uh before I jump into today's lecture I
wanted to answer a few questions people
emailed me saying they had questions
about the last lecture they we don't
have time for so if you have a question
about what we covered last time um I'm
welcome to answer it now starting with
you uh it should be on can you not hear
me
no maybe you can ask them to turn it
on uh hopefully it'll come on anybody
else
yes uh so one question that was
submitted online was uh how do I
identify if a market has a fast growth
rate now and also for the next 10 years
all right so the question is how you
identify markets that are growing
quickly um the good news about this is
this is one of the big advantages
students have um you should just trust
your instincts on this um older people
have to basically guess about the
technologies that are sort of that young
people are using right because young
people get older and they become the
dominant Market um but you can just
watch what you're doing and what your
friends are doing and um you will almost
certainly have better instincts on fast
growing markets than anybody older than
you and so the answer to this is just
trust your instincts think about what
you're using more think about what
you're using what you're seeing people
your age begin to start using um that
will almost certainly be the future
maybe I can do one more question in the
last lecture before we
start um this isn't really the last
lecture but another question online is
uh how do you deal with burnout while
still being effective and remaining
effective yeah sure um so the question
is how you deal with burnout as a
Founder uh this the answer to this is
just that it sucks and you keep going um
unlike a student where you can sort of
like throw up your hands and say you
know what I'm really burned out I'm just
going to like get bad grades this
quarter uh one of the hard Parts about
running a startup is that it's real life
and um you just have to get through it
uh the canonical advice is like go on
vacation or whatever um that never works
for found is sort of all consuming in
this way that's very difficult to
understand so what you do is you just
keep going um you rely on people uh it's
like really important and founder
depression is the serious thing and you
need to have the support network um but
the way through burnout is just to
address the challenges address the
things that are going wrong and you'll
eventually uh feel better all right so
last week we our last lecture we covered
the idea in the product um and I want to
just emphasize again that if you don't
get those right none of the rest of this
is going to save you um today we're
going to talk about how to hire uh and
how to execute hopefully you don't
execute the people you hire um sometimes
uh so first I want to talk about
co-founders um co-founder relationships
are among the most important in the
entire company um and everyone says that
you need to watch out for tension
Brewing among
co-founders um and address it
immediately and that's all true and
certainly in YC's case the number one
cause of early death for startups is is
co-founder
blowups but for some reason a lot of
people treat choosing their co-founder
with even less importance than they put
on hiring um don't do this this is one
of the most important decisions you make
in the life of your startup and you need
to treat it as such and for some reason
students are really bad at this they
just pick someone they're like I want to
start a business you want to start a
business let's start a startup together
um there are these like co-founder
dating things where you're like hey I'm
looking for a co-founder we don't really
know each other let's start a company
and this is like crazy um you would
never hire someone like this and yet
people are willing to choose their
business partners this way um it's
really really bad and choosing a random
co-founder or choosing someone you don't
have a long history with choosing
someone that you're not friends with so
that when things are really going wrong
you have this sort of past history to
bind you together um usually ends up in
disaster we had one YC batch where nine
of about 75 companies added on a random
co-founder between when we interviewed
the companies and when they started and
all nine of those teams fell apart in
the next year uh the track record for
Founders that don't already know each
other is really bad um a good way to
meet a co-founders in college uh if
you're not in college and you don't know
a co-founder the next best thing I think
is to go work in an interesting company
if you work at Facebook or Google or
something like that um it's probably
almost as co-founder rich as Stanford uh
it's better to have no co-founder
uh than to have a bad co-founder but
it's still bad to be a solo founder um I
was just looking at the stats here
before we started for the top and I may
have missed one because I was counting
quickly but I think that for the top 20
most valuable YC companies um all of
them have at least two Founders uh and
we we probably funded a rate of
something like one out of 10 solo teams
uh so best of all founder you know
co-founder you know um better than that
or not as good as that but still okay
solo founder random founder you meet uh
again students do this for some reason
really really bad uh so as you're
thinking about co-founders and people
that could be good um there's a question
of what you're looking for right and at
YC we have this public phrase um and
it's relentlessly resourceful and
everyone's heard of that and I think
that really is a very good description
for what you're looking for with
co-founders um you definitely need
relentlessly resourceful co-founders um
but there's a more colorful example that
we share at the YC kickoff um Paul
Graham started using this and I've kept
it going um so you're looking for
co-founders that need to be unflappable
tough they know what to do in every
situation they act quickly they're
decisive they're creative they're ready
for anything um and it turns out that
