
Before the Startup - bhaumik
http://paulgraham.com/before.html
======
IsaacL
_So this is the third counterintuitive thing to remember about startups:
starting a startup is where gaming the system stops working. Gaming the system
may continue to work if you go to work for a big company. Depending on how
broken the company is, you can succeed by sucking up to the right people,
giving the impression of productivity, and so on. [2] But that doesn 't work
with startups. There is no boss to trick, only users, and all users care about
is whether your product does what they want. Startups are as impersonal as
physics. You have to make something people want, and you prosper only to the
extent you do._

The bootstrapper crowd (Amy Hoy, patio11, etc) often level this as a criticism
of VC-backed startups -- that they _are_ a gameable system, a series of
hurdles from accelerator to series A to series B to acquihire. Whereas (they
say) bootstrapping isn't gameable, it relies on making something users want,
and it teaches you to deal with raw reality head-on. [1]

Maybe they are only looking at a dysfunctional subset of VC-backed startups
though? One common pattern seems to be that a person enters a particular
field, notices that many people around them are unimpressive and focused on
perception, "networking" and system-gaming -- and concludes that the field is
corrupt.

But in actuality, they'd only seen the bottom tier of the field, and the
higher tiers have more genuine talents who also despise bullshitters.[2]

[1] [http://unicornfree.com/2012/why-blacksmiths-are-better-at-
st...](http://unicornfree.com/2012/why-blacksmiths-are-better-at-startups-
than-you)

[2] I'm thinking specifically of academia as another example of this pattern.
Since bullshitters do manage to reach the higher tiers of both startups and
academia, there's a genuine question as to whether the bullshitters will
someday come to dominate both of these areas, and whether this has already
happened. By definition, a field that has been taken over by bullshitters is
not going to let you know that this has happened.

~~~
strlen
How do you bootstrap a company that requires significant R&D before an MVP can
be shipped? Or for that matter one that has initial infrastructure costs, or
one would only be affordable if there's an economy of scale?

This is armchair quarterbacking, of course, I'm not an entrepreneur and do not
pretend to be one. Patio11 has a lot of interesting and relevant things to
say, but I would hate to live in a world where entrepreneurs only undertook
ventures that could be bootstrapped for a reason that I'll frankly admit is
selfish: throughout my career I've worked on very fascinating problems in
either VC funded startups or companies that have began their life as such; I
can't see a scenario where I would have been able to do this (or similar kind
of work) in a bootstrapped product company. That's not to say there aren't
other interesting problems that could be solved in a bootstrapped company, but
my own area of focus -- distributed systems -- is almost by definition
something that requires both infrastructure and up-front development (and, in
general, is only something that should be used if there's a scalability or
reliability problem to start with.)

~~~
adrianhoward
_" How do you bootstrap a company that requires significant R&D before an MVP
can be shipped? Or for that matter one that has initial infrastructure costs,
or one would only be affordable if there's an economy of scale?"_

You can't — obviously. And folk like Amy Hoy @patio11 freely admit that.

The key word there though is "requires". I've encountered lots of companies
that have spent silly amounts of money, often their investors money, because
they've missed opportunities to validate their business model in cheaper ways.
Either because they don't know how or they don't want to. Folk who are so
focussed on the vision that their aiming for that they fail to look down as
they walk over a cliff.

To stereotype slightly I'd say that folk with a dev background are more likely
to go that route than not — since the business / marketing / user research end
of the skill spectrum that can help with that stuff is less familiar to them.

Nothing against VC funding, and it's absolutely necessary for some companies.
It's just that the majority of folk that I see trying for it are doing so
before it is actually required. Either because they're missing ways they can
continue more economically because they lack the skills, or they hope that the
(lack of) positive feedback that they're getting so far will be solved by
money.

~~~
strlen
Interesting answer, thank you for writing it.

As an armchair quarterback I'm a bit surprised about what you've said about
"folks with a dev background" (if I didn't focus on distributed systems, I'd
likely focus on development tools/services -- and there are tons of
bootstrapped companies in that area), but I'll take your word for it.

~~~
adrianhoward
Sorry — I didn't mean to imply that dev folk don't bootstrap!

What I meant, and expressed poorly, was that dev-ish folk tend to not have
some of practices in their toolbox that you can use to validate cheaply (e.g.
by knowing how to assess markets well, or knowing how to interview potential
customers in a non-directive way, or indeed the ability to talk to customers
at all, etc).

We also have a tendency to want to build things because, y'know, that's what
we do ;-) We also tend to want to build things really, really well for that
awesome future place where we have millions of users. So we over-engineer for
where we are now, and the learning we need now.

Because of both of these issues I think folk with a dev background find
themselves in a position where VC is the only route forward — when if they'd
taken a different approach earlier on they could have continued bootstrapping
and avoided VC money until later / forever.

