The essay seems aimed mostly at current
Silicon Valley (SV) style, mostly
consumer, information technology startups.
Okay, but that's not all of business or
even all of startups. Yes, YC is pursuing
much more, e.g., some shoe company in
Pakistan, still, the essay is SV style
and there, mostly Web and mobile. Fine
with me, because that's what I'm doing, be
we should understand this point about
scope. And, as below, we should
understand this scope and style because
IMHO it's time for SV style of consumer
Internet to borrow from some of the rest
of technology and business.
As we all can see, all heard from Mark
Andreessen, etc., and see from Sam,
" ... investors’ returns are dominated by
the big successes, ... "
So, from this Broad Point, the goal is
something exceptional. From that, we
have to suspect that we won't always be
following the common and ordinary, some
extensive experience and observations from
the past, or even "big successes" from the
past, and, instead, should be willing to
consider some exceptions in order to be
> "Your goal as a startup is to make something users love."
Now, can we, please, have some more
guidance on just how the heck to do that?
And, please, don't ask me to draw from
Snapchat or Homejoy. And I'm concerned
"However, these statistics also reveal a
grimmer reality: 93 percent of the 511
companies accepted by Y-Combinator have
failed. Even more alarming, only 3 to 5
percent of the companies that apply to
Y-Combinator are even accepted, meaning
that only one in every 200 companies that
applies to Y.C. eventually succeeds."
And, I'm concerned about the low ROI of
venture capital as in
Instead, for history with some good
examples, there have been many amazing
projects, some astoundingly innovative,
that worked the first time with high
probability, e.g., for a picture:
IMHO, here is a better approach:
(1) Find a problem that huge number of
potential users/customers believe or can
come to believe is really important to
have solved. E.g., want, say, 1+ billion
people with Internet access, if only from
(2) Find a solution that is much better
than anything else and difficult to
duplicate or equal.
(3) Make sure that for the target customers
right away or soon the solution will be
seen as a must have and not just a nice
to have. Want no doubts here; do not
want to have to depend on gossip and fads
from notoriously flighty teenage girls.
One of the best examples would be a single
pill, safe, effective, cheap, to cure any
(4) Deliver the product, easy to use at a
very attractive price.
(5) Make sure the revenue covers all
expenses and yields a fantastic margin,
e.g., pre-tax margin 90%.
(6) For that solution, do some good
original research with powerful, valuable
results in the STEM fields.
(7) Offer the solution as a Web site,
i.e., exploit software, Moore's law, and
(8) Be a solo founder until at least $10
million a year in after tax earnings.
> "A word of warning about choosing to
start a startup: It sucks! One of the most
consistent pieces of feedback we get from
YC founders is it’s harder than they could
have ever imagined, because they didn’t
have a framework for the sort of work and
intensity a startup entails."
There's something wrong here: All across
the US, east to west, north to south,
cross roads to the largest cities,
millions of sole proprietors do startups
and are successful enough to buy houses,
support families, and get the children
All the larger bodies of water in and
around the US have boats and yachts, and
nearly all the owners are just such
entrepreneurs. Maybe they own 10 fast
food restaurants, are big in asphalt
paving, are a manufacturer's
representative for some great lines, run
five new car dealerships, own and manage
2000 units of rental property, have a
private label line of industrial floor
cleaning supplies in a mid-size Midwestern
state, did a rollup of dry cleaning
stores, are the main beer distributor for
half of a state, are a leader in design
and construction of custom tanks on truck
frames for hauling liquids, etc.
But, a startup that exploits information
technology, software, Moore's law, and the
Internet should have some advantages and
generally be less difficult.
> "Remember that at least a thousand people
have every great idea."
Maybe true with SV style, but more
generally, no, and a thousand times no.
Instead, since so many startups fail, we
want some advantages and definitely can
get a lot of advantage from having a
genuinely new idea. People who wrote a
Ph.D. dissertation that was supposed to be
"an original contribution to knowledge
worthy of publication" and "new, correct,
and significant" will quickly appreciate
the importance of a unique idea and a lot
about how to construct such. Here SV
style is seriously lacking and, as above,
needs to borrow from outside.
As in Sam's
I believe that SV style nearly trivializes
the idea and, to raise the success rate,
very much needs to go much deeper into the
idea and associated considerations of user
need, market size, meeting the user need,
and new, proprietary technology to meet
the user need especially well with a
product difficult to duplicate or equal,
and protected intellectual property that
supplies a barrier to entry. In some
places such unique intellectual property
is taken very seriously, with laws,
contracts, national security
classification, etc. For higher success
rates, SV style needs to do better with
such intellectual property.
Several good examples of a such
intellectual property and its power are in
This is another case of where SV style
needs to borrow from outside.
Once again, over again, one more time, yet
again, we come to the issue of team.
Again we learn that it's tough to get a
good co-founder; co-founder disputes are a
major cause of startup failure; it's tough
to hire good staff; it's difficult to keep
the staff well involved; being a good
leader and manager and learning to do so
is a lot of work, and BoD members rarely
know much about the details of the
business, likely much less if some new,
unique, powerful, valuable crucial, core
technology is key to the business.
So, with all those clear dangers to the
startup, we begin to conclude: Be a solo
founder, get to earnings ASAP, grow
organically, well into very good
profitability hire no one, and from the
start carefully plan never but never to
accept equity funding or report to a BoD.
Or, follow the example of Markus Frind and
his romantic match making Web site Plenty
of Fish, initially, just one guy, two old
Dell servers, ads just from Google, $10
million a year in revenue, and recently
sold for $575 million in cash.
Understand the Users:
> "... it’s critical you understand your
Right. And for making, say, really nice
seat cushions for the driver's seats of
Rolls Dropheads with owners in the Chablis
and Brie set in the Hamptons, sure.
But in consumer Internet, for a big
success, there will millions, maybe
billions of users, and about all that can
be said about those users is that they are
a not very special cross section of
humanity. So, really just have to
understand the pair of the product and the
ordinary man on the street.