there's a model for this in in pop
culture and it sounds really dumb um but
it's at least very memorable and we've
told every class of YC this for a long
time uh and I think it helps them um and
that model is James Bond
um and again this sounds crazy but it it
will at least stick in your memory and
and you need someone that behaves like
James Bond more than you need someone
that is you know an expert in some
particular
domain as I mentioned earlier you really
want to know your co-founders for a
while um ideally years this is true for
early hires as well but incidentally
more people get this right for early
hires than they do for
co-founders um so again take advantage
of school
um in addition to relentlessly
resourceful you want a tough and a calm
co-founder um there are all the obvious
things like smart but everyone knows
that you want a smart co-founder uh most
people don't prioritize tough and calm
well enough especially if you feel like
you yourself aren't you need a
co-founder who is um if you're not
Technical and hopefully most people in
this room are you really want a
technical co-founder there's this weird
thing going on in startups right now
where it's become popular to say like
you know what we don't need technical
Founders we're going to hire people
we're just going to be great managers um
that doesn't work too well in our
experience you know software people
really should be starting software
companies media people should be
starting media
companies um so and in a YC experience
two or three co-founders seems to be
about perfect um one obviously not great
five really bad four works sometimes but
uh two or three I think is what to
Target okay the second part of how to
hire um try not to so one of the the
weird things that you'll notice if you
start a company is that everyone asks
you how many employees you have and this
is the metric people use to sort of
Judge how real your startup is and how
cool you are um and if you say you have
a high number of employees they're
really impressed and if you say you have
a low number of employees then then you
sound like sort of this little joke um
but actually it sucks to have a lot of
employees and you should be proud of how
few employees you can have lots of
employees ends up with things like a
high burn rate means you're losing a lot
of money every month complexity tension
slow decision making the list goes on
but it's nothing good so you want to you
want to be proud of how much you can get
done with a small number of employees um
many of the best YC companies have had
phenomenally small number of employees
for the first year sometimes none
besides the founders um they really try
to stay small as long as they possibly
can at the beginning you should only
hire when you have a desperate need to
later you need to learn how to hire fast
and scale of the company but in the
early days uh the goal should be not to
hire not too hire
and one of the reasons this is so bad is
that the cost of getting an early hire
wrong is really high um in fact a lot of
the companies that I've been very
involved with that have had a very bad
first hire in the first three or so
employees never recover from it it just
kills the company um Airbnb spent five
months interviewing their first employee
before they hired someone and in their
first year they only hired two people um
before they hired a single person they
they wrote down a list of the cultural
values that that they wanted any Airbnb
employee to
have one of those was that you had to
bleed Airbnb and if you didn't sort of
agree to that they just wouldn't hire
you um as an example of how intense
Brian chesky is he's the Airbnb CEO um
he used to ask people before he hired
them at Airbnb if they would take the
job if they got a medical diagnosis that
they had one year left to live um he
wanted them to be that committed later
he decided that was like a little bit
too crazy um and I think he relaxed it
to 10 years but last I heard he still
asks that
question um but like you know these
hires really matter these people are
what go on to Define your company and so
you need people that believe in it
almost as much as you do and it sounds
like a crazy thing to ask but he's
gotten this culture of extremely
dedicated people um that come together
when the company faces a crisis uh and
when the company faced a big crisis
early on everyone in the company lived
in the office uh and they ship product
every day until the crisis was over one
of the remarkable observations about
Airbnb is if you talk to any of the
first say I don't know 40 or 50
employees they all feel like they were
part of the founding of the company uh
and this is really hard to get right and
this is really rare um but by having an
extremely high bar I'm hiring slowly and
making sure everyone believes in the
mission you can get
that okay so let's say you know you've
listened to the warning about not hiring
and now you absolutely have to um when
you're in this hiring mode your job is
it should be your number one priority to
get the best people just like when
you're in product mode that's your
number one priority and when you're in
fundraising mode fundraising is your
number one priority um one thing that
Founders always underestimate is how
hard it is to recruit you know you think
you have this great idea everyone's
going to kind of join um but that's not
how it works to get the very best people
um they have a lot of great options
right and so it can easily take a year
to recruit someone it's this long
process and you have to convince them
that your mission is the most important
of anything that they're looking at this
is another case of why it's really
important to get the product right um
before anything else the best people
know that they should join a rocket ship
um by the way that's my number one piece
of advice if you're going to join a
startup pick a rocket ship um pick a
company that's already working uh and
that the you know not everyone yet
realizes that but it's you know you know
