” These days, they ask the same question but with a ten year timeframe.
Lecture 11: Culture – Part II.
Patrick Collison, Co-founder, Stripe
John Collison, Co-founder, Stripe
Ben Silbermann, Founder and CEO, Pinterest
At Stripe, all 170 employees have open access to every email sent in the company – which makes for a very transparent company – but a very crowded inbox.
At Pinterest, they encourage teams to be anonymous and nimble – almost like mini-startups within the Pinterest startup. They also love hiring creative minds, so they ask potential employees about their hobbies at the interview stage.
Lecture 12: Building For The Enterprise.
Aaron Levie, Founder, Box
Big concepts can sometimes be easier to achieve than small ones, because big concepts tend to attract better people.
Every customer wants something a little different. Listen to your customers but don’t get sidetracked by over-customizing your product.
Lecture 13: How To Be A Great Founder.
Reid Hoffman, Founder, LinkedIn, and Partner, Greylock Ventures
When LinkedIn launched, the only way they could get press was to say they were the “Friendster for business”. They knew this was not the right analogy, but because the press was in love with Friendster, they spoke in the language the press wanted to hear.
If a founder has work-life balance, they’re not committed enough.
If a founder cannot clearly articulate their mission and product, they will never rally a team.
Lecture 14: How To Operate.
Keith Rabois, Partner, Khosla Ventures (formerly PayPal, Slide, Square and LinkedIn)
As Peter Thiel says, most people solve B+ problems because they’re easier. But it’s the A+ problems that will make the biggest difference for the company.
Founders and CEOs need calendar audits. They need to write down their business priorities then check their calendar matches their priorities.
On a side note, when Keith was at PayPal, 25% of clicks from the homepage were to users’ own profiles. Build your site to incorporate vanity features.
Lecture 15: How To Manage.
Ben Horowitz, Founder, Andreessen Horowitz and Opsware
The most important thing you can do as a CEO is to see the company through the eyes of everyone not in the room.
For example, if someone asks you for a salary raise, think how the other team members will feel if you give that raise and other team members miss out. Sooner or later everyone finds out, so don’t allow a small flame to turn into a forest fire.
Lecture 16: How To Run A User Interview.
Emmett Shear, Founder and CEO, Twitch
When you interview users, be careful to interview the users who will pay for your product, which might mean the publishers or broadcasters, rather than the individual consumers.
In your user interviews, you should encourage your interviewees to ramble, because that’s where you will gain the most user insights.
Lecture 17: How To Design Hardware Products.
Hosain Rahman, Founder, Jawbone
Ask yourself, “What is the user problem that once we solve, users can’t live without?”
Design interactions that produce “moments of joy”, because if you can get your product right it can become a user’s entry point to a life-long relationship with all of your future products.
Lecture 18: Legal and Accounting Basics For Startups.
Kirsty Nathoo and Carolynn Levy, Partners, Y Combinator
If your startup is in the United States, funders should be paid at least minimum wage because working for free is against U.S. law.
If you want to avoid a $500k bill (like that paid by one Connecticut startup) to later move your company to Delaware, incorporate in Delaware from day one. Also, be diligent when storing important documents, because major deals have been lost because founders either did not file their 83B election form or forgot where they put their proof of filing.
Avoid investor double dipping by not giving them paid advisor or board roles.
Lecture 19: Part One: Sales and Marketing.
Tyler Bosmeny, Founder and CEO, Clever
To make sales targets you need to reach out to more than 100 companies, because it’s a numbers game.
If a customer asks you for a free trial, they might be someone who never commits. Test them by offering a 30-day opt-out contract instead.
Part Two: How To Talk To Investors.
Michael Seibel, Partner, Y Combinator
Qasar Younis and Dalton Caldwell, Partners, Y Combinator
Keep your pitch short. The more you talk, the more chance you’ll say something wrong. If an investor doesn’t have an ah-ha moment, you haven’t nailed your pitch.
The 30-second pitch:
(1) What does your company do?
(2) How big is the market?
(3) How much traction do you have?
The 2-minute pitch:
(1) What are your unique insights?
(2) How do you make money?
(3) Who’s in your team?
(4) What is the exact amount of money you’re seeking?
Lecture 20: Closing Thoughts and Later-Stage Advice.
Sam Altman, President, Y Combinator
After product/market fit is achieved, the most common failure cases at YC are a result of four mistakes:
(1) Being afraid to hire senior people;
(2) When founders can’t leave hero mode;
(3) Not enough delegation; and
(4) Not developing a personal tracking and productivity system.
One product is not enough. Sooner or later, founders need to be thinking about the second and third product. Repeatable innovation, and a culture of operational excellence, is what will help your company create enduring value over time.
Good luck with your startup!