What are startups really

I present to you the translation of Paul Graham's next great essay, What Startups Are Really Like .

October 2009
(This essay is based on a presentation at the Startup School in 2009.)

I did not know what to talk about at the Startup School, so I decided to ask the creators of the startups that we funded. What have I not written about yet?

I am in an unusual situation, having the opportunity to check out the essays I wrote about startups. I hope that essays on other topics are also correct, but I have no way to check them. Startup essays are reviewed by 70 different people every 6 months.

So, I sent a letter to all the founders in which I asked them what unexpected things they encountered when creating a startup. In fact, I asked them that I myself misunderstood, because I explained everything well enough, and nothing should have surprised them.

I can proudly say that I received one answer, which read:

What surprised me the most was that everything was really quite predictable!

The bad news is that I received more than 100 other answers with descriptions of the surprises encountered by startup founders.
The responses received were clearly divided into several categories; It is noteworthy how often several people were surprised at exactly the same thing.

1. Be careful when choosing partners

It was a surprise that most of the founders mentioned. There were two types of answers: that you need to carefully choose the co-founders, and that you need to work very hard to maintain relationships in the team.
People would like them to pay more attention when choosing partners for themselves, their character and determination, and not their abilities.

Here is a typical answer:

You can’t say that you know a person’s character well enough if you didn’t work with him in the same startup.

Character is very important because in a startup he is subjected to more serious tests than in most other situations. One of the founders clearly said that the relationship in the team was more important than the abilities of the people who compose it:

I would rather start a startup with a friend than with a stranger, even more productive. Startups are so complex that the emotional and social support that friendship gives is outweigh the loss in productivity.

We learned this lesson a long time ago. If you look at the statement in YC (Y Combinator, the company that Paul Graham created and which finances startups, translator comment), you will see more questions about the obligations and relationships between the founders of a startup than their abilities.
The founders of successful startups talked less about choosing partners, and more about how much they worked to maintain relationships.

I was struck by how the relationship between the founders of the startup is moving from friendship to marriage. My relationship with my partner went from just friendship to the fact that we began to meet constantly to rake in finances and clean up all shit. And the startup was our child. I once put it this way: "We are supposedly married, just do not fuck."

Several people used the word "married." This is a much more intense relationship than usually found between colleagues. Partly because stress is much stronger, partly because the founders are often the whole company. Therefore, these relationships should be built on high quality material. This is the basis of everything.

2. Startups occupy your whole life

As far as the relationships within the startup are more intense than the relationships between ordinary colleagues, the relationships between the startup founders and their company are just as intense. Managing a startup is not the same as having a job or being a student. Startup management does not stop for a second. This is so different from the experience of most people that they do not understand it until they themselves face it.

I did not expect that I would spend almost every minute until I was sleeping, either working on a startup or thinking about it. Your life completely changes when you start working for your company, and not for someone else's.

Everything is aggravated by the high rate of events in the startup, it seems that time begins to flow more slowly:

I think that the most unexpected for me was a change in the perception of time. When we worked on our startup, the time was stretched so that the month seemed like a giant interval.

With a good combination of circumstances, complete immersion can be exciting:

It is amazing how much a startup absorbs you, in the sense that you think about it day and night, but you never regard it as a “work”.

Although, I must say that this is a quote from the person whom we funded this summer. Maybe after a couple of years in his words there will be less enthusiasm.

3. Emotional roller coaster.

Something else came as a surprise to many people. They were not ready for such steep ups and downs.

At a startup, it seems to you that everything is going great at one moment, and that everything is terrible at the next. And by the next moment, I mean in a few hours.

The emotional ups and downs were the biggest surprise for me. One day we consider ourselves another Google and dream about how we will buy islands; in another, we reflect on how to tell our loved ones about our complete failure; And so on and so forth.

Complex are, of course, falls. For many startups, this was a big surprise:

How difficult it is to maintain team motivation in difficult days, how low these falls can be.

