
Hard Startups - sethbannon
https://blog.samaltman.com/hard-startups
======
pjdemers
The problem with startups building hard tech is it takes a long time to fail.
Failures that take decades doesn't work in the startup model. Image working on
a fusion reactor. It might take 25 years to fail. The failure may not be that
your idea doesn't work, but because some other kind of reactor comes along
that is a better business (ie, cheaper). At this point, you are now a world
class expert at a technology that is not economically viable. But, you can't
transfer that knowledge, or at least most of it. You are also now 50 years
old, give or take. You don't have 25 years to work on the next hard problem.
You certainly don't have time to fail again. Back in the day when lots of
people worked on hard technology, they were paid well to _work_ on the
problem; their life time earnings did not depend on creating a viable
business. Because of that, they usually earned a pension, too. Because if you
failed, you could retire comfortably, or, at least have enough to choose a
second career that didn't pay as well. That model doesn't work for startups.

~~~
beat
Right. Which is why government research is probably a better model for these
world-changing basic technologies than Silicon Valley.

Ugh, can you imagine how bad TCP/IP would have sucked if it had been developed
by venture capital funding?

~~~
rossdavidh
There are a few examples of government agencies which can make many parallel
bets, on the understanding that most will fail but a few may pay off big. But,
by "a few examples", I actually just mean DARPA. I'm sure there are others,
not many though.

Politics does not work well with "most of these projects failed". It's too
easy of a target. Anything that failed, is an easy target for a congressman to
take aim at as being "wasted", because in some sense that particular
investment was wasted, in the same sense that every insurance payment is
wasted except for the one right before you need insurance.

But, the logic behind "many long-shot bets in parallel" is inherently more
difficult to explain in the political arena, which is why I think VC may
actually be better at some of these kinds of things.

~~~
SolarNet
> I actually just mean DARPA

NASA is the obvious next example. They pay for a lot of esoteric stuff that
once made they don't actually end up needing - but having paid the startup
costs - end up contributing to other fields.

I think FEMA also does similar things though at a much less parallel (but a
higher volume).

Most of the "regulate and promote an industry" (a dumb idea for structuring
them but I digress) agencies also do this. The NRC for example does a lot of
research on storing and recycling nuclear waste, but also on new nuclear
technologies.

And other military agencies aren't worth leaving out. The army core of
engineers pushes a lot of contractors to deliver unique solutions that end up
getting resold, see the concrete barriers in Iraq.

~~~
killjoywashere
IARPA, DTRA, SCO, DIU. The DoD spends like 50B a year in research and
development.

NIH and CDMRP grant programs is several additional billion.

~~~
mattkrause
NIH is about 40 billion, and does a lot less development.

------
im_down_w_otp
This is an interesting perspective, but not one I found to be broadly shared
by the dozens of VCs that I interacted with during fundraising. That we were
doing a hard thing, despite having an experienced, capable, and "battle
tested" founding team, as well as early revenue that was nothing to sneeze at,
was very often a knock against us. Early on, it was kind of hard not to take
this a bit personally, but that quickly gave way to shrewd calculating
reality.

I think this is a perspective that's afforded to the VCs who have either the
pockets or the connections to carry out the strategy that's called out in the
OP. Namely, that the startup is probably going to need a lot of money to get
to clear product-market fit/readiness before being able to really scale.

For the throngs of early-stage VCs out there who can't write Million Dollar
checks more than a couple times a year, there's a built-in risk aversion to
going after something "deep tech" shaped because they literally can't afford
it.

What worked for us at the end of the day was essentially having larger, later-
stage funds who'd been exposed to or burned by the problems we're solving go
to bat for us, and also to find very focused & targeted VCs whose thesis about
the future of the world aligned very strongly with ours. We're very happy with
where things ended up.

One conflating problem I observed during fundraising was that as it became
clear that finding thesis alignment was essential, many VCs go out of their
way to appear very generic in their thesis. Though others are great about
being very specific. When you find a fund that invests in say biotech, they're
often really up front about that in numerous obvious ways from their website,
to the background of their partners, to their investment portfolio. As a
founder not explicitly targeting biotech it is then easy to filter out.

However, when it's not so cut and dry (I assume because many VCs want as much
deal flow as possible), it actually makes the problem worse for both parties.
Founders waste time targeting VCs that don't make much sense, and VCs waste
time talking to founders that don't make much sense, but there's a natural
tension because you're both living & dying based on matchmaking with each
other, and so it feels like you're doing something really irresponsible by
clearly signaling and constraining ahead of time who you'll talk to. Because,
"What if...?"

I learned a ton from the process. It's a really odd knowledge base to have
that's useful in almost no other situation.

~~~
ablekh
Interesting thoughts. Since you apparently have significant experience raising
VC funding, I'm curious about your opinion on the following (others, of
course, are welcome to chime in). If you were working on a deep tech (science-
based) startup and considered using venture capital, would you _prefer_
pitching your idea(s) to VCs, who happen to have relevant domain expertise
(most likely, as their educational background) due to potentially being
enthusiastic about relevant domain and problems as well as having better
understanding of an industry and having some (additional) connections or, on
the contrary, _avoid_ such VCs as potentially being "biased" and/or having
less enthusiasm / belief in probability of solving relevant problems and,
subsequently, the success of the venture? (For the purpose of this question,
assume that the market need is validated.)

~~~
im_down_w_otp
You want to pitch to VCs who you can get to believe you're solving a real
problem that exists (or will obviously exist) in the market, the solution to
that problem that you're providing scales super-linearly when money is added
to the pot (i.e. is a product, not a service), and that the actual market
opportunity is huge in total Dollars.

It helps then if they're familiar-ish with the markets you're addressing so
they'll be aware of some of the challenges and sizing considerations (we
talked to many, many VCs who just had no idea how big markets were outside the
ones they were familiar with, like the enormity of the "Operational
Technology" market compared to the IT market), and also that you can clearly
articulate what you're making is an actual repeatable product to sell.

The most important thing to remember is that VCs want to make money, your
ideas are just a path to making money, so your #1 job is to show them how
they're going to make lots of money, not show them how clever your ideas are.

