
One Order of Operations for Starting a Startup - jameshk
https://blog.ycombinator.com/one-order-of-operations-for-starting-a-startup/
======
mwseibel
Hello - I've been invited to some universities lately to talk to students
about Y Combinator and the question "how do I come up with a good startup
idea?" comes up every time. In this essay, I've attempted to write a guide for
people with the same question. One thing I'll point out from the onset is that
there are many paths to starting a startup and this one is not the only one
(and probably not even be the best). While providing a possible path - my
primary goal was to destroy some commonly held myths about "the right way" to
start a startup. Even more specifically the idea that you need a "great idea"
at the beginning. Happy to hear your thoughts and questions on the subject.

~~~
cvaidya1986
Hi Michael. I appreciate your candidness and openness to accept counterpoints.
How would you evaluate a startup that’s only a couple weeks old, however close
to shipping a prototype but probably won’t have time to get users by Sunday (
YC deadline ). It’s an idea that could generate a billion jobs and hence we
feel it’s better to get YC support than try to grow it slower with a revenue
model. Should we apply anyways or wait to get traction and apply late?

~~~
jameshk
In my experience, the answer is almost always “just apply” - there’s no harm
in it and answering the questions can be helpful to consider various aspects
of your idea in more detail.

~~~
cvaidya1986
True. It’s just going to physically hurt if the hurried demo doesn’t do the
idea justice. Won’t be fair to the scope and scale of the idea. I guess just
apply is the answer regardless. Thanks!

~~~
mwseibel
Just apply man :)

~~~
cvaidya1986
Ok! :)

------
kbuchanan
Here's a more cynical possibility: What if casting about for brilliant startup
ideas is actually a signal that you are unlikely to be a founder, by DNA.

In my experience, founders simply can't help themselves from starting things,
regardless of how ridiculous (or great) their ideas are. There are obvious
exceptions to this (for example, I wouldn't include people who inherit
businesses, who have a lot of startup capital, in this founder pool).

~~~
mlevental
this is so dumb. I'm a founder. I was chosen to be the technical co-founder of
a company where the space had been selected and problem had been identified.
before that I wanted to start something but because I'm not asinine nor had
any useful domain experience I didn't have any notions of valuable problems to
solve. i have all of the makings of a founder (work ethic, risk tolerant,
creativity, people skills, etc.) and we're alive because I do. are you really
going to argue because I didn't just start another Shopify clone for dogs and
then pivot 10 times that I don't have founder DNA?

edit: i'm probably getting downvoted because i come off as a braggart. maybe
but that was not my intention - i just meant that there are plenty of counter-
examples to this claim that if you don't go out and start from scratch
impulsively then you're not genetically predisposed to being a founder.

~~~
kbuchanan
You make a great point that there's a lot more to being a founder than simply
pulling the trigger on a business license. Props for making it work in your
bidness.

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dfabulich
This post doesn't mention when to sign an operating agreement with your co-
founders and legally form a company.

IMO, the answer is: you should have a signed equity agreement before you start
working on the MVP, and and you _must_ have one by the time you finish working
on the MVP.

In practice, you'll probably need to incorporate a business to build your MVP.
If you're accepting money from customers, the company should accept their
money, not a co-founder directly. (Y Combinator recommends a Delaware C Corp.)

Even if you're just spending money, maybe at first one of the co-founders can
fund it out of a personal bank account, but it's way better to have a business
with its own bank account and operate the business out of that.

Your MVP isn't really viable unless your co-founders have signed an agreement.
Sign one, early.

~~~
mwseibel
We have a number of companies who apply to YC with an MVP before
incorporation. While I agree getting this done is a good idea - its not an
absolute requirement for YC.

~~~
dfabulich
Incorporation isn't required, but delaying equity agreement is a recipe for a
painful co-founder breakup later when it emerges that I thought we were going
in 50/50 and you thought it was 70/30.

~~~
nostrademons
You should at least have talked about all the points that go into an
incorporation document and some that don't (equity shares, vesting, time &
work commitments, decision-making, roles, etc.) and have a verbal agreement
that everyone's on-board with. You don't have to actually file the paperwork,
which is expensive and creates ongoing administrative work. You _should_ file
the paperwork ASAP, but if a founder starts working on the project and then
decides that his true desires lie elsewhere or he's not happy with the working
arrangement, that's often easier to fix before there's a real company than
afterwards.

~~~
mwseibel
totally agree

------
mattbierner
My problem: lots of ideas and enough technical skills to make them happen, no
idea how to build any initial buzz even with an mvp. Even when I try
researching upfront, asking friends and family about problems and potential
solutions, most of the responses are like, “well that could be cool I guess.”
I’m not sure if this is a sign that I haven’t been coming up with the right
ideas, or iterating enough, or that I just suck a selling (or perhaps all
three).

Any suggestions?

