How to Start A Startup Lecture: Company Culture and Building a Team: Part 2

Presenters: Patrick Collison; John Collison; Ben Silbermann

Company Culture:

  • What have they looked for when hiring the first employees?
    • Looked for people he wanted to work with AND he thinks are really talented.
    • Hiring isn’t like architecture, it is more like gardening: you plant things and pull out the weeds as you go
    • Curious, creative, brilliant, quirky, hobbies, people that want to build something great (bigger than themselves)
    • The first ten people will have the greatest impact on the company of any hires
    • You can usually relax one constraint. When you are in the early stages of a startup, you will likely have an issue getting ‘known’ talented people since you won’t normally be able to convince them away from their company.
    • Looked for people that were
      • genuine
      • caring
    • There is no ‘wrong’ place to hire people
    • You should have an elevator pitch for your recruiting efforts as well. When you run into someone at a coffee shop, etc.
    • You owe it to the company and to the person that if it is not working out, you fire them
    • How to hire
      • understand what is world class going before the interviews.
        • Key character traits and characteristics?
        • What skills are needed for the position
        • What questions should I be asking?
      • Good people want to answer difficult problems
      • Be very transparent about the potential pitfalls of the opportunity: example hiring for iPhone – you won’t see your family for 3 years.
    • Work with the people as much as possible before you hire them: 1 week in advance
      • “is this person the best out of their friends at what they do?”
    • People/media focus way too much about founders, most of what the company does is by everyone else.
    • Reference people they have worked with in the past: “Is this one of the top 1% (or 5%) of the people you have ever worked with?”
    • Don’t forget about the orientation process. Make sure you have a list of things people need to know 30/60/90 days in:
      • Have them doing real work quickly
      • Do they know the structure?
      • Do they know what they are meant to be working on?
      • Give them quick feedback – especially feedback on how to adapt to the culture
    • What are the biggest changes you have had to make as you scaled?
      • Trying to make it a startup of a lot of startups: autonomous groups
      • Time horizons change pretty quickly as you scale: after 1 year, you are thinking 1 year ahead, after 4 years, you should be thinking 4 years ahead.
      • You need to hire people that are effective immediately at first. In the longer term, you can afford to invest in people that might not necessarily have an immediate impact
    • There is always a gap between ‘where we are and where we should be’ and in Pinterest’s situation, it has continued to grow as the scope of the company has grown.
    • How to convince people that they will be working on something new and incredible.
      • No smart person you are hiring will believe that what you are doing is guaranteed to succeed. Tell them how this role in it will help you succeed.
      • Don’t whitewash the difficult things that will be involved in your startup.
    • To Pinterest – How has your user base influenced your hiring
      • Look for people that are ambitious about the mission
      • Find people that are passionate about your product – you will have a natural advantage over the competition


Week 5 Readings: How to Start a Startup

“The Happiness Culture: Zappos Isn’t a Company, it’s a mission” Steven Rosenbaum

  • “Culture is about giving employees permission and encouraging them to just be themselves”
  • Tony’s (CEO of Zappos) success can be tracked to the feeling he had as a child  – wanting to receive something magical in the mail (he made custom buttons)
  • Hiring process:
    • 2 sets of interviews
      • Hiring fit
        • team fit
        • relevant experience
        • technical ability
      • Cultural fit
        • Personal values match the corporate values of Zappos
  • They have 10 core values:
    • Deliver wow through service
    • Embrace and Drive change
    • create fun and a little weirdness
    • be adventurous, creative, and open-minded
    • pursue growth and learning
    • build open and honest relationships with communication
    • build a positive team and family spirit
    • do more with less
    • be passionate and determined
    • be humble
  • They actually have a training for new hires – they make everyone do call centers for two weeks. They give them the option to quit and they will pay them + give them a $2,000 bonus to leave then. It weeds out the people who are just their for the paycheck
    • they haven’t written a check in over a year
  • Work-life balance should be more like work-life integration. You shouldn’t have to put on a different persona in the office. it should just be life.
  • In the end, you need to be able to combine pleasure, passion, and purpose in one’s personal life


