Startups, Role Models, Risk, and Y Combinator
blog.samaltman.com
blog.samaltman.com
> For example, when Adora Cheung was starting Homejoy, she would work all day as a cleaner to learn the business, drive an hour back to Mountain View, stay up as late as she could coding, then drive back to San Francisco at ~3am to beat traffic, sleep in her car, and do it again. She also gave both her apartment and her car to early cleaners so that they could partner up with Homejoy. We don’t want to delude anyone about what running a startup is like—it’s a rational decision to decide you don’t want to start a startup.
What I read here is the idea that the only way to do a startup is no sleep (except a few hours in a car) and no life. 100% of your time is startup, startup, startup.
Who profits most from cultivating this image? The startup founder or the VC?
I seldomly see current founders / executives say that this is how they lead their lives, but somehow, VCs (like Altman) keep squeezing this image into their blog posts somehow.
I don't think it's some kind of evil plot, and I like the rest of the post: it's good to be reminded that everybody started somewhere and nobody's great from the start. But I just don't believe that you can't be a successful founder and still have a life/family/healthy lifestyle.
Not always that hard. But yeah, sometimes that hard.
You can be successful in any number of odd scenarios but that is not the norm. It is not hard to prove: if you talked to any founder that led the creation of a billion dollar enterprise from nothing, you will find an endless stream of stories such as Adora's.
One of the things people fail to understand is that when you are embarking on an ambitious venture, the goal post keeps moving all the time. When you start out, you think that at a million dollar revenue, you'll be golden. Then you hit the million and now the goal post has moved to ten million dollars. And then something happens that completely threatens your whole business. Now you find yourself not just trying to grow revenue but save the entire business.
In this situation, how much time you find for life/family/health will vary from founder to founder but as a rule, it is good to go in assuming the answer is "not much".
Starting with the exceptions, and not the rule, can lead to distorted perceptions. Building a billion dollar enterprise is not the normal outcome for most founders. It is the "odd" scenario.
There's nothing wrong with modeling your entrepreneurial journey after those of billion-dollar founders, but the "go big or go home" path is not the only option for entrepreneurs starting a business.
It is entirely possible to start a multi-million dollar business and still have a life, and I'd encourage more entrepreneurs to talk to self-employed millionaires (there are a lot of them) than read Forbes articles about tech's most visible billionaires.
Yes, but anyone that knows the author and his business should also know that his post isn't addressed to those looking to make nice profitable businesses. The author has a very specific audience of people seeking funding and wanting to build large companies. His post appropriately addresses them; it isn't written that much for people whose ultimate motivation is to build a self-sufficient profitable million dollar business.
Building a billion dollar enterprise is not the normal outcome for most founders. It is the "odd" scenario.
Being successful at building the billion dollar business is the odd scenario in this case; attempting to build it is the norm. That most fail is just proof of how hard it is.
First, every "large" company was once a "small" company. You don't get to $100 million in revenue without first getting to $1 million in revenue. Focusing on the former milestone before the latter is silly.
Second, while I respect your point, it's important to look at actions, not words. Early-stage investors in Silicon Valley talk a lot about the type of businesses they want to fund, but spend half an hour browsing Crunchbase, AngelList, etc. A ton of the companies with seed funding (perhaps the majority) have very little chance of growing into the types of businesses their investors say they're looking to be involved with.
Finally, in response to your edit that attempting to build billion-dollar businesses is the norm: you can only come to such a belief if you have firmly ensconced yourself in the Silicon Valley startup scene. Countless new businesses are formed around the country each year and the people who create them, most of whom don't have billion-dollar delusions, are just as much "founders" as the broke 20-something making the rounds on Sand Hill Road.
Just because a company has billion dollar ambitions does not mean it isn't focused on the first million dollars. What remains true is that the first million can be just as hard(if not harder) as the other big jumps.
It is easy to play armchair VC and think we know what will and won't turn into a billion dollar business. If you have seen the Bessemer anti-portfolio, even Apple, Google and Intel were far from no-brainer investments(http://www.bvp.com/portfolio/antiportfolio).
So what matters is not so much that AngelList is full of companies that will never be billion dollar businesses. What matters is that among those companies are billion dollar companies and every investment represents a bet by a group of folks.
Investors have the luxury of spraying and praying because they primarily invest capital; founders, whose investment consists of time and opportunity cost, don't have this luxury. In simple terms, your investors have n lottery tickets, and you have one.