~~~
ablekh
I appreciate you sharing your opinion. So, essentially, you don't seem to
think that potential cons of approaching VCs with domain knowledge that I
mentioned above (inherent "bias" and lack of belief in possibility of certain
solutions) outweigh relevant potential pros. Regarding other aspects, I
certainly realize VCs' market size and financial upside considerations.

~~~
im_down_w_otp
It could present issues if you're speaking to a particularly disagreeable VC,
but you're unlikely to convince that person anyway. They've decided they've
got an axe to grind and they're going to use you as the grindstone.

If you're in a situation where you're having to overcome objections in your
pitch, most of the time you've already lost, and you should just move on. The
goal for your pitch is to figure out how to sidestep or head off at the pass
any of the objections you've heard before.

~~~
ablekh
Understood, thank you. I agree with your points. However, just to clarify, the
basis for my original question is whether it is possible to predict VCs'
"(dis)agreeableness", based on their domain expertise or lack thereof. I
appreciate your opinion and look forward to hearing more thoughts from this
community.

~~~
im_down_w_otp
That I don't think is likely to be any kind of stable predictor. It has more
to do with their personality than their background as near as I can tell.

~~~
ablekh
Fair enough. Keeping this in mind, I think that I should do my best to refocus
on working more on validating my ideas as opposed to over-analyzing potential
funding issues that might or might not happen down the road. :-)

------
kristiandupont
Before I started Submotion, I did a fairly thorough analysis of what kind of
startup I wanted to create.

I decided that I wanted to create something that

\- was B2B. Consumers are fickle, things can explode but they can also go out
of style just as fast. It's more sexy and makes for better smalltalk but my
assessment is that they are much more difficult to grow predictably.

\- targets SME's. I am somewhat extroverted for a developer, but I will never
be the type who goes golfing with CEO's to close deals. Million-dollar deals
is not my game, I will go for higher numbers of small ones.

\- targets tech-savy businesses. Because I speak their language, I understand
their needs and I stay in the loop of their world out of curiosity, not
because I need to keep up with my industry.

The problem is neither hard nor easy, by the definitions of this article. It's
deterministic; there's just a bunch of work to be done. I'm doing it. It's
slowly evolving. This is definitely a reflection of me being 40 when I started
it, it's somewhat boring but that suits me perfectly :-)

~~~
rland
HNCS (Hacker News Comment Section) is turning into AWZ (A WarZone) with these
acronyms.

Here are some definitions of acronyms:

B2B: Business to business.

SME: Small and Medium Enterprise? Subject Matter Expert?

CRUD: Create Read Update Delete.

B2SMB: Business to Small Business?

CEO: Chief exec officer, SEO: search engine optimization, they have nothing to
do with one another.

VC: venture capital

I'm not sure what SME means, that's why I posted this.

~~~
enraged_camel
Yes, SME is subject matter expert.

~~~
twic
In this context I assume it's Small or Medium Enterprise.

------
amirhirsch
Counterpoint: If you're looking for a life-changing outcome you probably
shouldn't work on a hard startup until after you've already saved some money
working somewhere else -- like at least spend two years somewhere stable so
you can get approved for a mortgage. Investors in hard startups are often more
like patrons who don't really understand the tech in which they are investing.
They probably got their first taste at money from selling a software app and
then invested that money in other "easy" software startups until they had
enough money to patronize your quantum computing project. Think of the clout
they are generating from magnanimously throwing money at PhDs they've
convinced to waste their lives in a field that will never produce practical
outcomes. When there's an economic downturn, the investor will still be rich,
just not enough to continue patronizing your project. The PhDs may scrape by
somehow or eventually be overcome by the existential dread that they should
have worked on something with fewer hurdles and higher probability of success
so they pivot to work on a location sharing app or venture capital investing.

~~~
euix
Are you talking about Jim Simons and the Flatiron institute right here? In his
case at least, he is paying pretty well.

~~~
deepnotderp
Rentec is the polar opposite of "easy software"

------
jkubicek
I feel like the money quote was buried in the postscript.

> Another solution to this problem is to think about startups that can become
> quite successful with less than ten people. As compensation packages from
> the giant tech companies continue to increase, I suspect this will become a
> trend.

As cash comp at big public companies grow and the future value of startup
options plummet, we need to start thinking about different ways to start
businesses, and this feels like the right solution to me. Starting a company
with 10 competent people that I enjoy being around and targeting $5-10mm in
revenue sounds perfect. Maybe $10mm isn't reasonable, but even if we hit 1/4th
of that amount, it's still plenty to support a small company.

~~~
bradlys
Is 2.5mm really viable for 10 people within SF Bay Area? That would mean
compensation would be around $250k per person (not including payroll taxes,
office rent, and whatever else cuts into that). That's distant from the
compensation packages being given out by Big N.

~~~
munchbunny
I would take a pay cut if it meant working with a high talent concentration
team that was small enough to be agile end to end in the full sales -> ops ->
product/dev -> support cycle.

But that's a unicorn. You don't find a unicorn, you stumble upon it one day
and miss the opportunity because you can't rationalize the fact that you
actually saw a mythical creature.

~~~
sp527
It doesn’t have to be a unicorn. Maybe it’s incumbent on the rational
participants in this community to figure out a way to do what you’re
describing. New business models can be even more valuable inventions than new
technologies. Perhaps VC has run its course for business and engineering ICs
who don’t have preexisting wealth.

------
sp527
It’s odd (read: motivated by self-interest) that he didn’t make any attempt to
establish the failure rate of these startups and the distribution of outcomes
for employees.

Further, he didn’t even argue for a referendum on equity comp. He’s blatantly
peddling the same broken model of “sell them your fugazzi so they can’t tell
their talent is being plundered for (founder/investor) economic gain”. It’s
downright insulting. I’d like to read Altman’s thoughts on making the cap
table transparent to startup employees. I’m sure it’d be a riot.

So why is Altman saying any of this? Because he relies on the portfolio model.
He doesn’t care if 99 companies fail and the employees within them end up with
squat as long as the 100th is an earth-shattering home run. And he needs the
world to start taking more massive risks on YC’s behalf, so they can keep
making piles of bank. This is the incentive structure dictating EVERY single
VC’s calculus. No one should ever listen to them without understanding this.
Incentives. Incentives. Incentives.

The “mission” doesn’t matter to a rational person, for a very simple reason:
the opportunity cost is the significant amount of wealth (reliably made
somewhere like Google) that will afford you the cushion to do whatever you
want later in life.

These guys need to get real. The highest EV play is to first get wealthy and
THEN do what you want. And it doesn’t even have to take that long (most
competent engineers could be there by age 35-40).

