
Why to Not Not Start a Startup - palish
http://www.paulgraham.com/notnot.html
======
h3h
Great read, but the biggest things that stop me from starting a startup aren't
really on your list.

It's a combination of factors, including (1) need for savings and planning for
the [non-startup-rich] future, (2) supporting a girlfriend who refuses to live
a grad student lifestyle, (3) expensive cost of living in the area I want to
live.

I fully realize that most of those sound like excuses more than reasons, but
there is definitely a huge chasm between investing money for retirement,
buying decent furniture, being able to pay rent and utility bills, etc.; and
throwing caution to the wind for a probable failure and extremely strenuous
social, economic and physical ordeal.

So I think my answer to why more people don't start startups is rather simple:
it's not easy to leap that chasm into poverty, seclusion and exhaustion for a
glint of a chance at huge success.

Of course I'll continue hacking on my side projects and hoping my equity in
the startup I'm working for affords me the opportunity to take a risk of my
own in the near future.

~~~
staunch
I think this is the explanation for why YC gets hundreds and not thousands of
applications.

Most hackers get jobs and generally make quite substantial income. Then they
get comfortable with being able to provide for themselves well (and frequently
a girlfriend or wife).

Even without kids there's a lot of commitment there. A 1 year lease on a nice
apartment, a girlfriend/wife "accustomed" to living comfortably, car
loan/insurance, etc.

Years of people doing this means that the highest potential founders have day
jobs right now. For them paths to a startup are 1) Make a lifestyle change and
go back to having little money. 2) Get sizable funding 3) Manage to pull off
something in their spare time.

I think #2 and #3 are rarely successful, making #1 the most likely path to
startup success for someone in this position.

Give up money, car, (nice) housing, girlfriend/wife(?), etc. to slave away
with no life on a startup that will probably fail. Certainly seems like a good
filter for determination, the most important attribute, the chances of success
for these people must be higher.

I suppose YC figures that the potential for these people is not significantly
high enough to justify the smaller number they could fund. Better to do 12 x
$20k investments with 25% chance of success than 2 x $120k with a 50% chance.

------
ced
Hypothesis: "I'd rather work on hard AI problems at Google than create a
startup and bitch about how Safari is not rendering my site properly."

What do you think? I haven't tried either, but working on cool problems ought
to be worth something. Most startup work seems rather mundane.

~~~
LongInTheTooth
Other posters show an inability to engage in a sufficient level of
abstraction. Original post is an interesting question that has nothing to do
with AI, Google, or Safari.

The point is that at a startup (especially the two guys and a laptop variety)
you do absolutely everything yourself, while at a big company you are
supported by IT, QA, custodial services, etc, etc.

The interesting question is whether there exist jobs for which that support is
worth the money and freedom one gives up working at the large company.

~~~
gibsonf1
The Big problem with a Big company: Let's say you're working on a great
project and you know what the next step should be to make the project even
better. _But_ , management disagrees and pursues a direction that you know
will diminish the value of the project. Your options are to suffer and watch
your energy go to waste, quit and work for another company (repeat the above),
or to start a start-up and do the job the way you know it needs to be done.

There has been nothing more stressful for me than having this scenario happen
- I just can't stand by and watch my efforts go to waste. (The Big company
context for me was in the Architecture world, but you can substitute any
profession you like in the above scenario) The best stress-reduction decision
I have ever made was to start my own company. It was very difficult
financially at first, but it was _completely_ worth it.

------
ecuzzillo
I'm only partly covered by this list. It's true that I don't really have an
immediately viable potential cofounder, but it's also true that if I had one,
I still don't think I would start a startup in the near future. My main
problem is that I'm most interested in machine learning and robotics, and
neither of those seem particularly friendly to starting a startup. (Alexa
doesn't run on robots, so I can't bypass the need for revenue, and selling
robots to people other than the government has so far been a fairly limited
market.) Grad school is much more friendly that way, and that's what I'm
planning to do at the moment.

This may change in the next few years, but it doesn't seem like robotics will
ever be as low-capital an operation as the Web.

~~~
lkozma
Grad school is more friendly only in the sense that you are not constrained to
make things that people want.

~~~
dougo
Are you kidding me? You have to make things the people on your thesis
committee want. There's only 4 of them, but you have to have 100%
satisfaction.

~~~
BrandonM
That may be true, but you can work for 5+ years at a problem, fully supported
by your university, without having to worry about pleasing anyone in the short
term. There is no need to worry about releases or fickle customers. And in the
end, success is virtually guaranteed. So I would have to agree that grad
school is more "friendly" than starting a startup, where you have to start
worrying about the viability of your work within a few months (at least in the
YC model).

~~~
dougo
It's true that you don't have to prove yourself after the first semester of
grad school, but there are many "release"-like hoops you have to jump through
in those 5+ years. The main one is your thesis proposal. I also had to do a
plan of study a couple years before that; nowadays, my school (Northeastern)
instead makes you publish a paper (and you're encouraged to publish multiple
papers). There's also all the things your advisor asks you to do as his
research assistant, which isn't always directly connected to your thesis work.

Your adviser, committee members, and conference/journal reviewers are all
"fickle customers". And these aren't customers who came to you because they
want your product, these are more or less assigned to you and you're stuck
with them (unless you change departments or schools). It's true that you get a
stipend, but I'm not sure that counts as "full support". And while the drop-
out rate is obviously lower than the startup failure rate, it's far from zero.

Still, I agree that grad school is less scary than a startup. But don't think
it's not all about pleasing others, with many non-trivial deadlines and
constraints.

~~~
BrandonM
Good points. I had some of them in the back of my mind, but I think that I was
subconsciously trying to forget about all that :).

------
jdb
Paul writes: "The big mystery to me is: why don't more people start startups?
If nearly everyone who does it prefers it to a regular job, and a significant
percentage get rich, why doesn't everyone want to do this?"

You have a logical disconnect here, involving the self-selecting nature of the
group. One could just as easily say: most people who try bungee-jumping enjoy
it - why doesn't everyone bungee jump?

------
Alex3917
"It's exciting to think we may be on the cusp of another shift like the one
from farming to manufacturing."

The biggest reason why startups are so much more feasible now than ever before
is because of the plummeting costs of production. Whereas twenty years ago it
would have taken millions of dollars to do a startup, today a college kid with
a powerbook can do one in his dorm room. Every year the tools of production
get exponentially more powerful and less expensive.

To play devil's advocate, these same factors that are currently driving
startups may ultimately be their demise as well. Almost every tool can be used
for both good and evil. A hammer can be used to drive a nail, or also to harm
someone. Governments have taken it on themselves to try to allow the good uses
of any given technology while regulating the evil purposes. The problem is
that every time they try to regulate away an evil, there is inevitably a
little spill over that prevents us from using the technology for good. Every
time a powerful new technology is invented, we end up losing little bits of
our rights and civil liberties.

As technologies exponentiate in both their power and interconnectedness, it
seems as if society (at least ours) will go down the road of increasingly
restricting freedoms in order to prevent terrorism and other evils.