Statistically, as a founder, you are not likely to build a billion dollar business. That is worth repeating, often. Pretending that your odds are better than they really are and working yourself into the ground because Silicon Valley culture has convinced you that it's the only way is foolish.
Which leads to my final point: if you're an entrepreneur, it's worth thinking long and hard about the path you take. If you're convinced that your ambitions should be measured in 9 and 10 figures and you are enticed by the funding game, you're often not just unnecessarily sacrificing your quality of life, you may be sacrificing the potential to build a successful 7 or 8 figure business.
You misunderstood me. I never said shooting for billion dollar businesses is the norm across the country but rather in the context of startups, particularly those that YC is most interested in funding.
I'm not debating or necessarily even disagree with what you are saying about founders and their chances of success. But that is not what we are debating here.
The primary debate here is whether Sam Altman's post to his audience makes the right point about his message. I think it does.
Personally, I find it hard to believe that every YCombinator-backed founder believes he's chasing a billion-dollar opportunity, but maybe I'm delusional.
Its a bad strategy for your life, tho
The 'tortured artist' is a romantic notion
It's that meme that is being co-opted by VCs here
The 'entrepreneur as tortured artiste'
Since the 'starving artist' basically sums up
the ideal sucker for a major label record deal
(ie, weak negotiating leverage)
Its worth being critical of over-adopting the analogy.
(at least, if your the starving artist).
That being said, nothing clears the mind
like no food on the plate.
And a clear mind is what you need to succeed.
The entire team shows up by 9:30am every day, and the office is empty again by 5:30pm, almost like clockwork. I exaggerate a bit... every now and then you might have a couple people stay past 6pm, but that's about it. Overtime is a very rare thing indeed.
I find it absurd this meme that to be successful in a startup, you must work yourself to exhaustion every day, sleep very little, and do it again the next day.
Or at least, it's not true for any company (startup or otherwise) that I'd ever want to work for.
Though I think the whole ecosystem (VCs, founders, the press) feed this notion because attributing success to luck isn't really interesting to people. You don't see a lot of books by lottery winners about how to succeed in life.
Again, this isn't to say these stories aren't true; founding a startup is extremely difficult. But then again, so are a lot of things. If I just selectively picked and exaggerated stories of "normal" programmers, I could make them seem like really special people.
So basically, my advice is to trust a story of a successful startup's founding history with the same grain of salt you would a fisherperson's story of how large of a fish they caught on their last vacation. Some truth, some exaggeration, and without any evidence you have no way to know.
It's definitely not the only way but with the number of startups, resources, talent and overall competition today, everything counts in the beginning and can make or break you.
In my own experience as a solo founder without funding, nothing gets done unless you do it yourself. People already have work and school and other commitments so that means making sacrifices, ones that aren't always glamorous, ones that may be scary and overwhelming and at times unhealthy but that people will continue making simply to have a chance to succeed at what they love, and that's their prerogative.
It is merely (or should be) a technique used to separate the "men from the boys" and the "women from the girls".
For example if that statement scares you away then you may not be cut out for what you need to do. According to Altman and/or YC.
I think this is quite similar to what I saw when watching a documentary or movie on Navy seals. It was quite clear to me that all of the seals interviewed were absolutely willing to die for their country. No doubt this was something that came up in training a lot in order to weed out the people who really weren't so obsessed with being a Seal that they couldn't imagine dying for their country.
I have to tell you that when I started a non tech company many years ago (after college) I worked for 6 years w/o taking a vacation practically 7 days a week. I didn't pay attention to the weather. Every day was the same. People used to pity me but it didn't bother me at all. I liked to work. I never thought about it it's just you do what you have to do. You know what? I still work that much and I don't even have to. (But I do take vacations..)
I hate these kinds of arguments, as though there were some evil man looking to exploit people for his own gains.
As you know, startups are pass or fail (in 99% of situations). It is in the VC's best interest to put you into the pass category. If it were better to not work 100% on your startup 24/7 then it would also be in the VC's better interest to not recommend that to you. The VC doesnt somehow earn more money because you worked more on your startup. Furthermore, if doing that actually hurt your startup, the VC would be doing himself a disservice recommending it to you because it would mean that you would more likely fail and thus earn the VC nothing.