Does that make sense?

------
nl
_one guaranteed way to turn your mind into the type that has good startup
ideas is to get yourself to the leading edge of some technology—to cause
yourself, as Paul Buchheit put it, to "live in the future." When you reach
that point, ideas that will seem to other people uncannily prescient will seem
obvious to you. You may not realize they're startup ideas, but you'll know
they're something that ought to exist._

I think this is one reason why geographic clusters of startups occur: You get
a few people "living in the future" co-located and suddenly the "uncannily
prescient" idea no longer just seem obvious to you, they seem obvious to
everyone around you too, and everyone wants them _now_.

 _The future is here, it is just not evenly distributed_ \-- William Gibson.

~~~
waterlesscloud
Interesting insight.

I think the internet, which sometimes serves as its own geographical place,
can foster the same sort of clusters.

You can see that with bitcoin/blockchain communities, all kinds of inventive
ideas coming out of the online communities there. It's a cluster of people who
are living in a certain subset of the future already, and the community is
centered online.

Which implies that a smart incubator would want its own online geography to
cluster people living in the future. HN isn't _quite_ that. I'm not sure
exactly how it misses that target, but it does somehow.

Hmmmm.

~~~
nl
_I think the internet, which sometimes serves as its own geographical place,
can foster the same sort of clusters. You can see that with bitcoin
/blockchain communities, all kinds of inventive ideas coming out of the online
communities there. It's a cluster of people who are living in a certain subset
of the future already, and the community is centered online._

I agree, but I think it's difficult to achieve this deliberately.

 _Which implies that a smart incubator would want its own online geography to
cluster people living in the future. HN isn 't quite that. I'm not sure
exactly how it misses that target, but it does somehow._

There have been some attempts to do this (NReduce) but no outstanding
systematic successes that I know of.

I think it's an interesting area.

------
brudgers
For me, reading Paul Graham's writings has taken on something of the flavor of
a Phillip Roth novel. I'm committing voyeurism, watching the inner life of the
protagonist, PG, mature. There's an arc to the narrative.

Around the turn of the millennium, the brashness born of 1990's success
transformed his writing from youthfully exuberant technical expertise [2]
toward experienced practical advice [3]. In _Before the Startup_ we meet up
with PG again just as he walks back into the ring of the public light. His
load has shifted, advice must be sage: consistent with the gestures of hands
that have firmly held the tiger's tail twice. Yet, despite the years, PG's
youthful earnestness remains intact.

Recently, because I've seen ViaWeb and HN trotted out as contemporary examples
of successful uses of Lisp in business, I've wondered how much of _Beating the
Averages_ describes what really happened and how the older PG would ascribe
the success of his first startup.

Was Lisp really the secret sauce? Would it have mattered if PG and Morris
ground out updates in Perl? Will there be an immodest greybearded admission
that, in hindsight, it really was the people?

Autobiography is not so much an author's way of gaming history, but rather
gaming the business of history. And that, the gaming of "the business of _x_ "
is the central theme of _Before the Startup_. What Graham is arguing is that a
person can't game their way into running a successful startup. He doesn't deny
that a person can successfully game the business of startups...there are
people who can sell Yelp for Dogs to investors sufficiently to purchase
barker.com.

No longer YC's designated spokesmodel, PG is in the agora pitching
_eudaemonia_ , the not-as-seen-on-TV good life, to the youths of the valley.
His life's example is not the celebrity brought about by business success. His
advice is "stay earnest."

[1] yes.

[2] _On Lisp_

[3] _Beating the Averages_

~~~
raldi
Your footnote [1] is disowned.

~~~
brudgers
It's the answer to "pun intended?"

------
TheUnPedant
> Yet when it comes to startups, a lot of people seem to think they're
> supposed to start them while they're still in college.

Is PG seriously implying he doesn't know where college students got the idea
that they should be founding startups instead, after spending the last ten
years telling them to?

~~~
apsec112
"The three big powers on the Internet now are Yahoo, Google, and Microsoft.
Average age of their founders: 24. So it is pretty well established now that
grad students can start successful companies. And if grad students can do it,
why not undergrads? (...)

The less it costs to start a company, the less you need the permission of
investors to do it. So a lot of people will be able to start companies now who
never could have before.

The most interesting subset may be those in their early twenties. I'm not so
excited about founders who have everything investors want except intelligence,
or everything except energy. The most promising group to be liberated by the
new, lower threshold are those who have everything investors want except
experience." \-
[http://www.paulgraham.com/hiring.html](http://www.paulgraham.com/hiring.html)

If PG has genuinely changed his mind in the face of new evidence, we should
award him points for that. But he should also come out and admit it.