because you're paying attention that
it's going to be huge and and again you
can usually identify these um but good
people know this right and so good
people will wait and they want to see
that you're on this breakout trajectory
before they join
one question that people asked online
this morning is how much time you should
be spending hiring um the answer is
either like zero or 25% you're either
not hiring at all or it's probably your
single biggest block of time um in
practice like all these books on
management or whatever say that you
should spend 50% of your time hiring but
the people that give that advice it's
rare for them to even spend 10%
themselves 25% is still a huge amount of
time um but that's really how much you
should be doing once you're in hiring
mode um
okay so if you compromise and hire
someone mediocre you will always regret
it uh we always like to warn founders of
this no one really feels it until they M
make the mistake the first time um but
it can poison the culture mediocre
people at a big company cause some
problems they don't usually kill the
company a single mediocre hire in the
first five will often in fact kill a
startup A friend of mine has a sign up
in the conference room that he uses for
interviews and he like positions the
sign so the candidate is looking at it
while they're interviewing and it says
that mediocre Engineers do not build
great companies
um yeah it's true um it's really true
you can get away with it uh in a big
company right because people just sort
of like fall through the cracks but but
every person in a startup sets the tone
um so if you compromise in the first you
know say five 10 hires um it might kill
the company and you should think about
that for everyone you hire like will I
bet the future of this company on the
single hire um and that's a tough bar at
some point in the life of the company
when you're bigger you will compromise
on a hire um there will be some pressing
deadline uh or something like that you
will still regret it um but this is the
difference between theory and practice
and we're going to have uh later
speakers talk about what this H what to
do when this happens but in the early
days you just can't screw it
up um sources of candidates this is
another thing that students get wrong a
lot um the best source by far for hir in
is people that you already know um and
people that other employees in the
company already know most great
companies in Tech have been built by
personal referrals for the first at
least 100 employees and often many more
um most Founders feel awkward about
calling everyone good that they ever met
and asking their employees to do the
same but you'll notice that if you go
work at Facebook or Google one of the
things they do in your first few weeks
is an HR person sits you down and like
beats out of you every smart person
you've ever met no matter how like you
think you are to be able to recruit them
um and these personal referrals really
are the trick to hiring so you have to
like go Way Beyond your comfort zone
here um another tip is to look outside
the valley it is brutally competitive to
H Engineers here um but you probably
know very good people living elsewhere
in the world that would love to work
with
you another question that Founders ask
us a lot about is experience and how
much that matters um the short version
here is that experience matters for some
roles and not others um when you're
hiring sort of like you know someone
that is going to run a large
organization of your company experience
probably matters a lot um for most of
the early hires you make in a startup
experience doesn't matter very much uh
and you should go for aptitude and
believe in what you're doing most of the
best hires that I've ever made in my
entire life have never done that thing
before um so it's really worth thinking
like is this a role where I care about
experience or not most of the time you
don't in in the in the early days
um there are three things that I look
for when I hire people um are they
smart do they get things done and do I
want to spend a lot of time around
them and if I get an answer if I get
ended up with a yes for all three of
these um I almost never regreted the
hire it's almost always worked out you
can learn a lot about all three of these
things from an interview but the very
best way is by working together so
ideally it's someone you worked with in
the past and in which case you probably
don't even need an interview um if you
haven't then I think it's way better to
work with someone on a quick project for
a day or two before hiring them um
you'll both learn a lot they will too
and most uh first-time Founders are very
bad interviewers but very good at
evaluating someone after they've worked
together so one of the pieces that we
give advice one of the pieces of advice
that we give at YC is try to work
together on our project rather than just
doing an interview um if you are going
to interview which you'll probably do as
well you should ask specifically about
projects that someone has done in the
past um you'll learn a lot more than you
will with brain teasers for some reason
young technical Founders love to ask
brain teaser questions rather than just
ask what someone's done really dig into
projects people have worked on and call
references uh that is another thing that
first-time Founders like to skip um you
want to call some
people uh that these people have worked
with in the past and when you do you
don't just want to ask like oh how was
so and so like you really want to dig in
like is this person in the top 5% of
people you've ever worked with with what
specifically did they do would you hire
them again like why why why aren't you
trying to hire them again um you really
have to press on these reference
calls
um another thing that I've noticed from
talking to a lot of YC companies is that
good communication skills tend to
correlate really well with hires that
work out um I used to not pay attention
to this we're going to talk more about
why communication is so important in an