Obviously situations like Adora's make for a good story, and that's a big part of why they spread. But, realistically: we are describing (mostly) young people who have forgone the steady jobs their peers all have to try making something enormous from literally nothing. They still have bills to pay, at least one mouth to feed, quite possibly student debt, family and friends who don't really understand any of it, and maybe even family and friends who put in money (makes for a pretty shitty Christmas dinner when your company only has 2 weeks of runway left, the next round isn't closing fast enough, and Uncle Johnny's already in it for too much). Of course with a bit of experience someone could avoid/mitigate some of those issues, and that's part of why organizations like YC exist, but it is in no one's interest to sugarcoat how difficult it really is to start a startup. Anyone who says founders tell these stories to brag about how hard they work has never done it.
What still scares the be-jeezus out of me, and anyone I’ve met is getting someone else involved, pretending that you know your thing and making them, innocent travel companions, crash with you, unaware that it’s all shadows and illusion. I’m assuming that’s why psychopaths are so good at that stage: they can hire ten people that they can’t pay, and not care for the life of them that their baby won’t have formula to eat in two months. (I’ve seen that with my own eyes. Spoiler alert: it cries.)
I am not surprised that HomeJoy founder gave her home to those first helpers: with an ounce of human decency, that must have felt like a tenth of the bare minimum she was asking from them. That discomfort must have been less that the inhumane hours. Good on her, and great for her.
The fact that Sam Altman fails to see that the problem is generally others scares me.
and employees should always ask a startup how much runway they have. if they won't tell you, it's a big red flag.
As someone who’s been burned (hard) by asking that question and trusting the answer many times (Fool me once…), I see as a huge opportunity an audit company that could answer that question accurately, and reasonably well for early start-up: before and after hiring you and the all the profiles being considered.
To me I remember Ronald Regan saying "trust but verify".
While it's nice to get an answer to the question I think, having been in business for a long time, [1] the fact that one gets an answer is not necessarily the end of the investigation or proof of the statement.
Point being that if it is important to someone (the answer) before hopping on board it would be appropriate to be shown proof of the fact. (Noting of course that it wouldn't be to difficult to fake that and also noting that you don't have any control over whether the assumptions being made will hold).
Worried about insulting someone by implying that you don't trust? Figure out a creative way to put it into the appropriate words to get by that issue.
[1] As a kid, before car dealers gave loaner cars, I remember my father being told by each salesman "and if your car is in for service I'll lend you mine for the day".
"Build something people want" is a popular mantra, but notwithstanding the fact that many entrepreneurs overestimate the potential demand for their product or service, it oversimplifies what's actually required to build a company that's likely to be successful.
In the consumer market, translating popularity into dollars sufficient to support a sustainable business can be very hard. It's easy to look at companies like Snapchat, but most startups will not become so popular that they can obtain the type of funding that allows them to significantly delay the implementation of a revenue strategy. Monetizing a modestly popular consumer property that can support more than a handful of employees is still very, very difficult.
In the B2B market, creating a successful business requires that you build something people want (or, more preferably, need), that you can sell and sell at a profit, and in sufficient volume. B2B sales can be difficult and slow, even if you have a great sales team and a great product, and the cost of sale can be much higher than you anticipate. If you do crack the sales puzzle in a profitable manner, scaling sales to the point at which you actually have a real business is a hurdle many startups never get past.
If you look beyond the top 1% startups, you'll quickly find that Silicon Valley is littered with stagnant startups that are based on seemingly good ideas and that might even elicit comments like "I would use that!" But they're not "wanted" enough to get from great idea to great business.
None of this means creating a company is a bad idea, but starting the journey with the "build something people want" mantra in mind, and little else, is more often than not a path to disappointment than success.
I have actually found this to be the most difficult thing - a lack of ideas that turn out to be wanted by other people.
Ultimately, yes, you need to build something people want - a lot.
But there are a series of hurdles along the way ranging from finding a co-founder/team, building the product, raising investment, acquiring users, monetization, etc.
I always used to think that future problems are good to have. It's true that they're good to have since it means you've crossed the previous hurdle. But they're just as difficult, if not more difficult, than prior hurdles.
This is why the mental model for startups is so important. You really do have to be relentless despite the numerous hurdles which will be placed in front of you.
Someone put it nicely - facebook is Mark's side project 6, probably? Of course not all startups start that way, if you don't know what others want, that is a good way to start and at worst it is a good way to sharpen your programming/non-programming skills.
Thanks for the advice though.
We have got our first follower and working feverishly to give them value...
P.S - I'm not a YC graduate but a startup aficionado
Does this mean that (i) YC will continue to invest in it companies up through their later rounds, or (ii) that YC will actually participate in a Series B for a company that it had no prior connection with?
A successful company about to close a series-B? Much, much harder to imagine how YC would be plus-EV at that point.