Don’t fall for their “mission” nonsense. It’s a monstrous lie designed to keep
funneling tremendous amounts of money to the people at the top.

~~~
tr00586
Is it really so crazy that people might care about more things than money when
considering what to work on?

If I were given the opportunity to go back in time and work at Bell Labs or
Xerox PARC, I would probably do so even if paid no money at all. This seems
rational to me, both in terms of how much knowledge I could accumulate and
just the self-actualization of working on such interesting problems. I imagine
the calculation for early employees at start-ups is similar.

~~~
ssorallen
A mission and a reasonable distribution of equity with fair terms do not need
to be mutually exclusive, that's how I read the original comment.

If the C-levels are still getting massive chunks of equity with tiny strike
prices while you get 0.01% and a 90-day post-termination exercise window and a
massive AMT bill, then this talk of a "mission" is vacuous and likely a
diversion from the fact that you as the employee are being under-compensated.

------
thorwasdfasdf
I agree with most of this post. But there's one part he's wrong about. The
most precious commodity is not talent. As he said "That year, probably over
1,000 photo sharing startups were funded". That means, when that original
photo sharing startup was hiring, it could have filled every position x1000
times, if they could find all those candidates. That's an indication of a vast
oversupply of talent.

The most precious commodity is Opportunity: Market opportunity.

And, I know, human desires are endless. But, (legally) solvable problems are
not endless, they're currently in very very short supply. this is why we end
up with start ups like juicero. out of desperation, entrepreneurs are forced
to take on problems that aren't really problems because all the real problems
are blocked by legislation/legality/monopoly: education, housing,
transportation, medical insurance.

~~~
brlewis
You envision a world with exactly one way to share photos? In this world, is
there also only one word-sharing site?

I think there are more information problems out there than software engineers.

~~~
thorwasdfasdf
Consider this: every day on ProductHunt, we see dozens if not hundred new apps
pumped out. How many of those succeed? Not very many. Why?

Each and every one of those apps was designed to solve a problem. So, why is
there so little demand? It's because users already have another
app/spreadsheet/website/solution/process that does something too similar and
because their existing solution is good enough.

The fact that so many apps are being produced and fail to see traction is an
indication of massive oversupply of solutions and talent. It's just too easy
to produce yet another app, and so everyone does. this inevitably, must lead
to an oversupply of solutions.

~~~
nmfisher
You're exactly right. Outside of deep deep tech (e.g. self-driving cars),
you'd have to really, REALLY dig deep to find one or two startups that failed
because of lack of technical talent.

Now consider how many startups failed because of lack of customer demand -
nearly all of them.

This isn't just an indicator of an oversupply of talent, it also suggests an
oversupply of capital. Cheap money lets you find talent, but it doesn't
guarantee a path to a profitable business.

------
spectramax
What bothers me about Sam Altman's writing is the following:

1) He talks about X, X being an observation with survivorship bias painted all
over it, but Sam Altman asserts as if it is true. Stop writing with authority
over unsubstantiated claims - you can only be humble and say "Perhaps X is
true because of my observations, take it with a grain salt".

2) Statements like "Easy startups are easy to start but hard to make
successful." are fluffy with no real substance. I might as well read "How to
become a millionaire" books.

3) Completely obvious observations: "Then talk about that big vision and work
relentlessly towards it, but always have a reasonable next step." You might as
well say "When you are embarking on a startup endeavor, make sure it is
successful". I can't help but exclaim "No shit!".

IMO these articles and blog posts offer zero advice of substance. I despise
them very much. There is nothing to learn from it, this is like grocery store
aisle tabloid version of the Silicon Valley.

~~~
qchris
The first point on your list is something that I come back fairly frequently
when reading through blog posts like this, or (for example) listening to
things like TED talks. I understand that there's a need to stand behind any
given thesis, but it seems to me that there is often a lack of distinction
between "I'm claiming this to be true primarily based on my experience" and
"I'm claiming this to be true based on widely-accepted external factors, like
peer-reviewed papers, industry standards, statistically-significant trends,
etc.".

When people don't meaningfully differentiate between those two positions while
communicating, it passes the burden of deciding which claims fall into which
category onto the reader. And since I'm then unable to distinguish if the
writer themself recognizes that difference, I find myself less easily able to
give any of their claims the benefit of the doubt. That isn't a recipe for
taking their advice or conclusions to heart.

~~~
spectramax
I think you summarized it better than I could. When stating facts, be
assertive and provide source. When stating opinions, state them as opinions,
not facts.

As a reader, I wanna chuck the whole thing out of the window.

This is pretty common place - Harari's Sapiens suffers from this behavior
excessively - I cannot read it and I don't understand why people like this
book so much. Full of unsubstantiated claims.

~~~
qchris
I appreciate you saying that. I haven't read Sapiens, but since we're on HN, I
figure it's worth mentioning that I think Paul Graham's writing wanders into
this territory a lot. Hackers and Painters has been sitting only half-read on
my shelf for a long time because I got too frustrated with it to continue for
that exact reason.

------
rafiki6
Something that really bugs me about this is the lack of examples where this
succeeds. In my mind, a good one is Intel. To that end, how many
microprocessor startups actually ended up succeeding at the same working on
some fundamental and challenging things? Also, the thing about hard startups
is there is a lot of luck involved. Counter to what the author is saying, you
do need a degree or some level of measurable expertise to start a hard
startup, because not only do you need the expertise, you also need the
credibility to get people to work with you and you need that solid team to get
funding.

The reality is, many "hard" startups actually were things birthed by experts
in a field that got lucky enough to have the right expertise at the right
time, but also managed to derisk many aspects of the business by being
experts.

~~~
jpmattia
> _Counter to what the author is saying, you do need a degree or some level of
> measurable expertise to start a hard startup, because not only do you need
> the expertise, you also need the credibility to get people to work with you
> and you need that solid team to get funding._

Interestingly, this criterion causes Microsoft to be in the "Easy Startup"
column. (Facebook too, but that seems more correct.)

The Elizabeth Holmes example is also interesting to consider. Lack of degree
in a hard field was no barrier to raising a ton of money.

> _In my mind, a good one is Intel. To that end, how many microprocessor
> startups actually ended up succeeding at the same working on some
> fundamental and challenging things?_

Nit: Intel's first products were memory, not CPUs.

[https://www.google.com/search?q=intel+first+product&oq=intel...](https://www.google.com/search?q=intel+first+product&oq=intel+first+pro&aqs=chrome.2.0j69i57j0l6.5384j0j7&sourceid=chrome&ie=UTF-8)
)

~~~
rafiki6
Elizabeth was doing a degree in a hard field and had the credibility of her
supervisor to lean on, plus a whole host of questionable motivations from
those who invested in Theranos. Funny enough, the degreeless founder in a hard
startup turned out to be a fraud.