early startup if someone is difficult to
talk to if someone cannot communicate
clearly uh it's a real problem in terms
of their likelihood to work
out also for early employees um you want
people that have somewhat of a
risk-taking attitude uh you you
generally get this or they wouldn't be
interested in a startup but now that
startups are sort of more in fashion um
you you want people that actually sort
of like a little bit of risk if
someone's choosing between like McKenzie
and joining your startup um very
unlikely that person is going to work
out at the startup uh you also want
people who are maniacally determined
and that is slightly different than
having a risk tolerant attitude so you
really should be looking for both by the
way people are welcome to interrupt me
with questions um as stuff comes
up there's a famous test from Paul
Graham called the animal test um and and
the idea here is that you should be able
to describe any employee as an animal at
what they do um and I don't think that
probably translates out of English very
well but um you know you need
Unstoppable people uh you want you want
people that are just going to get it
done um Founders that end up being
really happy with their early hires
usually end up describing these people
as the very best in the world at
whatever they
do Mark Zuckerberg once said uh that he
tries to hire people that a he would
spend time with socially and be that
he'd be comfortable reporting to if the
roles were reversed um this strikes me
as a very good framework you don't have
to be friends with everybody um but you
should at least enjoy working with them
and if you can't have that you need at
least deeply respect them um but again
the if you don't want to spend a lot of
time around people uh you should sort of
trust your instincts on
that while I'm on this topic of hiring
uh I want to talk about employee
Equity Founders screw this up all the
time um I think that is a rough
guideline you should aim to give 10% of
the company to the first 10
employees um they have to earn it over
four years
anyway and if they're successful they're
going to contribute way more than that
uh they're going to increase the value
of the company by way more than that um
and if not then they won't be around
anyway so for whatever reason Founders
are usually very stingy with Equity to
employees and very generous with Equity
to investors and I think this is totally
backwards um I think this is one of the
things that Founders screw up the most
often you know employees will only add
more value over time investors sort of
like write the check and then despite a
lot of big promises don't usually do
that much sometimes they do um but but
your employees are really the ones that
build the company over years and years
so I believe in like fighting with
investors to reduce the amount of equity
they get um and then being as gener
generous as you possibly can with
employees um the YC companies that have
done this well the YC companies that
have been super generous with Equity to
early employees um in general the most
successful ones that we
funded um all
right so one thing that Founders forget
is that after they uh after that they
hire employees they have to retain them
I'm not going to go into a huge amount
of detail here because we're going to
have a full lecture on this later um but
I do want to talk about it a little bit
because Founders get this wrong so
often um you have to make sure that your
employees are happy and feel valued this
is one of the reasons that big Equity
grants are important um people in the
excitement of joining the startup don't
think about it much but as they come in
day after day year after year um if they
feel like they've been treated unfairly
that will really start to on them uh and
resentment will build but more than that
learning just a little bit of management
skill um which first time CEOs are
usually terrible at uh goes a long way
um one of the speakers at YC this summer
uh who who is now extremely successful
but struggled early on and had his team
turn over a few times someone asked him
what his biggest learning was and he
said that uh it turns out you shouldn't
tell your employees they're up
every day unless you'd like them all to
leave because they
will um but but as a Founder this is
this like very natural instinct right
you think you can do everything the best
and uh it's easy to tell people when
they're not doing it well
so learning just a little bit here will
prevent this like massive team
Churn it also doesn't come naturally to
most Founders to really praise their
team um it took me a while to L this too
you have to let your team get all the
credit for everything good that happens
um and you take responsibility for the
bad stuff you have to not micromanage
you have to like continually give people
new areas of responsibility these are
not the things that most Founders think
about um I think the best thing you can
do is be aware that as a first-time
founder you are likely to be a very bad
manager and try to overcompensate for
that uh Dan pink talks about these three
things that motivate people to do great
work autonomy autonomy Mastery and
purpose um I never thought about that
when I was running my company but I've
thought about it since and I think
that's actually right and I think it's
worth trying to to think about that um
it also took me a while to learn to do
things like one-on ones and give clear
feedback all of these things that
firsttime CEOs just don't do uh until
they get burned a few times but maybe
maybe I can save you from doing
that all right and the last part on the
team section uh is about firing people
when it's not working um no matter what
I say here this is not going to prevent
anyone from doing it wrong and the
reason is that firing people is one of
the worst parts of running a company um
actually in my own experience I think it
is the worst
uh every firsttime founder Waits too
long everyone hopes that an employee
will turn
around but the right answer is to fire
