Why to Not Not Start a Startup
paulgraham.com
paulgraham.com
It's a combination of factors, including (1) need for savings and planning for the [non-startup-rich] future, (2) supporting a girlfriend who refuses to live a grad student lifestyle, (3) expensive cost of living in the area I want to live.
I fully realize that most of those sound like excuses more than reasons, but there is definitely a huge chasm between investing money for retirement, buying decent furniture, being able to pay rent and utility bills, etc.; and throwing caution to the wind for a probable failure and extremely strenuous social, economic and physical ordeal.
So I think my answer to why more people don't start startups is rather simple: it's not easy to leap that chasm into poverty, seclusion and exhaustion for a glint of a chance at huge success.
Of course I'll continue hacking on my side projects and hoping my equity in the startup I'm working for affords me the opportunity to take a risk of my own in the near future.
Most hackers get jobs and generally make quite substantial income. Then they get comfortable with being able to provide for themselves well (and frequently a girlfriend or wife).
Even without kids there's a lot of commitment there. A 1 year lease on a nice apartment, a girlfriend/wife "accustomed" to living comfortably, car loan/insurance, etc.
Years of people doing this means that the highest potential founders have day jobs right now. For them paths to a startup are 1) Make a lifestyle change and go back to having little money. 2) Get sizable funding 3) Manage to pull off something in their spare time.
I think #2 and #3 are rarely successful, making #1 the most likely path to startup success for someone in this position.
Give up money, car, (nice) housing, girlfriend/wife(?), etc. to slave away with no life on a startup that will probably fail. Certainly seems like a good filter for determination, the most important attribute, the chances of success for these people must be higher.
I suppose YC figures that the potential for these people is not significantly high enough to justify the smaller number they could fund. Better to do 12 x $20k investments with 25% chance of success than 2 x $120k with a 50% chance.
What do you think? I haven't tried either, but working on cool problems ought to be worth something. Most startup work seems rather mundane.
Not a rhetorical question.
One reason to worry about how my site renders in Safari is that I know people use Safari and if my site doesn't work for them they won't use my site. There's a thrill that comes when people enthusiastically approve of your work. Also I know my site will be higher quality and more valuable if it renders in safari. The more valuable my site is, the more likely I will be able to make money off of it.
Come up with a list for the Google job, and see how it compares. For me personally, both sound good.
I'm not saying the job at Google with Peter Norvig (ah) is perfect. I was just pointing out another reason why I'm hesitant to make a startup.
If you're asking yourself wether to pursue a job at google or starting a startup, you'll want to try enumerating as many reasons as you can for each one. You won't likely get a definitive answer, but the excercise will get you thinking about what other things are important to you. If you're lucky, one will turn up to be the obvious choice.
In my case, I have slid technically to the point that preparing for one is the same as preparing for the other.
And for every hard problem at a "real" job, there's 10 annoying ones. I bet the startup ratio is probably similar, but they're YOUR problems (hard and annoying), not someone elses.
Then you can focus on the the challenging and rewarding problems without worry of dealing with the mundane. The difference will be that they are problems YOU want to work on, not what Google wants.
The point is that at a startup (especially the two guys and a laptop variety) you do absolutely everything yourself, while at a big company you are supported by IT, QA, custodial services, etc, etc.
The interesting question is whether there exist jobs for which that support is worth the money and freedom one gives up working at the large company.
By enumerating what you want and comparing that with the support and restriction a steady job offers.
Money, freedom? I say risk.
There is less risk working in someone else`s company. If you take no risk then you will not have the potential to make more than in a startup. You also kiss your freedom away. Freedom. Thats a joke. For all those working for a company, tell me you really have the freedom to work, do what you want, when you want?
So if you want no risk, look forward to structured environments, other people telling you what to do and limit your ability to earn. Go work for the googles of the world [0].
Reference
[0] knowledge @ wharton, University of Pennsylvania, 'Perk Place: The Benefits Offered by Google and Others May Be Grand, but They're All Business'
There has been nothing more stressful for me than having this scenario happen - I just can't stand by and watch my efforts go to waste. (The Big company context for me was in the Architecture world, but you can substitute any profession you like in the above scenario) The best stress-reduction decision I have ever made was to start my own company. It was very difficult financially at first, but it was completely worth it.
Solving hard problems depends too much on creativity and research. I'm not sure I could do that under the pressure associated with a startup. The Google environment doesn't seem ideal either, come to think of it, but at least, I'm not the one absorbing the huge risk of failure.
Anybots is a startup that solved a hard problem, but it was self-funded, right? Would YC have funded them if it had been proposed by a 25-year-old Trevor Blackwell?
