Paul Graham’s Checklist, Would You Make The Cut?
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techcrunch.com
So...
PM me if you are interested in working on a side project together and nurturing a friendship based on shared values.
*Execution really is king, but is greatly helped by being smart and fast. Basically if you have all three you can take a whim idea do it quickly and see 'what if.' The faster that someone can iterate through that process the more chances they can give themselves at finding a good business.
Been friends
Worked together for awhile
Don't come together for only the startup
If close friends, stick with it even if things look bad because things eventually get better.
Don't want companies run by committee.
Need clear leadership, don't want unclear sense of who the primary decision maker is. Want to know who they should address a question to.
But not a megalomaniac, just want somebody who steps forward.
Founder power is increasing, investor power waning, probably good because those most knowledgeable getting more power.
Lot cheaper to start a startup these days.
More socially acceptable to start a startup these days.
Conway said a lot of his portfolio companies were in New York these days.
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I hate watching videos too as interesting as PG is to watch, I took the hit for the rest of ya.
(I read much faster than anyone can possibly speak.)
I took away : friends will work on a project through the bad times out of loyalty (which happens to be a good thing), while co founders who were not friends will bail at the point when the walls come crashing down.
You may have your refund of $0.00 for my services in two weeks.
Everything else I said in that post were my own words, especially the reasoning on why good friends stick it out. I find it kind of negative to simply put it on guilt -- I choose to believe that good friends work together and help each other out because they like each other, not because of fear of losing a friendship.
"No apparent leader" is easy to say, but during the video PG describes his observations of that leadership vacancy in a number of different ways. You can intuitively understand what sort of leadership he's talking about, in a way that "we don't like not knowing who to address a question to" doesn't really convey. (ie, it's nothing about the artist not wearing a "hi I'm the artist" nametag.) And it doesn't have to be a super-charismatic visionary who also knows everything, just someone who is more assertive and capable of driving the others.
Ultimately as the entrepreneur your rules should be gear towards gaining traction. Think about it, you would be over the moon if 6 out of 10 persons sign-up. Gaining customers is your way of reducing risk. Concoct your rules for reducing your risk. I think Eric Reis, Steve Blank and the lean start-up movement are doing a great job at this.
So my advice is don't try to focus on meeting this check list but focus on obtaining traction. Oddly enough, all investors love traction.
This is probably closer to what you want: http://paulgraham.com/13sentences.html
I wonder why people are so afraid to put their relationships on trial. An old adage says that you should not trust a friend of yours until you have tested it.
It's not nearly as simple as you make it out to be.
In London at any startup event you go to in London I'd say around ~20-30% of the founders have backgrounds in the financial sector.
I think investment banks are more nurturing of that sort of behaviour than many other firms, they're willing to let people go off and experiment and then rehire them back if stuff doesn't work out for them. I left the bank I was working for, and they became my first client (on a consultancy basis) to help finance my startup and after the consultancy contract was over they gave me an open invite to call them if I ever wanted to come back. I know many other people who have similar stories.
Would you like to share it?
To put it another way—there are only two ways to do a job whose output is boolean (invest/don't invest): either algorithmically, or randomly. Any judging algorithm can be approximated by a checklist.
Lets say his probability of finding the next Google with this rule was a arbitary value of 0.001. I wouldn't know its exact value but I'm assuming it's non-zero.
He would have to invest in 693 companies before he has a 50% chance of hitting a google. I don't think they have gone that far as yet. It's just a matter of time.
The chances of finding 'the next google' are a lot smaller than what you think they are, but the chances of scoring a really big hit (on the order of 10's of millions in terms of ROI for YC) are pretty good.
has_traction?
has_ability_to_get_traction?
It's pretty clear that the "checklist" boils down to sizing up the founders (clear leader?) and sizing up the founders persistence. Persistent leaders usually end up getting traction some way with some product. So that would be my 2 classifiers.
With FUD and spin making such big motions on startups (see diaspora 2 months ago) you're as well off making random bets, bets on personality or some other arbitrary factor that works for you.
There isn't a winning strategy, or all invested startups would succeed, so it's pretty much a die roll. People like PG pick a few criteria that work for them and to some measure stack the deck in their favour, but it is and will always be a gamble.