This is the first of a series of posts about the YCombinator lectures about how to create a startup. I'm following them and found them very interesting. Hope You like it too.
Sam explains whats is the goal of the course: "the goal is hyper growth and eventually building a very large company". By "very large company" he means Facebook, Twitter, PayPal, etc.
To create a startup there are four main areas: great idea, great product, great team and great execution. The aim of creating a startup is to have a particular problem you feel passionate about and think starting a company is the best way of solving it.
About the idea
Sam thinks is very important to find something you really need and feel passionate about because in the best case you will be working on this for ten years so its worth your time thinking upfront if the idea is worth it and you really like it.
"Even tough (business) plans themselves are worthless, the exercise of planning is really valuable". This is a opinion I've always had (even though I haven't done any business plan yet). The exercise puts you in front of questions and obstacles you didn't expect that you will encounter in a near future, and start thinking about them beforehand can be valuable. Also it is important to place "sensors" to measure what you are doing and what is good or bad depending on the values you are getting overtime. Choosing the right things to measure and to focus on is part of this planning.
Sam always talk about an idea that must scale and that should be difficult to replicate. He sees becoming a monopoly as a good thing. And that the process of creating an startup is so hard and painful that it must be something in what you believe or eventually you will give up in the process. On the other hand if the idea is good enough you will more easily get people genuinely involved in the project, both financially and technically.
"I prefer to invest in a company that's going after a small, but rapidly growing market, than a big, but slow-growing market. [...] It may seem small today, it may be small today, but you know - and other people don't - that it's going to grow really fast."
He also thinks that the idea must be really simple to explain. If it take more than a sentence to explain your idea is probably too complicated. Keep it simple.
About the product
Once you have the idea, you must build a good product and focus on it doing very little less until is done. The objective is build something the users love, not just like. Choose to have a small number of people that love your product over a large number of people that like it. If the growth comes by word of mouth you are doing it right.
"Very few startups die from competition. Most die because they themselves fail to make something users love, they spend their time on other things. So worry about this about all else."
Another point is to make something simple but do it extremely well. Care about the quality of the details. Get close to your users and understand their needs. Listen their feedback and improve your product. Ask them what they are paying for. The founders of these companies do things like sales and customer support themselves in the early days to be really close to the end users, see their needs and improve the product.
You have to monitor meaningful metrics. Growth of active users (not total registrations), activity levels, revenue, etc. If you have growth you are building a good product.
Team and execution
This two sections will be treated in a future post, since its part of the Lecture 2 of the classes.
The Lecture 1 still has a section about "Why to start a Startup" that will be treated in a future post as well.
While the overall speeches are good, sometimes the generic ideas end up with sentences like:
"The truly good ideas don't sound like they're worth stealing [...] You want to sound crazy, but you want to actually be right".
This sentence is worthless to me. What does "be right" means? Follow your instinct? 'Right' is just an opinion, in this case, that will be proven right or wrong in the future, after all the job has been done. "Oh, it turns out it was a bad idea after all because I've failed miserably".
That's why I don't like this classes that much because they present you a very tough problem, create an startup, that can fail in a lot of different ways, but then they tell you to follow your instincts or to 'be right' on things.
Another example is that you must "know" that a small market will become a fast growing marking that will expand quickly. You can guess that, but not be sure. You can have an insight that this niche can become the 'next big thing' but what is the real probability of it? Low. Very low.
The conclusion is that they always point to the big success companies like Facebook, Google, Airbnb, PayPal, etc as successful startups and it seems that they got everything right but probably a lot of other companies did really good as well and they ended up in nothing. The advice they give you is for creating the Next Big Thing, which is OK, but I had a different perspective of what a startup was or meant. I must admit that I'm enjoying the lectures, tough, and I'm going to keep doing this post after each one.