Uses some pretty advanced algorithms for planning seating arrangements.
Of course, the real challenge with a consumer product is usability, that intersection b/t your cool product and the folks with the wallets. But, that's where the money is. (Money isn't everything, of course).
You have a logical disconnect here, involving the self-selecting nature of the group. One could just as easily say: most people who try bungee-jumping enjoy it - why doesn't everyone bungee jump?
This may change in the next few years, but it doesn't seem like robotics will ever be as low-capital an operation as the Web.
Your adviser, committee members, and conference/journal reviewers are all "fickle customers". And these aren't customers who came to you because they want your product, these are more or less assigned to you and you're stuck with them (unless you change departments or schools). It's true that you get a stipend, but I'm not sure that counts as "full support". And while the drop-out rate is obviously lower than the startup failure rate, it's far from zero.
Still, I agree that grad school is less scary than a startup. But don't think it's not all about pleasing others, with many non-trivial deadlines and constraints.
It does not depend on being in grad school or not whether you can do what you want, it depends on having the money - either to pay for grad school, or for toying around with your startup.
I realize I made some oversimplifications, but still...
If you do not get a Fellowship, you are expected to perform 20 hours worth of work per week (which you actually receive credit for), in addition to your time spent on classes and on your own independent research.
In other words, grad school is more like a low-paying job than a cost. You could make the case that you could be working a higher-paying job in that time, but then you are missing out on the flexibility of being a Ph.D., which allows the possibility of being a professor or getting hired for a pretty high income. Additionally, you have the opportunity to leave your mark on the field with your research.
Even more interesting is that Ph.D. work could lead you to your startup idea, as you unveil a new use of existing technology or a new approach altogether which leads to a money-making possibility. Furthermore, if you are exceptionally driven, you may be able to get some work done on your startup idea while attending grad school, because at least so far, I have found grad school to be significantly easier than my undergrad was, because I am taking less "real" classes.
The biggest reason why startups are so much more feasible now than ever before is because of the plummeting costs of production. Whereas twenty years ago it would have taken millions of dollars to do a startup, today a college kid with a powerbook can do one in his dorm room. Every year the tools of production get exponentially more powerful and less expensive.
To play devil's advocate, these same factors that are currently driving startups may ultimately be their demise as well. Almost every tool can be used for both good and evil. A hammer can be used to drive a nail, or also to harm someone. Governments have taken it on themselves to try to allow the good uses of any given technology while regulating the evil purposes. The problem is that every time they try to regulate away an evil, there is inevitably a little spill over that prevents us from using the technology for good. Every time a powerful new technology is invented, we end up losing little bits of our rights and civil liberties.
As technologies exponentiate in both their power and interconnectedness, it seems as if society (at least ours) will go down the road of increasingly restricting freedoms in order to prevent terrorism and other evils.
It isn't hard to imagine that as the costs of production approach zero, so will the freedoms that enable us to start startups. In many countries, such as Japan and Germany, it is so hard to do anything other than the status quo that it is effectively illegal. In Germany the government subsidizes the wages of students finishing school, which makes it effectively impossible to get a job without graduating. And in Japan it's even worse.
If the past is any indicator, the same forces driving the boom in startups are ultimately going to be drivers in forcing people into more restrictive social structures.
N.B. I don't necessarily believe this, but I think it is a serious argument that has never really been rebutted. Perhaps because the guy who proposed the idea was driven insane by it is currently doing life in prison for killing a bunch of people (Kaczynksi).
I don't really think, though, that what you present are the precise beliefs of Kaczynski. In your comment, you seem to have the idea that decreasing costs of production (which is largely due to improvements in technology) is a good thing, while the decrease in freedom is the thing that is bad. It seems to me that anarcho-primitivists actually believe that technology itself is the bad thing, because it departs from the pure, hierarchy-less society of hunter-gatherers.
It is truly an interesting endeavor to consider where the boundary exists between what is good about where we are headed and what is bad. I think that all of us accept the idea that those who have greater drive and motivation to succeed should be rewarded for their efforts, and it's also hard to deny PG's contention that people now are living more luxurious lifestyles than kings of yesterday (heated houses year 'round). We may also argue that if people are content with their station in life (i.e. doing nothing to change it), then what is the problem?
On the other hand, I think that nearly all of us would agree that a situation like that in the Matrix would be a bad thing; even though the people believe they are living well, it is all a facade. Additionally, we are perfectly okay with improving the lives of friends and family members who have been less driven than we, presumably because we love them.