It isn't hard to imagine that as the costs of production approach zero, so
will the freedoms that enable us to start startups. In many countries, such as
Japan and Germany, it is so hard to do anything other than the status quo that
it is effectively illegal. In Germany the government subsidizes the wages of
students finishing school, which makes it effectively impossible to get a job
without graduating. And in Japan it's even worse.

If the past is any indicator, the same forces driving the boom in startups are
ultimately going to be drivers in forcing people into more restrictive social
structures.

N.B. I don't necessarily believe this, but I think it is a serious argument
that has never really been rebutted. Perhaps because the guy who proposed the
idea was driven insane by it is currently doing life in prison for killing a
bunch of people (Kaczynksi).

~~~
BrandonM
It's a little discouraging, after considering PG's idea that we may be on the
cusp of another production revolution, to consider some of the ideas that you
put forward here. I do think, however, that you are right in saying that it is
very hard to rebut the idea that you present.

I don't really think, though, that what you present are the precise beliefs of
Kaczynski. In your comment, you seem to have the idea that decreasing costs of
production (which is largely due to improvements in technology) is a good
thing, while the decrease in freedom is the thing that is bad. It seems to me
that anarcho-primitivists actually believe that technology itself is the bad
thing, because it departs from the pure, hierarchy-less society of hunter-
gatherers.

It is truly an interesting endeavor to consider where the boundary exists
between what is good about where we are headed and what is bad. I think that
all of us accept the idea that those who have greater drive and motivation to
succeed should be rewarded for their efforts, and it's also hard to deny PG's
contention that people now are living more luxurious lifestyles than kings of
yesterday (heated houses year 'round). We may also argue that if people are
content with their station in life (i.e. doing nothing to change it), then
what is the problem?

On the other hand, I think that nearly all of us would agree that a situation
like that in the Matrix would be a bad thing; even though the people believe
they are living well, it is all a facade. Additionally, we are perfectly okay
with improving the lives of friends and family members who have been less
driven than we, presumably because we love them.

I guess if you consider the implications of that train of thought, if we loved
humanity, we would be perfectly fine with sharing everything equally,
regardless of the amount of work the individual does, and we thereby arrive
back where we started, with hunter-gatherer cultures that have gift societies.
We can even see evidence of this model working in the open source movement
today.

I'm not really trying to make any points here, I'm just pointing out some
interesting questions that your post (and my readings on Kaczynski) brought up
in my mind which made me question what I had previously considered to be
unquestionable truths. Perhaps it's not necessary for the entrepreneur's
reward to be directly proportional to the amount of wealth the he or she has
created, especially considering that with the current state of social
stratification, opportunity is certainly not equal.

~~~
Alex3917
From the Unabomber Manifesto:

"technology exacerbates the effects of crowding because it puts increased
disruptive powers in people's hands. For example, a variety of noise-making
devices: power mowers, radios, motorcycles, etc. If the use of these devices
is unrestricted, people who want peace and quiet are frustrated by the noise.
If their use is restricted, people who use the devices are frustrated by the
regulations... But if these machines had never been invented there would have
been no conflict and no frustration generated by them."

"It is a chronic complaint of small-business persons and entrepreneurs that
their hands are tied by excessive government regulation. Some of these
regulations are doubtless unnecessary, but for the most part government
regulations are essential and inevitable parts of our extremely complex
society."

I take it that what he is saying is that technology creates social complexity,
both good and bad, which then inevitably leads to the loss of liberty. I know
Bill Joy, who co-founded Sun, wrote a good article in Wired a while back about
reconciling Kaczynski's ideas with Kurzweil's.

~~~
BrandonM
"But if these machines had never been invented there would have been no
conflict and no frustration generated by them."

That is the quote that stands out to me, and what it tells me is that he
believes technology itself to be the bad thing, because it breeds the conflict
and resulting regulations.

Regardless of this minor issue, I think that we are both thinking along the
same lines.

------
herdrick
Excellent. The essay and talk together produced several surprises. The essay
cleared up things things that the video obscured (couldn't see the visuals),
like the "not-so-smart" / "enterprise software" connection (I was thinking he
just meant the competition was dumb so you'd have the one-eyed man / land of
the blind advantage).

The big surprise is that YC hasn't seen an order of magnitude increase in
applicants from their first round. You'd think this impossible: Paul announced
the first YC program only about a week before its deadline and they got
something like 250 applications. Now they are all over the tech news and they
still haven't cracked 1000? Maybe PG's new speaking approach (memorize,
practice, use visuals) is an effort to get more people fired up?

Paul, regarding this new speaking style: you _could_ make yourself into a
Steve Jobs dynamo of a speaker, but I think you shouldn't. Your usual
wordsmith style is probably better for attracting nerds.

Question: Paul, it sounds like you've mostly swung in the direction of
encouraging people to look at their own lives for problems to solve. Whereas
in "Why Smart People Have Bad Ideas" you were saying the opposite, like in the
two paragraphs starting with "Reading the Wall Street Journal for a week
should give anyone ideas... " Trevor says something similar in the footnotes.
But it looks like YC has been placing all its bets on the first sort of ideas.
There's a good reason: all the huge software successes come from the "build it
for you and your friends" model because those are the problems you fully
understand. But it's more common to find software companies making solid
profits on products they built for others' problems. Am I overlooking YC
companies building products designed for other people? Is the problem that
there just aren't enough potential founders like the Octopart guys: people
deeply involved in some non-computing world who also happen to be good
programmers? If so, maybe the richest source of ideas and cofounders would be
cruising web forums for the near-programmers (people who build things like MS
Access half-solutions to their companies' problems) to listen to what they
would like to build if only they knew how. Maybe YC should be recruiting
there, too. Thoughts?

~~~
sethjohn
I've often wondered whether you could make a lot of progress by bringing
together hackers with, for example, doctors or lawyers. These are people who
use computers every day but probably don't spend much time thinking about how
to hack a solution to their computing problems.

As a scientist I've had a lot of success looking for the simple yet
groundbreaking problems that occur at the boundaries between very different
disciplines. It can be difficult not to make 'stupid' mistakes in a discipline
with which you are unfamiliar...but it's a lot easier than trying to work
faster and smarter on the exact same problem as everyone else!