~~~
hguhghuff
I just don’t see the point in asking someone’s opinion.

To me the only thing that counts is how people respond to actual software, and
even then it’s got to do what you envision the core functionality being.

I know everyone else disagrees but I think you basically got to build it to
find out what people really think.

And even then the only real measure is whether they jump on it without much
selling explaining or persuading.

But then again I’ve never succeeded so there you go I’m provably wrong.

------
startupdiscuss
> "There are a lot of counterexamples to the “failure” scenarios I described
> above, both for first time and repeat founders."

As a reminder the two failure scenarios are (1) idea -> pitch -> raise ->
start company and (2) non-technical team.

What are these counter-examples? I can't think of any, although I have the
vague feeling they must exist. In particular, counter examples to (1) must
exist since the MVP/lean/validate idea wasn't as prevalent even 20 years ago,
and counter examples to (2) must exist especially outside of technical
startups where there are other moats.

Can you think of some?

------
stanleydrew
This is good advice. It is sometimes preferable to start with the right people
though, and together explore various problem spaces.

In reality this isn't much different from the reverse order, since usually you
find out what kinds of problem spaces are interesting to you from talking to
friends.

Great people that you work well with come around way less often than
reasonable ideas in my experience. So I think it makes sense to prioritize
finding the people rather than finding the problem space.

------
brucephillips
The biggest advice I'd add is to talk to users _before_ buidling your MVP. You
can potentially save yourself a lot of work.

Also, there's a ton of details in how to identify risks and validate
assumptions. Four Steps to the Epiphany is a good tactical book on how to do
this.

------
Cenk
Slightly related, the Startup Podcast has two great episodes on Justin.tv:
[https://www.gimletmedia.com/startup/almost-famous-
season-3-e...](https://www.gimletmedia.com/startup/almost-famous-
season-3-episode-1)

~~~
mwseibel
That was so much fun :)

~~~
Cenk
I really enjoyed your episodes, thank you for taking the time to do them

------
wcchandler
Thanks for this!! I’ve started pitching my idea to incubators and accelerators
(cold) but now I don’t think I’ve done a well enough job of showing
progression beyond the idea phase. Time to start making my software more
publicly accessible. Scary. Can’t wait though. :)

