
Lecture 1 – How to Start a Startup [video] - declan
http://startupclass.samaltman.com/courses/lec01/
======
tucaz
I've been watching it for 8 minutes as of now and despite the fact that the
content looks good it really bores me to death that he is reading the whole
thing like a robot. It does not sound like a natural converstation or
presentation. Does anyone else share this feeling?

~~~
bequanna
I disagree.

The content is great and communicated well.

Some people prefer making presentations having only some general idea of what
they are going to say before hand. Other people spend a good deal of time
thinking about exactly what they want to say and how they want to say it. Both
presentation styles are perfectly valid.

~~~
peter_mcrae
Agreed that both presentation styles work. That said, regardless of the
"strategy", the delivery needs to be clean to be seen as authoritative (unless
a tremendous amount of respect as been pre-built). Imagine your CEO delivering
an all-hands with 47 ums and reading from a script -- how much confidence
would that instill?

------
mbesto
Dustin talks about Financial Reward and Impact of "why to do a startup" for
examples like Facebook and Dropbox here:
[https://www.youtube.com/watch?v=CBYhVcO4WgI#t=2161](https://www.youtube.com/watch?v=CBYhVcO4WgI#t=2161)

Are these values correct? If you join Dropbox as employee #100 with 10bp,
you're 10bp is going to get massively diluted through subsequent rounds, no?
Isn't it more like $1-2mil? And also this is wealth on paper, which means that
you don't all of the sudden have $10mil sitting in the bank. I don't think he
explains that but that's how it's portrayed, and is probably worth explaining,
given the audience.

~~~
7Figures2Commas
Based on the holdings disclosed at the time of Facebook's IPO, and even
accounting for the rise in the company's stock, I doubt very much that
employee #100 at Facebook is sitting on $200 million in gains from his or her
options or RSUs. In the case of Dropbox, looking at what the Box founders own
according to Box's S-1[1] probably provides a more realistic comp.

One thing worth noting is that Dustin's slide apparently fails to take into
account the cost of exercising options. You can absolutely make a lot of money
at a startup, and you don't even need to be one of the earliest employees to
do so, but today's valuation trend works against employees. Startups are
raising money at significant valuations earlier and earlier, so even early
employees aren't receiving cheap equity.

As an example of this, consider that Facebook had sold shares at a $15 billion
valuation just three years after the company was founded. Google went public
at a valuation under $27 billion (edit: corrected). If you had your choice,
you'd almost certainly have received a better equity package as an early rank-
and-file employee of Google versus Facebook.

[1] [http://fortune.com/2014/03/25/aaron-levie-owns-more-of-
box-t...](http://fortune.com/2014/03/25/aaron-levie-owns-more-of-box-than-you-
think/)

~~~
birken
When Google went public the valuation was ~$23 Billion (they raised just under
$2 billion in the IPO) [1]. However to your point this was around 6 years
after founding, whereas Facebook was valued at ~15 billion by Microsoft in
2007, 3 years after it was founded.

I had a friend who turned down a job at Facebook in late 2008 because he felt
the 15 billion valuation was very high and it limited his upside. And before
about July '13 when FB's stock started a huge rise, this was pretty correct
thinking.

There is also still a problem with all of this revisionist valuation stuff for
a company like Facebook. It only would be worth some obscene amount if:

a) you got a generous stock option package when you joined

b) you stayed with the company until the IPO (so you could actually both have
a chance to sell your stock and pay the exercise costs)

c) you didn't sell until right now after the stock has massively appreciated
in the past year.

And even still you are going to be paying regular income tax on all of that
gain which is going to be around 50% if you live in California.

[1]: [http://www.washingtonpost.com/wp-
dyn/articles/A14939-2004Aug...](http://www.washingtonpost.com/wp-
dyn/articles/A14939-2004Aug19.html)

~~~
7Figures2Commas
Yes, you are correct.

Your friend didn't necessarily make a bad decision. Facebook traded as low as
~$18/share in 2012 and didn't get back to its IPO closing price until
mid-2013.

According to a media report[1], at one point, even employees who joined the
company as late as the end of 2010 were underwater. So _anybody_ (you, me,
your friend) could have purchased FB shares with a cost basis lower than that
of many employees.

Given this, it's somewhat disingenuous for Dustin to use Facebook's current
valuation to demonstrate "getting rich at a startup." It's actually a better
demonstration of "getting rich trading the stock market." Adding insult to
injury is the fact that the investor with long-term capital gains receives
more favorable tax treatment on his or her gains than employees usually
receive.

Incidentally, employees who don't exercise and sell as soon as they can are
effectively investing their hard-earned gains back into their employer's
stock. Depending on how well the company's stock does, and when sales are
timed, this can either be a really profitable thing or a really unprofitable
thing.

[1] [http://www.businessinsider.com/facebook-lockup-
release-2012-...](http://www.businessinsider.com/facebook-lockup-
release-2012-8)

~~~
prostoalex
> even employees who joined the company as late as the end of 2010 were
> underwater

That is not correct usage of the term. According to external report, Facebook
stopped issuing stock options to employees as of 2007. People joining in 2010
would be receiving RSUs, whose "strike price" is $0. While the monetary value
of the shares at IPO was different than the value they imagined, they would
not be underwater (having a strike price above market price, thus rendering
options meaningless).

[http://www.nytimes.com/2012/02/02/technology/for-founders-
to...](http://www.nytimes.com/2012/02/02/technology/for-founders-to-
decorators-facebook-riches.html?pagewanted=all)

~~~
7Figures2Commas
I was not privy to when Facebook started granting RSUs instead of options. My
use of the term "underwater" was based on what was reported.

Still, this is a red herring. The fundamental point of my comment was that in
the past couple of years, every single person here had the ability to purchase
Facebook shares on terms just as favorable if not more favorable than many
Facebook employees _without having to spend a single day working for the
company._

In fact, in the past several years, you could have on favorable terms
purchased shares in any number of tech companies that have delivered fantastic
gains to shareholders. Obviously, timing investments (or trades depending on
your persuasion) is easier said than done, but it's probably no more difficult
than trying to determine whether the startup you're going to work at for the
next four years of your life is the next Facebook or the next MySpace.