------
jariel
I find these 'Valley Koans' popularised in the last long while to be a little
troublesome.

Things like 0->1->n Do things that don't scale Andreesen Horowitz bit on 'The
Good Ideas That Seem Bad' Paul G's essays.

They all have nice little nuggets of wisdom, but what the almost always lack
are good examples and concrete evidence.

Funny that many HN comments are better researched than a lot of these 'Deep
Thoughts'.

Since these guys have access to startup data like nobody else, golly, wouldn't
it be nice to see examples and break-downs?

i.e. here's 1000 YC startups, and how they categorise in terms of
'hard/simple' problems. Here's their trajectory. Here's some mitigating
factors etc..

The reason I write this is because of my flinch on this note from Sam. He's
worth listening to, absolutely, but that doesn't mean we can't disagree.

The problem with his thesis is that YC makes all their money from very regular
businesses.

There is no 'magic' to Stripe. It's a really great product that did mostly
what previous products did, with a much cleaner API that devs loved. This is
not koolaid/AI kind of stuff. For pragmatically minded people, yes, it does
seem like it could 'really help change the world', but really ... it's not
sexy.

AirBnB because it's more consumer, yes, I can see some koolaid about 'sharing'
etc. but again I don't think it's in the category of 'tough problems'.

DoorDash, Instacart, Dropbox, Faire, Brex, Flexport, Checkr, Mixpanel.

So many of the big YC companies are solving regular kinds of business
problems, in big market places.

The 'heady' startup would be 'Cruise' but that was an odd man out for a few
reasons.

All the things it would seem to me that Engineers would _really_ like to solve
are not quite on that top list. The 'coolest tech' YC startups aren't really
the big hits.

~~~
keenmaster
The biggest "deep problem"-type leaps in the past few decades have been due to
innovations in technological infrastructure: the advent of the internet, GPS,
and smartphone for example. All three innovations benefited from the positive
externalities of government funding, as well as routine R&D and large
corporations. The entities that collectively solved those hard problems only
captured a fraction of the profits/benefits of their innovations.

The quickest route to success for a "hard problem" startup is to see the
obvious Next Big Thing that is still in early adoption phases, and find the
best way to translate it to the broader market. I know, that's not solving a
hard problem in the same sense as the OP, but I think it's an underrated
strategy with a quicker feedback loop and higher likelihood of success.

What's the Next Big Thing? One of them is AR combined with AI, cloud-
computing, and 5G for real-time rendering of 3D objects. That will enable so
many incredible things. Imagine the most profitable possibilities, for
software, peripherals, physical objects that play a part in the new physical-
digital realm, etc...and start hacking now. By the time AR devices are
mainstream, you'll be ready to profit immensely while everyone else is
scrambling to learn the fundamentals of AR.

VR is fairly mediocre right now. Of course, you know it will get better.
However, do you think you correctly predict the magnitude and speed of that
change? It's fairly likely that VR will be very, very good in the next ten
years. If you're ready for that scenario, you can strike gold.

Self-driving cars are another Next Big Thing. Right now all the attention is
on Velodyne, Waymo, etc...and those are promising companies. However, there's
plenty of room for startups in that space. Anticipate how self-driving cars
will change the world, and profit off of that change. That can make you rich.

I'd rather ride the tsunami of new technologies than try to capture the energy
from late-stage ambient tidal waves (such as making another camera app, or a
niche ERP tool for enterprise). On the other side of the spectrum, it's noble
to try to invent the Next Big Thing yourself, but the odds are against you
even if you're extremely smart. You might be just as likely to stumble into
the Next Big Thing doing routine work at a big company.

~~~
JabavuAdams
Second mouse gets the cheese.

------
jrkelly
"If you want to start a company working on a better way to build homes, gene
editing, artificial general intelligence, a new education system, or carbon
sequestration, you may actually be able to get it funded, even if you don’t
have a degree or much experience."

I encourage anyone to give hard startups a shot, but there are tons of
PhDs/Postdocs out there who would make amazing founders -- they should make
the leap! Often feels to me like recent undergraduates get more encouragement
to launch startups than recent PhDs/postdocs -- which is a weird miss
especially when it comes to hard startups where PhDs have the advantage of
deep understanding of a hard field.

~~~
jimkri
I'm currently in the research phase for an idea using algae/other plants that
sequester CO2 rapidly and continue to have questions, which lead to more
questions. Thankfully there is a ton of research that has been done, which
makes diving into the topic easy. But having someone to work with that has a
PhD/postdoc in this area could help build the idea faster.

How can I meet someone with a PhD/postdoc in a specific field? Should I just
browse ASU for PhD students or look at specific universities and areas.

~~~
pfdietz
I suggest you look at algae that live in highly alkaline lakes, like soda
lakes in Africa. The high pH means the water scrubs CO2 from the air, which is
then available (as carbonate and bicarbonate) for the algae to use.

(Mass transfer is an underappreciated limit on photosynthesis. A corn field in
still air becomes CO2 limited pretty quickly in bright sunlight.)

------
ttul
A colleague of mine more than a decade ago started a company in the
alternative energy space with very interesting yet extremely difficult and
unproven technology. It took them a decade to find out that the performance of
the technology was not quite good enough to be commercially successful.

He burned perhaps a third of his working life grinding away on something that
won't succeed - perhaps at all. Yes, there is some chance of a base hit OEM
deal for a very niche application of the technology. But it's definitely not
making anyone rich after so many years.