~~~
NewHermes
I didn't get the vibe that PG was saying not to start a company in college. I
may have misinterpreted him incorrectly, but to me the advice was to not do
both simultaneously.

He does mention that there are certain things you can't do if you start a
successful company at a young age, but to me the main point was that when you
take on a startup you have to be completely invested, and if you're still in
school it will be very hard to find time work on both the company and maintain
your grades.

------
TeMPOraL
> _So this is the third counterintuitive thing to remember about startups:
> starting a startup is where gaming the system stops working. Gaming the
> system may continue to work if you go to work for a big company(...) But
> that doesn 't work with startups. There is no boss to trick, only users, and
> all users care about is whether your product does what they want. Startups
> are as impersonal as physics. You have to make something people want, and
> you prosper only to the extent you do._

I don't believe this is true. I think the startup ecosystem actually learned
how to game "making something people want". After all, startups are companies,
companies need to profit, and "making what people want" vs. "making what
people will pay for" are similar, yet not perfectly aligned goals.

pg may be right that startups are "as impersonal as physics", but users
aren't, and herein lies the trick. One of the most blatant ways of gaming the
system is the exit-seeking, toilet-paper startup. It exploits the disconnect
between "growth" and "making something users want". The algorithm works like
this:

    
    
      - find something people apparently "want"
      - make a half-baked solution, maximize it for user-acquiring candies
      - market the living hell out of it
      - keep the growth until you can sell your startup or get acquihired
      - kill the product; who cares about it, anyway? oh and don't forget to thank your users for the journey, you couldn't all share this awesome moment without their help.
    

I _want_ startups to be like pg describes. Maybe the most successful ones are
like that. But there are so many that don't care about users that people are
already developing a huge mistrust with everything-SaaS. I guess it's exactly
like univerity - you can game your way through it if you treat is as an
intermediate step. That your trick-grades don't reflect any actual knowledge
doesn't matter after they get you a good job.

~~~
waterlesscloud
The 'gaming the system' section gave me insight into both why 'growth hacking'
is such a popular idea and why I hate the term.

Founders know they need growth, so they ask themselves "How do we...", and
"Hire a Growth Hacker!" is an easy response. It sounds like a way to game the
system. After all, growth is right there in the job title, and we all know
hackers game systems.

The appeal of a 'hacker' for growth is that it sounds like it solves the hard
work of growing by building something people like. We'll just game around it
with our hacker!

I don't think that's the conscious intent, but I do think it's the
subconscious intent. And both why the term is appealing to founders and why it
bugs the hell out of me. It's the subliminal implications of gaming the
system.

~~~
TeMPOraL
Honestly, with fierce hatred I hate that term. It basically means "word
'hacker' sounds cool, so let's make marketing cooler by renaming it to 'growth
hacking'". Seriously, just look at the Wikipedia article[0] and see how
meaningless this term is. The whole text is just basically pile of buzzwords.

But you're right. Growth is hard, and if you're a hacker at heart, focused on
developing your idea/product, someone specialized in "all that murky businessy
client-getting stuff" is godsend. You don't want to distract yourself with it,
you have better things to do.

I also think that it can sometimes be a way to out-source conscience. You pay
the growth hacker to do "the magic", and you don't care what it is that he is
actually doing. You can hire one that will do black-hat SEO and abuse social
networks without feeling any guilt, by simple virtue of not thinking about it.

[0] -
[http://en.wikipedia.org/wiki/Growth_hacking](http://en.wikipedia.org/wiki/Growth_hacking)

~~~
jacques_chester
The people being "hacked" by the title "growth hacker" and the folks who do
the hiring.

------
dkural
"So strangely enough the optimal thing do to in college if you want to be a
successful startup founder is not some sort of new, vocational version of
college focused on "entrepreneurship." It's the classic version of college as
education for its own sake. If you want to start a startup after college, what
you should do in college is learn powerful things. And if you have genuine
intellectual curiosity, that's what you'll naturally tend to do if you just
follow your own inclinations. [10]

The component of entrepreneurship that really matters is domain expertise. The
way to become Larry Page was to become an expert on search. And the way to
become an expert on search was to be driven by genuine curiosity, not some
ulterior motive.

At its best, starting a startup is merely an ulterior motive for curiosity.
And you'll do it best if you introduce the ulterior motive toward the end of
the process.

So here is the ultimate advice for young would-be startup founders, boiled
down to two words: just learn."

This is my favorite part. Elon Musk does it this way even after his first few
companies. He goes and learns a bunch of stuff to the cutting edge.