~~~
prostoalex
> every single person here had the ability to purchase Facebook shares on
> terms just as favorable if not more favorable than many Facebook employees

But RSUs are not purchased, they are gifted. So having an opportunity to
purchase 10,000 shares of FB at low-low 2012 prices is still expensive
compared to a gift of 10,000 shares vesting over 4 years.

I pulled the 10,000 number out of a hat, but I'm not too far off - here's a
question from 2011 [http://www.quora.com/Is-110-000-and-15000-RSUs-a-good-
starti...](http://www.quora.com/Is-110-000-and-15000-RSUs-a-good-starting-
salary-at-Facebook-for-an-Ivy-League-PhD) numbers were probably more
attractive at earlier years.

~~~
7Figures2Commas
RSUs are not "gifted." They are a part of one's compensation package, and you
have to work for them.

Consider this scenario: a company offers me 10,000 RSUs when its shares are
valued at $50/share. When the company goes public the value of the shares soon
drops to $20/share. What I thought was worth $500,000 is now worth just
$200,000 (pre-tax). That's a huge difference. Had the company's shares been
valued at $20 the time I was offered a position, I might have negotiated for
more of them.

Now, to be fair, maybe salary plus $200,000 is still the best compensation
package (and overall outcome) available to me, but that doesn't mean that it
was risk-free or cost-free.

As for the cost of purchasing 10,000 shares of Facebook stock outright, yes
this is expensive. But you can easily establish a meaningful leveraged
position through the use of options if you have the conviction. Also, keep in
mind that this is precisely what employees do when they fail to sell their
shares when they first have the chance. A Facebook employee who has $500,000
in newly-vested shares that can be sold, but who doesn't sell, is in effect
purchasing $500,000 in Facebook shares in the hopes that they will rise in
price. If they fall in price, his or her loss is still very much a loss, even
if it _looks_ less painful because the shares were purchased with labor
instead of cash.

------
cjmb
On Sam's part -- am I the only one who got the "heard this before" feeling?
Obviously he attributed everything pretty appropriately, but I thought I
could've placed 50-75% of his sentences in the "Summary" sections of various
PG essays, Peter Thiel writings, and other luminaries of the startup-sphere.

I'm not saying it was wrong or that his delivery was bad. But I remember
reading the Class Notes from Thiel's class after Blake made them available and
thinking "Wow, there's some original thoughts in here I haven't come across
before."

Maybe it's because PG already put it all to paper, and some of these other
figures just added post scripts. Maybe it was a solved problem by the time Sam
got a seat at the table. Just some food for thought. Looking forward to the
other lectures regardless.

~~~
AVTizzle
Surely, but for lecture 1 in a "Startup 101" series, you don't need to
reinvent the wheel. We're talking about a very, very well documented path at
this point, with established best practices.

------
dheer01
Disagree completely with the very first opinion expressed - 'Don't do a
startup just to do one - do it only if you really want to solve a problem'.

India has produced about 3 big ~billion dollar compaines in the recent past -
inmobi, flipkart, druvaa. None of the founders really started to 'solve' a
problem they were passionate about. What they were really passionate about was
just 'starting up' \- and based on their personal strengths, industry
knowledge and what they thought could be sold, stumbled on these big
businesses. This was probably true for HP too.

It is absolutely ok to do a startup just for the heck of it. Get in the game
and find out the intersection of what you can build and what a customer will
buy. If you build a big business - the passion will follow. Do not forget to
bullshit though on your big interview on how the so solved problem kept you
awake at nights - it makes for some good reading and impressionable pr.

~~~
rdlecler1
That could be more survivor bias. I think what he's saying is that if you're
going to start something you better be in love with it because there will be
bad times and you're going to need to lean on that passion to keep going. If
you happen to get lucky and ride a rocketship then this requirement will be
less applicable.

~~~
sharemywin
but since he came from a rocketship, I think he's pointing no matter what it's
hard on you.

------
philipDS
I made some notes while watching/listening. Might include minor errors or
misinterpretation on my side

4 critical parts: Idea, Team, Product, Execution

1\. Idea

-> Good startups take about 10 years

-> Startup should feel like an important mission

-> Hardest part coming up with great ideas: best look terriblea t the beginning (e.g. search engine, social networks limited to college students without money, a way to stay at stranger's couches)

-> "Today only a small subset of users want to use my product, but I'm going to get all of them"

-> You need to believe and willing to ignore naysayers

-> Most people will think your idea is bad: be happy. they won't compete. it's not dangerous to tell people your idea.

-> it's okay if it doesn't sound big at first. first version should take over a small specific market and expand from there. unpopular but right

-> take the time to think about how the market will evolve. market size in ~10 years. think about growth rate of the market instead of its current size. small, but rapidly growing market! people are desperate for a solution

-> you cannot create a market that does not exist

-> there are many great ideas, pick and find one you really care about.. "SW is eating the world"

-> "Why Now?" \- dixit Sequoia - have a great answer to this question

-> Build something that you yourself need. You'll understand it a lot better.