Surely interdisciplinary collaboration could be just as valuable in startups.

~~~
herdrick
Agreed. And yet the founders need to have worked together already, at least a
bit. The big problem is that non-programmers can't help out with the
programming in the early stages of a startups when that's about all that's
happening.

------
jayliew
I love the comment about telling an adult from a kid. I'm 25 and many a times
I just feel my peers are clueless, or should be more mature than they should.
Maybe I'm just thinking too far ahead, but the same goes for dates that I go
on. Dumb clueless girls actually turn me off (even if pretty). My friends
think I am kidding when I say I am attracted to women a little older than me
because they assume I am a gold-digger. But I'm not, I just like their
maturity over girls my age.

Anyway, for the longest time, I couldn't really describe, I didn't have any
solid metrics on how to explain to a friend, why I think a girl is
mature/inmature. It's not about the age.

I think your point about pulling the "I'm just a kid" card totally makes
sense. Kids tend to wait for something to happen (reactive) -- wait for their
mom/dad/boss to tell them to do something, they need to be prodded, at which
they will say "do I really need to brush my teeth now?" and groan. Adults are
they ones who anticipate the next move, planning the strategy of where to go
next, looking out for potential pitfalls and coming up with ideas of
mitigating (proactive).

I guess I just am attracted to driven people, and dislike pessimists. I've
seen plenty of people in college and in corporate who pessimists/downers like
that, because they can't come up with new ideas/strategies. So by shooting at
ideas of their peers, and bringing their peers down to their level -- they get
to maintain the status-quo.

------
annex_hipster
Paul, your essays inspired me to quit my job even though I was looking forward
to a nice promotion. A couple of years was enough. I'm two weeks into my
startup, which I'm basing on a Paul Graham/Joel Spolsky hybrid model. I'm
building up capital by taking on some small- to medium-sized projects while
prototyping my real idea behind the scenes with a few collaborators.

While my work struggles to find my replacement, I have no problems finding
people that A) want to work for me on contract projects, and B) want me to
work on their projects (right now there is a queue). I actually work longer
now than I did in the office. But I'm not tired. In fact, I have more energy.
Additionally, if you normalize my work hours, I am even more productive
working on my own. I just generally feel better about myself and am only
experiencing "good" stress these days. I encourage anyone who finds themselves
agreeing with Paul Graham in his essays more often than not to make the leap.

I fundamentally agree with Paul Graham about the change we are seeing. In
fact, my little prototype bets the farm on the premise that this change is
indeed happening.

I'm sufficiently capitalized having had a couple of years out of school to
make some money that Y Combinator's funding is, quite frankly, an unattractive
proposition. Plus, I'm in Toronto and I love the city. I live/work downtown
right near the university. I would not want to move. All this said, is there
any chance that you will do a talk up here in Canada?

------
aarjav
"[2] The best kind of organization for that might be an open source project,
but those don't involve a lot of face to face meetings. Maybe it would be
worth starting one that did"

Mitch Kapor's OSAF (profiled in the excellent book Dreaming in Code) is an
example of the pitfalls of doing this. I'd say the primary pitfall is the lack
of hard deadlines which it itself caused by the lack of 'hunger' because
profit/existence is not the ulimate motive. This seemed to have wreaked havoc
on the schedule for Chandler at OSAF..

~~~
william42
Hence the Cathedral and the Bazaar rule "release early and often".

------
mallipeddi
Question to Paul: First of all I've to tell you I'm a big fan of all your
essays. But a lot of things which you say in your essays seem to work really
well only if you're developing Web 2.0 sites. Version 1 of any Web 2.0 app can
be built with 3 people in 3 months with very less capital needs (especially if
the founders are fresh grads, all you need to do is to feed them for the three
months). So as an investor, I would assume that you don't have to care much
about revenue models, business experience & age of the founders, etc because
in the event the startup tumbles, you don't stand to lose a lot?

But what about bigger projects? Projects which need maybe 10 people working
for an year? Hardware? Would your views change when you are asked to invest in
projects of these kind? The reason I ask is because I'm a final year CS
student in Singapore and I've developed a 360 degree video camera along with a
couple of my friends and we've been talking to a lot of angel investors here.
They all love the idea and are amazed by the demo but most of the time their
major cause of concern is that we don't have business experience and we're
very young (21). How would you evaluate an idea like this one
(hardware+software)? Would you be interested in seeing something like this
sent to YC? Or do you prefer sticking to web 2.0 sites?

~~~
pg
We do sometimes fund expensive projects. Then the focus is not so much to get
something launched in three months but just to build a good demo to take to
VCs to raise more.

------
matter77
I see the big divide between those who do and those who don't differently.
Most people choose a life pursuing happiness, a few choose lives of meaning.
The person who chooses a life of meaning wants to get rich, but they secretly
don't do it for the money. they simply can't not do their dreams. To most,
it's foolishness. It's not that the person choosing a life of meaning doesn't
want to be happy, or can't be, it's just that their happiness is largely
irrelevant. I also disagree with the crap about age. PG filters everything
through this fine mesh, then claims the result is representative of the whole.
I realized sometime around age 40 that to those who see startups as
foolishness, there IS NO GOOD AGE. I kept wondering how I could go instantly
from being too young to being too old. According to most, there is no good
age. It's always a bad idea. What PG is experiencing is this. Much of the
corporate World, and the homes of families in which people grow up, it is
heavily permission-based. In the Midwest for example, anyone behind a tech
startup is considered out of line because they didn't ask permission, they
didn't spend twenty years climbing a permission ladder. If they succeed, they
are thought to have broken the rules. Younger people are more rebellious - we
don't need no stinking permission - and can succeed if they don't first spend
years working for a bunch of mindless droids. Yet, it is still far superior to
have broken through all this and risen above it all, to have endured the worst
and still plow ahead in relentless pursuit of meaningful dreams to build
something great. Meanwhile, there's PG with his clipboard going up and down a
check list. I plain know better.

------
hundreddollar
My favorite part is this: "To almost everyone except criminals, it seems an
axiom that if you need money, you should get a job." As an entrepreneur, I'm
happy to almost be in the same category as a criminal. ;)

I also love the 0% dissatisfaction idea, whether or not the result is a
success. The experience of launching your own project just can't be
replicated. Any of the points you mentioned, even if the result is complete
failure, is well worth the expense of time & risk.

------
jsjenkins168
I was particularly interested in the reversal Paul made with his opinion on
working for a company right after school (before founding a startup).

This was something I've always debated myself. I can see how the companies
he's funded have shown that working first is probably not necessary. I also
understand his argument that trying and failing can teach you more than
working for a company would anyway. But I think it really depends on the
company. Not all larger tech companies suck. And I'd still argue that working
in the corporate environment (even for just a short while) teaches you a lot
of valuable lessons.

I guess my view is weigh the options. Some larger companies (mainly the people
you work with there) can teach you new and diversive things you simply cant
learn on your own. Looking back 10 months to when I just graduated, I
definitely feel I've learned a lot about accountability and being responsible
from the corporate work environment. It also modivates the hell out of you to
break free of the mandatory work hours and start something on your own..

------
aristus
Question for Paul: if you believe that more people will startup in the future,
but success requires lots of hands-on help, coaching, etc, surely you need a
way to scale YCombinator, right? How?

~~~
pg
We often think about that. We could hire assistants, so we didn't have to do
everything ourselves. Or we could make YC work more peer-to-peer. Or we could
build a robot that would walk around telling everyone "don't make users
register," "delete half the text on your frontpage," "face the audience when
you're presenting," etc, and I could just hang out in the next room with a
book and a cup of tea.

~~~
elad
"don't make users register" Funny that I had to register to post here :)

~~~
nostrademons
The alternative is anonymous comments, which usually lead to a significant
drop-off in the quality of discussion.

I think "Let the users see what they're getting into before registering" is a
more accurate description.

------
akkartik
Hey, I said something before PG did! Compare footnote 2 with
<http://news.ycombinator.com/comments?id=635>

I'm sure I wasn't first, but it's cool nonetheless.

Startup idea: supporting geographically collocated open source projects to
help potential partners get to know each other. It might start out similar to
<http://prehacked.com> \-- allow people to enter projects they're interested
in and their geographic location, and cluster similar interests together to
show them potential partners. Allow people to say x is similar to y when the
system can't figure it out (I always thought reddit should accept hints like x
is related to y or not related to y).