fast when it's not working out um it's
better for the company it's also better
for the employee but it's so painful and
so awful that everyone gets it wrong the
first few times um in addition to firing
people who doing bad at their job you
also want to fire people who a uh
creating an office politics and be who
are persistently negative um the rest of
the company is always aware of employees
doing things like this and it's just
this huge drag it's completely toxic to
the company uh again this is an example
of something that might work okay in a
big company although I'm still skeptical
but will kill a startup so I think you
need to watch out for people that are
yes you balance fast and making other
employees feel like they're secure even
if they screw up sometimes you don't
want them to feel like they're out the
door the so the question is how do you f
balance firing people fast and making
early employees feel secure um the
answer is the when an employee is not
working it's not like they screw up once
or twice um anyone will screw up once or
twice or more times than that uh and you
know you should be like very loving not
take it out on them like be a team work
together uh if someone is getting every
decision wrong that's when you need to
act and at that point it'll be it'll be
painfully aware to everyone it's not a
case of a few screw-ups it's a case
where every time someone does something
you would have done the opposite
yourself you don't get to make their
decisions but you do get to choose the
decision makers and if someone's doing
everything wrong uh just like a
consistent thing over like a period of
many weeks or a month you'll be aware of
it this is one of those cases where in
theory it sounds complicated to be sure
what you're talking about and in
practice uh there's almost never any
doubt it's the the difference between
someone making one or two mistakes and
just constantly screwing everything up
or causing problem or making everyone
unhappy is is painfully obvious the
first time you see it yes when should
co-founders decide on the equity split
great question when should co-founders
decide on the equity split uh for some
reason I've never really been sure why
this is a lot of Founders a lot of
co-founders like to uh leave this off
for a very long time you know they'll
even sign the incorporation documents in
some crazy way so that they can wait to
have this
discussion this is not a discussion that
gets easier with time
um you want to set this uh ideally you
know very soon after you start working
together um and it should be near equal
um if you're not willing to give someone
your co-founder you know like an equal
share of the equity uh I think that
should make you think hard about whether
or not you want them as a co-founder um
but in any case you should try to have
the ink dry on this before the company
gets too far along like certainly in the
first number of weeks yes experience be
okay uh but then how do you know if it's
going to be crippling and you fire
without waiting to um so the question is
I said that inexperience is okay um how
do you know if that's going to you know
if someone's going to scale past not
scale up to a role as things go on and
later become crippling um people that
are really smart and that can learn new
things can almost always find a role in
the company as time goes on you may have
to move them into something else
something other than where they started
um you know it maybe that you hire
someone to lead the engineering team
that over time can't scale as you get up
to 50 people and you give them a
different role um really good people
though can almost always find some great
place in the company I have not seen
that be a problem too
often what if your relationship with
your founder or Founders breaks down
over time ready to split and everything
what's the best way all right so the
question is what happens when your
relationship with your co-founder falls
apart um we're going to have a session
on mechanics at the near the end of the
course but here is the most important
thing that Founders screw up which is
every found every co-founder you
yourself of course has to have vesting
um basically what you're doing with
co-founder vesting is you're
pre-negotiated what happens if one of
you leaves and so the normal stance on
this in Silicon Valley is that it takes
four years let's say you split the
equity 50/50 it takes four years to earn
all of that um and the clock doesn't
start until one year in so if you leave
after one year you keep 25% of the
equity if you leave after 2 years 50 and
and on and on like that um if you don't
do that and if you have a huge Fallout
and one founder leaves early on with
half the company uh you have like this
dead weight uh of the on your Equity
table and it's very hard to get
investors to fund you or to do anything
else so number one piece of advice to
prevent that uh is to have investing on
the equity um we pretty much won't fund
a company now where the founders don't
have vested Equity uh vesting Equity
because it's just that bad the other
thing to do uh is as soon as problems
come up in the relationship between the
co-founders which happens to some degree
in every company um talk about it early
don't let it just sit off there and
fester if you have to choose between
hiring an employee that's not ideal and
losing your users to another compor what
will you do if you have to choose
between hiring a suboptimal employee uh
and losing your customers to competitor
what do you do um if it would be one of
the first five say employees of a
company uh I would lose those customers
um I just I think the damage that it
does to the company
um you know you don't want to it's
better to lose some customers than kill
the company um later on I might have a
slightly different opinion but it's
really hard to say in the general case
how about one more question then I'll
keep going yes uh what's your experience
with co-founders who aren't working in
the same location I'm going to get to