~~~
Vulkum
Some of the things I've learned at university are pretty interesting and fun
to play with. Now, notice the "fun to play" with part. Some thing require a
lot of investment (both money and time) in order to be learned. So, I believe
it's not unfeasible to want to start a company so that you can fund your
curiosity and learn the new things. The company itself might fail, or might
not, but I believe as long as the purpose was to learn something new, failing
is not as bad. If you start a company thinking this is the future, and you put
value in making money as opposed to learning, then failing is losing.

~~~
chton
In an ideal world, that would be possible, yes. But a company does need to
make some money, even if only to pay its founders for their time. That money
can come from investments, but if you start a company just to learn new stuff
you'll have a hard time finding those.

------
bdr
Regarding the first point, I recently came to this conclusion: "The reason
listening is hard is that not-listening doesn't feel like not-listening, it
just feels like the other person is wrong."

Keeping this in mind has been very helpful.

------
staunch
It seems odd not to acknowledge that most successful startups are not created
like this. Very few are. Perhaps only the truly great ones take the organic
personal project route. Apple, Google, Facebook, and YC are among the handful
one could list out of thousands of startups.

Most successful startups are the result of ambitious people working hard to
come up with good ideas. PG has explicitly said he started Viaweb to get rich.
IIRC it was picked from a list of other startup ideas and was the second
attempt. He wasn't deeply fascinated by online stores, it just seemed like a
good business to start.

~~~
philwelch
As an investor, you'd rather fund Apple, Google, or Facebook than Viaweb.

~~~
mahyarm
Not necessarily. Would you properly fund EverPix or TextSecure, or would you
worry about them sticking to their principles too much and avoiding potential
profit opportunities?

~~~
philwelch
As an investor, yes, necessarily. As someone trying to do good and make money
at the same time, of course your priorities will be muddled.

~~~
mentat
Because doing good cannot be made coherent with making money? Or that you have
to optimize for one or the other? This seems quite limiting and contrary to
human history as well.

------
akassover
I like the term "playing house". Seems like there are a lot of similar
activities. I don't make it to many "startup" type events, but when I do, I
always wonder why everyone there is spending so much time hanging out with
each other instead of going to the events their customers go to.

~~~
TeMPOraL
From my observations as a participant of such events, people actually working
on startups don't frequent them.

The composition of people attending your typical bi-weekly unmeeting is: few
people with money, lots of people who would like some of that money, few
random CEOs who look for free employers, and the rest that just wants to hang
out with "startup guys" because it's cool (and maybe they get to see some new
toys).

~~~
melvinmt
This is spot on (especially for the "Hackers & Founders" kind of meetups) but
there are a subset of (technical) events that are full of smart people and
less bullshitters.

None of them will probably be your real customers but most of the people
you'll meet are extremely interested in startups and new ideas. It's a crowd
of early adopters, willing to try anything. This is worth something, at least
while you're starting out and need to validate your ideas.

Compare that with pitching your startup idea to random people in a Walmart,
that's way harder than it sounds :)

~~~
johan_larson
Anyone know any good places to meet people who are interested in startups but
who aren't from technical backgrounds?

There must be people out there who have identified problems that software can
solve, but who can't build the solutions themselves. Lawyers who know what law
firms need or plumbers who know what general contractors need, and such.

------
strlen
Can this advice be generalized to other creative endeavors in general? There's
an interesting article by Scott Alexander, "Negative Creativity"
[http://slatestarcodex.com/2014/08/05/negative-
creativity/](http://slatestarcodex.com/2014/08/05/negative-creativity/)

"It is said that one of the highest-level and most awe-inspiring of
rationalist skills is Sitting And Thinking About Something For Five Minutes.

The sitting part isn’t that difficult. It’s not even that hard to…how should I
put it…apply mental effort at the problem. But that mental effort tends to be
spent rehearsing the solutions already thought up, retreading worn paths,
ruminating on how difficult the problem is.

Coming up with entirely novel ideas is really, really hard."

In other words, if we set out deliberately to "come up with a startup idea" or
(in a completely different context) "plot for a short story" we're likely to
fall into the "gaming" trap, that is coming up with what _sounds like_ a great
idea and could potentially even convince others, e.g., professors in a
"Creative Writing" class or investors that it is one.

I've been applying this same tactic when dealing with "once in a million"
(which at -- I hate to use this term, but it's actually a good one -- webscale
can easily happen once an hour) Heisenbugs: fire up five processes in gdb (as
to force contention around network, disk, and CPU), add a bunch of log
statements, pepper the code with random usleep()s, and set assertions or
watch/break points in "impossible" places -- as opposed to a more rookie
approach of rewriting any suspect code ("let's put a lock around this just to
be sure...") and hoping the problem goes away.

~~~
atmosx
I find it much more natural to walk/run and think about a problem. I don't
know what you need to do when you need to keep notes and look at numbers while
approaching the problem, you can't do that on your iPhone while walking, but
generally speaking running/walking disconnects my brain from my body very
effectively. So all I need to do is focus on the problem, but doesn't take as
much as effort as it would take if I did it while sitting on a desk.