------
heriks
A sad thing about life is that after squandering ten years on playing in bands
and stuff (point 11), if you eventually do get your act together and go to
university and then (point 16) take the default route to a job in a big
company, happy to make a living at all; after a while, if you have half a
mind, you'll end up realizing that you're getting dumber by the year (point
14), but by then you've also stumbled into a family, and a start-up is no
longer a realistic option (point 9, 13, and maybe even point 12 has kicked
in). But then it's just 25 years to go until you're retired, just clench a
fist in the pocket, produce a smile and keep coding for a salary. Sorry.

~~~
marcinc
Or alternatively you spend 8 years in the military, 4 years in a big national
Telco and then you're 33, with a family, and even PG saying you shouldn't
start a startup.

------
nateritter
I think this is a great essay, but it's missing one very important factor
which keeps me from starting a startup (successfully so far) - networking. I
don't know the right people, and knowing people is so much of the battle (as
I've found recently).... I guess that's not much of a problem if you are Paul
Graham, or know Paul Graham. But, it's a problem for average joes like me.
Spend all your time hacking on a problem and no time meeting the right people
and you'll still have problems with your startup, like getting funded, getting
known by the public, etc. That takes people.

~~~
rsynnott
Yes, I'd have more or less the same view; I don't know enough people, and I
doubt I have the social skills to court VCs or similar. I've worked for a
couple of startups/ex-startups, and in each case there was at least one person
there from the beginning who was very good at things like that.

~~~
AurSaraf
Hello. I am Aur Saraf.

Social skills are learnable. Very learnable.

I believe that every geek should submit himself to a crash course in social
skills (to a level where he can control a room in a party). It's really not
that hard. The problem is that it's one of those problems where no one would
admit it and therefore I currently research the field alone, recording my
results in private (anyone interesting in starting a community dedicated to it
should contact me by mail, hunt my address).

Aur Saraf

------
Oldude59
Excellent!! Like so many current narratives - You assume that only the young
are concerned with start-ups! My partner is in his middle 50's and I'm 61
going on "28". You made quite a point to inform us what and why 18 was such an
important age - how about telling me something about the other end of the
scale. As a boomer - there are more of us coming back from the corporate wars
battered, bruised and ready for a life we can love. I say send the "kids" to
work and let those of us that still have the fire do the creating.

------
MrAnalogy
The success rate Paul has had is actually lower than average success rate of
small business startups (with more than one employee) Everyone always quotes a
10% success rate after 1 or 2 years. That is, as Paul suspects, a myth. True
success rate is around 66%. Y-combinator's success rate was 50%

66% OF SMALL BUSINESS STARTUPS LAST 2 YEARS
<http://www.smallbiztrends.com/2005/07/business-failure-rates-highest-in.html>

~~~
gibsonf1
Survival and success are two different things. The 50% PG referred to are for
the founders becoming "rich" by their standards, not just staying in business.

------
jackpipe
Well, you state that 0% of your startups had a bad experience. But of course
these were the ones that got funding - they are already winners, even if they
later failed to make it big. What about the 400-odd that didn't get funding?
It takes much more than a couple of weekends in a cafe to put together a
decent startup proposal, often the startups have made considerable sacrifice,
not to mention putting their hopes and dreams on the line, even to get face
time with potential investors.

------
Goladus
6\. No cofounder Is my main discouragement. I'm 28 and have been out of school
for 6 years.

13\. Uncertainty interferes a little. I have a comfortable , quiet apartment
and I'd be risking that on a startup. This obstactle isn't hard to overcome,
though.

Other comments on the essay

2\. Too inexperienced: In my case, being too inexperienced meant that the idea
of a startup didn't even occur to me. This advice might have helped, but I
probably wasn't listening.

12\. Need for Structure: While some people do seem to have a built-in need for
structure, sometimes that structure can be "There Is No Structure." I'd say:

The problems appear when the expected structure is differs from what actually
exists.

Employees will stagnate in what feels like a structured environment if they
are given no instruction. However, if it's clear from the start that no
structure will be provided, they won't waste time waiting. On the other side,
managers may get upset if employees don't follow policy with military
precision, despite the fact that military structure hasn't been provided and
the relevant policy is 30 pages deep in a handbook no one has read in 2 years.
The manager can either figure out how to include military drilling, or accept
that degree of structure is unworkable.

My impression of Y Combinator is that it's fairly clear early on how much
structure is provided (or not provided).

------
drrogera
The time span cited in that study was an aberration; anyone with an idea was
getting money thrown at them. There is also a great big chasm between "still
in existence" and success. If you sell-off assets for the benefit of creditors
your company can still exist but it would be hard to call that a success.

The numbers I hear from my VC friends is that around 50% are out of business
after the 2nd year. They see more of teh picture than I do so I trust they are
better qualified to make teh call.

My opinion is that more companies fail because of incompetence than
insufficient funding. If you really have a great idea you can make it work.
The trouble is that most make some big mistake and spoil the well.

I think starting a company is one of the most exhilarating things you can do.
I wish more people would try it. I also wish more of them would try to
understand the basics of business operations. This is where I disagree with
Paul. I have seen too many $100 million ideas ruined by founders mistakes. Too
often the time has past before they can regain their opportunity.

I still encourage everyone to give it their best shot. It's a great ride, up
or down.

------
sanderbilt
Here's my big question for Paul, and for everyone. How does one afford to
start a startup? Does everyone do it by eating Ramen and maxing out their
credit cards? Wouldn't you hear about more people who had their life left in
ruins with $50k in debt when their website went under? I'm not talking about
the cost of running and developing your business. I'm merely worried about
rent, food, and Health Insurance!

I work a day job and am diligently developing multiple startup ideas with a
few friends, but these will obviously never get off the ground until we quit
our jobs. How do you do this without massive savings for six months or a year?
What if you don't become profitable for 2 or 3 years?

My best solution so far has been to trick myself and go back to get my MBA
this fall. I can live off loans and spend all my free 'college' time
developing our sites. I've had a lot of entrepreneurs tell me that this is a
bad decision, and that I should just quit and go to town on the web.