I guess if you consider the implications of that train of thought, if we loved humanity, we would be perfectly fine with sharing everything equally, regardless of the amount of work the individual does, and we thereby arrive back where we started, with hunter-gatherer cultures that have gift societies. We can even see evidence of this model working in the open source movement today.
I'm not really trying to make any points here, I'm just pointing out some interesting questions that your post (and my readings on Kaczynski) brought up in my mind which made me question what I had previously considered to be unquestionable truths. Perhaps it's not necessary for the entrepreneur's reward to be directly proportional to the amount of wealth the he or she has created, especially considering that with the current state of social stratification, opportunity is certainly not equal.
"technology exacerbates the effects of crowding because it puts increased disruptive powers in people's hands. For example, a variety of noise-making devices: power mowers, radios, motorcycles, etc. If the use of these devices is unrestricted, people who want peace and quiet are frustrated by the noise. If their use is restricted, people who use the devices are frustrated by the regulations... But if these machines had never been invented there would have been no conflict and no frustration generated by them."
"It is a chronic complaint of small-business persons and entrepreneurs that their hands are tied by excessive government regulation. Some of these regulations are doubtless unnecessary, but for the most part government regulations are essential and inevitable parts of our extremely complex society."
I take it that what he is saying is that technology creates social complexity, both good and bad, which then inevitably leads to the loss of liberty. I know Bill Joy, who co-founded Sun, wrote a good article in Wired a while back about reconciling Kaczynski's ideas with Kurzweil's.
That is the quote that stands out to me, and what it tells me is that he believes technology itself to be the bad thing, because it breeds the conflict and resulting regulations.
Regardless of this minor issue, I think that we are both thinking along the same lines.
The big surprise is that YC hasn't seen an order of magnitude increase in applicants from their first round. You'd think this impossible: Paul announced the first YC program only about a week before its deadline and they got something like 250 applications. Now they are all over the tech news and they still haven't cracked 1000? Maybe PG's new speaking approach (memorize, practice, use visuals) is an effort to get more people fired up?
Paul, regarding this new speaking style: you could make yourself into a Steve Jobs dynamo of a speaker, but I think you shouldn't. Your usual wordsmith style is probably better for attracting nerds.
Question: Paul, it sounds like you've mostly swung in the direction of encouraging people to look at their own lives for problems to solve. Whereas in "Why Smart People Have Bad Ideas" you were saying the opposite, like in the two paragraphs starting with "Reading the Wall Street Journal for a week should give anyone ideas... " Trevor says something similar in the footnotes. But it looks like YC has been placing all its bets on the first sort of ideas. There's a good reason: all the huge software successes come from the "build it for you and your friends" model because those are the problems you fully understand. But it's more common to find software companies making solid profits on products they built for others' problems. Am I overlooking YC companies building products designed for other people? Is the problem that there just aren't enough potential founders like the Octopart guys: people deeply involved in some non-computing world who also happen to be good programmers? If so, maybe the richest source of ideas and cofounders would be cruising web forums for the near-programmers (people who build things like MS Access half-solutions to their companies' problems) to listen to what they would like to build if only they knew how. Maybe YC should be recruiting there, too. Thoughts?
As a scientist I've had a lot of success looking for the simple yet groundbreaking problems that occur at the boundaries between very different disciplines. It can be difficult not to make 'stupid' mistakes in a discipline with which you are unfamiliar...but it's a lot easier than trying to work faster and smarter on the exact same problem as everyone else!
Surely interdisciplinary collaboration could be just as valuable in startups.
We will fund people still in school. (The founders of Weebly were.) But they have to be serious about starting a company.
Have you ever had any issues with IP?
Anyway, for the longest time, I couldn't really describe, I didn't have any solid metrics on how to explain to a friend, why I think a girl is mature/inmature. It's not about the age.
I think your point about pulling the "I'm just a kid" card totally makes sense. Kids tend to wait for something to happen (reactive) -- wait for their mom/dad/boss to tell them to do something, they need to be prodded, at which they will say "do I really need to brush my teeth now?" and groan. Adults are they ones who anticipate the next move, planning the strategy of where to go next, looking out for potential pitfalls and coming up with ideas of mitigating (proactive).
I guess I just am attracted to driven people, and dislike pessimists. I've seen plenty of people in college and in corporate who pessimists/downers like that, because they can't come up with new ideas/strategies. So by shooting at ideas of their peers, and bringing their peers down to their level -- they get to maintain the status-quo.