~~~
ProAm
It's referred to as 'dissociative thinking'. The back burner of your mind...
similar to waking in the middle of the night with an answer to a problem that
has been plaguing you for days

------
mlyang
I find it interesting how YC is trying to increase its classes sizes
significantly and YC partners are traveling all around encouraging everyone to
apply (which would seemingly reduce the standard for getting in, unless
qualified applicants are significantly increasing every year) in light of pg's
point about gaming the system. Getting into an incubator, for many applicants,
is effectively like "playing house" at starting a company or gaming the
system, when really what those people should be focusing on is just
building/growing their product, rather than figuring how to get into an
incubator before they have a validated product. Especially given the
predictors on a YC app that might increase an applicant's chance of getting in
(prestigious school, work experience, etc.), seems like there are still lots
of opportunities for "gaming the system" in YC.

~~~
argonaut
> > which would seemingly reduce the standard for getting in This statement is
> fairly unfounded

This is basically just speculation (and rather uncharitable speculation at
that). And, plausibly, if the YC partners manage to increase the pool of
applicants faster than they increase class sizes (which is plausible because
the class sizes have not expanded tremendously), it would only raise the bar

> unless qualified applicants are significantly increasing every year

This is probably what is happening.

------
dschiptsov
The magic formula, it seems, is "become an expert in something that matters
(what other people want or need to be done) usually in a non-CS realm, but you
must "love it" and then apply CS with someone who could program/engineer
better than you". At least it resembles a pg + rtm pair.)

The question is not like "what code in which language should I write", The
fact that Zukerberg wrote a yet-another-bunch-of-webforms in PHP doesn't mean
that you should do it too. It isn't about PHP at all, it is about being in a
right time in a right place _and_ being able to code some PHP. (the facebook
really began after it has been noticed by a "serious guys" from Harvard
alumni).

So, it boils down to a very few words - learn some fundamental principles of
CS, then become an expert in a field (follow the money), being an expert you
would "see" opportunities which cannot be seen by an ignorant observer outside
the field. Then try, approach the problem, describe it, discuss, try to write
a naive prototype (to discover the difficulties and lack of appropriate
knowledge) and then try to make a team. btw, other people in the field would
quickly grasp and validate your idea, and if it is really good, they would
find money for you, because the result will be beneficial for them.

Another key idea (to which having children is a nice metaphor, at least to
those who have no siblings) is that _one have to go into unknown_. There is no
other way. It should be unknown and first time, like any learning on-the-go in
any field. We start totally ignorant, and then we learn by doing.

And about gaming the system (another polite-correct name for cheating) - one
cannot game yourself. You are either good at what you do or not.

    
    
       Dagny, there's nothing of any importance in life - except how well you do your work
    

This has been written half century ago, and still true (no matter how naive it
sounds), especially for startups.

------
aashaykumar92
I'm a college kid, started a startup with my roommate and sold it to our
university. We did everything wrong, but learned so much that I could write a
thesis on it. If I had to do it again and change ONE thing, though, it would
be one of PG's central points in this post: get to know your users. We knew
who they were at a big picture (UofM students) but did not do a good job
honing on on specific 'personality types' that would enjoy our app nor did we
keep in touch with our loyal users as much as we should have. Will definitely
do that when a next time comes around. The crazier, and daunting, part of
reading this post is realizing that despite how much I learned from my first
startup, there will be so much to learn from when I find the next fun thing or
problem to work at. Can't wait.

~~~
joshdance
What did your product do?

~~~
aashaykumar92
It was a social calendaring app exclusive to UofM students. We uploaded the
course database so students could pick the classes they were enrolled in and
sync it to a calendar (students could also sync their other calendars) and
share it with their friends. It was an easier way for UofM students to see
what their friends/classmates were upto throughout the day.

------
AndrewKemendo
I was really hoping this article would be about how massive companies were
built (billion dollar or otherwise) before the invention of the "startup."

Something along these lines: [http://startupguide.com/world/the-history-of-
entrepreneurshi...](http://startupguide.com/world/the-history-of-
entrepreneurship/) with less use of the word "entrepreneur" as PG expressed
his distaste as such.

~~~
davidw
That article, expanded, would make a fantastic, fantastic book, if done
properly.

------
startupfounder
"The component of entrepreneurship that really matters is domain expertise.
The way to become Larry Page was to become an expert on search. And the way to
become an expert on search was to be driven by genuine curiosity, not some
ulterior motive.

At its best, starting a startup is merely an ulterior motive for curiosity.
And you'll do it best if you introduce the ulterior motive toward the end of
the process.