-> Get close to your customers. Work in their office or talk to them multiple times a day

-> If it takes more than a sentence to you know what you're doing, it likely is too complicated

-> "Do more when you're a student." Think about new ideas and meet potential co-founders

-> Think about the market first and you'll have a big leg up

2\. Product

-> Great Idea > Great Product > Great Company

-> Until you build a great product, almost nothing else matters

-> Sit in front of the computer working on product, or talk to your customers

-> Biz Dev, Raising Money, Raising Press, Hiring are significantly easier when you have a great product

-> Step 1: build something that users love

-> YC is all about: Exercise, Eat, Sleep, Work on Product and Talk to Customers

-> "It's better to build something that a small number of users love, than a large number of users like"

-> Get growth by word of mouth. This works for consumer as well as enterprise products. You'll see organic growth. If you don't have some early organic growth, then your product isn't good enough. It's the secret sauce to growth hacking.

-> Breakout companies always have a product that's so good that grows on word of mouth

-> Great products win. Make something users love.

-> Keep it simple. Look at first versions of Google, Facebook, iPhone

-> Founders care about small details. They're fanatical

-> One thing that correlates with success is hooking up PagerDuty to their ticketing system. Response time within an hour.

-> Go recruit your first users by hand to get feedback every day.

-> When everyone tought Pinterest was a joke, Ben Silbermann walked around coffee shops in Palo Alto to convince people to use Pinterest. He set Pinterest to the home page in the Palo Alto public library so people would discover the website. Do things that don't scale. Read Paul Graham's essay.

-> Create a tight feedback loop. What do users like? What do they pay for? What would make them recommend it?

-> Try to keep your feedback loop going for all of your companies' life

-> Do sales and customer support yourself in the early days. This is critical. Do not hire these people right away.

-> Keep track of metrics. Look at active users, activity levels, cohort retention, revenue, etc. Be brutally honest if they don't go in the right direction

-> If you don't get your product right, nothing else in this class will matter.

Why start a startup?

-> "It's glamorous", "You'll be the boss", "Flexibility", ...

-> Entrepreneurship gets romanticized

-> The reality is not so glamorous. It is a lot of hard work. You're sitting at your desk, focused, figuring out hard engineering projects. It is quite stressful.

-> Founder depression is a real thing. If you start a company, it's gonna be extremely hard

-> You have loads of responsilibity

-> You're responsible for the opportunity cost of the people who decide to follow and help you out

-> You're more committed. A founder cannot leave a company. For 10 years if it's going well. Probably for 5 years if it's not going well.

-> "Number one role of a CEO is managing your own psychology"

-> You're always on call, you're a role model. You'll always be working anyway

-> If you joined Dropbox or Facebook early on, your financial reward might be a lot better than when starting a startup

-> If you join a later stage startup, you have more impact - massive userbase, existing infrastructure, work with an established team. E.g. Brett Taylor was employee #1500 at Google and he invented Google Maps. He got a big financial reward for this.

-> What's the best reason? You can't NOT do it. You have to make it happen

-> Do it out of passion

-> The world needs it (if not, go do something else) and/or the world needs you (you're well-suited to do it). The world needs you somewhere, find where.

~~~
revorad
The surprising thing was that Sam's advice about working on a big mission and
something "important" seems directly contradicting what pg has been writing
for years.

 _Just as trying to think up startup ideas tends to produce bad ones, working
on things that could be dismissed as "toys" often produces good ones. When
something is described as a toy, that means it has everything an idea needs
except being important. It's cool; users love it; it just doesn't matter. But
if you're living in the future and you build something cool that users love,
it may matter more than outsiders think. Microcomputers seemed like toys when
Apple and Microsoft started working on them. I'm old enough to remember that
era; the usual term for people with their own microcomputers was "hobbyists."
BackRub seemed like an inconsequential science project. The Facebook was just
a way for undergrads to stalk one another._

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

I'm not too keen on Dustin Moskovitz's whole spiel about telling people not to
start startups. In a course about how to start startups, it seems really
misplaced.

~~~
tim333
I'm not sure the two view points really contradict. While early
microcomputers, BackRub and early Facebook may have seemed like toys I sure
some of those folks were aware they could become "important." I think Gates
and the Apple guys were aware microcomputers would become widespread and the
Google guys were aware better search could be a big deal. I think from
interviews Zuckerberg was a bit surprised by how theFacebook took off though.
Although subsequently he's got the "For us, it is this vision of connecting
the world," thing going on.

~~~
revorad
It's easy to write grand vision statements in retrospect. At the time though,
Page and Brin said looking at Sean Parker, "We'll never be as famous as him",
as per a story Ron Conway once told at Startup school.

~~~
hkailahi
*Shawn Fanning

------
7Figures2Commas
"All the advice in this class is geared towards people starting a business
where the goal is hyper-growth and eventually building a very large company.
Much of it doesn't apply in other cases and I want to warn people up front
that if you try to do these things in a lot of big companies or non-startups
it won't work."

------
smuss77
@3:12: "There are much easier ways of getting rich." Could I get some
examples? Thank you!

~~~
TimPC
So here is a simple idea. If you're going to work 80h/week anyway and you're a
talented coder: source one contract job billing hourly in London and another
in SF. Working out of EST you work 5AM-9PM on a 10-6 in both places -- Billing
$80/hr with a good corporate setup and working 4000 hours/year you can get
320,000/year, if you have EU citizenship (potentially from one of the return
countries) and US citizenship you can probably setup a decent double irish and
keep about 280,000+ of that in offshore money. If you want the money in the US
and are clever about it you can keep over 250,000 of that money. I suggest
London and SF because the 8h timezone difference and high cost of living in
both cities. But to give you an idea this is basically $2.5M after-tax locked
in the time it takes to make a 10 year exit. That's 1/4 of the first example
and way more than 25% of start-ups fail. Admittedly $2.5M isn't the kind of
resources that lets you go after solving the biggest problems in the world,
but it's pretty solid by developer standards. 1.8X is a good return for a
venture capital fund and they have more favourable stock than employees or
founders, so you have to think the average start-up return for founders, even
enormously talented ones is far worse than that.

Edit corrected typo in time worked.