After time, if no significant success comes, it begins to exhaust:

One of your first tips to startup founders is “just don't die,” but the energy to keep the team in the absence of overwhelming success is not taken from the air, it is drawn from the founders themselves.

There is a limit to how much you can take on yourself. And if you have reached a point where you cannot stand it any longer, this does not mean that the end of the world has come. A lot of founders of successful startups experienced setbacks on their way.

4. It can be fun

The good news is that takeoffs are also high. Several startup founders wrote that what surprised them most was how fun and interesting it was to work in a startup:

I think that you talk a little about how to create a startup is very interesting. I am more satisfied with my work than most of my friends who did not create new companies.

Most of all they like freedom:

I am surprised how much better it is to work on what contains a challenge and requires a creative approach, what I believe in; this is very different from the usual garbage that I did before. I knew that this should be better, but I did not suspect how much.

Honestly, if I didn’t talk about this before, then I’m not going to continue. Let people think better that starting a new company is a gloomy and difficult task than if they wait for fun, and after a few months say: “Is that supposed to be fun? Are you kidding? ”The

truth is that for most people this will not be fun at all. Most of what we do when considering applications is that we try to weed out those who do not like working in a startup, for the sake of ours and their own well-being.

It’s best to say this: starting a startup is as fun as taking survival courses if you like things like that. In other words, you will not have fun at all if you don’t like such things.

5. Persistence is the key to victory

Many startup founders were surprised at how important persistence was. It was a pleasant and unpleasant surprise at the same time: they were surprised by the level of necessary perseverance

Everyone wrote about how purposeful and flexible it was necessary to be, but when I went through it myself, I realized that the necessary level of determination was underestimated anyway.

and at the same time how persistent in itself was able to solve problems:

If you are persistent, even those problems that initially seem beyond your control (for example, immigration) are resolved themselves.

Several founders explicitly mentioned that perseverance was more important than the mind.

I was constantly amazed at how persistence was more important than just the mind.

This applies not only to the mind, but also to abilities in general, which is why so many people said that character was more important in choosing partners.

6. This is for a long time.

You will need perseverance because it takes longer than you expect. So many were surprised by this:

I am constantly amazed at how long things have been going on. If a product does not undergo that explosive growth, like some other very few products, everything from development to transactions (especially transactions) takes 2-3 times longer than I expect.

When a startup comes in contact with bureaucratic organizations, such as a large company or a venture capital fund, tremendous stress arises.

One of the reasons why the founders are surprised at this is because they themselves work fast and therefore expect the same from others. This is why startups are killing so many people to seek financing and enter the global market.
But I think the main reason why startup founders are surprised at how long things have been going on is because they are overconfident. They think that they are waiting for instant success, like Google or Facebook. They are told that only 1 out of 100 successful startups has such a trajectory, and they all think: “we will be this 1”.

Maybe they will heed what one of the more successful founders says:

The main thing that I did not understand before I took up all this was that persistence is the name of this game. For the vast majority of startups that will succeed, it will be a very long journey, at least 3 years, or maybe 5+.

There are positive aspects to the fact that everything lasts a long time. Patient work causes less stress and you can work better:

Since we are relaxed, it is much easier for us to enjoy what we do. This awkward nervous energy disappeared, mixed with the desperate need not to fail, which governed all our actions. Now we can concentrate on what is best for our company, product, employees and customers.

That's why things get so much better when a startup reaches a profit point. You can switch to another mode of operation.

7. A lot of little things

We often emphasize that startups rarely become successful just because they realize some kind of magical idea. I think startup founders have already driven this into their heads. But many were also surprised that this applies to matters inside the startup. I have to deal with a bunch of different things:

A startup has a lot more routine than glamor. If you took any random length of time, you'd rather find me searching for some strange bug when loading a DLL in the Swedish version of Windows, or searching for a bug in the financial model in Excel table the night before the next meeting, than for generating brilliant strategic ideas.