Could someone please suggest some means that would allow me and my fellow co-
founders to do this?

~~~
inklesspen
Someone's already mentioned Y Combinator. But YC isn't the only place you
could go for funding. There are angel investors and VC groups all over the
map. What you have to do is put together something that convinces these people
that not investing in you now is leaving money on the table. Don't worry about
failure to get financing at this stage; there's always more people out there
looking for the next hot startup to invest in. All you have to do is convince
first yourself and then these other people that you can do this.

I would caution you against using college loans to fund your startup. For one
thing, it's probably foolish to borrow money for this when there are people
who will invest if you spend the time to get them interested. But for another
thing, it may be a violation of federal law, with serious consequences if you
get caught. A CPA or lawyer may be able to advise you about your options here.

------
domp
Paul, I really liked your point about the change in the business world. I also
feel that the current model is shifting into a more favorable situation for
individuals.

I think it might be the change in perception. My parents, and people around
their age, seem to have a different perspective on what a job means. They see
work as a smaller role in their life. "Work just pays the bills". But most
younger generations seem to put more of an emphasis on their careers. They see
work as the main part of their life. It could be due to the amount of money
that we pay for college tuition. I know I don't want to waste my degree and
years of my life doing someone else's work. I'd rather have the comfort and
responsibility to be left alone to do my own work. Maybe I'm just speaking
about my own situation.

------
kernwill
Paul, Great article, I found it extremely helpful and encouraging. I did have
one question though around point # 9. Family to support. When you started
Viaweb, did you have a family? If not, what about when you founded Y
Combinator? The reason I ask is that I feel that having a family is a huge
motivator for success, not a detractor. Now it is extremely risky especially
if you are the sole provider for the family, but the reward is extremely high.
If you have the confidence, determination and the right support (money, good
business partners, etc.) your chances of success are increased. That would be
like saying that it is not wise to be an extreme sports athlete or even a race
car driver if you have a family because it is too risky. Calculated risks have
great potential.

Will

~~~
MMax
Will, you've just told me my thoughts :) I absolutelly agree with that. A
family is a powerful incentive to becoming the best one.

------
aek82
As a young startup founder myself, the one point that really drove me to
uproot was the monotony of the day to day life in cubeville. I lasted a little
over a year - told myself "what the hell" - and two weeks later.. I quit and
started my own company.

The primary reasons I left corporate are already iterated in the essay.

1\. I'm only two years out of college and fairly young, My living expenses are
fairly low.

2\. I was bored out of mind. I now know the real meaning of corporate drone
and can relate to the movie 'Office Space'.

3\. As each day of work passed by, I swear the work made me a little dumber.

4\. Nothing to loose. Last straw was when the company got bought out, and the
CEO jumped ship with his golden parachute.

5\. I don't want to be remembered as a person who was a [insert job title] at
Big Company A.

------
sri
great article paul. i especially love number 7: produce something specific for
yourself. this forces you to notice problems and noticing your own problems
and overcoming them with technology is a subset of noticing problems of others
and using technology to help them, which is the job of startups and
companies... so IMHO, noticing and solving your own problems is a fundamental
skill people in startups need to have.

that technique works because most of us have been conditioned to ignore the
problems that we encounter daily. when faced with a problem we simply side
step, avoid the problem and keep marching. the entrepreneurs are the ones who
stop, notice the problem (or opportunity) and help us get things done easier.

~~~
kingkongrevenge
"produce something specific for yourself."

This excludes any sort of capital good like an accounting package, or his own
example of groupware.

You'd never get most of the good product ideas targeted at businesses without
industry experience, which sort of contradicts his advice not to work before
starting a company.

~~~
abossy
I don't understand -- how are accounting packages or groupware examples of
goods that don't solve a problem for oneself?

If I need to manage my money and taxes, I can build software for that.

If I need to develop some kind of collaboration tool to help me work better
with teams at school, or on an open-source project (both not inherently
business domains), I can build software for that.

Business tools are merely extensions of these. Unless I missed it, PG never
mentions good product ideas targeted at businesses, so I am unclear as to
where there is a contradicition. His mantra is to go for a wide user base,
which typically requires mainstream business ideas, i.e., business-to-
consumer, not business-to-business.

------
dschwarz
Terrific essay.

I worked for startups all through my 20s, but now at 37, I, I find myself up
against point #9.

9\. Family to support

I'd love to found a startup, but having a wife, two wonderful kids, and a
$500K mortgage give you a very different perspective on the startup lifestyle.

I imagine a startup incubator where the founders are provided with salary and
benefits comparable to working for a corporation, and they are encouraged
(forced?) to maintain a reasonable life/work balance, (The latter is probably
the hardest to achieve; a startup requires an almost monomaniacal focus).

In return,the incubator would gain access to a pool of talented people who
would otherwise not be able to make the leap.

Is this being done now?

~~~
nostrademons
"I imagine a startup incubator where the founders are provided with salary and
benefits comparable to working for a corporation, and they are encouraged
(forced?) to maintain a reasonable life/work balance,"

Google. Except the work/life balance.

------
matter77
Anyone less than an excellent co-founder, is worse than no co-founder at all.
I have been there and done that many many times. Pressure is intense, 100 hr
work weeks, then the "other guy" is a little cynical or has to dumb everything
down. It's worse than no partner at all. I'm not sure about the advice to go
and get a co-founder no matter what. I'm sitting on the next big thing and I
have $ to pay people, and do everytbing else myself. Now, I'm supposed to get
a co-founder? Why? And if there isn't anyone I guess I'll just shut it down.
No wait! Why not spend 6 mos of precious time searching.

------
joeljordan
The cofounder requirement is always going to be a huge deal for a lot of
people. I spent lots of time in college doing extracurricular projects to try
to find smart, hard-working people to be around. Most of the best of that
bunch ended up working for large technology companies for lack of any better
ideas. My experience suggests that meeting cofounders at school is a pretty
chancy thing. I wonder if the best way to purposely meet potential cofounders
isn't to work at startups in the first place, where people won't be stuck in
the big-company mindset.

------
startforfun
Question about co-founders. Say one guy came up a good idea and has worked on
it for some time. He wants to find a co-founder as you suggested. But how
should the two co-founders split up the pie? Is each having 50% reasonable? If
not, will the new co-founder accept a less share? How do you value the past
work of the 1st co-founder and the new value that the 2nd guy brings in? It
seems stupid to argue this when nothing has achieved, but this delicate and
sensitive issue has impeded many cooperations. Your insight is very much
appreciated.

------
ktappe
Count me as one of the (apparently) very few who had a terrible time with my
startup. The one thing that I really didn't count on his how hard the
government makes it. It is a REAL pain in the butt to handle all the paperwork
to create an LLC and then it gets worse when tax time comes around. I tried to
do it all on my own and I would NEVER do it again without hiring both a lawyer
and an accountant. How one-man operations do it, with all the legal and
accounting plus doing their actual jobs of running the startup is unfathomable
to me.

------
Laura
Very strange notions of "success," if you ask me. To me, if you're in a
"startup" only to be acquired, then you're not in business, you're in
speculation, and you've already started to undermine your longevity. Why go
through all the pain and sweat of starting up a company if you don't want to
be driving that company 20 years from now? What you're describing strikes me
as a "flash in the pan" mindset. If all you want to do is start and then cash
in, well, that's not starting _up_ , it's just starting _out_.

------
BusinessGolf
Most failures and successes are based on the business' operations....too much
marketing/sales will drive a start-up to failure. Too much work setting up
operations causes the business to really never start. My advice to my clients
is if you are not a person who can balance both sides of business you need to
get another person to take on the part you are not strong at...most of the
time it is Operations....

Scot Duke Virtual Operations Consulting <http://innovativebusinessgolf.com>

------
mes
_[3] There need to be some number of big companies to acquire the startups, so
the number of big companies couldn't decrease to zero._

No there don't. There only needs to be some number of entities with deep
pockets and marketing expertise. Those entities could be small companies and
individuals, or networks thereof.

While it might turn out that a large black-box structure like today's
multinationals is the most efficient organization for accomplishing certain
important tasks, it doesn't seem obvious to me that it must be so.

Michael Sullivan

------
scrollinondubs
I just finished reading this essay and there were so many sentances that
resonated for me that I may have to frame the whole friggin thing. We had
originally applied a year ago for the Y Combinator summer program of 06. We
didn't make it but we did the startup on our own instead and it continues to
be the most rewarding experience of my life: JumpBox.com Paul, you are an
absolute beacon in this industry. I look forward to reading all these comments
on this post next...

------
temporary
Paul,

I wish I had met you or read this column column back in 1993 when I was
graduating from college. Not that I'm complaining but I'm now in the don't
start phase of my life due to kids etc... So I'll just wait and use the time
to learn more until the point where my kids are a little older and can go off
like Mike Siebold.

PS: I thought I'd add this post since no one has posted for a while to let you
know that people are still reading your thoughts.

------
achillesheel
0% of the startup founders hate startups these people: Paul __selected out of
a pool of people having advanced ahead enough to consider funding __. Sounds a
lot like - making 100000$ per year is an easy problem - just go to Stanford
Univ everyone who goes there makes 100,000$.

Drive is probably the hardest thing to maintain. I worked at a startup for 3
months. Highs are higher and lows are much much lower.

------
jayliew
Not to nitpick or anything, but in the essay:

"If you're smart enough to worry that you might not be smart enough to start a
startup, you probably are"

I understood what the last line meant, although it may seem ambiguous to some.
It could easily have been interpreted to mean that if you think you are
stupid, that means you are probably correct that you are stupid, and shouldn't
start a startup.

But what do I know, I'm no linguistics expert ;P

