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Startups that execute with the end in mind do much better than those that code with ambiguity. Unfortunately, I feel that YC might be encouraging startups to not strategically plan ahead due to the emphasis put on "The original idea is not important because it will change anyway". Yes, ideas do change, but that does not give us the excuse not to make a long term plan before they do.

Startups should always have a week long tactical plan and a rough strategic goal stretched upto three months.

"If you don't know where you're going, you will end up somewhere else."

Last question from YC's FAQ:

Q. Are you looking for investors? A. Not at the moment.

I always wondered why YC was reluctant to take outside investment. Now we know why :)

The issue with scalability is the same problem many corporations faced 50 years ago. This was before Ray Kroc turned McDonalds into a "turn-key" operation. This model provides the franchisee licensed trademark along with tried and proven methods of doing that particular business; which, in our case, involves establishing mini-YC companies to fund startups.

For scalability, YC will need to experiment with establishing several offices around the country and then provide guidance, connections, and resources from the central office to all the smaller branches. The essence of turn-key operations is to work on building a business rather than the product.

I don't claim to know much about this. So if anyone is interested, they should check out "The E-Myth Revisited".

It seems the lawyers take away more money than the development process! eek

There are more startups forming now than they were back in 1999. The difference, though, is that not as many startups are receiving funding. So while the bubble might be back, it isn't clear how it will burst.

"However, eMarketer last month forecast that online ad growth will slow this year to 19 percent, reaching $19.5 billion."

I reckon the ad spending is going to exponentially rise once some tiny startup figures out how to effectively advertise to the cellular market. Exciting times!

They lose money because they forget the most basic principle of any business: moneymaking.

It seems so obvious; but everybody on Web 2.0 seems to think that exit strategies mean they don't need a business plan. The bottom line is that a business is not a business if it does not make money. By that metric, almost all internet startups, even the ones funded by VCs, are just "hobbies".

Exit strategies are great. But that does not give us the excuse to ignore the basic economics of this business.

According to Jessica Levingstone, it is 4. And according to Paul, it is 3. The rest of us can take the mean and agree upon 3.5 females.

For the same reason guys don't apply to "America's next top model". There just aren't enough female geeks. Which is a pity, since they are mathematically better tuned.

agreed. I loved the detailed post. I am now reading "Demo Day": http://mealticket.wordpress.com/2007/02/13/demo-day/

"..when you think of Facebook as being one of the most exciting companies in the Valley right now and then you realize it's being driven by a young team it makes you question a lot of assumptions. So my 'intended' career path had been law - where your pay and rank is determined purely by the number of years you have worked at the firm for. When you hit a certain age maybe you make partner and maybe you don't. But the point is that age and experience rule in that culture and not raw ability. Why do we have to assume that we can measure the ability to perform well purely by the number of years someone has worked in a particular field? Mark Zuckerberg doesn't have 10 years experience of running companies worth $1 billion but he's doing a pretty good job of it so far.

Why does someone who has spent 10 years analysing financial markets have a better chance of making a success out of an idea we live and breathe everyday? The attitude in the Valley is that your age is determined by the number of startups you've gone through - there are people here my age who have already started and scrapped a couple of companies. That gives them experience and all the 'grey hair' they need."

Thanks for the great blog, Harj!

Awesome work Daniel! You just made my day :D

Bad publicity is not as good as good publicity, but it is better than no publicity at all. As Seth Godin often points out "Being safe is risky".

If you wish to make a pre-launch buzz, try it in a controlled environment. A strategy I used was to aim for foreign startup blogs (mandarin, spanish, french, etc) instead of western ones. Their reviews gave me a leg up on the feedback I should anticipate from western bloggers.

Since the initial buzz I generated centered around foreign bloggers, I did not risk losing my reputation in front of the big name Web 2.0 startup bloggers. I took my startup to the west only after I was satisified with the feedback.

Any sufficiently large corporation cannot continuously hire smart people since there is a tendency to push for the average. Google has avoided this by applying something known as the "Lake Wobegon strategy" (http://googleresearch.blogspot.com/2006/03/hiring-lake-wobegon-strategy.html). It states that a company should only hire candidates who are above the mean of the current flock of employees.

Though, as I stated earlier, even Google cannot continue to endlessly hire smart individuals. A sample of the average IQ of University students would most likely be the same as the rest of the population. There are always a few exceptional individuals in any group, but the group itself is most often average.

yeah Dan, do one for the team!

It might not be a good idea to place too many requests on pg's schedule. What Paul can do, instead, is integrate "MyBlogLog" widget into news.yc. That alone will solve the problems regarding messaging and avatars.

pg, did you create news.yc as a long term solution or is this something temporary (just for the startup school and YC applicants)? It's great to see the site's enormous growth. Unfortunately, there is a good chance the traffic will drop sharply following April.