While my work struggles to find my replacement, I have no problems finding people that A) want to work for me on contract projects, and B) want me to work on their projects (right now there is a queue). I actually work longer now than I did in the office. But I'm not tired. In fact, I have more energy. Additionally, if you normalize my work hours, I am even more productive working on my own. I just generally feel better about myself and am only experiencing "good" stress these days. I encourage anyone who finds themselves agreeing with Paul Graham in his essays more often than not to make the leap.
I fundamentally agree with Paul Graham about the change we are seeing. In fact, my little prototype bets the farm on the premise that this change is indeed happening.
I'm sufficiently capitalized having had a couple of years out of school to make some money that Y Combinator's funding is, quite frankly, an unattractive proposition. Plus, I'm in Toronto and I love the city. I live/work downtown right near the university. I would not want to move. All this said, is there any chance that you will do a talk up here in Canada?
Mitch Kapor's OSAF (profiled in the excellent book Dreaming in Code) is an example of the pitfalls of doing this. I'd say the primary pitfall is the lack of hard deadlines which it itself caused by the lack of 'hunger' because profit/existence is not the ulimate motive. This seemed to have wreaked havoc on the schedule for Chandler at OSAF..
But what about bigger projects? Projects which need maybe 10 people working for an year? Hardware? Would your views change when you are asked to invest in projects of these kind? The reason I ask is because I'm a final year CS student in Singapore and I've developed a 360 degree video camera along with a couple of my friends and we've been talking to a lot of angel investors here. They all love the idea and are amazed by the demo but most of the time their major cause of concern is that we don't have business experience and we're very young (21). How would you evaluate an idea like this one (hardware+software)? Would you be interested in seeing something like this sent to YC? Or do you prefer sticking to web 2.0 sites?
I also love the 0% dissatisfaction idea, whether or not the result is a success. The experience of launching your own project just can't be replicated. Any of the points you mentioned, even if the result is complete failure, is well worth the expense of time & risk.
This was something I've always debated myself. I can see how the companies he's funded have shown that working first is probably not necessary. I also understand his argument that trying and failing can teach you more than working for a company would anyway. But I think it really depends on the company. Not all larger tech companies suck. And I'd still argue that working in the corporate environment (even for just a short while) teaches you a lot of valuable lessons.
I guess my view is weigh the options. Some larger companies (mainly the people you work with there) can teach you new and diversive things you simply cant learn on your own. Looking back 10 months to when I just graduated, I definitely feel I've learned a lot about accountability and being responsible from the corporate work environment. It also modivates the hell out of you to break free of the mandatory work hours and start something on your own..
I think "Let the users see what they're getting into before registering" is a more accurate description.
I'm sure I wasn't first, but it's cool nonetheless.
Startup idea: supporting geographically collocated open source projects to help potential partners get to know each other. It might start out similar to http://prehacked.com -- allow people to enter projects they're interested in and their geographic location, and cluster similar interests together to show them potential partners. Allow people to say x is similar to y when the system can't figure it out (I always thought reddit should accept hints like x is related to y or not related to y).
Social skills are learnable. Very learnable.
I believe that every geek should submit himself to a crash course in social skills (to a level where he can control a room in a party). It's really not that hard. The problem is that it's one of those problems where no one would admit it and therefore I currently research the field alone, recording my results in private (anyone interesting in starting a community dedicated to it should contact me by mail, hunt my address).
Aur Saraf
66% OF SMALL BUSINESS STARTUPS LAST 2 YEARS http://www.smallbiztrends.com/2005/07/business-failure-rates-highest-in.html
13. Uncertainty interferes a little. I have a comfortable , quiet apartment and I'd be risking that on a startup. This obstactle isn't hard to overcome, though.
Other comments on the essay
2. Too inexperienced: In my case, being too inexperienced meant that the idea of a startup didn't even occur to me. This advice might have helped, but I probably wasn't listening.
12. Need for Structure: While some people do seem to have a built-in need for structure, sometimes that structure can be "There Is No Structure." I'd say:
The problems appear when the expected structure is differs from what actually exists.
Employees will stagnate in what feels like a structured environment if they are given no instruction. However, if it's clear from the start that no structure will be provided, they won't waste time waiting. On the other side, managers may get upset if employees don't follow policy with military precision, despite the fact that military structure hasn't been provided and the relevant policy is 30 pages deep in a handbook no one has read in 2 years. The manager can either figure out how to include military drilling, or accept that degree of structure is unworkable.
My impression of Y Combinator is that it's fairly clear early on how much structure is provided (or not provided).
The numbers I hear from my VC friends is that around 50% are out of business after the 2nd year. They see more of teh picture than I do so I trust they are better qualified to make teh call.
My opinion is that more companies fail because of incompetence than insufficient funding. If you really have a great idea you can make it work. The trouble is that most make some big mistake and spoil the well.