So here is the ultimate advice for young would-be startup founders, boiled
down to two words: just learn."

It's not about the money, it's not about how old you are, it's not about
giving up, it's not about tricks or hacks and it's not about the obvious path.

For me it's about the curiosity of genuinely wanting to understand how the
world generates, transports and consumes energy and how I can remove the
barriers and inefficiencies of transitioning our global society towards using
clean energy more efficiently and cost effectively so we can mitigate the
effects of climate change.

------
adamzerner
Nice to hear from pg again. I love his writing. He has useful points, and says
them well. HOWEVER...

There's a lot of _prescribing_ of advice, but not too much explaining why it's
good advice. Usually there's a few sentences of explanations, but the topic
could be discussed in much more depth. I'd like to hear a more complete
explanation from pg.

~~~
projectileboy
While I certainly can't speak for PG, I would imagine that the advice is
simply derived empirically, and so doesn't really demand a great deal of
elaboration.

------
rumcajz
The claim made is that "gaming doesn't work on users". The claim breaks down
when selling to the enterprise.

~~~
senderista
That's because you're not selling to the actual users of your product.

~~~
rumcajz
Yes. That's how it goes in enterprise sales.

------
sayemm
PG, this has been one of your best essays IMO.

Maybe these are also the same qualities required to be a winning investor.
Thinking clearly, loving the area that you're working in, and developing
domain expertise.

------
malanj
This is a really useful perspective for undergrads. I would have gained a lot
of value if I could have read this while studying.

I started a startup during my undergrad degree, and ended up finishing my
degree at the same time. I made a deal with my lecturers to allow me to skip
basically everything during the term time, and then just took "holiday" from
my startup to write exams. It worked out OK and we raised a lot of money the
year after I got my degree. So I don't think that's impossible, but it was
pretty hard work.

------
fsloth
A very nice read as always. Footnote [4] is a bit off-putting though "[4] What
should you do if your true calling is gaming the system? Management
consulting."

Management consulting probably has more opportunities for gaming the system
than startups do, and I concur. However, my friends who work at management
consultants, from what I can tell based on anecdotal evidence, mostly perform
value adding work for their clients, including performing managerial duties in
for fast grown firms that do not have the talent at hand, performing
macroeconomic research and factory floor optimization. My friends are mostly
of engineering background, though, so that probably affects the sampling quite
a bit.

I would rephrase the dichotomy of not being about adding value vs. gaming the
system but about creating something new versus optimizing and tinkering with
an established system.

As an example all the protagonists in "The art of profitability"
([http://www.amazon.com/The-Art-Profitability-Adrian-
Slywotzky...](http://www.amazon.com/The-Art-Profitability-Adrian-
Slywotzky/dp/0446692271)), for instance, deal mostly in a similar problem
space as described by my friends' professional war stories.

~~~
sanxiyn
You can add value by gaming the system. Gaming the system is a mean, not a
goal.

~~~
fsloth
Good point, I hadn't thought of it in that way but very true. Most systems
have pathologies and you just need to work around them somehow. I agree:
Gaming for personal profit and gaming for some higher goal are two different
things.

------
akbar501
pg wrote, "Batch after batch, the YC partners warn founders about mistakes
they're about to make..."

My question would be "what are the mistakes"?

It would be amazingly interesting if PG, Sam or someone else from YC can start
to list some of these warnings / common mistakes in one of the classes.

Obviously, some advice is company specific, however starting to compile this
list of advice would be a valuable additional to community knowledge.

~~~
surreal
The 18 Mistakes That Kill Startups by Paul Graham
[http://www.paulgraham.com/startupmistakes.html](http://www.paulgraham.com/startupmistakes.html)

------
zxcvvcxz
Nice I like this, it makes me feel somewhat better about choosing to pursue
graduate education (in engineering) over getting a job at a bigco in my field.
I will certainly learn more fundamental concepts, and frankly, work on much
more interesting technical problems.

That being said, regarding having domain expertise on the furthering
boundaries of a topic (presumed technical), I'm not sure if evidence suggests
that this is the best way to go. Did this help any of AirBnB/Dropbox/Reddit?
These are not "technical" companies, at least what got them started.

Maybe I'm reading too much into how technical the domain expertise should be,
though he did mention computer science in his fractal analogy. Perhaps I'm
just having a tough time having faith that doing research on the forefront of
computer vision will lead to good startup ideas.