~~~
e12e
While I agree with the idea that working like crazy is likely to net more than
a failed startup, a couple of comments:

> If you're going to work 80h/week anyway and you're a talented coder: source
> one contract job billing hourly in London and another in SF. Working out of
> EST you work 5AM-9PM on a 10-6 in both places -- Billing $80/hr with a good
> corporate setup and working 4000 hours/year you can get 320,000/year

I seriously doubt most people can produce 40 billable, quality
architecture/programming hours a week, let alone 80 -- especially over a long
period of time. Anyway 80/hour is way low for quality work as a consultant;
100 usd/hour should be a minimum. Target a more manageable 2300 hours a year
(6 day work week or 5 long days) and invoice 230 000/year.

> if you have EU citizenship (potentially from one of the return countries)
> and US citizenship you can probably setup a decent double irish and keep
> about 280,000+ of that in offshore money.

Yeah, stealing (or tax evasion) is an easy way to get rich. If you want to
break the law, you might want to look into smuggling or credit card
fraud/skimming as well...

~~~
TimPC
For a second issue, there is a certain perception that start-up founders can
produce far more than 40 hours/week of quality architecture and programming.
Founding a company involves believing in that at some level. I agree it's not
in the category of most people, but neither is start-up founder. If you have a
serious belief in your ability to do so, try working like crazy on 3 month
contracts and see if you actually can. Over 3 months you're unlikely to burn
out completely, and you can adjust your expectations of the kind of hours
you're capable of accordingly.

~~~
e12e
Perhaps. But working 4000 hours a year, and producing 4000 billable hours a
year, aren't the same thing. There's lots of "fluff" that goes into running a
business. Sure, if you can show me someone that are able to produce quality
code for 4000 hours a year, that'd be great. But sounds like the EA death
marches to me. On the other hand those games, bugs and all, do rack in a tidy
profit. So maybe I'm wrong, and you can throw shit at people for a year, and
still have them come back for more shitty code the next year?

------
kartikkumar
One thing that bothered me about the lecture was reinforcement of the idea
that working hard is the same as working long. I can appreciate the fact that
at times as a founder you have to work all hours of the day, but surely this
is not the optimum scenario for maximum productivity. If I look at my own work
situation currently, it's abundantly apparent to me that the law of
diminishing returns affects me strongly after working 8-10 hrs straight.

I would have expected the message to be that the most successful founders in
the long-term are the ones that figure out the right work/life balance, to
ensure they don't burn out. In other words, successful founders are able to be
focussed and driven for the hours that they work, and in recharge-mode when
offline.

This is intuitively what I would have expected and I'm curious if the message
from the lecture of "work all day, everyday" is really right.

~~~
sharemywin
Let's say you have 10 employees and you decide to work 7 hours/day. All your
employees decide well sounds good. Versus, let's say you work 10 hours day and
on average your team work 9 hours day. 3 plus 20 = 23 hrs * 350 days = 8000
more hours that year. Your an investor which team do you pick?

~~~
kartikkumar
I think some part of your comment is missing, as I can't follow the numbers.

The whole point of my comment is precisely about the fact that extra hours
don't necessarily represent proportionately greater productivity. If investors
only look at number of hours you work and not what you produce, then I'd be
fearful for their cash.

The lecture conveyed the "all day, everyday" message and that goes against my
intuition.

------
bcjordan
To temper some of the nit picks, just wanted to say this lecture felt
insightful and fun to watch. I hope YC continues this trend of investing
effort in shareable advice content in the spirit of pg's essays.

This is the first time a lot of the YC flavor of startup how-to material has
been presented in a lecture video format[1]. I suspect much of the long-term
audience of these lectures wouldn't have come across pg's essays, Blake
Masters' Peter Thiel startup notes or Dustin Moskovitz's excellent Medium
posts before. Maybe some lecture watchers were allergic to long-form articles,
or maybe some would rather receive a weekly email with videos. Myself, I
consume this sort of material on my walk to work, either text-to-speeching
essays or listening to lectures. The video lecture format was especially fun,
I watched it full screen on the TV while eating an enchilada and poking my
fiancee about points she might find relevant to her side project. How often do
you get to consume this sort of content like that?

Having read pg's essays[2], I still had a number of "aha!" moments from Sam's
slides and hearing his presentation. And hearing Dustin describe in his low-
key tone why you should be employee 1,000 at an obviously successful startup
rather than start your own, and backing it up with charts and photo-jokes
about the elephant in the room was just entertaining. Seeing "this is how
we'll teach you to do this thing. Here's an expert on why not to do this
thing." is not always the type of juxtaposition you get with standalone online
essays.

Looking forward to the next lecture. I'd say it's well worth the time and
opportunity cost of putting this all together, so thanks all involved.

[1]: Yes, some Lean Startup™ and Principles of Entrepreneurship™ flavored
material has been presented in lecture format before, but not YC™ lensed
AFAIK.

[2]: Okay, I skipped the early seemingly pure-Lisp-focused ones. Though like
Zen and the Art of Motorcycle Maintenance isn't about a long motorcycle trip,
and maybe pg's Lisp essays are not really all about writing Lisp?

------
jduhamel
The presentation style is a bit rough but the material is gold.

------
bayesianhorse
There are easier ways to get rich? For Stanford Graduates, maybe. For those
who don't have a degree in an ultra-paying job, I'd really like to know an
easier way.