Hard startups are exciting and fun, but unless you are already rich, it may
not be worth the risk. Comparatively, you could spin up and fail five times at
an "easy tech" startup and perhaps have a greater overall chance of winning
the one time that you need to win to make it all worthwhile.

~~~
mrg3_2013
VCs are incentivized to see more hard startups start. As a founder, I agree
you don't want to be doing it, unless you life goal aligns with it or you are
already rich.

------
Liron
Long-term-committed founders are indeed a big advantage to a business.

If you're committed to investing 20 years of your time into a startup, then
you're self-funding a multi-$million Series A, just in terms of market value
of your time.

Investors who spot a commited founder and buy in at pre-seed valuation are
getting a deal.

------
jarjoura
Just 10 years ago the dominant message was, startups today are lucky that they
are easy and cheap to spin up. It makes testing hypothesis easy. That brought
in a flood of small angel and seed investors with thousands of bonkers ideas.

When I think of hard startups, I think of FitBit, GoPro, or even Oculus. Yet,
all those companies did was prove that people want fitness trackers or smart
cameras, or screens wrapped around eyes.

Those companies early employees were all specialized PhD employees with very
specific skill-sets. You aren't going to go to an 8 week bootcamp and come out
able to contribute meaningful to the research needed to pull off those
products. Sam is right, yes, you will have an enthusiastic group of people
knocking on the door to work there, but the bar is exceptionally high to hire
the people you need to be successful.

Google, Facebook, Amazon, Microsoft, Apple, AMD, Nvidia, etc, they are all
paying top salaries with great perks to work on hard problems with the
resources to be successful. Want to build custom servers, Amazon has a
dedicated Gravitron engineering team and internal customers salivating at
deploying them. Microsoft is currently already shipping AR glasses with a
cohort of trained developers already able to write software for them. Apple,
well, there's a rumor they are building an ARM laptop, and we know only Apple
will be able to shift the industry in that direction. No hard startup could do
that. On and on...

Anyway, not trying to be cynical, but I do think the problem is deeper and VCs
will need to give huge initial rounds, with really long several years runways,
just to bring in the talent needed to compete against the established players.
Then, these hard startups need to be prepared for the sea of copycats who will
swoop in for free after all the hard research was done.

Another example of what I mean by huge rounds:
[https://techcrunch.com/2019/12/23/rivian-adds-1-3-billion-
in...](https://techcrunch.com/2019/12/23/rivian-adds-1-3-billion-in-funding-
for-its-electric-utility-and-adventure-vehicles/)

------
rexreed
Silicon Valley loves to shine its turds. And they love to believe their own
stink about how much they're disrupting and changing the world. And yet the
most funded startups are just car services and rooms-for-rent and song-
sharing-apps and the next social media whatever. When the top 10 SV funded
startups are solving really big problems, then I'll start believing this
nonsense.

~~~
vapemaster
So where is the geographic location that does fund hard problems?

SV $ is far from perfect but it is surprisingly audacious and fault tolerant.

A few examples old and young:

Genentech

SpaceX

Joby

TAE Technologies

~~~
rexreed
The geographic location of the company or the money? These aren't the same
thing.

* There's a lot more biotech in Boston than SV * There's even more biotech in Pennsylvania * Battery tech companies are all over the country * There's a ton of space tech in Texas and Mississippi. Yes, Mississippi. And Florida. * Telecom? Look outside the US for strength * Cybersecurity? Maryland. Virgnia. and Israel. * AI? Literally every major country in the world. * Advanced materials? So many places.

Increasingly SV has less and less to offer. Maybe raw money, but I thought
companies were looking for smart money, not dumb money.

~~~
MetalGuru
You specifically reference funding, so I would assume he's referring to VC
capital allocation.

------
dickjocke
This seems very related to the blog post that introduced me to Paul Graham,
and in turn Hacker News, about a phenomenon he calls Schlep Blindness.

[http://www.paulgraham.com/schlep.html](http://www.paulgraham.com/schlep.html)

I would be curious what people think today's most obvious schelps or hard
problems are? Nuclear Fission as in OPs post is cool, but Im thinking more
along the lines of something a team of competent developers could do.

~~~
chubot
I feel like one of the hardest problems in tech is making search engine that
credibly competes with Google.

It's not just because the tech is hard (and it is), but also because they have
some of the strongest network effects, user lock-in, and distribution deals.

It sounds almost dumb/crazy for people to try, but there is a newer effort
from Europe that I saw on HN recently (i.e. they've been working for ~5 years
and are just starting to publicize). And I think PG has mentioned it a few
times -- i.e. encouraged people to take on Google :)

BTW I think "schleps" are different than "hard startups". I think schleps are
about raw effort where you kind of "know" you'll succeed at the end. It seems
like most companies are hard because you don't know if what you're building
will succeed, even if you build it.

edit: "new" search company is cliqz:
[https://news.ycombinator.com/item?id=21724191](https://news.ycombinator.com/item?id=21724191)

~~~
chris_f
_" It sounds almost dumb/crazy for people to try..."_

Timely comment. I hesitantly shared a "Show HN" this morning for an early
search engine I have been working on.

I almost feel silly when I tell people about it because I realize it is such a
crazy idea. It's obviously nowhere even close to being a competitor to anyone
today, but I figure why not.

I have been lucky with two prior highly vertical startups, so I decided that
my next project would involve asymmetric risk.

~~~
jacquesm
You should definitely connect with Chuck McManis.

[https://news.ycombinator.com/user?id=ChuckMcM](https://news.ycombinator.com/user?id=ChuckMcM)

------
whack
> _If you want to start a company working on a better way to build homes, gene
> editing, artificial general intelligence, a new education system, or carbon
> sequestration, you may actually be able to get it funded, even if you don’t
> have a degree or much experience._

Is this actually true? I have plenty of "hard startups" that I would love to
work on. But these hard startups require far more investments and manpower,
even to get to the MVP stage. As someone with minimal prior-startup-success
and investor-contacts, I get the impression that no one is going to bet
significant sums on me and my unproven idea. Am I wrong?

~~~
arbitrarylimit
You're skipping over the previous sentence, which is that you convince people
you're serious about it.

------
dana321
Solving hard problems is the trap of the genius. I know.

We want a simpler world, but create complex software to do that. All we are
doing is moving the complexity under the rug somewhere else. The complexity is
still there, warts and all.

Doing something mundane over a large surface area (quantity being the hard
vector) is better than solving a really difficult problem that has little
reach in terms of real-world value.

The complexity in my own startup is its multi-layered nature, solving multiple
problems for multiple levels of ability. I'm still aware of the fail aspect,
but one layer will succeed. I know this. I have a 10 year challenge, but
sooner is better. I know for a fact what i'm doing isn't being done out in the
wild apart from a couple of sporadic os projects badly implemented and a
couple of small commercial ventures that kind-of work. On different products
on different levels.