------
Zaskoda
I have a lovely blockchain idea but don't really know an appropriate person to
deep dive with on it. _sad face_

~~~
cvaidya1986
Hey! I would suggest following an existing tutorial with an adjacent concept
and modifying it as close to your idea as possible. I am sure you can find a
close enough one on medium or Udemy.

------
hxta98596
Hey Michael, nice article. I saw in a comment you said students frequently ask
you "how do I come up with a good startup idea?" and I know in the article you
also included "This by no means the only path to an MVP...but it is a path
that I’ve seen work for a number of YC companies."

I wanted to share something tangential that has worked for me as I also speak
to students regularly and get the exact same question every time. My response
includes the standard "Is there a problem you are passionate about?". But I've
also observed how many students don't see problems as "problems" when asked to
brainstorm about it and many would-be entrepreneurs end up left out of the
process and discussion. I'm not sure all the reasons why but maybe a pain
point isn't significant enough for them to label it a "problem" in their head
when asked ("oh that's just an inconvenience not a real problem"). Or maybe
their personality leans toward accepting status quo without realizing it can
be changed and they can be the ones to change it. Or maybe they are too shy or
introverted at first to describe and complain of a problem out loud.

So I've modified my response to students a bit to include: I have seen startup
ideas come from 1. An idea for a solution to a problem and 2. An idea for
something "that would be awesome" if someone created it but no one has yet or
at least not done a good job of it. Here's what I mean by "that would be
awesome" ideas, to take the example of Justin.tv, it leads to the same startup
being created but 2 different types of entrepreneurs might get there by
thinking:

1\. _What 's a problem you experience and want to solve_: "TV used to be
entertaining but TV shows now feel stale, boring and with writing that feels
so formulaic."

2\. _What is something "that would be awesome" if someone created it_: "I love
TV and movies, The Truman Show is one of my favorite movies, _it would be
awesome_ if someone made a TV show for based on following someone's life
similar to The Truman Show but for real and with real people not actors".

Same startup. Two ways to get there. Hopefully this all makes sense. I've had
good results engaging with students by adding the "that would be awesome if
that existed" to the ways to think of startup ideas. This especially true with
students who are shy or less likely to complain about problems out loud for
some reason as well as for students who know how lucky they are to be at a
fancy university in a first world country and they feel guilty describing
anything as a problem worth solving if it isn't on the level of world hunger
or similar (in which case I encourage those students to go solve world hunger
if that's what they want to do).

Also one more thing. In my opinion the real major problem for aspiring
entrepreneurs, bigger than coming up with a problem to solve, is how to
brainstorm!

Most people assume brainstorming is just "sit and think". And it can be that
and some people are very good at that (and other people aren't good at sit and
think brainstorming at all but they just get lucky and a good idea pops in
their head one day). But there's a lot of literature out there with research
on _effective brainstorming_ as well as tips and tricks to get one's brain
into a better brainstorm mode (hint there's a reason why so many people say
their best ideas come while showering or jogging). I am outside the valley so
your mileage may vary over there but I see _guided_ brainstorming sessions
work much better than the usual casual 'shoot the shit type brainstorming' for
the majority of people as brainstorming doesn't come naturally to them. Hence
everyone has 99 problems and no good ideas.

The most popular thing I do when talking to students is a class discussion to
come up with a problem and get the entire group of students brainstorming and
iterating solution ideas together, with the goal being "find the first 5
feasible but bad solutions" (Asking them to come up with a "good solution" is
too much pressure and then no one wants to raise their hand to say an idea
others in the group might think is bad, so it helps to make clear it's OK we
don't need good ideas at this point). Another thing that helps is I hand out
index cards to start things and get students to anonymously write down one
"problem to solve" idea or one "That Would Be Awesome" idea. I collect the
cards and pick the idea that best facilitates brainstorming and discussion to
start things off and then do guided brainstorming together. Most students have
never been part of a real brainstorming session beyond some brainstorming how
to do a group school assignment that gets an A and isn't too much work for
everyone and that really they don't care about. Real brainstorming is hard and
they have never done it for real in a group setting.

Sorry for the long comment. Just wanted to share something that has worked for
me getting more students more involved in entrepreneurship, especially for the
types of students who currently are under-represented among the population of
founders these days for whatever reasons. Yes. Also shout out to my fellow shy
introvert founders and anyone who doesn't walk around all day thinking about
problems or like complaining about them. It's OK to start a company with the
goal to make something awesome a reality, everyone has 99 problems and zero
good ideas, try thinking up something awesome instead.

------
Invictus0
Using Airbnb as a reason why your idea doesn't matter is like using Bill Gates
as an argument for dropping out of college. The idea is super important; in
Twitch's case, the process of getting to that idea was putzing around with
something terrible for a while. Ideas do matter and you're not doing anyone
any favors with this quixotic reductionism.

~~~
mwseibel
Clearly the idea (or the solution) is important - my argument is that knowing
the right solution day one isn't very important. Airbnb and Twitch are great
examples of this.

~~~
Invictus0
You're extrapolating from the winners and applying that to the masses. Read up
on their history; Airbnb and Twitch almost died multiple times and that's not
a good model for any startup. Even startups that actually start with a good
idea fail frequently.