I'm usually sceptical about start-up chances, I know how much work it means,
and I know that a lot of early-stage employees get rich, too. Yet, I don't
think you can get rich this fast/easy with a modest degree... Even as early-
stage employee often you'll still get a raw deal or you overestimate their
chances of success.

~~~
tim333
I think some fairly average people become millionaires along the lines of
manage a McDonnald's for a bit, get finance to have your own one, expand to
have 2 or 3 at which point you'd likely be worth $1m+

~~~
bayesianhorse
So I don't know how McDonnalds works exactly, but you would either need the
capital to buy (borrow etc) a restaurant or you would have to be chosen to run
a restaurant. Meaning you have very high-paying abilities. And in some sense,
growing a franchise-taking enterprise could be technically called a start up
even if not particularly innovative!

------
agentultra
Great presentation and very clear that the rest of the course will be focusing
on advice for SV-style hyper-growth startups.

There's still some good advice for those of us not interested in that life
style. I was particularly taken with the idea of building something that just
a handful of people will really love. Having a rapt-audience for your product
would be a huge win if you decide to build more, scale up, or sell out.

I think it's really good that they're at least trying to convey how difficult
building the style of companies they're talking about can be. I can appreciate
how challenging that must be. The cultural yard-stick for success these days
are valuations and IPOs. There's a ton of pressure to go that route especially
from YC. I'm glad they're being conscientious about it even if they don't 100%
succeed at removing some of the glimmer from the stars in peoples' eyes.

There's nothing wrong with wanting to start a smaller enterprise and aspire to
keep just a handful of customers you know by name.

------
bramgg
@2:22: "You may still fail. The outcome is something like Idea x Product x
Execution x Team x Luck, where Luck is a random number between 0 and 10,000,
literally that much."

What does that mean? I'm not trying to rip on the video or anything like that,
but am genuinely curious as to how much luck Sam Altman thinks is involved in
a startup.

~~~
derekchiang
That simply means if you are extremely unlucky (e.g. luck being 0, like being
hit by a bus), then all the other factors don't matter. On the other extreme,
extreme luck can turn your company around even if you don't do so well on the
other parts.

------
jtwebman
Wow this was good information. It really got me thinking on what my reasons
are and how bad they might be. Did anyone else get that from this?

I would also love if they cover how you work on a startup if you still have
the 40 hours a week programming job as well. And how to avoid getting in
trouble or legal issues with your job.

------
Reltair
The recommended reading from the final slide:

\- The Hard Thing About Hard Things

\- Zero to One (CS 138A)

\- The Facebook Effect

\- The 15 Commitments of Conscious Leadership

\- The Tao of Leadership

\- Nonviolent Communication

~~~
acrefoot
I cannot find "The 15 Commitments of Conscious Leadership". Is it a book? I
don't see it on Amazon. Is it an article? Does someone know the authors (I
can't quite make it out on the image), or the link?

EDIT: [http://consciousleadershipforum.com/wp-
content/uploads/2011/...](http://consciousleadershipforum.com/wp-
content/uploads/2011/05/15-Commitments-of-Conscious-Leaders.final_1.pdf) is
the answer, I believe.

~~~
JSeymourATL
Evidently this book is scheduled to be published in November 2014. Nice way to
create pre-sales buzz via the Stanford lecture.

Here's a link> [http://www.businessconjunctions.com/2014/09/05/do-good-
leade...](http://www.businessconjunctions.com/2014/09/05/do-good-leaders-
really-have-integrity-guest-post/)

------
lukasm
I find it artificial when the lecturer reads the presentation - it's not a joy
to listen.

~~~
andrewchambers
I thought it was fine.

------
rdlecler1
Sam: "Step 1, build something that users love"

How does this compare with an MVP approach where you put something out there
first and test the market. Then there is the issue of runway. With enough
time, you can start with an MVP and iterate in private beta until users love
it, but in many cases a founder is not going to have that kind of runway. They
have just enough resources to put something together, and they're going to
have to go out to the market with that and iterate on the fly. Unfortunately,
once you do get out there and need to take on all of the other
responsibilities, then that's time taken away from building a great product.

~~~
napoleond
The two concepts are not mutually exclusive. If you target a big enough pain
point, your first users will love the product even if it lacks polish. It's
also important to remember that MVP != shit. It is the minimum _viable_
product; in the context of the YC motto it's the minimum product that a small,
core group of users will love.

This is all theoretical on my part, FWIW--I have not successfully built such a
thing on my own yet.

------
petersouth
Sam Altman's law of conservation of how much happiness you can put into the
world with the first product from a startup -> the total amount of love is the
same it's just a question of how it's distributed.

~~~
liantics
That line cracked me up. A great observation in an unexpected wrapper.

------
dkaplan
Why did we submit questions if the video was just going to cut out at the Q&A

------
steakejjs
This seems like a really valuable recruiting tool for YC. Start early at
Stanford, groom freshman to have a great mindset and understanding of the
fundamentals, fund them and make money.

YC is still a for-profit company, after all.

------
coralreef
Sam mentioned that the idea was actually quite important. I recall PG saying
that YC would often invest in the team because ideas change and aren't as
important as good founders.

Anyone have thoughts on this?

~~~
anthony_franco
Like a good startup YC wanted to validate their assumptions and experimented
with "no-idea" teams. Considering they don't have that option anymore, I'd
venture to guess that they disproved PG's original saying and are now
realizing that a good idea correlates with success. That's my guess.

~~~
coralreef
Having no idea is crazy though, you want someone with at least some idea of
what they want to work on. Also I don't think they accepted enough no idea
teams to have a good statistical reference.

------
simonebrunozzi
I also don't agree that working on a startup should mean no work-life balance.
There's a limit to how productive you can be, and working 90 hours/week is not
going to make you more productive than working 45 hours/week. If you work too
much, you'll do more mistakes. Ryan Carson, founder of TeamTreeHouse, can
teach us a lot about it. [http://ryancarson.com/](http://ryancarson.com/)

------
dkural
I disagree that a startup should commonly start with an "idea". Start with an
unmet need people are willing to pay for. Or take an existing category with a
lot of bad products and make a truly better one that improves every aspect of
the experience. Often, you'll see many startups working on the same "idea".
Something like Google is truly rare (a genuinely innovative approach to
search).

~~~
steve_taylor
Building a product for which people are willing to pay to meet an unmet need
_is_ an idea. As is building a good product in an existing category that
contains only bad products. Just plug in the unmet need or existing category
and you have the kind of ideas that sama talked about in the lecture.