that later the question is what about
co-founders that aren't working in the
same location
um don't do
it uh I am skeptical of remote teams in
general but in the early days of a
startup uh where communication and speed
outweigh everything else um for whatever
reason video conferencing or calls just
don't work that well the data on this is
look at the say like 30 most successful
software startups of all time and try to
point to a single example where the
co-founders were in different locations
it's really really
tough um all right we'll skip a little
bit of
this all right so now we're going to
talk about execution
um execution for most Founders is not
the most fun part of starting a company
but it is often the most critical um
most people that start a company think
that they are signing up to have this
brilliant idea and you know then they're
just going to like be on magazine covers
and go to parties um but but really what
it's about more than anything else what
what what being a Founder means is is
signing up for this yearslong grind on
execution and you can't Outsource this
um the way to have a company that
executes well is to execute well
yourself everything in a startup gets
modeled after the founders whatever the
founders do becomes the culture so if
you want a culture where people work
hard and pay attention to detail and
focus on the customer and are Frugal um
you have to do it yourself there's no
other way you cannot hire a Co and have
them you know do this while you go off
to conferences uh the company just needs
to see you as like this maniacal
execution
machine as I said in the first lecture
there's like a hundred times at least
more people with great ideas than people
that are willing to put in the effort um
to execute them well ideas by themselves
are not worth anything only executing
well is what what adds value or what
creates
value a big part of execution is just
putting in the effort um but there is a
lot you can learn about how to be good
it and so we're going to have I think
three classes that just talk about
this uh so the CEO people have asked me
a bunch of times like the jobs of a
startup CEO and there are probably more
than five but you know here are five
that come up a lot in the early days um
the first four I think everyone thinks
of is CEO jobs set the vision raise
money evangelize the company to people
you're trying to recruit existing
employees Partners press customers
everybody hire and manage the team um
but the fifth one is that setting the
execution bar and this is not something
that most Founders get excited about or
think about themselves doing but I think
is actually one of the critical CEO
roles and no one but the CEO can do this
um execution gets divided into two two
key questions one can you figure out
what to do and two is can you get it
done um so I want to talk about two
parts of getting it done assuming that
you've already figured out what to do um
and those are focus and
intensity
uh so so focus is critical um one of my
favorite questions to ask Founders is
what they're spending their time and
their money on um this reveals almost
everything about what Founders think is
important one of the hardest parts about
being a Founder is that there are 100
important things competing for your
attention every day um and you have to
identify the right two or three work on
those and then ignore or delegate or
defer the rest and a lot of these things
that that Founders think are really
important you know interviewing a lot of
different law firms going to conferences
recruiting advisers whatever um they
just don't matter right and what really
does matter uh varies with time but it's
an important piece of meta advice you
need to figure out what the two or three
most important things are and then just
do those and you can only have two or
three things every day because
everything else will just come at you
you know fires the day and if you don't
get really good at setting what these
two two or three priorities are every
day um you'll never be great at actually
getting stuff
done this is really hard for Founders
right um Founders are people that get
excited by starting new things
unfortunately the trick to Great
execution is to say no a lot you know
you're saying no 97 times out of 100 um
and most Founders find that they have to
make a very conscious effort to do this
most startups are not nearly focused
enough they work really hard maybe but
they don't work hard on the right things
and you'll still fail um one of the
great and terrible things about a
starting a startup is that you get no
credit for trying you only get points
when you make something at the market
wants so if you work really hard on the
wrong things uh no one will
care so then there's this question of
how do you figure out what to focus on
um each day and this is where it's
really important to have
goals most good Founders that I know uh
at any given time have a small number of
overarching goals for the company
everybody in the company knows could be
things like ship a product by the state
you know maintain this growth rate get
this certain engagement rate hire for
these key roles get this deal done but
anybody could tell you in the company
every week what are our what are our key
goals and then everybody executes based
off of
that the founder really does set the
focus um whatever the founder cares
about whatever the founders think are
the key goals um that's going to be what
the whole company focuses on and and the
best Founders repeat these goals over
and over far more often than they think
they should need to they put them up on
the walls they talk about them in one-on
ones All Hands meeting every week um but
it keeps the company focused one of the
keys uh to focus and why I said I think
co-founders in different places struggle
is that you can't be focused without
really great communication um even if
you only have say four or five people in
a company a small Communication
Breakdown is enough for everybody to be
working on slightly different