How to Convince Investors – Paul Graham

  • Founders typically struggle to convince investors to invest in their company. The thing a founder really needs to focus on is “why their startup is worth investing in”
  • You need three things:
    • Formidable founders
    • A promising market
    • Some evidence of success so far
  • If you seem like a winner, they will like your idea more
    • if an investor likes you, they will be reaching for ideas: “yes, and you can also do X” vs. saying “what about X”
  • A formidable person is someone who seems like they will get what they want, regardless of whatever obstacles are in the way
  • Warning – do not try to imitate the swagger of more experienced founders. Investors are not that good at judging technology, but they are good at judging confidence
  • Truth- the easiest way to portray confidence is to stick to the truth. Convince yourself that your startup is worth investing in and when you explain this to investors they will believe you.
    • You need to truly evaluate whether your startup is worth investing in
    • Know everything about your market – be the expert of your domain
  • The time to raise money is not when you need it. Its when you can convince investors, and not before.
  • Why is it worth investing in?
  • You don’t have to prove you’re going to succeed, just that you’re a sufficiently good bet. You need a plausible path to owning a big piece of the a big market.
    • Your target market has to be bit, and it has to be capturable by you
      • there has to be some sequence of “hops” to adjacent markets and/or market growth to show that you can be a market leader
      • Ask “why now” – why haven’t other people done it?
  • Rejection – if they ask why other investors turned you down, it is usually a best practice to tackle the problem head-on. Explain why the investors have turned you down, and why they are mistaken.
  • At the end of the day, you are really just trying to convince investors that you are a good bet. Ask yourself: does your startup have all the elements of a good bet?
  • Don’t use vague, grandiose marketing speak- it doesn’t impress, and makes it look like you don’t know what you’re talking about
    • be concise
    • if you can’t explain your plans concisely, you don’t really understand them
  • Recipe for impressing investors:
    • Make something worth investing in
    • Understand why it’s worth investing in
    • Explain that clearly to investors
  • Never let pitching draw you into bullshitting: make the truth good, then just tell it.


How to Raise Money – Paul Graham

  • Raising money typically comes in a couple different phases:
    • Angel phase – tens of thousands of dollars to get an idea off the ground
    • Raise a few hundred thousand to a few million to build the company
    • Once the company is clearly succeeding, raise one or more later rounds to accelerate growth
  • There is no real order in the real world – but the focus of this essay is on the phase 2  fundraising.
  • Fundraising is hard: it is difficult to convince people to part with their money AND it seems like a puzzle since it is foreign to most founders. The second point here is that it can be overcome using this essay as a guide
  • As a founder, you need to impose external constraints on yourself. This essay lays out those constraints well.
    • Don’t raise money unless you want it, and it wants you
    • Be in fundraising mode, or not
    • Get introductions to investors
    • Hear no until you hear yes – get a commitment in writing before you count your money
    • Do breadth-first search weighted by expected value:
      • expected value = how likely an investor is to say yes X how good it would be if they did. Use this to prioritize your potential investors.
    • Know where you stand
    • Get the first commitment
    • Close committed money
    • Avoid investors that don’t “lead”
    • Have multiple plans
      • Including the plan of how you could get to profitability without raising any money, it would just be slower
    • Underestimate how much you want to raise
      • it is better to say you want $250k if you really want $500k. that way when you raise $150k you are more than half way there. There is no reason you cannot increase this number as you are in your fundraising round.
    • Be profitable if you can
    • Don’t optimize for valuation
    • Yes/No before valuation
    • Beware of valuation sensitive investors
    • Accept offers greedily
      • Simple rules: if someone makes you an acceptable offer, take it. If you have multiple incompatible offers, take the best one. Don’t reject an acceptable offer in the hope of getting a better one in the future.
    • Don’t sell more than 25% in phase 2 – don’t give up too much equity in early rounds
      • Phase 1 should be <= 15%
      • Phase 2 should be <= 25%
    • Have one person handle fundraising
    • You’ll need an executive summary and maybe a deck
    • Stop fundraising when it stops working
    • Don’t get addicted to fundraising
    • Don’t raise too much
    • Be nice
    • The bar will be higher next time
    • Don’t make things complicated


How to Start a Startup Lecture: Company Culture and Building a Team

Presenters: Alfred Lin, Brian Chesky (AirBnB)

What is company culture?