~~~
dkural
True, it is an idea. I guess I was responding to the order in the slide deck.
I'd rather have (1) more specific, "market need". I think going idea ->
product might be misunderstood by younger folk. The whole point of doing idea
-> product super fast is to validate the market.

------
yatoomy
I'm interested in Thiel's upcoming lecture. It seems like there has been a
hard shift from "move fast/lean/mvp/pivot" to "make a monopoly". Economically
speaking, it is accurate. Hopefully it will motivate people to go after
problems previously taboo, ie healthcare, education, finance etc, and less
about messaging and photo apps. Our world may depend on it.

------
hayksaakian
Sam kept bringing up the 10 year number

But: YC (and therefore every YC company) is < 8 years old

What startups succeeded after this long (AND were still actually considered
startups)

~~~
adamt
A startup can easily take 10 years from funding to the point where it's
purchased or no longer needing more investment. My first business was founded
in 1995 before being sold (for decent money - e.g a successful outcome) in
2011. Was the business still a startup after 10 years? I would argue yes.
There were still many ups and downs, funding challenges, near-death
experiences etc, and our culture was still largely that of a startup business.

Even if you consider the massive tech IPOs and classic success stories, the
timeline between incorporation and IPO is pretty long. Microsoft was founded
in 1972 and IPO'd in 1986. Google took 9 years from incorporation to IPO, and
it was 8 years from Zuck launching 'thefacebook' until the Facebook IPO. I
think this backs up Sam's assertion that a startup is a 10 year commitment for
a founder.

------
piotry
Funny that I just wrote about how I was considering killing a startup I
started:
[https://medium.com/@piotr/i-failed-82b9469977ac?source=lates...](https://medium.com/@piotr/i-failed-82b9469977ac?source=latest&)

Probably the best way to know how to build a successful one is knowing how to
build one that won't fail!

------
bobbles
Are transcriptions of these videos going to be provided?

It's much easier for me to consume lectures as text rather than watching the
video.

------
AzmD
Ideas are important ... but if Ycombinator stresses so much on the idea being
really great then they should take these lines off their website (its on the
"Apply" page)

"Your idea is important too, but mainly as evidence that you can have good
ideas. Most successful startups change their idea substantially."

------
steve_taylor
It's refreshing to see such importance placed on the idea and building a
product that users love.

------
ThomPete
Don't get me wrong I love Sam Altman I love y-combinator but a small part of
me is thinking that a good first step to start a startup is to not watch that
video and find your own way. Not because it's probably not great but because a
startup is not a formula.

Your path is your own.

~~~
mladenkovacevic
I agree. It strikes me as a very inefficient use of an enterpeneur's time who
wants to launch a business to first watch a series of 20 lectures about all
aspects of starting a business.

Just start doing it, and whenever you get stuck or need feedback ask someone
whose expertise you trust for advice on a particular issue you're dealing with
at that moment.

~~~
scobar
Perhaps it's not the most efficient use of an entrepreneur's time, and I agree
that it definitely doesn't have to be the first step. Working on an idea helps
you learn fast, but there was so much I didn't know at first (I still have a
lot to learn). I am so grateful that resources like this exist, and I expect
this one by YC to have a higher density of quality info in the time spent
watching lectures.

~~~
McDoku
“Principles and rules are intended to provide a thinking man with a frame of
reference.” -- Karl von Clausewitz

~~~
ThomPete
Running a company is not about neither principles nor rules. To the extent it
does it's doesn't require a thinking man.

~~~
McDoku
Please elaborate.

~~~
ThomPete
Running a startup is not an intellectual exercise which is the context for
that quote.

Running a startup is more like improvising in a jazz band. There is some
theory behind it but if you think you stink.

~~~
McDoku
...talent and genius operate outside the rules, and theory conflicts with
practice - Carl von Clausewitz

I would argue that he agrees. However...

The general who wins the battle makes many calculations in his temple before
the battle is fought. The general who loses makes but few calculations
beforehand. - Sun Tzu

Both intellectualism and the ability to improvise are necessary. Arguably, if
you have to adapt then a calculation has failed. Hearing the sound of thunder
is not the mark of a keen ear, neither is entering battle and winning the mark
of a great general.

There is no point reinventing the wheel. Many have come before and it seems
wise to assimilate their experience with a critical mind.

Instinct ultimately rises from your existing body of knowledge. And even in
jazz it emerges from a bass line.

------
howradical
Here are some timestamped notes synced with the video:
[https://timelined.com/how-to-start-a-
startup/lecture-1-how-t...](https://timelined.com/how-to-start-a-
startup/lecture-1-how-to-start-a-startup)

------
lawsohard
looks like rap genius is putting up a full transcript
[http://tech.genius.com/Sam-altman-how-to-start-a-startup-
lec...](http://tech.genius.com/Sam-altman-how-to-start-a-startup-
lecture-1-annotated)

------
smaili
Can non-Stanford students drop in or is this for students only?