Most startup hackers would prefer to do programming all the time. But you will not have to, unless of course you fail. This can be rephrased as follows: if you only program all your time, you will fail.
This principle extends even to programming. Very rarely there is any ingenious hack that ensures you success:

I learned how to never bet on any particular feature of an application or a deal or anything else. Everything happens gradually and you should just continue to do a bunch of things until you stumble upon something.

Even in those rare cases when some tricky hack brings you success, you most likely will not be able to find out about this until the last moment:

There is no such thing as a main idea that will bring you success. Well, or at least you won’t know which one.

So the best strategy is to try many different things. The reason why you don’t have to put all your eggs in one basket is not quite ordinary, which applies to the case when you know which basket is the best. In a startup, you don’t even know this.

8. Start with the smallest

Many talked about how important it was to start with a minimal work product. At this point, everyone already knows that you need to start as soon as possible and do iterations. It is practically a mantra in YC. And still, a lot of people were burned out without doing this:

Do the smallest thing you can call a complete application and sell it.

Why do people spend so much time on the first version? Mostly because of pride. They hate the idea of ​​releasing a product that could be better. They worry about what people will say about them. But this must be overcome:

To do something simple at first glance does not mean at all to do something insignificant or useless.

Do not worry about what others will say. If your first version is so good that the trolls don’t taunt her, you have been running too long.

One of the founders said that this should apply to any programming, not just startups, and I tend to agree with him. Now, when I program, I try to think: "How would I write this so that people who read my code admire how compact it is and how little it does?" Too much programming is poison.

9. Attract users

Product development is communication with the user that does not really start until you start. Before you start, you look like a photobot artist who does not show the first version of his sketch to a witness.

Getting started fast is so important that you are even better off treating the first version of your product as a trick designed to get the first users to start this conversation.

I learned to think of the first steps of a startup as a big experiment. All products should be considered an experiment. And those for whom there is a market show promising results very quickly.

As soon as you start communicating with users, I guarantee you will be surprised at what they tell you.

When you give users the opportunity to tell you what they need, they will reveal to you a lot of amazing things about what they consider valuable and what they are willing to pay for.

The information received will be pleasant and unpleasant at the same time. They will not like what you did. But on the other hand, they will want you to do many other things that will be easy to implement. They won’t be able to tell you (or even realize) what they don’t like until you start the wrong product and start communication.

10. Change the idea

The great benefit of attracting users is that you may want to change your idea. We always advise startup founders to treat their idea as a hypothesis and not as a drawing. And still they wonder how well the change of idea works.

Usually, when you complain that something is going very hard, you are advised to work even harder. In a startup, I think you need to find a problem that can be easily solved and solve it. Everyone is familiar with optimization in the field of solutions and the first thing that comes to mind, but optimization in the field of problems can bring you good results.

Just decisiveness, without flexibility, is a dumb and simple algorithm that can do nothing but a mediocre local maximum:

When someone is determined, there is a danger that he will go a long and difficult path, which will still lead nowhere.

You need to move forward, but at the same time dodge and turn to find a more suitable path. One of the founders put it short:

Fast iterations are the key to success.

This tip is pretty hard to follow because many people don’t understand how difficult it is to evaluate ideas for startups, especially their own. Experienced startup founders learned to keep their mind open:

I don’t laugh at ideas anymore, because I know how badly I evaluate whether they are good or not.

You can never say what works and what doesn’t. You just need to do what seems best at the moment. We ourselves do this at YC. And we still don't know if this will work, but it looks like a promising hypothesis.

11. Do not worry about competitors

To come up with a good idea is how to learn something indecent. Someone will look at you strangely and you already think: “Oh God, he knows.”

These alarms are almost always unfounded:

Companies that at first glance seemed to be competitors and the threat in fact usually turned out to be different. Even if they worked in the same field, their goals were different.

People often react so nervously to competitors because they overestimate ideas. If ideas were really that important, then competitors with the same idea would be a real threat. But usually decides the execution:

All the troubles caused by the appearance of a new competitor were forgotten after a week. It always comes down to your own product and approach to the market.

