Paul Graham of Y Combinator has a good essay up on “What Startups Are Really Like“. Here are his headlines with some concise additional commentary of my own.
1. Be Careful with Cofounders: hugely important because things get stressful; agree on worst case “breakup scenario” at the start and have founder stock vesting.
2. Startups Take Over Your Life: they do. I’ve seen them burn people out and wreck marriages. However, it *is* possible to create a successful startup and still keep your life intact, and the lives of your employees. It takes conscious effort. (You might enjoy this from Caterina Fake: Working hard is overrated)
3. It’s an Emotional Roller-coaster: god yes.
4. It Can Be Fun: indeed! but startups are not for normal people. Sometimes I think I am “broken” from a “normal person” sense (my poor family), but even with all the stress and uncertainty and work, I love it and don’t see how I would do anything else.
5. Persistence Is the Key: you will have lots of barriers and lots of naysayers to bull your way past; the tricky thing is deciding where to stick to your guns and vision, and where it is time to make a change based on what the market is telling you.
6. Think Long-Term: raising money, signing customer deals, and building your actual company do always take longer than you hope and want. Expect it, although don’t let that take your foot off the pedal.
7. Lots of Little Things: had a couple reactions to Paul’s points here: yes startups require you to wear lots of hats and focus on lots of details; just remember that lack of focus, and I mean ruthless focus, is a startup-killer.
8. Start with Something Minimal: this is where I sometimes find myself outside the Y Combinator world — I completely agree with shipping “minimal viable product” but sometimes I get the feeling they think everything is a lightweight web app that can be hacked up overnight. Not true. I also can be more conservative in opening up a product to the world until the feedback has gotten to the right point in a closed beta program, although this would depend on the application and target customer. I’m not dogmatic about it.
9. Engage Users: yes absolutely. My opinions as to when to open up a beta program does not mean you can’t have a large beta program. Start everything by talking to prospective users and never stop iterating based on what your customers show/tell you.
10. Change Your Idea: yes, smart “pivots” are often necessary, after all, no plan survives contact with the market. The challenge is figuring out when you need to be #5 in this list (persistent) versus knowing when to change.
11. Don’t Worry about Competitors: when it comes to statements like this, I love Steve Blank’s approach of segmenting the type of market you are facing — existing, re-segmented, or new. Your view towards competitors is really different depending on your market type. I really agree with this comment of Paul’s: “One reason people overreact to competitors is that they overvalue ideas. If ideas really were the key, a competitor with the same idea would be a real threat. But it’s usually execution that matters.”
12. It’s Hard to Get Users: it is true, and you cannot rely on word of mouth and SEO alone. You can do interesting low-budget acquisition experiments with ads on Google, Facebook, StumbleUpon, etc. For early stage companies, complex distribution partners and strategies are often not practical (they take a long time to close, discussions often have to wait until your company has more credibility, and they are often better on paper than in reality), although you might find you have to talk about them with a VC to make them feel better.
13. Expect the Worst with Deals: yes. Paul focuses on funding falling through, but I want to note that you should always plan for the worst in your contracts. Include performance targets that give you outs when things fail to work.
14. Investors Are Clueless: obviously depends on investor; Paul writes “The reason VCs seem formidable is that it’s their profession to.” I’d say that many VCs seem formidable because they are often bright and see a lot of different data points, but mostly because they hold so much power in the relationship (which sadly breeds arrogance, although not with the best).
15. You May Have to Play Games: Paul writes about posturing; it is true that if you aren’t really confident in front of VCs, you will get killed. Nothing beats a Steve Jobs reality distortion field!
16. Luck Is a Big Factor: yes, it’s a factor but it is pointless to dwell on it — you just have to do your best to make your own luck.
17. The Value of Community: entrepreneurship is really hard, and I believe that entrepreneurs need to support each other. I’m hoping to get more involved in the community in New York to further foster this.
18. You Get No Respect: I don’t think this is as bad today as when I got started — startups have a little more sex appeal today. But I think my mother preferred it during those years she could tell people I was an investment banker!
19. Things Change as You Grow: I find that companies go through big cultural changes at certain employee levels: >5, >20, >50, and then roughly every doubling.