*ill still be around, though. YC can't get rid of me that easily*

From wikipedia's article on Lambda calculus:

"..in other words, f must expand to g(f). This call to g will then expand to the above factorial function and calculate down to another level of recursion. In that expansion the function f will appear again, and will again expand to g(f) and continue the recursion. This kind of function, where f = g(f), is called a fixed-point of g, and it turns out that it can be implemented in the lambda calculus using what is known as the paradoxical operator or fixed-point operator and is represented as Y -- the Y combinator."

A similar argument was raised on another blog, to which Adam Siegel left an appropriate reply. Have a look:

http://www.midasoracle.org/2007/02/22/are-nathan-kontny-and-adam-siegel-of-inkling-markets-being-exploited-by-paul-grahams-y-combinator/

Like most other hackers, I am not applying to YC for the investment. 5000(1 + n) is really not a large sum. In fact, I already have half that amount sitting in my bank account (student fees, :p). Our reason for applying to YC is to have the opportunity to create something larger than us (apologies for the cliche). There is no better place to do it than through Y Combinator. YC works at the same wavelength as its hackers; that is a considerable difference between a VC and Y Combinator.

If you were an aspiring hip/hop musician, would you rather go to Shady Records for a record label or Donald Trump?

Seth Godin operates one of the most famous blogs in the world. To be honest, I don't think his posts warrant the popularity his blog receives. Seth is a great guy, but his ideas are somewhat redundant.

Books by Seth that I highly recommend:

1. Permission Marketing

2. All Marketers are Liars

3. Purple Cow

4. Small is the new big

Books by Seth that I do not recommend:

1. The Big Moo

2. Free prize inside

3. Idea virus

4. The Bootstrapper's Bible (I am not finished reading this one, so don't take my advice on it)

I ended up writing him an email explaining my frustration over "The Big Moo" and "Free prize inside".

Oh and for Star Trek lovers, please visit: http://shuzak.com/UniversalSearch.php?query=star&Type=Communities

lol.

I estimate that 85% of the people on there are hackers. In fact, there are a number of users involved in actually coding the social network. Moreover, there is a chatroom there so we may converse in real-time.

Here is the YC community: http://shuzak.com/Community.php?ID=6472

YC represents a good demographic of undergrads, grads, and recently graduated students so I think it's a pretty good place to start it. Moreover, Facebook opened up to everyone two months ago.

Alternatively, if Danw prefers, we can start a YC group on my social network instead (Shuzak.com). People don't have to register to post there.

The best way to build a company is not by going after an existing category, but by creating a new category you can be first in. In the struggle for life, no two startups can occupy the same position. If they try to do so, one company will drive the other to extinction.

Now this does not mean that you can go ahead and invent some "obscure niche". A startup that serves a market too small and of little interest may never gain the traction to reach a tipping point.

Competition is a good thing. It takes a George Foreman to make a Muhammad Ali. Strong competition validates the smaller player. I will go as far as to suggest that without Digg, Reddit would've had a difficult time gaining wide angle attention from the blogosphere. However, competition should be avoided where it makes sense. In other words, don't consciously look for it.

That's awesome Daniel! I am currently busy reading "Small is the new big", "The Wisdom of Crowds" and "Unleashing the ideavirus" but I will drop all these as soon as this book arrives. I hope the content is thought provoking.

Actually, Daniel, I thought about it but then I wasn't sure if your name is Daniel or Daniela (male vs. female). Sorry :p

I read about this on a post titled "MySpace News: The Digg Killer?" The comments on Mashable are worth checking out:

http://mashable.com/2007/03/08/myspace-news/

By their own contention, MySpace is a "place for friends". I am not sure what NewsCorp has in mind, but this is certainly not a direction that will appeal to teens. Companies that try to appeal to everyone end up losing market share to smaller more focused startups.

Thank you danielha! keep up the great posts

I will hopefully get "Founders at Work" by March 14th. It is actually a birthday gift from my sister :p (along with 3 other books). I can't wait to get my hands on it `:D

Looks awesome! My favorite are,

Writewith: Google docs is a great application. But it is very limiting when it comes to collaboration. I have recently setup an article with an editor and 6 contributing authors; I know the collaboration on Google docs for such a project is going to be hell.

Octopart: I love vertical search engines since they have the potential to compete with mainstream search engines. Moreover, as an engineer and electronics enthusiast, I've always had trouble locating components, so Octopart will certainly come in handy. In fact, I am going to go ahead and recommend it to my EE friends.

Auctomatic: I am not a power user on eBay, but from the sound of it, this startup really has something going for them. There is a definite need for streamlining the process of listing on eBay. The downside is that their exit strategy is limited to eBay and perhaps a few other smaller companies.

I am Jawad Shuaib on there. Introduce yourself as well :)