If you're going to put your eggs into one basket, make it the basket of n
dimensions.

~~~
erikpukinskis
I am on a similar arc, attacking a multi-facet problem space and assuming some
% of facets will fail. Would love to chat with someone on a similar path.
Email me if you are interested in that!

------
PopeDotNinja
> Few recruiting messages are as powerful (when true) as “the world needs
> this, it won’t happen any time soon if we don’t do it, and we are much less
> likely to succeed if you don’t join.”

This line would work on me if it the founder(s) and I were in the same boat.
But when you have 20% and you won't even tell me what percent of the company
my X shares are worth, your pitch only makes me thing "I'm less likely to be
rich if you don't slave away for a really long time (and I might be a few
million if we're modestly successful, and in that scenario you probably won't
get anything)". When startup equity distribution becomes more like a pirate
ship, where everybody gets X, and the captain gets 2X, then I'll buy into the
"we're all in this together" pitch.

------
crankylinuxuser
Hard startup, huh?

Well, that's what I'm doing. I'm doing a SigInt startup to prevent PII
breaches and things like this from happening:
[https://www.zdnet.com/article/hacked-tornado-sirens-taken-
of...](https://www.zdnet.com/article/hacked-tornado-sirens-taken-offline-in-
two-texas-cities-ahead-of-major-storm/)

I've got a lineup of hardware with specific industry use cases. Right now, I'm
the designer, hardware engineer, software engineer, and more. And right now,
Only have around $2k of my own money in it, with possibly more on its way from
grants and funds. All equity is ours.

------
rexreed
Unpopular opinion: Silicon Valley is in the beginning stages of a period of
decline. There's lots of great entrepreneurial activity elsewhere, and for
building these sorts of "hard startups", the truth is that SF and SV are not
the best places to do it. People and rent simply cost too much, and the
venture scene lacks depth in these areas.

~~~
unlinked_dll
I disagree, having worked both outside and in the Bay Area.

The network effects are unparalleled. We're paid far better (my salary nearly
doubled when I moved to the Bay, my rent didn't). It's far easier to find
quality talent and freelancers for startups than elsewhere.

But most importantly, the money and culture is here. Raising money outside of
the VC scene here is orders of magnitude more difficult and you get far less
for the time you spend.

And I could go on about how places I've been (South Florida, Chicago, Research
Triad, etc) all claim to want to be the "next Silicon Valley" but they won't.
Partly because SV didn't become the "next" anything, it garnered a unique
culture that funded massive amounts of innovation, and anyone chasing a trend
is too late. But mostly because the money and tech people in those cities are
too cowardly to do anything truly innovative, by and large. There are
outliers, of course. But frankly there's not a lot interesting going on
anywhere outside the Bay and it pays way, way worse.

~~~
rexreed
Not for the sort of "hard tech" that Samalt is talking about here. Those
network effects aren't as prevalent for those working with nuclear fusion, or
space tech, or advanced materials, or battery technology.

Yes, you can find lots of brogrammers cranking away at the next advanced app
using React, etc. in the Silicon Valley / SF / Bay area and get paid better
there for doing that sort of thing. For that, Silicon Valley has the tech in
spades.

But if you want to start an advanced lightning company, for example, the
Research Triangle (not Triad) that you refer to above is the place to do it.
It's the home of CREE and many other LED innovators. Not Silicon Valley.

------
zwieback
_> for the most part talented people want to work on something they find
meaningful_

Is this really true? I would hope so but apparently the definition of
meaningful is different for everyone. From my point of view funding and talent
has been allocated poorly in recent years.

~~~
fossuser
I think most people are pretty good at retroactively creating a narrative
around whatever they find themselves doing to imbue it with meaning and
purpose.

I think most people do want to work on something meaningful, but few start
with the purpose and then pursue that.

Then given the difficulty of actually getting into what you want (either
access restrictions via things like admission, the randomness of technical
interviews, or the thing you want not being very lucrative) - you're better
off doing what you can until you have the money to be free. Unless you can
tolerate lots of risk, don't worry that much about having a family, or have
some existing family wealth.

------
foobiekr
Another fairly common take on this is a preference for technical risk over
business risk. For the VCs that are from the "real" technology era, there
seems to be a distinct preference for "if you can solve the technical
challenges, you'll mint gold" businesses over things like social networking
which simply work or do not in a way that cannot be addressed by the addition
of technical or business skill.

These companies tend to be very expensive and take 3Y or so to be tested on
the market, so in a way they are not for people who want to follow the as-
quick-as-possible MVP approach, but they also tend to have defensibility which
your generic SaaS does not have.

------
stopachka
I love the spirit of this, but I'm not sure this reflects reality as well.

There are some examples that come to mind (boom, openai), but I think many
more examples that have a different impetus.

The most common successful impetus i.m.o is "tinkering"

Playing, solving something lightly, and realize it's taking off like crazy.

I think this can be a better light to follow, because it removes the pressure
of thinking of the excellent idea out of the bat. Just play, show stuff to
users, and see where it grows.

Examples of these kind of successes: Facebook, Instagram, Gmail, YCombinator,
PG's first startup, etc

------
bigcohoneypot
I find ycombinator to be acting completely ignorant of why and how it succeed.
The whole notion that they can apply the techniques for an internet startup to
hard things is bizarre. As the internet S curve comes to a close, new
organizations should be built. Using ycombinator's name to launch unsuccessful
startups is just asking to destroy Bs

~~~
dana321
So, oh wise one, what should we all be working on?

~~~
bigcohoneypot
open a bunch of yc only clubs. Turn inward.

------
mc3
And the opposite end of the spectrum, if you want to get something going more
quickly: [https://www.indiehackers.com/post/how-to-brainstorm-great-
bu...](https://www.indiehackers.com/post/how-to-brainstorm-great-business-
ideas-ab51c3d51c)

------
unexaminedlife
I'm almost thinking hard startups shouldn't exist. If a startup is considered
hard, what is making it hard. Probably ecosystem / infrastructure. Maybe a
good approach would be to ask the founder why timeline is so long or will cost
so much. Once they answer those questions, ask them to build an "easier"
startup that will be able to sustain itself and can (eventually) partner with
the "hard" startup, which will only be launched once it becomes easy.