I think starting a company is one of the most exhilarating things you can do. I wish more people would try it. I also wish more of them would try to understand the basics of business operations. This is where I disagree with Paul. I have seen too many $100 million ideas ruined by founders mistakes. Too often the time has past before they can regain their opportunity.
I still encourage everyone to give it their best shot. It's a great ride, up or down.
I work a day job and am diligently developing multiple startup ideas with a few friends, but these will obviously never get off the ground until we quit our jobs. How do you do this without massive savings for six months or a year? What if you don't become profitable for 2 or 3 years?
My best solution so far has been to trick myself and go back to get my MBA this fall. I can live off loans and spend all my free 'college' time developing our sites. I've had a lot of entrepreneurs tell me that this is a bad decision, and that I should just quit and go to town on the web.
Could someone please suggest some means that would allow me and my fellow co-founders to do this?
Aur Saraf
I would caution you against using college loans to fund your startup. For one thing, it's probably foolish to borrow money for this when there are people who will invest if you spend the time to get them interested. But for another thing, it may be a violation of federal law, with serious consequences if you get caught. A CPA or lawyer may be able to advise you about your options here.
I think it might be the change in perception. My parents, and people around their age, seem to have a different perspective on what a job means. They see work as a smaller role in their life. "Work just pays the bills". But most younger generations seem to put more of an emphasis on their careers. They see work as the main part of their life. It could be due to the amount of money that we pay for college tuition. I know I don't want to waste my degree and years of my life doing someone else's work. I'd rather have the comfort and responsibility to be left alone to do my own work. Maybe I'm just speaking about my own situation.
Will
The primary reasons I left corporate are already iterated in the essay.
1. I'm only two years out of college and fairly young, My living expenses are fairly low.
2. I was bored out of mind. I now know the real meaning of corporate drone and can relate to the movie 'Office Space'.
3. As each day of work passed by, I swear the work made me a little dumber.
4. Nothing to loose. Last straw was when the company got bought out, and the CEO jumped ship with his golden parachute.
5. I don't want to be remembered as a person who was a [insert job title] at Big Company A.
that technique works because most of us have been conditioned to ignore the problems that we encounter daily. when faced with a problem we simply side step, avoid the problem and keep marching. the entrepreneurs are the ones who stop, notice the problem (or opportunity) and help us get things done easier.
This excludes any sort of capital good like an accounting package, or his own example of groupware.
You'd never get most of the good product ideas targeted at businesses without industry experience, which sort of contradicts his advice not to work before starting a company.
If I need to manage my money and taxes, I can build software for that.
If I need to develop some kind of collaboration tool to help me work better with teams at school, or on an open-source project (both not inherently business domains), I can build software for that.
Business tools are merely extensions of these. Unless I missed it, PG never mentions good product ideas targeted at businesses, so I am unclear as to where there is a contradicition. His mantra is to go for a wide user base, which typically requires mainstream business ideas, i.e., business-to-consumer, not business-to-business.
I worked for startups all through my 20s, but now at 37, I, I find myself up against point #9.
9. Family to support
I'd love to found a startup, but having a wife, two wonderful kids, and a $500K mortgage give you a very different perspective on the startup lifestyle.
I imagine a startup incubator where the founders are provided with salary and benefits comparable to working for a corporation, and they are encouraged (forced?) to maintain a reasonable life/work balance, (The latter is probably the hardest to achieve; a startup requires an almost monomaniacal focus).
In return,the incubator would gain access to a pool of talented people who would otherwise not be able to make the leap.
Is this being done now?
Google. Except the work/life balance.
Scot Duke Virtual Operations Consulting http://innovativebusinessgolf.com
No there don't. There only needs to be some number of entities with deep pockets and marketing expertise. Those entities could be small companies and individuals, or networks thereof.
While it might turn out that a large black-box structure like today's multinationals is the most efficient organization for accomplishing certain important tasks, it doesn't seem obvious to me that it must be so.
Michael Sullivan
I wish I had met you or read this column column back in 1993 when I was graduating from college. Not that I'm complaining but I'm now in the don't start phase of my life due to kids etc... So I'll just wait and use the time to learn more until the point where my kids are a little older and can go off like Mike Siebold.
PS: I thought I'd add this post since no one has posted for a while to let you know that people are still reading your thoughts.
Drive is probably the hardest thing to maintain. I worked at a startup for 3 months. Highs are higher and lows are much much lower.