things um and then you lose focus and
the company just scrambles
I'm going to talk about this a little
bit more later um but growth and
momentum are something you can never
lose focus on uh growth and momentum are
what a startup lives on uh and you
always have to focus on maintaining
these you should always know how you're
doing against your metrics you should
have a weekly review meeting every week
and you should be extremely suspicious
if you're ever talking about we're not
focused on growth right now we're not
growing that well right now but we're
doing this other thing you know we don't
have we don't have a timeline for when
we're going to ship this cuz we're
focused on this other thing we're doing
a Rebrand whatever um almost always a
disaster so you want to have the right
metrics and you want to be focused on
growing those metrics and having
momentum
um don't don't let the company get
distracted or excited by other things um
a common mistake is that companies get
excited by their own PR it's really easy
to get PR with no results um and it
feels like you're actually really cool
but in a year you'll still have nothing
and at that point you won't be cool
anymore and you'll just be talking about
these articles from a year ago that oh
you know like the Stanford students
start this new startup it's going to be
the next big thing and now you have
nothing and that sucks
um and then as I mentioned already be in
the same space uh this is like I think
this is pretty much a non-starter remote
co-founding teams is just really really
hard it slows down the cycle time more
than anybody ever thinks it's going
to the other piece um
besides Focus for execution is
intensity um startups only work at a
fairly intense level um a friend of mine
says that the secret to Startup success
is Extreme focus and extreme dedication
you know you can have like a startup in
one other thing you can have a startup
in a family but you probably can't have
many other Hobbies um startups are not
the best choice for work life balance
and that's sort of just the sad reality
um there's a lot of great things about a
startup but this is not one of them um
they are all consuming in a way that is
difficult to explain you you generally
need to be willing to outwork your
competitors the good news here uh wow
that's hard to see um is that a small
amount of extra work on the right thing
makes a huge difference one example that
I like to give is thinking about the
viral coefficient for a consumer web
product um how many users how many new
users each existing user brings in if
it's 099 the company will eventually
Flatline and then die U and if it's 1.01
you'll be in this happy place of
exponential growth forever um so this is
just one concrete example of where a
tiny bit of extra work is the difference
between success and failure and we talk
to successful Founders they tell stories
like this all the time you know just
outworking their competitors by a little
bit was what made them
successful um so you have to be really
intense you know this this only comes
from the CEO this only comes from the
founders uh one of the biggest
advantages that startups have is
execution speed and you have to have
this Relentless operating Rhythm um
Facebook has this famous poster that
says move fast and break
things um but at the same time they
manage to be obsessed with quality and
this is why it's hard it's it's easy to
move fast or be obsessed with quality um
the trick is that you have to do both at
a startup um you need to have a culture
where people have very high quality
standards for everything the company
does but still move quickly uh Apple
Facebook and Google have all done this
extremely
well it's not just about the product um
it's about everything they do they move
fast and they break things and they're
Frugal in the right places but they care
about quality everywhere um you know you
don't buy people shitty computers if you
don't want them to write shitty code you
really have to you do have to set a
quality bar that runs through the entire
company related to this is that you have
to be decisive um indecisiveness is a
startup killer mediocre Founders spend a
lot of time talking about Grand plans
but they never quite make this decision
you know they're they're talking about
well I could do this thing that sounds
great or I could do this other thing and
they keep going back and forth and they
don't act um and what you actually need
is this bias towards action um the best
Founders work on things that seem small
but they move really quickly uh they get
things done really quickly every time
you talk to the best Founders uh they
they've gotten new things done in fact
this this is the one thing that we've
learned best predicts the success of
Founders in YC if every time we talk to
a team they've gotten new things done um
that's the best predictor we have that
the company will go on to be
successful part of this is that you can
do huge things by in incremental pieces
if you just keep knocking down small
chunks one at a time in a year you look
back and you've done this amazing thing
on the other hand if you disappear for a
year and you expect to come back with
something amazing all at once um it
usually never happens so you have to
pick these right siiz projects you know
even if you're building this crazy
synthetic biology company um most people
would say well I have to go away for a
year I can't do this incrementally
there's almost always a way to break it
down into smaller
projects um so speed is this huge
premium right the the best Founders
usually respond to email the most
quickly um they make decisions the most
quickly they're generally quick in all
these different ways um and they just
have this do whatever it Tak takes
attitude they also show up a lot um they
come to you know they come to meetings
they come in they they meet us in person
um one piece of advice uh that I have
that's always worked for me is they they
get on planes in marginal situations um
how we doing on time I'll tell a quick