And I'm not saying do something different. I'm saying the "easier" startup
would be built as a means to enabling the hard startup.

~~~
erikpukinskis
This is also how I think software engineering should be organized. But most
orgs seem to want hard thing with big priority done now.

------
readhn
>The most counterintuitive secret about startups is that it’s often easier to
succeed with a hard startup than an easy one.

I completely disagree. It has nothing to do with being "easy" or "hard". It
has everything to do with the RIGHT people heading the team of RIGHT people.
Put RIGHT people together and you can solve both easiest and hardest problems
out there.

Companies fail a lot of times because wrong people with wrong or little
experience make executive decisions that ultimately destroy these companies.

Poor managers cant build and keep good teams together. Poor managers
ultimately erase companies chances to succeed.

~~~
thorwasdfasdf
Consider this: When facebook came on the scene and made it super easy for
developers to publish apps, what happened? A bazillion people all the sudden
jumped in and next thing you knew, within less than a year, there were 100K+
apps in the app store. That's because, it was easy to do so, too easy. And
this leads to a ton of competition. Now, imagine for a second, it was much
harder: let's say only a 100 engineers in the world knew how to do it, then
there'd be far fewer apps in the app store and far fewer competition.

------
diego
I get his point, but it’s not expressed well. It’s not “easier to succeed.”
The chart effort/time has a different shape. Upfront effort is tremendous, and
if you can get past that _then_ it gets easier.

------
ssivark
_“When all you have is a hammer, everything looks like a nail.”_

Seems like Sam Altman’s hammer is startup investing, so he tries to solve
everythin... even the most challenging/ambitious problems through those means.

Doesn’t necessarily mean it’s a bad approach, but that seems to be his bias.

It’s worth having a more nuanced discussion. The current piece sounds more
like cheerleading than advice.

~~~
arkades
Strong agree.

I found Sam Altman's writing on quora and followed it off-and-on long, long
before I found out "who he is." And his advice is so overly-positive and one-
note that, honestly, I thought he was a snake oil salesman or self-help guru.
I would never have guessed he was actually a VC / successful entrepreneur.

Frankly, his arguments and writing continue to sound like Self-Help Guru
shined through the lens of SV VC to me. Nuance isn't really on the table.

~~~
throwaway8291
Agreed.

I remain amazed until today about his progression. He founded a startup to
solve a white upper middle class "problem", raised millions for that, was
lucky to get a little bit more when he sold out his startup's users' data to
the greater fool and now runs around and tries to get rich off other peoples
creativity and sweat through the VC vehicle. When I learned that he actually
founded OpenAI that org lost almost all appeal to me.

So yes, it might not be too much of a stretch to picture him as the embodiment
of the current silicon valley mindset and all its tech-hybris and duplicity.

~~~
appleshore
As opposed to what, being a financial engineer or wealth manager? Or maybe he
should be a real entrepreneur and open up a well managed brand of gas
stations? Or build a better kitchen utensil? Or maybe leverage political
relationships for tax abatements for major real estate deals?

Vs pushing people to strive for grand ideas, restructuring the greatest
accelerator in SV history towards big, bold ideas.

------
nickpinkston
Also, when laying out your strategy, don't make the mistake of betting
everything on the hard problem working quickly. Uber started as a taxi hailing
service, not a self-driving taxi service, and that was the right plan.

Make a model that makes money now using low-risk tech/ops approaches so you
have the money to build your flux capacitor to plug into the business you
already built to unleash the phase II hard-tech-powered model.

------
DrNuke
Sometimes it is serendipity that makes the biggest breakthrough, though... see
for example the Ebola drug now, this same evening, seeming effective against
Coronavirus... you as a VC can neither plan for nor invest in any given lab or
boutique consultancy worldwide... and the bigger and bigger hammer thrown at
hard nuts is just another way, a very expensive one and possibly unsustainable
by VC?

~~~
pfdietz
They tested that drug against Feline Infectious Peritonitis, and it was highly
effective (turning a cat death sentence into a 80% cure rate), but decided not
to commercialize for that because the market was too small. I bet they're
kicking themselves now.

------
travisl12
> An easy startup is a headwind; a hard startup is a tailwind...

Is that backwards? Wouldn't a tail wind represent "easier"?

~~~
adenverd
Not backwards. The point he's making is that hard problems attract talent and
capital, which makes them easier to keep going.

------
toohotatopic
In sailing, don't you want wind from the side? With tailwind, you can't sail
faster than the velocity of the wind.

~~~
doitLP
Airplanes like tailwinds.

~~~
toohotatopic
Not when they are starting.

------
tikiman163
This is basically drivel. My personal motto is "we chose to go to the moon,
not because it is easy, but because it is hard!" The trend of startup failures
has nothing to do with the difficulty of the problem they were trying to
solve, and everything to do with the fact that smart people can spot when a
startup is just a copy of something else already successful.

Yes, startups doing photos sharing apps increased after Instagram was created.
That's because most people are idiots and just won't realize they aren't going
to disrupt a new industry. Venture capitalists also frequently invest in
failures because they too are idiots.

The reason there are only 2 startups trying to do cold fusion energy is
because nobody has any clue on how to make that happen, where as social media
apps can be designed and built in an assembly line.

Yes, trying to invent a new industry is infinitely harder, but for the most
part we all know that startups aren't going to invent successful cold fusion.
Either someone will invent it by accident, or some chemist/physicist is going
to figure it out as part of a think tank funded by either the government or by
one of the existing fortune 50 companies.

Picking a hard problem to solve can't make it easier for your startup to
succeed because the hard startups are basically trying to get retardedly
lucky. There is no mythical group of employees who you can identify as being
the group who will invent cold fusion, which is why these kinds of startups
always fail. Funding one of them is throwing money away, where as funding a
photo sharing app has a small chance of breaking even if they at least have a
unique selling point.

------
choonway
I think Tesla, SpaceX is an indication of how much investor faith and strength
of stomach is required in order to make things work.

But honestly, how many VCs would rather invest in something else than see 2
rocket launches fail in a row and getting laughed at?

------
eanzenberg
This is true: If I'm going to take a 40-50% paycut (or more) then I better
damn well believe in their goal and mission, enough that their 1% equity will
be valuable to me. It's on an emotional level, not a practical one.

------
matchagaucho
It's also true that "easy startups" can iterate into solving progressively
harder problems.

The "hard" idea doesn't need to be the mission day one. Amazon was just an
online bookstore at one time.