"If you're smart enough to worry that you might not be smart enough to start a startup, you probably are"
I understood what the last line meant, although it may seem ambiguous to some. It could easily have been interpreted to mean that if you think you are stupid, that means you are probably correct that you are stupid, and shouldn't start a startup.
But what do I know, I'm no linguistics expert ;P
The point is: Don't hesitate too much and learn to deal with your doubts (especially if you start a startup :o)).
It is true -- sometimes I get that feeling that I beat my up unnecessarily for no real reason, and get miserable. Then, it takes someone else (like my mentor), to point to me all the things I did right, which makes me go "oh yeah ..", I'm not a that dumb after all. HEH.
But you know what, if there's one thing I've learned from my previous job -- working in a team where I am the smartest person on board, IS NOT APPEALING to me. I specifically told my current boss, during the interview, that I _don't_ want to be the smartest guy on the team.
So basically its an infinite loop:
1. don't want to be the smartest person on the team
2. play catch up
3. go to (1)
So in all that three steps, the standard I set for myself is always higher and I never appear to have "met" my standards. Just like you said.
LOL
:)
sean
An alternative to starting a consulting business is to build your stuff on the side. Possibly draining? Yes, but if you're determined, I believe this is better than getting distracted by a consulting business. Time will tell if this is wise though.
You really have to find the right technologies that motivate and enable you. For you, it was lisp. For me, it seems to be python right now. For years I worked with java, and it simply didn't seem to fit well with me. For some reason, python seems to be the perfect fit, and I have a new sense of desire to code.
(Although if you think that a job at a big company is guaranteed income, you've never worked at a big company going through any kind of hard times!)
But no matter how frugal you are a $40000 debt is unlikely to be paid off on $10000 in funding. You would be making a big bet not only on a success but a timely one. So yes I think student debt is a large deterrent for those who have it.
Feel free to delete this comment after changes are made.
Paid back?, what about the risk issue involved here, do founders have to expose their money (if they have) to launch the startup?, don't really understand
I wish you would provide another funding route for the old hackers who didn't strike gold in 1999 but who don't have the option to work for next to nothing for a summer (even if we're willing to quit our jobs for the opportunity).
If you want to change the world, you have two ways to do it:
1) By force - in this case, don't do it. Waste of energy on anti-productivity.
2) By creating something people REALLY REALLY want (like your examples) - in that case, yes. Create a company. Find someone as enthusiastic as you. If you create something people want, money will come.
Email me for details, I'm a gmailer and my nick is SonOfLilit.
But I have the impression that PG means "to start starup is to launch a web application". right?
Your friend, Julie
- Prabu
I was a founder in a startup that died late last year. It was the hardest I have ever worked, and one of the most challenging things I have ever done. It was frustrating in so many ways and there was amazing amounts of strife involved. In the end the project ran out of money and the products of my labor and imagination are now gathering dust in storage. After all that, without any monetary reward, I would do it all again in a second. The challenge of following my senses through completely unknown territory and the reward of seeing my idea come to life was more then enough to make the whole thing worth it. It was the challenge that drove me. In the end it was the challenge itself that rewarded me even though the company didn't fly.
"A lot of people think they're too young to start a startup. Many are right. The median age worldwide is about 27..."
I do agree completely with the idea that adulthood is a state of mind and not an age. I remember my dad asking me "What do you want?" when i was somewhere between 18 and 21. My reply at that time was "I just want to be comfortable." I remember it quite distinctly. He then told me "I expect that will change some day, given your creed." He was right, and I realized it while in the midst of working my tail off on a project. All I wanted to do was work on my ideas, see them come to life. The discomfort didn't slow me down at all, it was the challenge that I wanted.
"You need a lot of determination to succeed as a startup founder. It's probably the single best predictor of success."
A founder without determination is not going to succeed, but their drive can't cause them to loose perspective. One can dig with a singular purpose and make a big hole, but if it is in the wrong place it does the project no good.
"You don't need to know anything about business to start a startup."
True, but eventually the business skills will be required if the project is to continue. My experiences have taught me that while a viable product is most of the battle, a lack of resources on the business end of a project can stop it in it's tracks. Weather it is the founders themselfs that learn the skills, or outside resources are brought in to help - the skills must be obtained. The lesson I learned is pick the right people to depend on, or depend on yourself. Implementing your ideas is great all in itself, but it is much better if there is someone interesting there to see it when you finish.
"If you don't have a co founder, what should you do? Get one."
Be careful! Going into business with someone in the startup environment is a commitment. You will spend allot of time with them and you will have to depend on them constantly. It is almost like a marriage, choose wisely. Good friends do not always make good business partners.
"In a sense, it's not a problem if you don't have a good idea..."