------
ckvamme
I posted some casual, but in depth notes on my site for anyone wanting to skip
the video:

[http://chriskvamme.com/](http://chriskvamme.com/)

------
gorkemyurt
its really sad that he is reading the presentation..

~~~
mathgenius
Yeah.. And not very well.

I'd much prefer incoherent rambling, than this robot presentation. Put the
script on a blog somewhere.

------
gadders
Just a quick question - are these a Sam only initiative, rather than YC? Is
that why they are on Sam's domain?

------
xavierkelly
This is a really good video lesson. I fell inspired to work harder on my
dreams of growing my startup.

------
graycat
Just watched the lecture.

The first part of the lecture was on the "Idea", and I want to give an
alternative approach.

First, do I believe that what Altman describes can work and is what he has
seen has worked? Definitely yes.

Second, is that all that can work? I don't think so.

Third, do I suggest that the alternative approach I describe here will be
common and/or always better than what Altman describes? No. Sometimes better?
I do believe so. But even if the alternative approach is rare, that should not
be a huge obstacle since the success Altman is talking about, the goal, is
also rare. That is, for the rare successes, we should expect that some of the
means will also be rare and not common.

But for the alternative approach, given that it is rare, we should have some
solid evidence of its effectiveness, and I believe that we can.

I want to propose that it can be possible to have an idea, test it,
essentially just on paper, and, if it passes the test, be quite sure the
resulting product will be good and fairly sure the resulting company will be
successful.

Yes, I'm proposing that the alternative approach provides a way to have the
idea be by far the most important part of the work and the rest, e.g., the
execution, be routine.

Or I would say that a _good_ idea is one that makes it through the _filters_
of my alternative approach. Then I am claiming that with a bad idea, yes,
execution is everything but with a good idea execution is routine.

Yes, to me, the _ideas_ like Altman describes look to me as far too
unpromising to be taken seriously and promise that, yes, indeed, execution
will be many times more difficult than the idea. Indeed, Altman is admitting
that many start ups fail, that building a successful start up is difficult. I
would agree that, starting with a bad idea, building a successful start up is
difficult.

Now, for the alternative approach for finding a good idea for a start up:

First, the alternative approach is very selective, that is, rejects a lot of
ideas. Some of the ideas the approach rejects will be able to be the basis of
successful companies. The alternative approach rejects ideas when it just
cannot build a rock solid case that the idea is good. E.g., the alternative
does not know how to conclude that the ideas for Facebook or Twitter would
lead to success. The alternative wants to accept only good ideas and in doing
so will reject a lot of good ideas. The alternative approach asks for a lot
from an idea, and many good ideas will not have that much.

Second, Altman does emphasize that a need and a corresponding solution one
person sees in their own life can be relevant. Okay, I've been there and done
that, that is, I've seen needs and solutions.

Third, what I'm proposing for an alternative is, at least in broad terms, and
compared with what Altman describes, much older, much more thoroughly tested,
and with a much better, really excellent, track record.

Actually, we all know at least something, maybe a lot, about the alternative
and its track record. I learned about the alternative early in my career doing
mostly US DoD projects around DC and also some other experiences, but there is
much more information about the alternative readily available far from me.

So:

(1) Need.

To make the alternative work, we have to start with a suitable need, i.e.,
_market need,_ that is, a suitable problem to solve. We want the first good or
a much better solution to be, obviously, no doubt, a "must have" and not just
a "nice to have".

Next, for this need, we want to find the first good or a much better solution,
presented just on paper.

Then we want to evaluate the solution, also just on paper. Sorry, no, we don't
"get out of the building" and talk to other people.

Big example of such a need? Okay, we'd like to have a safe, effective,
inexpensive one pill taken once to cure any cancer. So, yes, early on, for
Facebook, Twitter, Snapchat, a lot of doubt. For such a cancer pill, we have
"no doubt"; to know this we don't have to "get out of the building", ask
people, throw trial solutions against a wall to see if there is interest, etc.

(2) Solution.

Given the need from (1), we try to find a solution. If we fail here, and
likely we will, we return to (1) and find another need. E.g., clearly so far
the one pill cure for any cancer will fail here for at least a long time.

We want a solution that we are sure, "no doubt", will be the first good or
much better.

Here's a way: Start with the real problem and see what about it we can assume.
Then convert this problem and its assumptions into a mathematical problem. So,
we are limiting ourselves to needs that lead faithfully to mathematical
problems. Sorry, no intuitive heuristics need apply.

Next find a mathematical solution.

Develop the mathematical solution just on paper, as carefully done theorems
and proofs, and then severely check the proofs.

Then observe that it is totally clear that the mathematical solution will be
fully close enough to the first good or much better solution we want for the
need.

If any of the work here in step (2) fails, then return to step (1)

(3) Product.

Write software to do the data manipulations specified by the mathematical
solution. Severely check the software. That's essentially the product.

If fail here, then return to (1).

Track record? Okay:

(A) GPS.

(B) The version of GPS done first by the US Navy for the SSBNs.

(C) Beam forming in passive sonar.

(D) The A-bomb of WWII -- all three exploded just as planned.

(E) The H-bomb of the 1950s -- first test, 15 million tons of TNT.

(F) The SR-71, for Mach 3+, 80,000+ feet, 2000+ miles without refueling;
proposed by Kelly Johnson just on paper; built and flown just as proposed.

(G) Keyhole satellite, essential a Hubble, before Hubble, but aimed at earth
instead of space.

(H) The F-117 stealth, essentially a modified F-16, flew as planned, through
Saddam's anti-aircraft artillery without a scratch.

(I) The airplane the Wright brothers took to Kitty Hawk, NC.

(J) Phased array radar for Aegis class ships.

(K) High bypass turbofan engines.

(L) RSA encryption.

(M) Hubble.

(N) LHC.

(O) COBE, WMAP, and Planck.

And there are many more. Such projects that failed in execution? Tough to
find. Batting average? Near 1000.

Right: Projects A-O are all just _technical_ projects. Right. But in each case
they provided the intended solution for the need. As we have explained, to
have a successful technical solution lead to a successful solution in
business, we want such a solution to be a "must have"; else we return to (1).

The high bypass turbofan jet engine a commercial "must have"? Darned right: It
saves an ocean of expensive jet fuel. How? Simple: Burning jet fuel releases
energy. Want to convert that energy to kinetic energy and get the resulting
momentum. But for mass m and velocity v, kinetic energy is (1/2) mv^2 and
momentum is just mv. So, we pay in energy (1/2) mv^2 and get in the momentum
we want mv.

So, since in kinetic energy we have v^2 but in momentum have just v, to get
more of our desired momentum from our given, available energy, we want m to be
large and v to be small. So, mostly we want to use the hot gasses from the
combustion to turn a big ducted propeller that moves a huge mass of air at a
low velocity. Instead, the military jet engines intended for supersonic
speeds, and long used in commercial aviation because they were available, move
a smaller mass at high velocity. So, for commercial, subsonic flight, a high
bypass turbofan is a "must have". Then have the first good one or a much
better one, as we have assumed, and very much should have a successful
business.