As a rule, this applies even to those cases when competitors receive a lot of public attention.

Competitors, about whom bloggers write a lot of good reviews, as a rule are not really winners and can disappear from the horizon very quickly. In the end, everyone needs only customers.

The hype does not create satisfied users, at least not in such a complex area as high technology.

12. Searching for users is hard

Many startup founders have complained that finding users is very difficult.

I could not imagine that it took so much time to get users.

This is a difficult question. If you can’t find users, it’s hard to say whether this is because they know little about you, or because you simply have a bad product. Even good products can be difficult due to the high cost of switching to them or integration:

Making people move to a new service is incredibly difficult. This is especially true in cases where companies already use another service, because it requires the work of their developers. If your company is small, they consider that it is not urgent.

One of the founders criticized YC quite sharply for the fact that we pay little attention to attracting users:

YC preaches “do what people want” as an engineering task, an ongoing stream of improvements until enough people are satisfied and the application takes off. Very little is said about the cost of receiving users.

This may be true; maybe we need to fix it, especially for applications like games. If you are doing something where the main difficulties are of a technical nature, you can rely on the fact that people themselves will spread information about you, as Google did. One of the founders was surprised how well it worked for them:

There is an irrational fear that no one will buy your product. But if you work a lot and gradually improve it, you have nothing to worry about.

But some other types of startups can win more without improving the product, but through deals and marketing.

13. Expect the worst from deals.

Transactions break down. This is the law of the startup world. Startups have no power, and good startup ideas tend to look erroneous. Therefore, everyone is afraid to make transactions with you and you can not do anything about it.
This also partially applies to investors:

Looking back now, I think it would be much better if we worked on the assumption that we would never be able to get additional investment. This would make us look for ways to make a profit much earlier.

As a rule, I advise you to be pessimistic. Assume that you will not find money, and if someone still offers them to you, assume that you can never find yet.

If someone gives you money, take it. You say it all the time, but I think it needs to be emphasized again. We had the opportunity to receive much more money than we received last year, and I would like us to do it.

Why do startup founders ignore me? Mostly because they are optimistic in nature. It is a mistake to be optimistic about things that you cannot control. Be optimistic about your abilities and that you can do something wonderful. But you are looking for problems if you are optimistic about large companies and venture investors.

14. Nifig investors do not understand

Many startup founders said they were surprised by the ignorance of investors:

They do not understand even those things in which they invested. I know investors who invested in the device, and who could not turn it on when I asked them to hold a demonstration.

Business angels are slightly better than venture investors, because they usually have their own startup experience:

In half the cases, venture investors do not understand what they are talking about and are a hundred years behind in their thinking. Some were great, but 95% of the investors we dealt with were unprofessional, it was unlikely that they were well versed in business or that they had a creative vision. With business angels, as a rule, it was much better to communicate.

Why are the founders so surprised that venture investors do not understand anything? I think because investors seem eerily powerful.

The reason they seem powerful is because the profession obliges them to be like that. They become venture investors, convincing financial managers to give hundreds of millions of dollars. How to do it? You need to look very confident and pretend that you are tech savvy.

15. You may have to play

Due to the fact that investors may not appreciate you correctly, you will have to work harder on how to sell yourself. One of the founders of startups said that what surprised him most was:

How false confidence impresses investors.

It surprised me very much. This summer, we invited several university graduates to tell new startup creators about finding financing, and almost 100% of their advice came down to the psychology of investors. I thought I was cynical towards venture investors, but it turned out that the founders of startups are much more cynical.

A lot of what startup creators do is just show off. And it works.

At the same time, venture investors themselves have no idea that the startups that they like are the ones who show their best. This is exactly the same phenomenon that we described in the previous paragraph. Venture investors get money by making themselves confident in front of financial managers, and startup creators get money by putting themselves confident in front of venture investors.