I believe that a person's ability to learn, gain skills, and adapt is the most important thing period. You find someone with a carrot, you've just got a carrot. Even if you need a carrot, their value is limited once they give it to you. Find a gardener and you can grow anything you need. Reminds me of some proverb about choosing a fishing pole or a fish.
"This one is real. I wouldn't advise anyone with a family to start a startup."
I agree with this 100%. I did it, and I would not advise it for someone with a choice. My family is amazing and supportive and more then anything else they KNOW me. I have founder pumping through my veins. The startup world is home to me, there is no question that I will be a serial entrepreneur. Good ideas give me goosebumps, unsolved problems give me insomnia. My family supports who I am, so I am able to do what makes me happy. Successfully pouring your soul into a project and being a member of a family at the same time is a learned skill. Play it safe unless you know what you are getting into, or just can't change who you are.
"Start another company? Are you crazy?"
See above.
"Be aware, though, that if you get a regular job, you'll probably end up working there for as long as a startup would take, and you'll find you have much less spare time than you might expect."
Working a regular job instead of chasing dreams is still a commitment. Yes, you can work a regular job without thinking about it all the time. You can go to work 8 hours a day 5 days a week and not have it take over the rest of your personal time. Having said that, is it really worth it? Why do something all day that you don't care about? Sounds flawed to me.
"Each person should just do what they need to without anyone telling them."
This throws back to the "pick carefully" comment. Your choice in business partners is paramount. There are many many people who will just stand there on the field with the ball looking confused. Within the constraints of a startup you may not have time to figure it out after the fact. Make sure you know they can work, and that they can work with you.
"If you go to work for Microsoft, you can predict fairly accurately what the next few years will be likeÃÂall too accurately, in fact. If you start a startup, anything might happen."
This is part of what attracts me to the role of a founder. Clicking send on an important proposal and not knowing what will happen is like jumping off a bridge for me (with cord of course). I love not knowing, I love the process of finding out. I love the risks you have to take and the rewards you can reap. Anything can happen, and that resonates with me.
"A significant number of would-be startup founders are probably dissuaded from doing it by their parents."
This is a problem I never had. My dad tells a story about having a booth across the aisle from Oracle WAY back when they were both small. He was lead developer on a similar DB app called RDM which was a far more mature and fully featured product at the time. His business leaders thought conservatively, Oracle shot for the stars. The rest is history. My father will never discourage me from chasing my ideas, and my mom just loves to see me glow. He was there, at the time and the place; he chose the steady paycheck.
"Imagine being sad on Sunday afternoons because the weekend was almost over, and tomorrow you'd have to get up and go to work. How did they stand it?"
What, as apposed to kicking back - stretching out - and wondering what day it is on Sunday afternoon? Never.. operating by the seat of your pants and living your ideas is the only way to go. Its the best feeling in the world, and the bad times only make the good ones better.
[edit] Getting my proverbs straight.
2. These ideas don't just apply to technology startups. They apply to new businesses generally.
3. Walt Disney couldn't make it on his own, knew this and got his brother Roy out of hospital (!) to work with him. Roy outlived Walt. Walt painted castles in the air, Roy built the (economic) foundations. = Co-founder good, Creative+Executor great :-) = There has to be real trust/loyalty between the founders. With enormous wealth on offer, enough people go crazy & try to take it all. A partner you don't know well can take you down easily.
4. 'Founders', a.k.a. entrepeneurs, are more willing to take risk than most people - which means they get pretty comfortable with failure. They are also a special breed. = Comfort is the enemy of Change. = Change is Risk, but the only way forward. = Comfortable people won't pursue a startup vigorously...
5. How do you get your Founders to "put skin in the game"? To have a personal stake in the outcome? (Besides losing their dream - or is that generally enough?)
6. One of the most important personal traits of a great entrepeneur - keeping a journal... Gotta write everything down. Crops up repeatedly in biographies. Richard Branson is quite clear about it - but doesn't relate it to his success. There is supposedly some research that says 1.5-3% of all people write down their goals. Once there was a long-term Ivy League school study (is this apocryphal?) showing that people who wrote down their goals out-performed others by 5:1 or 10:1
7. People are different. Some are shy/introvert, many extrovert. Shy people don't sift through the large numbers needed to establish 'good networks' and check-out who'd make a good partner. Many of the best geeks are quiet & retiring folk. They will, by definition, find it hard or impossible to bring along a partner. But forcing someone on them won't work either. This is a hard problem to solve. = A solution is something like your "Startup School", but a little more frequent, to provide a mileu in which these people can mix and hook up. [As conferences and User Groups can do.]
