Startup Playbook. The ultimate guide to launch startups from Y Combinator (part 1)

Original author: Sam Altman
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Startup playbook

We spend a lot of time advising startups. Although this one-on-one advice is always more important and significant, we decided that publishing some kind of how-to advice could help us scale the Y Combinator.

This guide is intended for beginners in a startup get-together and the majority of what is described below may turn out to be savage button accordions for experienced startupers, nor will I open America for those who follow YC materials. Maybe in the next part of this guide I will tell you how to scale a startup.

The goal of a startup is to acquire loyal users. If it works out, then you should figure out how to get more users. This is the first, and perhaps the most critical, part of the launch of truly successful companies today. All successful startups started with a product that the first users liked so much that they told everyone around it. If you are not able to achieve this, you will not succeed. If you are fooling yourself into believing that users like your product, and this is actually not the case, you will not succeed.
The start-up industry is dotted with the “corpses” of the founders who believed that they could skip this step.

It is much better to launch the product for a small group of fans than for a wide audience of relatively loyal users. Even if the total number of positive attitudes is the same, it is much easier to simply increase the audience than to achieve a transition of the user’s attitude from “liking” to “I'm a fan”.

I’ll warn you right away that it’s hard to start. “It turned out to be much harder than I could have imagined,” is the most frequent feedback we get at YC, although joining a startup in the early stages is usually a much better financial deal.

On the other hand, a startup is not a very big risk to your career. If you are really good, you will always have the opportunity to find work if it does not burn out. Most people are very poor at assessing risks. I personally think that the more risky option is an idea or project that you are really passionate about and work on at the expense of your employer.

For a startup to succeed, you need: a great idea (always in a large market niche), a great team, a great product, and masterful execution.

PART I "IDEA"


IDEA
Illustrated by Gregory Koberger

“What” and “Why” are some of the first questions for startups at YC. We await short and precise answers to these questions. Thus, we value the idea of ​​you as a founder. Ability to think and communicate is very important for any founder, and will be needed for hiring, fundraising, sales and much more. To spread ideas, they must be transparent and understandable, since complex ideas are almost always problematic and are a sign of confused thinking. If an idea does not immediately catch at least some people who hear it for the first time, this is very bad.

We are also concerned about who is the target audience of the product and desperately needs it. The best case is if you yourself enter the target audience. It’s also good if you clearly understand the target user, but do not enter the target group yourself.

If the company already has users, we ask how and how quickly their number is growing. We find out why the audience is not growing faster, and in particular we are trying to find out if existing users really love the product. Usually this means that users talk about the product to their friends without any promptings or requests from the company. We are also interested in whether the company is already making money, and if not, then why.

If there are no users yet, we find out the minimum requirements hypothetically, reversing on the basis of ideal experience.

At first it would be nice to test the idea in order to get confirmation of its viability. In this case, first it is better to check the consumer version, and then the corporate one. In particular, if you plan to work in B2B, one of the first questions will be whether you have a letter of intent .

For most biotech and technology companies, testing the idea is to communicate with potential customers to find out the minimum essential priority set of product features. At this stage, it is very important to get feedback to develop an idea. The concept of the actual needs of users is necessary to develop a great product and build a cool company.

As mentioned earlier, launching startups is really difficult. They take a lot of time and effort. Founders and employees should have a common goal . Therefore, we ask why the founders want to establish this particular company. We also ask how the company may one day become a monopolist. There are many different terms for this, but we use the ones suggested by Peter Thiel. Of course, we do not need the company to behave unethically in relation to competitors; instead, we try to find promising businesses for scaling that are difficult to replicate.

Finally, we are interested in the market niche, how big it is today, how fast it is growing, and why it will become huge in ten years. We are trying to understand why the market will grow rapidly and how good it is for subsequent startups. We like the beginning of the main technological changes in the industry, when no one still understands the prospects, and the major players are skeptical. And paradoxically, the best part is answered by most of the small market .

A few other thoughts on ideas:


We like everything new. Most large companies started with something fundamentally new. We doubt the advisability of a startup if there are ten other companies developing similar products at the same time. Other things being equal, people will want to be with you if you create something new and difficult to achieve than something derivative and easy to accomplish.

Best ideas often sound wild, but really good. Do not carefully hide the cards, trying to protect yourself from theft, if the idea is cool, it is unlikely to look worthy of theft because of its incredibility. Even if the idea is similar to what is possible to steal, it is unlikely to happen. There are always a thousand times more people with good ideas than people who are able to realize a great idea, turning it into a big business. Therefore, sharing ideas with people is more likely to help you than to stole the idea.

Talking about your ideas, be prepared for the fact that they will be called sucks. Perhaps this is true. Perhaps the interlocutors do not understand startups, or maybe they are just jealous. Regardless of the reasons, this will happen often and will be unpleasant, and even if you think that this does not concern you, you will still worry. Therefore, the faster you gain self-confidence, the better. No matter how successful you are, haters will always be there.

What if there are no ideas, but there is a desire to stir up something? Maybe it's still not worth it? It is much better when the idea is primary, and a startup is just a way to implement it. We once conducted an experiment in which we financed many promising teams without any ideas in the hope that they would appear. But the miracle did not happen, no one could. I think part of the problem is that good founders usually always have a lot of good ideas (usually too many). But an even greater problem is the need for urgency. When you try to whip up something, the ideas that come with a ready-made company cannot be crazy enough, which ultimately leads to a secondary idea. And this is already a high probability of the pivot .

So it’s better not to try to force yourself to create by force. Instead, it is worth learning from, in practice, noticing problems, things that seem ineffective, and major technological changes. When working on projects, you can find something interesting. Rotate in a circle of smart interesting people and at some moment ideas will certainly appear.

To be continued...

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