16. Luck plays a big role

It would seem that it should not be surprising that luck plays a large role in the search for financing and transactions. And still, many startup creators were surprised by this.

I did not realize how much luck means and how much lies beyond our control.

If you recall the famous startups, it will become pretty obvious that luck plays a huge role. Where would Microsoft be now if IBM insisted on an exclusive DOS license?
Why do startup founders ignore this? Businessmen probably aren't, but hackers are used to a world where abilities and skills are paramount, and you get what you deserve.

When we started our startup, I bought the dream of all startups: this is a game in which skills are everything. So it is, to some extent. Abilities have value. As well as determination. But lucky is a critical ingredient.

In fact, the best approximation is to say that success is a product of ability, determination and good luck. No matter how steep and determined you are, if luck is zero, the work will also be zero.
Quotes about luck do not belong to those founders whose startups have failed. Those startup creators who quickly left the race mostly blame themselves. Startup creators who have quickly succeeded do not usually realize how lucky they are. Those who are in between see how important luck is.

17. Community Value

An amazing number of startup founders said they were most surprised by the value of the community. Some of them had in mind the micro-community of startup founders at YC:

The value of the YC group of companies is experiencing the same problems at the same time.

And this should not be surprising, because it is specially organized in this way. Other people were surprised at the significance of the startup community in a broader sense:

A huge advantage is life in Silicon Valley, where you cannot help but hear the news about the latest technologies and startups. And you constantly intersect with helpful people.

They were especially surprised by the general friendly attitude:

The most amazing thing I saw was the desire of people to help us. Even people who could not get anything from it, pushed back their business to help us succeed.

And, in particular, the fact that it spread to the very top:

I was very surprised how accessible high-ranking and interesting people are. It is amazing how easy it is to reach these people and get an immediate answer.

This is one of the reasons I like to be part of this world. Wealth creation is not a one-goal game, and you do not need to hit people in the back to win.

18. You will not get respect

I forgot one more thing that surprised many startup creators: outside the startup world, startup founders don't get respect:

I found that in my social environment, I gained a lot more respect when I said: “I worked on Microsoft Office” than if I said: “I work in a small startup that no one heard about, it's called x.”

In part, this is because the rest of the world simply does not understand startups, and in part this is another fact showing that most of the good ideas of startups seem bad:

If you tell your idea to a random person, in 95% of cases you will find a person who decides that your idea is garbage, and you waste your time (although perhaps he will not tell you this in person).

Unfortunately, this also applies to girls:

I was surprised that the fact that I am the founder of a startup did not cause more sympathy among women.

I knew about it, but already forgot.

19. Everything changes as it grows.

The last big surprise that startup creators wrote about was how much was changing as they grew. The biggest change was that less programming was needed.

The description of your work as the founder of a startup is completely corresponded every 6-12 months. Less programming, more management / planning / organizing a company, hiring people, putting things in order, and just organizing events that should happen a few months from the current moment.

In particular, now you have to deal with employees who often have a completely different motivation:

I knew the conditions for the success of the startup creator, and I constantly focused on this, since I knew that I wanted to create a startup from the age of 19. The conditions for the success of an employee are completely different, and it took me a while to figure this out.

Fortunately, everything can become much less stressful when you gain flight altitude:

I would say that 75% of the stress has gone since the moment we started. Now managing a business is much nicer. We are more confident. We are calmer. We fight less. We sleep more.

I would like to say that this is true for all successful startups, but 75% looks very convincing.

General

There were other categories, but these are the most frequent. The first question that comes to mind after looking at all of them is there anything in common between them?
I saw him right away, and one of the founders of YC, to whom I read this list, also saw him. It should have been surprises, something that I didn’t tell people about. What do they have in common? All this I have said. If I wrote another essay with the same theses, without summarizing the answers of the creators of startups, everyone would say that I have run out of ideas and that I just repeat myself.

Unfortunately, everything did not fit, so read on to continue here .