~~~
rwallace
Your way of thinking is interesting, but in all of the examples you give, the
execution was vastly more difficult than the idea. Furthermore, most of them
weren't commercial products and couldn't have been done by a startup.

~~~
graycat
It appears that we are not considering the same issues, i.e., we are not
communicating,

E.g., right up front in my post I said, as a summary, and overview, and a
statement of my purpose in my post:

> I want to propose that it can be possible to have an idea, test it,
> essentially just on paper, and, if it passes the test, be quite sure the
> resulting product will be good and fairly sure the resulting company will be
> successful.

To me, this statement of mine about the _idea_ is very different from what
Altman said and very different for the _plan_ and the resulting _execution_
and business. Here I will avoid taking enough words to quote enough from
Altman's lecture to show these differences; I assume we agree that, on the
_idea_ Altman and I are saying very different things.

For your

> in all of the examples you give, the execution was vastly more difficult
> than the idea.

Sure, but if you are concerned about this then you are not really responding
to what I wrote.

All the examples (A)-(O) do illustrate what I said about the _idea_.

For execution I said that with a good idea, execution should be routine and
low risk. Projects (A)-(O) also illustrate this point -- routine and low risk
-- about execution. So, with a sufficiently good idea, execution can be
routine and low risk. Here, too, what I am saying is different from what
Altman said.

You are also concerned about the amount of effort in the execution. Right.
And, right, mostly the projects (A)-(O) do not illustrate low effort. Okay.
But we can't use those projects to conclude that there are no projects, start
ups, that follow what I said about ideas and that have have low execution
effort.

So, for effort in execution, can we also have projects that have low execution
effort and, thus, are suitable for start ups? Well, except maybe for the
project (L) RSA I listed, the projects in (A)-(O) do not illustrate low
effort.

But I do believe that, as we select projects, we can also have some that
follow what I described and also have low execution effort. How? Broadly, just
do what is the focus of Hacker News -- Information technology that exploits
Moore's law and current infrastructure software.

E.g., in

The Happy Demise of the 10X Engineer By Sam Gerstenzang at

[http://a16z.com/2014/07/30/the-happy-demise-of-
the-10x-engin...](http://a16z.com/2014/07/30/the-happy-demise-of-
the-10x-engineer/)

is a discussion of the question:

"How long before we have a billion-dollar acquisition offer for a one-engineer
startup?"

So, this is from A16Z: They are guessing that the issue you raised about
"effort", we should be able to have a "billion-dollar ... one-engineer
startup".

So, A16Z and I agree that now, in information technology start ups, low effort
in execution is reasonable to expect.

The A16Z arguments add to mine and do not conflict. I would suggest that my
arguments help show the way to the A16Z information technology "billion-dollar
... one-engineer startup" with low risk and low effort.

Why don't we have a lot of examples of projects that followed my arguments,
and were "billion-dollar start ups" with low effort? Sure: What I am saying
is. so far in practice, mostly new for information technology start ups --
instead of what I described people have followed what Altman described in his
lecture. I'm saying that there is a better way, heavily in the _planning_.

That what I am saying seems new for information technology start up can seem
good news unless find the thinking wrong.

Nutshell View: I'm claiming that we can do good planning and with a good plan
execution can be routine and the intended success low risk. A key to a
reliable path from plan to success is some math for the core of the product.
Another key is a problem where the first good or a much better solution is a
"must have". My project examples (A)-(O) illustrated that such planning, the
role of math, routine execution with low risk, and "must have" solutions are
possible. Yes, nearly all the project examples (A)-(O) had high effort. For
effort, there's evidence, e.g., from A16Z, that now, due to Moore's law, etc.,
that for some information technology start ups we might get all of these
project attributes along with low effort.

Here what I'm saying is very different from what Altman said and maybe good
news.

------
polskibus
Is there a download link for the video to make offline viewing possible?

~~~
Walkman
You can use the yotube-dl script: [http://rg3.github.io/youtube-
dl/](http://rg3.github.io/youtube-dl/)

------
reelgirl
I loved the video and it really encouraged me to keep on trying.

------
simonebrunozzi
Sam, your voice sounds very irritating to me. Sometimes too fast, no "tempo".
I think you should change the way you deliver your points to a classroom.
(constructive feedback, not rant)

------
hanley
Very interesting lectures and it's great that they are doing this. Both of the
speakers could benefit from a public speaking class though.

------
gbachik
It was so good I wish It was thursday.

I want mooooore!

------
pmosh
subtitles please!!

------
porter
Ycombinator leading the way once again. Looking forward to this!

~~~
porter
I guess all the people downvoting this are from other incubators. Not sure why
this is being downvoted.

~~~
dkural
Because your comment does not add anything to the discussion.

~~~
tim333
Or adds the wrong thing. Go team A, we're better than team B stuff is not that
productive.