[For a great example of this, see how Paul Allen was treated by Bill Gates and Steve Balmer on his last project at Microsoft.]
8. The Internet changes everything. But the VC process is still face-to-face personal contact... Silicon Valley was caused by VC firms like "Kleiner, Perkins, Caufield & Byers" bringing money from The East into technology. Even with the hordes of imititors and rip-off merchants, greedy investors flocked and made out well... Because the place had critical mass - in people and places to meet, and the culture to support it. These comments are peppered with genuine frustration (& longing) from would-be entrepeneurs. = How can the Internet overcome this tyranny? = Business is about personal relationships. Can the Net ever replace or augment that critical factor?
9. Technology support. Finding someone who is fluent with a key technology, like hardware hacking, can be critical to the success of a project/startup. When it's not your field, how do you find a way in? Then how do you get taken seriously by an expert??
10. Scaling: small trials and growing entrepeneurs. My belief is that good entrepeneurs are grown, not born. And that there are predictable growth stages for all companies. A wealthy friends' advice is: Never attempt anything more than 30% larger than you've done before. = Have you thought of building a process to train up entrepeneurs before they enter your funding process? = I'm thinking graduated funding levels, starting low ($10k) and in a couple of stages getting to $500k or so.
11. For solid research on what makes great employees, see Robert E Kelley's book "How to be a Star Performer" [http://www.kelleyideas.com/pages/howtobeastar.htm] Number One Quality: Initiative. Sounds the same...
12. One of the prime causes of some recent major corporate collapses here in Australia was: "Ignorance, Arrogance and Self-Delusion". They are a powerful triplet that can't be broken through. Witness the non-musical entrants in "American Idol" who honestly believe they are brilliant. = How do you sort these out? They'll always have a high opinion of themselves, their abilities and a string of huge accomplishments.
To my knowledge the "revenue-less liquidity event" route to riches is new circa 1998, e.g. The Globe and other such IPOs. This route is probably a symptom of the global liquidity bubble rather than a lasting development. We are still in a global liquidity explosion that measurably started around 1995. It has fueled all kinds of bubbles and weird business practices and now it's fueling acquisitions, just like it's fueling Private Equity deals and stock buybacks. We are in financially anomalous times.
There are a variety of business models to try once you've made something people want. Sometimes it is ads (myspace) sometimes it is merchandise (homestarrunner) or a combination of the two (penny-arcade). Maybe your content is worth a subscription (hotornot). Maybe you sell books or offer training and advanced services (SysInternals/Winternals).
Another argument for not worrying about the business model, if it is your intent to be acquired, is that your product may wind up more flexible. 3 different companies might use 3 different ways to make money from your product. Again, the distinction is that it's already profitable companies doing the buying, rather than the Stock Market At Large.
I'm a Paul myself ... :) Y Combinator is an inspiration for me! I think that as Y Combinator incubates more companies successfully, more and more groups will apply. :)
The comparitively small number of valuable start-ups are doing good work by tackling problems that are difficult, and/or have a strong potential to separate a customer from the contents of his/her wallet. It is not that hard to separate the wheat from the chaff and identify start-ups with good ideas.
The biggest discouragement for starting a start-up is the notion that you'll bust your ass for a few years and create a great product, but end up skewered by IP patent trolls, aggressively predatory competitors with deep pockets, professional compensation claimants etc. etc. etc.
Incidentally, I wonder how attitudes to starting a start-up will change when the current western bubble of cheap credit finally pops?
I see that paying naive college students in Ramon noodles to work in overdrive to create a startup is indeed pure genius. The startup at Y-Combinatorics has a much better chance of being popular regardless of merit, because, face facts, our mass media isn't particularly clever or creative but more a bullhorn for what they are told is trendy and clever. Congratulations.
That said, I say to everyone out there, empathy is the well from which creativity springs.
The old have suffered and have had their minds sharply honed to recognize problems. It's called being cranky. That gives the old the unique perspectives needed to identify solutions. However, the old have wrinkles, yuck, and are not marketable by the mass media as genius wunderkinder.
With that in mind and noting that telecomuting is increasingly relevant it's clear Y-Combinatorics is not about founding companies with relevant solutions and worth while products. It is about marketing (man we Americans have mass media that are ignorant a@@ clowns). It is about manipulating the ignorant mass media into egging on the Goggles of the world to ape the thought process expounded in the media and snatch up such trendy start-ups as StuffedUp and so on.
So yeah, any clown with a startup idea would be a fool not to take advantage of such a flatulent environment. If they don't like your makeup, wipe it off and paint a new face. Go for it!