~~~
brucephillips
Yes, Michael Seibel, please read up on the history of Twitch.

~~~
mwseibel
Lol

------
graycat
I was looking for more "operations" closer to the day of nicely positive
earnings.

Idea? Had that. Started with a problem that essentially every Internet user in
the world has and that so far is solved piecemeal, with poor means, and, net,
at best poorly. For a solution, the first good solution, and what should be a
really good solution, invented one based on some original applied math based
on some advanced pure/applied math prerequisites. The applied math makes good
progress on the _meaning_ of Internet content.

Team? Just me.

Technical Founder? Just me. I've been in applied math and computing for a long
time, have written a lot of code. Did applied math and computing at IBM's
Watson lab in an AI project. Once at FedEx quickly wrote some code that
scheduled the fleet, alleviated some severe concerns of the BoD, enabled some
crucial funding, and saved the company. My Ph.D. dissertation research was in
stochastic optimal control. Since in that field, commonly the computational
demands are absurdly high, some good computational experience was important.
So, I made some progress in computational algorithms and wrote and ran some
code that had the computational demands quite reasonable. Have written a lot
of other successful code otherwise, especially for US national security.

Code? So, with my idea, I designed and wrote the code. To users, my work will
be just a Web site. So, I needed to write the code for the Web pages. And the
Web site needs to make some use of relational database and also, of course, my
applied math. So, for the coding, I selected Windows over Linux and there
selected the .NET version of Visual Basic (apparently essentially just a
different flavor of syntactic sugar compared with C#). I designed the software
and server farm architecture: There are several programs that communicate over
a server side local area network (LAN). The communications are based on TCP/IP
and de/serialization of object instances. One of the server types is for the
Web pages. The software architecture is so that there is no _session affinity_
between a particular user and a particular instance of a Web server, and for
this there is a session state server; I could have used Redis but, instead,
wrote my own based on just two instances of a .NET collection class. For the
code for the Web pages, used ASP.NET. For the code for the database access,
used ADO.NET. My code has about 24,000 programming language statements in
about 100,000 lines of typing. So, about 76,000 lines have comments. So, the
code is well documented, with the comments and with various external
documents. The applied math is documented using D. Knuth's mathematical word
processing software TeX. The code appears to run as intended: So far I know of
no bugs. The code doesn't need refactoring. Execution timings show that the
code is nicely fast. The code is for a serious service and company and not
merely a _minimum viable product_ (MVP). I wrote all the code.

The next operations I have in mind are (1) tweak the code to make a few small
changes, (2) for the code for the crucial applied math, do some severe testing
a third time, (3) gather a lot of data for the database, (4) do an alpha test
and tweak the code as advisable, (5) do a beta test, (6) arrange to run ads,
(7) get publicity, users, revenue, and earnings.

There are some user interface (UI) and user experience (UX) features: (1)
There is no use of HTTP _cookies_. (2) The Web pages are simple; the pages
should load quickly since the largest page sends for just 400,000 bits. (3) I
wrote no JavaScript; Microsoft's ASP.NET wrote a little JavaScript for me,
likely for some aspect of cursor positioning, but for the users enabling
JavaScript is optional. (4) The site is interactive, but the UI is simple. (5)
Many users should find the UX fun, somewhat game like. A good user might spend
a hour a week using the site. That much time per week for a significant
fraction of all developed country Internet users would be a lot of usage, Web
pages and ads sent, and ad revenue.

The latest is that my development computer developed some data corruption and
finally quit. I ordered parts for a new development computer and first server.
So, I got an Asus motherboard, an AMD FX-8350 processor (8 cores at 4.0 GHz),
16 GB of ECC (error correcting coding) main memory, etc. As of yesterday, the
system boots and runs the power on self test (POST) and BIOS (basic
input/output) code successfully; the BIOS finds the details on each of the
motherboard, the processor, the one disk drive installed so far, the CD/DVD
device, etc.

The OP seemed to concentrate on the earlier operations I've already done, that
is, the idea and the ability to design and write code, but the operations from
the running code to good earnings also stand to be important.

For venture funding, I found that all the well known venture firms in Silicon
Valley, Boston, NYC, etc. were not at all interested -- e.g., nothing about
the description here is of any interest at all. So, I funded this work from my
own checkbook and am 100% owner. Maybe once I have, say, $250,000 a month in
revenue, some venture firm would be interested, say, write me a Series A check
for $5 million. But with $250,000 a month in revenue, cash won't be a
bottleneck; I won't need their check and won't want to take on the overhead
and risk of a BoD, and won't accept their check. I got no meaningful response
at all from YC. That I am a sole, solo founder seems to be a big negative for
venture firms and YC.

Should I be able to be a sole, solo founder of a successful company with no
equity funding? Sure: In the US, border, villages, town, and cities, people do
that by the millions in pizza carryout, auto body repair, .... Should I be
able to be successful as a sole, solo founder of a Web site business? Sure:
The founder of the romantic matchmaking site Plenty of Fish did that.

~~~
mlevental
you're getting downvoted because 1 you're rambling 2 this isn't the time or
place for this.

~~~
graycat
I'm not "rambling" at all. Instead very much I'm responding quite directly to
the OP. I'm responding point by point on just what the OP concentrated on, the
business idea, what constitutes a promising business idea, the founders,
technical founders who could write code, the code, minimum viable product, the
"team" of founders and the point about a sole founder, and venture funding, in
particular, YC funding. Those issues were all central in the OP and also in
what I wrote. So, I'm right on topic. And I went point by point and didn't
"ramble".

And to be more clear, I illustrated with a project I know well, my own.

Then from my example, readers who are a natural audience for the OP can see
some likely important points: (1) Getting a promising business idea can be
less obscure than suggested in the OP. (2) Getting a "team" that can do the
work is easier than suggested in the OP, e.g., some sole, solo founders can do
all the work from the business idea through the code ready to go live. (3)
Venture funding and/or YC funding can be much more difficult to obtain than
suggested in the OP.

Then I made the point that the OP didn't say much about the "operations" from
the running code ready for production to good earnings -- there's more to say
there, too.

And for the potential of a sole, solo founder, I gave some arguments and
examples why that is not unreasonable.

You noticed how what I wrote was really a direct response to the OP, right?
Apparently not. What you wrote about my post makes no sense. So, your concerns
must be elsewhere, and a strong suspicion has to be that you do have some
bitter reactions to what I wrote but not like anything you wrote.

So, you don't know me at all but want to mount a personal attack on me. Okay,
I understand.