~~~
DanielH
Well it's not that hard... Normally smart people don't realize that they are
smart because they have higher standards and often if they reached those they
set them even higher. So from their perspective they normaly never reach their
own standards. The problem is that smartness and self-confidence often seem to
be diametrically opposed.

The point is: Don't hesitate too much and learn to deal with your doubts
(especially if you start a startup :o)).

~~~
jayliew
That's a very good point, Daniel .. thanks :)

It is true -- sometimes I get that feeling that I beat my up unnecessarily for
no real reason, and get miserable. Then, it takes someone else (like my
mentor), to point to me all the things I did right, which makes me go "oh yeah
..", I'm not a that dumb after all. HEH.

But you know what, if there's one thing I've learned from my previous job --
working in a team where I am the smartest person on board, IS NOT APPEALING to
me. I specifically told my current boss, during the interview, that I _don't_
want to be the smartest guy on the team.

So basically its an infinite loop:

1\. don't want to be the smartest person on the team

2\. play catch up

3\. go to (1)

So in all that three steps, the standard I set for myself is always higher and
I never appear to have "met" my standards. Just like you said.

LOL

:)

------
jackpipe
To the JumpBox guy. Interesting idea. You need to come right out with what
you're doing, on the home page, or in the first sentence of the 'about' page.
I don't want to read a paragraph of crap about automobiles, before coming to
what you're all about. Also, I'm sure LAMP components (ie the various tiers of
web server) would be a hit - ie seperate VM images for apache, database, etc.

~~~
scrollinondubs
jackpipe- yea we know that page is admittedly weak right now ;-) we're
replacing the about page with a distilled 5-point tour that explains the
concept better and more visually. RE: the vanilla preconfigured stacks- the
VirtualAppliances.net guys and Spike Source are doing a pretty good job now
with putting out lean versions of the basic software stacks so we're targeting
the end-to-end apps for now. We'll hit those up down the road though. thanks
for the feedback.

sean

------
tinkertim
As a 32 year old owner of 2 failed and one successful startup, I can say
without hesitation that this is by far the most insightful piece I've read on
the topic. It was not just an essay, for me this was a trip down memory lane.
Thanks to the author for a very insightful and enjoyable piece of literature,
I hope to see this selected as its been submitted to Slashdot.

------
mountaineer
Great essay, I sure wish my reason was because of #10 (wealthy) and not #9
(family to support), so true, so true.

An alternative to starting a consulting business is to build your stuff on the
side. Possibly draining? Yes, but if you're determined, I believe this is
better than getting distracted by a consulting business. Time will tell if
this is wise though.

~~~
lupin_sansei
Another alternative is to work 4 days a week, and use the extra day for your
startup.

~~~
lkozma
You're talking about Google, right?

------
STOpandthink
There will be more startups over time, but eventually this growth will hit a
limit. There are only so many people who can participate in a startup.
Eventually the startups grow and merge with big companies and that's where
_most_ of the people will spend their life working. Startup will always remain
an adventure fit only for the elite.

------
ts
Paul - I think you missed one point.

You really have to find the right technologies that motivate and enable you.
For you, it was lisp. For me, it seems to be python right now. For years I
worked with java, and it simply didn't seem to fit well with me. For some
reason, python seems to be the perfect fit, and I have a new sense of desire
to code.

------
LongInTheTooth
I wonder how large a factor student debt is when people consider the one or
the other. A guaranteed liability can be a powerful motivator for finding
guaranteed income.

(Although if you think that a job at a big company is guaranteed income,
you've never worked at a big company going through any kind of hard times!)

~~~
Elfan
Its income period. If you are reasonably frugal any sort of "real" programming
job is enough to handle the loan payments.

But no matter how frugal you are a $40000 debt is unlikely to be paid off on
$10000 in funding. You would be making a big bet not only on a success but a
timely one. So yes I think student debt is a large deterrent for those who
have it.

------
BrandonM
Minor edits: under #4, the second paragraph, "Any in any case..." should be
"And...". Also, I personally think that the previous sentence could use a
little work, because "you probably are" could mean "you probably are not smart
enough".

Feel free to delete this comment after changes are made.

------
shadowolf
I love this post. I loved it so much it was forwarded to all my friends that
hate their jobs. It was very inspiring for all of them, esspecially since most
of us are looking to escape the corporate world and its life energy sucking
affect.

------
pepe
"After they paid back their angel investors, they had about a year's salary
each"

Paid back?, what about the risk issue involved here, do founders have to
expose their money (if they have) to launch the startup?, don't really
understand

------
to_jon
Paul,

I wish you would provide another funding route for the old hackers who didn't
strike gold in 1999 but who don't have the option to work for next to nothing
for a summer (even if we're willing to quit our jobs for the opportunity).

------
rikard
What if I'd like to accomplish something, like building an operating system or
a world wide web, and don't really care about the money. What if I just want
to change the world. Should I start a company and if so why?

~~~
AurSaraf
Hello. My name is Aur Saraf.

If you want to change the world, you have two ways to do it:

1) By force - in this case, don't do it. Waste of energy on anti-productivity.

2) By creating something people REALLY REALLY want (like your examples) - in
that case, yes. Create a company. Find someone as enthusiastic as you. If you
create something people want, money will come.

Email me for details, I'm a gmailer and my nick is SonOfLilit.

------
nandan
are there any plans on putting up the videos for start-up school on the YC
site?

------
count0
Greate article.