~~~
glbrew
The set "easy problems iterated" is a subset of "hard problems" and I would
argue a very small and uninteresting subset. Biotech, energy, next gen
computing physics; I don't see any of those as iterating on a simple problem.

------
pfdietz
The problem with long term goals is that you've permanently screwed yourself
if the goal is bad. With short term goals, you get unavoidable feedback
quickly that keeps that from happening.

------
airnomad
Sometime those start-up gurus sound like self-help gurus.

------
quelsolaar
Im all-in on hard problems, but the startup echo system isn't. I have to self
fund because I don't think there is funding available for projects that take
time and don't have a fast ROI. To guild the kid of things that can disrupt
the really big players: FAANG, big oil, Detroit, Boeing you need more time and
need to solve harder problems. I find it curious that Elon Musk is such a hero
in the startup world, when his companies had to be self funded for a long time
because VCs don't want to invest in that kind of bets.

------
mitjam
Probably the hardest startups today tacle climate related problems. They face
hard problems and the problem of not yet marketed demands.

------
avmich
> Be willing to make a very long-term commitment to what you’re doing.

Is it always the case that successful founders do this commitment?

------
tjholowaychuk
Or just don’t be a huge noob and create a real business, without privileged
funding.

------
rl3
It would be nice if part of the ecosystem was structured more in terms of
supporting founders who want to take on hard problems via way of dedicating
their life to it. I'll provide my own perspective here in case anyone finds it
interesting:

I've been working on my startup for 7 years now, and the damage it's done to
my personal life and well-being has pretty much ground progress to a halt,
with the exception of advances in thinking in certain areas, which has been
nothing short of mind-blowing recently.

Of course, a large part of this is my own failure to plan instrumentally.
Admittedly it's quite backwards to spend years planning the mid and high-
levels first, then not have a solid plan to get from 0 to 1. Ending up there
by accident is easier than you'd think.

Fortunately I now have a fully tractable, instrumental plan that goes from 0
to ripping the guts out of a couple FAANG-scale companies:

1\. Get a well-paying engineering job I'll probably hate, because money,
quality of life, and sanity all have instrumental value. Hopefully keep the
fire alive during this period.

2\. Work it for about two years, then raise a pre-seed round (at year 9!) to
support myself for the next couple of years, while I embark on a formal pre-
production phase, and possibly develop an up-to-date prototype/PoC.

3\. Potentially a seed round totaling a few million. Hire a few key people and
put together a refined prototype/pitch over the course of a year, for a Series
A that no high-caliber VC with sufficient funds could refuse.

4\. At year 12, raise a 100M+ Series A, with the caveat it's going to take
about a decade to do properly, with further funding rounds along the way.

5\. Complete the journey, or at least achieve the intended objectives, a
decade later at year 22.

\---

I'm well aware that sounds insane, mostly was just a writing exercise to
underscore the timescales involved. The funding requirements are high because
it's basically a blueprint for something that will become an indispensable
part of people's every day life, and it consists of multiple verticals all
woven together, sharing a common technology. Thinking about how to do this
precisely was not trivial and took years.

End of the day I'd rather be skipping to step two, but I'm ironically out of
time at this point. Job it is.

In retrospect, a proper plan would have been this:

a) Work a job until financially comfortable.

b) Do a smaller-scale startup or two.

c) Then dream big.

Hindsight is of course 20/20, and I suspect isolation, desperation, being
depressed, being uncomfortable—all those things breed a level of ideation you
might otherwise not encounter. It ain't recommended, though at least perhaps
there's a silver lining.

\---

For the most part, the tractability of the plan has only increased with time,
not decreased, and I don't view competition or someone else figuring it out as
a threat.

The biggest threat I face actually, is some of my talent pool may be aging
out. Of the 50 or so people I've kept an eye on for years and basically dream
of hiring on a daily basis, a few key people are in or approaching their 60s.

On the bright side, if anyone ever doubts how committed I am in the long-term,
it should be easy enough to simply respond that I'm moving so slow the people
I want to hire may end up retiring before I can hire them!

~~~
ssivark
> Get a well-paying engineering job I'll probably hate, because money, quality
> of life, and sanity all have instrumental value. Hopefully keep the fire
> alive during this period.

Based on what I've observed and heard in discussions (both IRL and on HN),
keeping the fire alive over the years is a significant challenge. One key
ingredient to that is finding the right community/people for healthy feedback
(both positive and negative, as appropriate, over years).

~~~
rl3
For sure. I'm fortunate to at least have a couple friends I can bounce
anything off, even if it's just talking to myself sometimes.

As far as keeping the fire alive, I've had little trouble thus far. In fact,
the fire's done nothing but increase in intensity for the most part. However
when you have a lot of free time, that's perhaps natural.

Being too tired to do anything else outside of job and a long-overdue
social/romantic life is a very real concern. The other side of that coin is
grinding to a halt on startup progress because my personal life is in tatters.
I suppose it's like anything else, where you make time for whatever is most
important and practice effective time management.

Arguably the more ambition you have, the better your time management must be.
Which is ironic because some of the best ideation and thinking in my
experience has come from a lack of structure. Then again, no reason one can't
schedule unstructured thinking time when needed.

~~~
ssivark
Lol, I feel ya! I’d love to chat more if you’re interested (e-mail on my HN
profile)

------
mootzville
Thanks Sam, I needed this reminder.

------
trevyn
Is Sam trying to write like PG?

------
new_realist
Translation: the only startups willing to play YC’s sweatshop game are fruit
flies; they want meatier deal flow. I doubt the founders of hard startups are
that stupid.

------
avocado4
> If you want to start a company working on a better way to build homes, gene
> editing, artificial general intelligence, a new education system, or carbon
> sequestration, you may actually be able to get it funded

One of those is not like the others.

------
dheera
> The most counterintuitive secret about startups is that it’s often easier to
> succeed with a hard startup than an easy one.

For white male founders, yes. For a lot of others, they don't believe you can
do something hard. Speaking from numerous fundraising experiences in which I
got continually asked crappy "how do I believe you can do this" and even "what
would you do if I do [bad thing]" type questions instead of growth questions.

I realize I'll probably get downvoted not just on Sand Hill road but on HN as
well, but I believe this does need to be said.

~~~
coffeemug
Do you seriously think white male founders don't get asked these questions?

