How to Start a Startup: Lecture 1 – Ideas & Products

Sam Altman:

  • Everything in this course is geared towards hyper-growth
    • Startups are different from ‘normal companies’
  • 4 things you need. They can be multiplied, but there is always going to be things like luck as a multiplier.
    • Idea
    • Product
    • Team
    • Execution
  • You should only start a startup if you are compelled by a specific problem; and starting a business is the best way to fix it.


  • The idea
    • Great execution towards a bad idea is still bad
    • The best businesses are based on great first ideas
    • If it works out, you will be working on the idea for 10 years.
    • The idea will expand and evolve as you go
    • You want something that will develop in interesting ways
    • You want to keep in mind your business should be difficult to duplicate
    • Wait for an idea to be one you are compelled to do. The best companies are usually mission-oriented. The company should feel like an important mission.
    • You will get more support on a hard task than an easy one. In many ways it is easier to start a ‘hard’ startup than an ‘easy startup’. It is easier to get more help on a mission-driven startup.
    • Derivative companies: companies that copy an existing idea with very few insights don’t excite people and don’t compel the team to work hard enough to be successful
    • The hardest part about great ideas is that they usually look terrible to begin with.
    • A startup is at the intersection of ‘seems like a bad idea’ and ‘this is a good idea’
    • You are trying to get a monopoly in a small market, then expand.
    • You need a conviction in your own beliefs in the face of naysayers. If you do come up with an idea, people will usually tell you it is a bad idea. You want to sound crazy but be right.
    • A common problem for founders think it is bad to pick a small target market

Think about your market:

  • You need to think about how a market is going to evolve. Think about the market in 10 years.
    • Will the market top out?
    • Is the market small but rapidly growing?
    • You cannot create a market that doesn’t want to exist
    • In a small, growing market, the consumers are hungry for anything and willing to put up with imperfect, but improving products
  • Why now?
    • Why is now the perfect time for this particular company in this market.
    • All great companies have had a good answer to this question
    • You should be solving a problem of your own need.
  • Startup ideas are almost always easy to understand and explain. Should be able to say what it does in one or two sentences.

Building a great product

  • Great idea > great product > great company
  • Make sure the company builds a great product. Until you do that, nothing else matters.
    • In the beginning you should be creating your product and talking with customers.
  • At YC they say don’t spend time on press, advisors, etc:
    • Work on your product
    • Interact with your customers
    • Exercise
    • Eat
    • Sleep
    • Nothing else
  • It is better to build something a small number of users LOVE than a lot of users LIKE. It is easier to expand.
    • If you get this right, you can do a lot of other things wrong
    • If you get this wrong, you can do everything else wrong and still fail
  • If you make something people love, they will tell their friends about it.
  • If you don’t have organic early growth, your product probably isn’t good enough.
  • Over the long run, great products win
  • Great products are very simple
    • It forces you to do one thing really well
  • Successful founders are fanatical about their product. It takes a certain level of fanaticism.
  • Listen to outside users, do everything you can to make them love you
  • Get feedback
    • What do they like
    • What would they pay for
    • What would make them recommend it?
  • It takes a lot of effort, but eventually you will get enough support (turning the flywheel)
  • Metrics: focus on growth
    • Activate users
    • Activity levels
    • Cohort retention
  • The founder should be very close to the customer feedback. Needs a really good pulse of what the customers want.


Why you should start a startup – Dustin Moskovitz

  • Common reasons
    • Glamorous
    • You’re the boss
      • This is a double edge sword because
    • Flexibility (flexibility)
      • Not really, you are always on call
      • You are a role model
      • You’re always working anyway
      • If you take your foot off the gas, your team will see that and do the same
    • Make more $$ and have more impact
      • Maximizing impact
  • Warning: it is incredibly stressful
    • Responsibility – your team bet the best years of their life on you
    • You’re always on call
    • Fundraising
    • Unwanted media attention
    • You’re a lot more committed – it’s not like you can just quit
  • The best reason:
    • “you can’t NOT do it
      • Passion –  you NEED to do it
      • The world needs you to do it
        • The world needs it
        • The world needs YOU
      • You can’t stop working on it
  • Recommended reading
    • The hard thing about hard things
    • Zero to One
    • The Facebook effect
    • 15 commitments of conscious leadership
    • The tao of Leadership
    • Nonviolent communication



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