But I have the impression that PG means "to start starup is to launch a web
application". right?

~~~
philc
Not necessarily, but building a web app turns out to be a good way to build a
product. He wrote about some advantages of doing so here-
<http://www.paulgraham.com/road.html>

------
busterdog
I think a lot of this stuff applies to starting anything new. I thought about
church planters who work for non monetary rewards. Same stuff applies to
pioneers in any endeavor.

------
duds
The very last title won by Real Madrid was the National Championship, at the
middle of 2003. Beckham himself never won anything there, even playing with
Ronaldo and Zidane :)

------
icky
I've been going the consulting + startup route, and I already feel the way
about "real jobs" as Paul described-- serfs, or slaves. I feel a certain pity
for them.

------
ttonca
Awesome essay Paul! Tell it like it really, really is.

------
jmcantrell
Fantastic essay. Now I'm all pumped up. As soon as I find a colleague that I
want to share an office with, I'll be submitting an application :)

------
julie
Essay great, as usual from PGraham. Quibble is: should rightly be called "Not
reasons not to start a startup".

Your friend, Julie

------
brlewis
Who are the random schleps? Customers?

~~~
pg
errands

------
dherman76
Very impressive essay. I'm a founder of a startup and agree with most things
here. Great job.

------
prabuinet
Provoking my thoughts to start a Start-Up again (I already failed twice). I
will.

\- Prabu

------
lauranattysteph
What are your plans on putting YC up on the TDP? and tell PG he rocks!!

------
blats
"Even the founders who fail don't seem to have such a bad time."

I was a founder in a startup that died late last year. It was the hardest I
have ever worked, and one of the most challenging things I have ever done. It
was frustrating in so many ways and there was amazing amounts of strife
involved. In the end the project ran out of money and the products of my labor
and imagination are now gathering dust in storage. After all that, without any
monetary reward, I would do it all again in a second. The challenge of
following my senses through completely unknown territory and the reward of
seeing my idea come to life was more then enough to make the whole thing worth
it. It was the challenge that drove me. In the end it was the challenge itself
that rewarded me even though the company didn't fly.

"A lot of people think they're too young to start a startup. Many are right.
The median age worldwide is about 27..."

I do agree completely with the idea that adulthood is a state of mind and not
an age. I remember my dad asking me "What do you want?" when i was somewhere
between 18 and 21. My reply at that time was "I just want to be comfortable."
I remember it quite distinctly. He then told me "I expect that will change
some day, given your creed." He was right, and I realized it while in the
midst of working my tail off on a project. All I wanted to do was work on my
ideas, see them come to life. The discomfort didn't slow me down at all, it
was the challenge that I wanted.

"You need a lot of determination to succeed as a startup founder. It's
probably the single best predictor of success."

A founder without determination is not going to succeed, but their drive can't
cause them to loose perspective. One can dig with a singular purpose and make
a big hole, but if it is in the wrong place it does the project no good.

"You don't need to know anything about business to start a startup."

True, but eventually the business skills will be required if the project is to
continue. My experiences have taught me that while a viable product is most of
the battle, a lack of resources on the business end of a project can stop it
in it's tracks. Weather it is the founders themselfs that learn the skills, or
outside resources are brought in to help - the skills must be obtained. The
lesson I learned is pick the right people to depend on, or depend on yourself.
Implementing your ideas is great all in itself, but it is much better if there
is someone interesting there to see it when you finish.

"If you don't have a co founder, what should you do? Get one."

Be careful! Going into business with someone in the startup environment is a
commitment. You will spend allot of time with them and you will have to depend
on them constantly. It is almost like a marriage, choose wisely. Good friends
do not always make good business partners.

"In a sense, it's not a problem if you don't have a good idea..."

I believe that a person's ability to learn, gain skills, and adapt is the most
important thing period. You find someone with a carrot, you've just got a
carrot. Even if you need a carrot, their value is limited once they give it to
you. Find a gardener and you can grow anything you need. Reminds me of some
proverb about choosing a fishing pole or a fish.

"This one is real. I wouldn't advise anyone with a family to start a startup."

I agree with this 100%. I did it, and I would not advise it for someone with a
choice. My family is amazing and supportive and more then anything else they
KNOW me. I have founder pumping through my veins. The startup world is home to
me, there is no question that I will be a serial entrepreneur. Good ideas give
me goosebumps, unsolved problems give me insomnia. My family supports who I
am, so I am able to do what makes me happy. Successfully pouring your soul
into a project and being a member of a family at the same time is a learned
skill. Play it safe unless you know what you are getting into, or just can't
change who you are.

"Start another company? Are you crazy?"

See above.

"Be aware, though, that if you get a regular job, you'll probably end up
working there for as long as a startup would take, and you'll find you have
much less spare time than you might expect."

Working a regular job instead of chasing dreams is still a commitment. Yes,
you can work a regular job without thinking about it all the time. You can go
to work 8 hours a day 5 days a week and not have it take over the rest of your
personal time. Having said that, is it really worth it? Why do something all
day that you don't care about? Sounds flawed to me.

"Each person should just do what they need to without anyone telling them."

This throws back to the "pick carefully" comment. Your choice in business
partners is paramount. There are many many people who will just stand there on
the field with the ball looking confused. Within the constraints of a startup
you may not have time to figure it out after the fact. Make sure you know they
can work, and that they can work with you.

"If you go to work for Microsoft, you can predict fairly accurately what the
next few years will be likeÃÂall too accurately, in fact. If you start a
startup, anything might happen."

This is part of what attracts me to the role of a founder. Clicking send on an
important proposal and not knowing what will happen is like jumping off a
bridge for me (with cord of course). I love not knowing, I love the process of
finding out. I love the risks you have to take and the rewards you can reap.
Anything can happen, and that resonates with me.

"A significant number of would-be startup founders are probably dissuaded from
doing it by their parents."

This is a problem I never had. My dad tells a story about having a booth
across the aisle from Oracle WAY back when they were both small. He was lead
developer on a similar DB app called RDM which was a far more mature and fully
featured product at the time. His business leaders thought conservatively,
Oracle shot for the stars. The rest is history. My father will never
discourage me from chasing my ideas, and my mom just loves to see me glow. He
was there, at the time and the place; he chose the steady paycheck.

"Imagine being sad on Sunday afternoons because the weekend was almost over,
and tomorrow you'd have to get up and go to work. How did they stand it?"

What, as apposed to kicking back - stretching out - and wondering what day it
is on Sunday afternoon? Never.. operating by the seat of your pants and living
your ideas is the only way to go. Its the best feeling in the world, and the
bad times only make the good ones better.

[edit] Getting my proverbs straight.

------
zkinion
oohhhhhhhhhhh 100th comment :)

------
stevej098
1\. _the_ best piece I've ever read on startups.

2\. These ideas don't just apply to technology startups. They apply to new
businesses generally.

3\. Walt Disney couldn't make it on his own, knew this and got his brother Roy
out of hospital (!) to work with him. Roy outlived Walt. Walt painted castles
in the air, Roy built the (economic) foundations. = Co-founder good,
Creative+Executor great :-) = There has to be real trust/loyalty between the
founders. With enormous wealth on offer, enough people go crazy & try to take
it all. A partner you don't know well can take you down easily.

4\. 'Founders', a.k.a. entrepeneurs, are more willing to take _risk_ than most
people - which means they get pretty comfortable with failure. They are also a
special breed. = Comfort is the enemy of Change. = Change is Risk, but the
only way forward. = Comfortable people won't pursue a startup vigorously...