story here uh when I was running my own
company um we found out that we were
about to lose a deal it was sort of this
this critical deal from the first big
customer in the space uh and it was
going to go to the this company that had
been around for years before we were um
and they had this like all locked up so
we called we said hey we have this
better product you got to meet with us
they said you know what we're signing
this deal tomorrow sorry um we drove to
the airport we got on a plane um we were
at their office at 6:00 a.m. the next
morning we just sat there they told us
to go away we just kept sitting there um
finally one of the junior guys decided
to meet with us um finally after that
one of the senior guys decided to meet
with us they ended up ripping up the
contract with this other company um and
we closed the deal with them about a
week later uh and I'm sure that had we
not gotten on a plane had we not shown
up in person that would not have worked
out um and so you just sort of like you
show up you do these things you know uh
it's when people say get on planes in
marginal situations they usually mean it
uh well they don't usually mean it
literally but I think it's actually good
literal
advice um all right minutes so uh I'll
skip that part then
so I mentioned this momentum and growth
earlier uh once more that momentum and
growth are the lifeblood of startups um
this is the probably in the top three
secrets to executing a well um you want
a company to be winning all the time if
you ever take your foot off a gas pedal
things will spiral out of control
snowball downwards um a winning team
feels good and keeps winning a team that
hasn't won in a while gets demotivated
and keeps
losing so always keep momentum is this
prime directive for managing a startup
um if I can only tell Founders one thing
about how to how to run a company it
would be this for most start software
startups this translates to keep growing
for Hardware startups it translates to
don't let your ship date slip um this is
what we tell people during YC and they
usually listen and everything is good um
what happens after the end of YC is that
they get distracted on other things and
then growth slows down and
somehow after that happens um people
start getting unhappy and quitting and
then everything falls
apart it's hard to figure out a growth
engine because most companies grow in
new ways um but there is this thing
about if you build a good product it
will grow and so getting this good this
product right at the beginning is the
best way to not lose momentum
later if you do lose momentum most
Founders try to get it back in the wrong
way they give these long speeches about
vision for the company and they try to
rally the troops with with speeches um
but employees in a company where
momentum has saged don't want to hear
that um you have to save the vision
speeches for when the company's winning
when you're not winning you just have to
get momentum back in small wins um a
board member of mine used to say that
sales fix everything in a startup and
that is really true so you figure out
where you can get these small wins and
you get that done and then you'll be
amazed how all the other problems in a
startup
disappear uh another thing that you'll
notice if you have momentum sag is that
everyone starts disagreeing about what
to do fights come out when a company
loses momentum uh and so a framework for
that that I think works is that when
there's disagreement among the team
about what to do then you ask your users
and you do whatever your users tell you
and you have to remind people like hey
stuff's not working right now we don't
actually hate each other um we just need
to get back on track and everything
willon work and if you just call it out
if you just acknowledge that um you'll
find that things get way
better to use a Facebook example again
when Facebook's growth slowed in 2008 uh
Mark instituted a growth group they
worked on very small things to make
Facebook grow faster um all of these by
themselves seemed really small but they
got the the curve of Facebook back up um
it quickly became the most prestigious
group there um Marcus said that it's
been one of Facebook's best Innovations
um according to friends of mine that
worked at Facebook at the time it really
turned around the dynamic of the company
and it went from this thing where
everyone is feeling bad uh and momentum
was gone back to a place that was
winning so a good way uh to to keep
momentum is to establish an operating
rhythm in the company early where you
ship product and launch new features on
this regular basis uh where you're
reviewing metrics you know every week
with the entire company um this is
actually one of the best things your
board can do for you um boards add value
to business strategy only rarely um but
very frequently you can use them as a
forcing function to get the company to
care about metrics and
Milestones
um one thing that often disrupts
momentum and really shouldn't is
competitors competitors making noise in
the Press I think probably crushes a
company's momentum more often than any
other external Factor um so here's a
good rule of thumb don't worry about a
competitor at all um until they're
actually beating you with a real shipped
product uh press releases are easier to
write than code um and that is still
easier than making a great product so
remind your company of this and don't
this is sort of a Founders role is not
to let the company get down because of
the competitors in the Press um this
great quote from Henry Ford that I love
um the competitor to be feared is one
who never bothers about you at all but
goes on making his own business better
all the time these are almost never the
the companies that put out a lot of
press releases um and they bum people
out uh should we move on to the second
se you know what we'll cover this in a
later lecture we'll talk about um
Finance deal making and distribution are
there any
questions okay so on Tuesday Paul Graham
is going to speak uh see you then thank
you