Summary: Sam Altman & Dustin Moskovitz – How and why to startup a Startup summaries

Video reference:

Reasons to start a company

  • Passion – you can’t not do it (a pathological obsession)
  • You are the best person to make this happen by starting the company.
  • The problem was so important we could not stop working on it

Reasons not to start a company:

  • Become very wealthy
  • Massive impact
  • Lifestyle
  • Autonomy in how I spend my time
  • Building a killer feature that might work well in an existing company

Actual state of affair doing startups

  • Most markets already have competing players already
  • Valuation multiples are lower now in the public market
  • Existing entrenched players are now smarter and faster
  • Tech Worker Talents are becoming more expensive
  • Real estate in the bay area has gone up
  • Founders more likely end up with nothing
  • Founders have long term commitments – 10 years or more
  • Employees get to leave after a few years
  • Existing companies provide existing teams and infrastructure that help you succeed
  • Impact gets magnified via infrastructure setup by company
  • A lot of heads down time doing hard work
  • High stress level
  • Each round of fund raising is demanding
  • Always feeling stretched thing
  • Team is relying on you to deliver
  • Team members is always being poached by recruiters
  • Working on problems that could not be delegated
  • Dealing with human issues
  • You are always on call
  • You are the leader and need to be a role model
  • When joining late stage companies, you can ask existing employees and gain better clarity
  • Founder breakups are really bad. To work with someone that you have worked with for a long time and need to discuss a lot of the details

Why the need for a Silicon Valley like community?

  • High concentration of people doing the same nature of work
  • They will take your wild ideas seriously even when they don’t really understand it
  • They will be willing to support your idea
  • There is no tall poppy syndrome
  • Culture of paying it forward

The Idea

  • The idea is the most important thing
  • Derivative ideas are not likely to succeed
  • Pay attention to the problems you yourself are facing
  • Students tend to be at the fore front of technology
  • At the forefront, you can predict the Great Wave that is about to happen –
  • new things become possible that were never possible before
  • Startups you can do things that would otherwise could never have happened
  • Watch out for what peers are doing and what they are excited about – even/especially if it looks like a toy
  • Its easier to start a hard company – easier to attract talent
  • Nurturing Idea:
    • Finding good ideas are not a solo endeavor.
    • Find a group of smart people that you can start bouncing ideas off of
    • Look for people that don’t immediately shoot a bad half baked half form idea down
    • See if people are willing to think how big if it worked

The importance of co-founder

  • Look for the attributes in the following priority
    • Values first – make sure they believe in the same thing you believe in
    • Aptitude second – make sure they have the ability to learn and then execute at the level that is need for the project to work
    • Specific skill set last: a good bonus is if they already have the ability required to execute on what is required for the project
    • Humble and not feel entitled
  • Shared history and bond helps you keep going during times when it does not logically make sense to continue on the project
  • Determination is the most valuable attribute when looking for co-founders
    • I always figure it out, I never give up
  • Humble and not entitled
  • They are doing it because they really want to build the stuff

The product

  • Approach: A small number of people who loves you instead of a lot of people that like you
  • Next find more people that will love the product
  • A good indicator:
    • Retention and frequency of use
    • How does it compare to another product in the space
  • Nothing but a great product will save your company
  • Talk to users that will help you build this great product
    • People generally don’t want to disappoint you, they will fluff talk to you by saying they love your product, but you don’t learn much
    • Need to find out exactly what they are using your product for
    • Watch them use your product to identify where they are doing things that doesn’t make sense because they are using something else
    • Ask them why they have not recommended this product to someone else
    • Ask them why they are not willing to pay for this product
    • Figure out times when they stop using your product and use some other products instead
    • Top level questions don’t help you

Getting the first 100 users

  • Email people that you already know
  • Call someone up
  • If it is a paid product, you need to charge them
  • Research on people that might use your product
  • Conversion rate is 1-2%
  • Send targeted email
  • Social Media / Hackernews
  • Need to figure out how to keep it on going
  • The laziest way forward is to buy ads on Google and get people to come

Good operating principles

  • Best founders:
    • they go visit their users,
    • they go sit in the office of their users,
    • AirBnB – they go live with their users
    • Get to know their users really really well
  • Short cycle time – talk to their users ask them what works or not, come up with another prototype and repeat the cycle
  • The ideal goal is to build the fasting iterating company
  • Make a long term commitment to a project, think of it as a 10 year project
    • cause you to think in a different way
    • cause you to hire very different people
  • Lean and Mean versus Big and Powerful
    • Stay lean and really really small until everything is working really well
    • Flexibility of a company decreases with the Square of the number of employees
    • Once things are working you will need to switch into hyper scale mode and get as big and as fast as you can with great people
    • The signal to switch into Big and Powerful mode is when users are really begging to have your product and you are working 80 hours a week because people are all clamoring to get your product and you are not able to build it fast enough
  • Hiring
    • Resist the urge to hire mediocre people
    • The team you build is the company you build
    • Best
  • On Rejections
    • Take it as a learning experience of what didn’t work
    • Iterate to improve base on feedback
  • Fiduciary duty to your stakeholders
    • maintain personal relationship
    • take care of your own health
    • Best CEO spends huge amount of time hiring and retaining their people
  • Figure out the MISSION
    • Helps getting people to join them
    • Helps media to write about them
    • Become a great evangelist for this mission
    • Clearly think and communicate this mission

Fund raising

  • When people are desperate to give you money
  • When you really need the money
  • You need to display progress to warrant the funding you need


Further references

  • Book: Hard things about hard things – Ben Horowitz
  • Book: The score takes care of itself – Bill Walsh

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