5\. How do you get your Founders to "put skin in the game"? To have a personal
stake in the outcome? (Besides losing their dream - or is that generally
enough?)

6\. One of the most important personal traits of a great entrepeneur - keeping
a journal... Gotta write everything down. Crops up repeatedly in biographies.
Richard Branson is quite clear about it - but doesn't relate it to his
success. There is supposedly some research that says 1.5-3% of all people
write down their goals. Once there was a long-term Ivy League school study (is
this apocryphal?) showing that people who wrote down their goals out-performed
others by 5:1 or 10:1

7\. People are different. Some are shy/introvert, many extrovert. Shy people
don't sift through the large numbers needed to establish 'good networks' and
check-out who'd make a good partner. Many of the best geeks are quiet &
retiring folk. They will, by definition, find it hard or impossible to bring
along a partner. But forcing someone on them won't work either. This is a hard
problem to solve. = A solution is something like your "Startup School", but a
little more frequent, to provide a mileu in which these people can mix and
hook up. [As conferences and User Groups can do.]

[For a great example of this, see how Paul Allen was treated by Bill Gates and
Steve Balmer on his last project at Microsoft.]

8\. The Internet changes everything. But the VC process is still face-to-face
personal contact... Silicon Valley was caused by VC firms like "Kleiner,
Perkins, Caufield & Byers" bringing money from The East into technology. Even
with the hordes of imititors and rip-off merchants, greedy investors flocked
and made out well... Because the place had critical mass - in people and
places to meet, and the culture to support it. These comments are peppered
with genuine frustration (& longing) from would-be entrepeneurs. = How can the
Internet overcome this tyranny? = Business is about personal relationships.
Can the Net ever replace or augment that critical factor?

9\. Technology support. Finding someone who is fluent with a key technology,
like hardware hacking, can be critical to the success of a project/startup.
When it's not your field, how do you find a way in? Then how do you get taken
seriously by an expert??

10\. Scaling: small trials and growing entrepeneurs. My belief is that good
entrepeneurs are grown, not born. And that there are predictable growth stages
for all companies. A wealthy friends' advice is: Never attempt anything more
than 30% larger than you've done before. = Have you thought of building a
process to train up entrepeneurs before they enter your funding process? = I'm
thinking graduated funding levels, starting low ($10k) and in a couple of
stages getting to $500k or so.

11\. For solid research on what makes _great_ employees, see Robert E Kelley's
book "How to be a Star Performer"
[<http://www.kelleyideas.com/pages/howtobeastar.htm]> Number One Quality:
Initiative. Sounds the same...

12\. One of the prime causes of some recent major corporate collapses here in
Australia was: "Ignorance, Arrogance and Self-Delusion". They are a powerful
triplet that can't be broken through. Witness the non-musical entrants in
"American Idol" who honestly believe they are brilliant. = How do you sort
these out? They'll always have a high opinion of themselves, their abilities
and a string of huge accomplishments.

------
mae
Thank you

------
mae
Thank you

------
mae
Thank you

------
kingkongrevenge
I'm still doubtful about the "Revenue is not important" thing. Maybe right now
you can get acquired with no revenues, but that probably won't last. People
said revenue didn't matter during the Web 1.0 IPO bubble, and that turned out
wrong. To be convinced otherwise I'd have to see the accounting for these web
deals showing a return on investment. And if the profits are predicated on web
advertising call me skeptical about the sustainability.

To my knowledge the "revenue-less liquidity event" route to riches is new
circa 1998, e.g. The Globe and other such IPOs. This route is probably a
symptom of the global liquidity bubble rather than a lasting development. We
are still in a global liquidity explosion that measurably started around 1995.
It has fueled all kinds of bubbles and weird business practices and now it's
fueling acquisitions, just like it's fueling Private Equity deals and stock
buybacks. We are in financially anomalous times.

~~~
Elfan
There is a distinction between "revenue is not important" and "if lots of
users love you, you can probably figure out how to make money out of it (if
you arn't acquired first)".

~~~
Goladus
I think another difference is that there are companies absorbing the risk and
associated losses. As was noted in another one of Paul's essays, big companies
tend to be good at extracting revenue from an existing product but not so good
on boldness and innovation.

There are a variety of business models to try once you've made something
people want. Sometimes it is ads (myspace) sometimes it is merchandise
(homestarrunner) or a combination of the two (penny-arcade). Maybe your
content is worth a subscription (hotornot). Maybe you sell books or offer
training and advanced services (SysInternals/Winternals).

Another argument for not worrying about the business model, if it is your
intent to be acquired, is that your product may wind up more flexible. 3
different companies might use 3 different ways to make money from your
product. Again, the distinction is that it's already profitable companies
doing the buying, rather than the Stock Market At Large.

------
pageman
dear Paul et. al.

I'm a Paul myself ... :) Y Combinator is an inspiration for me! I think that
as Y Combinator incubates more companies successfully, more and more groups
will apply. :)

------
lauranattysteph
This essay was exceedingly entrancing, enticing and thrilling!!!!!!! It made
me very pensive and extreamly vexed!! I thouroughly commended your effort,
however for your intellectual ability you could have tried harder!! Durrr :p

------
Mattster
Too many start-ups are doing trite and vacuous work. The world does not need
another online calendar or customisable homepage or some clown wearing a
webcam 24/7.

The comparitively small number of valuable start-ups are doing good work by
tackling problems that are difficult, and/or have a strong potential to
separate a customer from the contents of his/her wallet. It is not that hard
to separate the wheat from the chaff and identify start-ups with good ideas.

The biggest discouragement for starting a start-up is the notion that you'll
bust your ass for a few years and create a great product, but end up skewered
by IP patent trolls, aggressively predatory competitors with deep pockets,
professional compensation claimants etc. etc. etc.

Incidentally, I wonder how attitudes to starting a start-up will change when
the current western bubble of cheap credit finally pops?

------
RedBully
Hhhhmmm, I've read some of your site so far.

I see that paying naive college students in Ramon noodles to work in overdrive
to create a startup is indeed pure genius. The startup at Y-Combinatorics has
a much better chance of being popular regardless of merit, because, face
facts, our mass media isn't particularly clever or creative but more a
bullhorn for what they are told is trendy and clever. Congratulations.

That said, I say to everyone out there, empathy is the well from which
creativity springs.

The old have suffered and have had their minds sharply honed to recognize
problems. It's called being cranky. That gives the old the unique perspectives
needed to identify solutions. However, the old have wrinkles, yuck, and are
not marketable by the mass media as genius wunderkinder.

With that in mind and noting that telecomuting is increasingly relevant it's
clear Y-Combinatorics is not about founding companies with relevant solutions
and worth while products. It is about marketing (man we Americans have mass
media that are ignorant a@@ clowns). It is about manipulating the ignorant
mass media into egging on the Goggles of the world to ape the thought process
expounded in the media and snatch up such trendy start-ups as StuffedUp and so
on.

So yeah, any clown with a startup idea would be a fool not to take advantage
of such a flatulent environment. If they don't like your makeup, wipe it off
and paint a new face. Go for it!