------
budu3
_What 's an especially productive 22 year old to do?[...] If you're really
productive, why not make employers pay market rate for you? Why go work as an
ordinary employee for a big company, when you could start a startup and make
them buy it to get you?_[0]

 _And though starting a startup can be part of a good life for a lot of
ambitious people, age 20 is not the optimal time to do it._ [1]

PG seems to be giving contradictory advice or his stance seems to have changed
on whether 20 year olds should start a startup

[0] [http://paulgraham.com/hiring.html](http://paulgraham.com/hiring.html)

[1] [http://paulgraham.com/before.html](http://paulgraham.com/before.html)

------
kinkora
Well written article.

I think PGs advice doesn't just apply to startups but to nearly everything in
life. Learning (or as PG puts it, "Just Learn") is huge part of the equation
if one wants to advance. You'll be surprise how this attitude is not very
prevalent to the general population of adults.

Want to get earn more money? Just learn how.

Want that promotion? Just learn what you need to achieve.

Not an expert on a particular thing? Just learn from someone else.

In trouble and need help? Just learn where to find it.

Having said that, in my experience, I think another crucial step needs to tie
in with learning is self-efficacy to make it worthwhile. Learning is one thing
but if you don't have the belief to stick to it and act on it, learning will
only get you so far.

~~~
lmartel
This is the sort of advice that, imo, sounds great (especially to HN readers
and PG fans) but isn't actually helpful or correct.

Learning is important but life isn't that simple--earning money is mostly
leverage and negotiation, promotions are mostly politics, and so on. You can
choose not to participate and "just learn" but you'll be at a disadvantage
unless you are a truly exceptional learner.

~~~
kinkora
Yep, I wholly agree!

Which is why i say self-efficacy[1] is the other important half of the
learning bit. Without it, learning is only just that: learning. If you don't
have the belief, motivation or even the tenacity to act and follow through on
what you learned, then all you have is just knowledge in your head.

[1] [http://en.wikipedia.org/wiki/Self-
efficacy](http://en.wikipedia.org/wiki/Self-efficacy)

------
mentos
What are the examples of successful startups that were created deliberately to
'start a startup'?

I'd imagine the majority of successful startups never set out with any
aspiration of becoming one. I think having that goal is poison and leads
people to "playing house" and going through the motions of a successful
startup without achieving the key ingredient: a product users need.

------
cjdrake
I wish he included that joke about users being like sharks. Something like
"you can't trick sharks; it's meat or no meat".

------
dheer01
"[1] Some founders listen more than others, and this tends to be a predictor
of success. One of the things I remember about the Airbnbs during YC is how
intently they listened."

\- Looks like a case of survivor bias. How many founders who listened as
intently did not build Airbnbs ?

"[4] What should you do if your true calling is gaming the system? Management
consulting."

\- Nailed it.

~~~
kiba
_\- Looks like a case of survivor bias. How many founders who listened as
intently did not build Airbnbs ?_

There were also examples of failure in their portfolio.

------
hristov
Great essay! It makes me feel good to know that random curiosity may prove to
be a good thing somehow. Alas, I am much older than his intended audience.

And as a proof of being old I would like to congratulate Paul Graham for being
one of the very few people in the world to actually use the "begging the
question" phrase correctly.

------
sreyaNotfilc
Hey guys, I believe this is from the "How To Start A Startup Lecture 3", so if
you'd like to hear it go here... [https://www.youtube.com/watch?v=ii1jcLg-
eIQ](https://www.youtube.com/watch?v=ii1jcLg-eIQ)

------
joeyspn
Another great essay by PG... I would just add (in the All-Consuming part) that
startups are all-consuming either if you make it or you fail... at least that
is what experience has taught me. It's important to know when you have to pull
the plug.

------
jforman
"So starting a startup is intrinsically something you can only really learn by
doing it"

This makes absolutely no sense coming from somebody who built an empire giving
advice to budding entrepreneurs.

~~~
ar7hur
No, PG built that not by giving advice to founders, but by selecting them.

~~~
jforman
How did he get into a position where he has his choice of founders? He _built_
the empire by offering mentorship, money, and community (which is peer-to-peer
mentorship). In the beginning, the draw wasn't money because they didn't offer
much of it.

~~~
ghshephard
In his essay, he says that most people ignore his advice, so it's unclear how
value there is in the mentorship. The money though, is pretty important when
your young - it pays for travel, 2-3 months of food and rent. Another very
important element these days is the opportunity to pitch at demo day, as well
as having the YC cachet associated with you.

I would argue (and I'm sure that a lot of people would disagree), that one of
the most important things that YC does is give budding entrepreneurs a chance
to just get away from everything else in their life and completely focus on
their startup.

He also caveats a lot of his points by saying that honestly, he really is
never particularly certain which startups or set of founders is really going
to take off.

At the end of the day, it's really up to them.

------
trop
Slightest nitpick...a missing hyperlink due to handcoded (?) html in lines
240-41:

    
    
       <xa href="relres.html">tough and ambitious</a>

------
zem
i found it a bit jarring that pg has bought into the idea of "known boring
ideas" \- there is little that is not interesting to somebody. i would
cheerfully read books on literary theory, for instance, and i'm sure that
doing middle management cleanly and efficiently involves challenges that are
interesting to people who are intrinsically interested in group dynamics and
effort-to-result optimisation.

------
tegeek
This is one of the best & "easy to understand" article I've read on start-ups,
entrepreneurship etc. in a long time.

------
donutreceipt
Title should be: "Just Learn"

------
gregpilling
"My kids are little, but I can imagine what I'd tell them about startups if
they were in college, and that's what I'm going to tell you."

\------------ I made my first money at 8. I bought a Honda 50 for $60 and sold
it for $180 after painting it and fixing some little things. My father guided
the whole process of course, but it was my money and my work that got the
result. Now I am 45 and I have 4 boys. My oldest is 10 and has been working on
his "startup" for two years. He is making his own version of Pokemon, and he
has sold some of his characters on T-shirts. Total revenue so far - $120.00
(1)

It is not much. But it is something. At 10, my kid is outsourcing graphic work
overseas, he has sent out 30 projects on Fiverr. He is using outside vendors
to make shirts, and having to deal with customers asking about shirt orders
(he took some money, but forgot to order the shirt. Then he has to deal with
upset people). While the dollar amounts are trivial, my purpose it to get him
exposed to how business and making money works. So far he has been doing it
for 2 years and his quality of work and detail have grown so much that you
would probably not believe it. My main job is to ask him if the work is as
good as he can make it (most of the time he makes it better, some times he
decides that he is done)

The interesting follow on effect for me is that his younger brothers are now
wanting to do the same. The 7 year old has been bugging me to get his website
done, and has done his first few drawings. His project is very similar to his
older brother;s , but we have made sure that they are distinct. Last week the
4 year old decided that he needed a company too (so far it is only a
declaration, he has not decided on a concept).

So I guess I am doing it different. I can't imagine waiting until college for
them to start. They see what I do, and want to do similar things. So they are.
To me it is amazing what they can accomplish, and how "making a company" for
them is more interesting than watching TV. This weekend we have a giant vat of
playdough waiting to be made. My oldest is going to model the racetrack for
his Android game in real life, then translate it to digitial . All of this was
his plan, I merely drove to the store to get the materials.

It is not a startup of course, more like a complicated hobby. The kids are
having fun, and so am I ,

Maybe in another 10 years my son will be ready for a real startup. By then he
will have 10 years into customer service, colabortaing with an international
team, product development. Mostly I hope he enjoys himself and learns some
things about business. It beats a lemonade stand.

1
[https://www.facebook.com/legimon?ref=hl](https://www.facebook.com/legimon?ref=hl)

------
olleicua
Fantastic article

------
michaelochurch
There's a lot of good in this essay. I'm going to attack the weak point, even
though I agree with most of it.

 _So this is the third counterintuitive thing to remember about startups:
starting a startup is where gaming the system stops working. Gaming the system
may continue to work if you go to work for a big company. Depending on how
broken the company is, you can succeed by sucking up to the right people,
giving the impression of productivity, and so on. [2] But that doesn 't work
with startups. There is no boss to trick, only users, and all users care about
is whether your product does what they want._

Then, to his credit, he admits...

 _The dangerous thing is, faking does work to some degree on investors. If you
're super good at sounding like you know what you're talking about, you can
fool investors for at least one and perhaps even two rounds of funding. But
it's not in your interest to. The company is ultimately doomed. All you're
doing is wasting your own time riding it down._

Okay, so we have something to chew on.

First of all, investors are gameable if you're good at social proof arbitrage
(that is, lying about competing interest in order to set off a "herd
mentality" and become a VC darling). I don't have an ethical problem with
social proof arbitrage. It's what you have to do if you want to raise VC and
you're not from a very wealthy family.

Is the system gameable? It depends on what your objectives are. You can't
build a successful company if you make something no one wants. That's clear.
However, let's be cynical and realistic here. Do you care about the success of
"the company" or of your own career?

If your investors don't like you but you build a great company, they'll give
it (and most of the rewards) to someone they do like. If your investors like
you and your company fails, they'll arrange a favorable acqui-hire. This means
that you collected $120k for each year that the business was alive, and got a
3x salary bump (plus a 7-figure hiring bonus) in your next job. Or, they might
make you a VC.

The part that determines whether your product is Google or Clinkle is
difficult, if not impossible, to fake. We don't even understand how many of
those random variables work. There's some part that's performance- and skill-
related and a large part that's luck, and no one knows where to draw the
lines. However, _the startup career_ is immensely gameable, and that's true
the whole way to the top (partner-level ranks in VC firms).