  • “Every day (A) and (B) of each member of the team in pursuit of our company (C)”
    • A- Assumptions, beliefs, values, core values
    • B- Behaviors, Actions
    • C- Goals, BHAG, mission
  • Why does it matter?
    • First principles
    • Alignment
    • Stability
    • Trust
    • Exclusion
    • Retention
    • ALSO… if you look at a comparison of the fortune 100 best companies to work for vs. the S&P 500/Russell 3000 is over double the stock market return.
  • Core value worksheet – go through this list and create your core values around the answers
    • As the leader, what personal values are most important to you?
    • What are the most important values for business success?
    • What values will you look for in employees
    • What could never be tolerated? (consider the opposite as values)
    • Remember to incorporate your mission into you core values
      • Credible
      • Uniquely tied to your strategy
  • You need more depth than just key words like (integrity, teamwork, honesty…)
  • Pyramid from Lencioni’s 5 dysfunctions of a team
    • See my post on it
  • Best practices
    • incorporate your mission into your habits
    • make it a daily habit
    • performance = think harder, deeper, longer about your values
    • interview for culture fit
    • evaluate performance on culture as well


Q&A w/ Brian Chesky

  • AirBnB was never meant to be ‘the big idea’ – it was meant to be the idea that would pay for the bills while they thought of their big idea
  • He found two great people that made him uncomfortable because he had to raise his game so much
  • Step one is to build a great product, then you realize you need to build a great company. Build a company that will endure:
    • companies that were around for a really long time have a clear mission/set of values
    • AMZN, AAPL, etc. Culture needs to be designed
    • What they learned – behaviors can change, but you need the principles and ideas that are unique to you.
    • What are the 3-6 unique things. What is different about you than every single other person??? Do this exercise for yourself and your company.
    • They hired their first person after about 6 months. It took reviewing thousands of applicants to hire their first engineer.
    • 2 of AirBnB’s 6 values
      • Champion the mission – they want people to be there because of the mission, not the job/valuation/etc.
        • Their mission is to give a sense of belonging wherever you go. They will always be about the that mission, regardless of whether they are actually
        • “if you had 10 years left to live, would you take this job?” if what you are meant to do is something else, you should go do that.
      • Another value: be a serial entrepreneur. They believe constraints bring out creativity. You need to be scrappy and frugal.
  • Issues with the culture
    • nobody ever tells you that you need to build a great culture
    • it is hard to measure
    • it doesn’t pay off in the short term
  • Culture
    • what is unique to you that you stand for
    • hire and fire based on these values
    • When you interview, make sure they are world class, and they fit the culture
      • They have value interviewers as well: not technical people that are just gauging the values
  • Culture vs. Branding
    • Brand is the promise outside the company
      • your brand evangelists are your employees
  • AirBnB wanted to make travel make you feel more like a human.
    • Hosts are partners, and they should have the same values you do.
  • Companies need a mote to protect them: AirBnB had the largest network effects, they share a lot of open source tech.
  • Best advice from Paul Graham: it’s better to have 100 people that love you than a million people that sort’ve like you. Do things that don’t scale.
    • They created a button that sent them a message and they would go to peoples houses to take professional photos. They automated it only after they knew what the perfect way to do it was.



How to Start a Startup Lecture 5 – How to Raise Money

Speakers: Marc Andreessen, Conrad Parker, Ron Conway

  • Venture Capital is a huge feast or famine business. You are looking for the extreme outlier.
  • Invest in strength vs. lack of weakness
    • Don’t just check boxes – “solid leader, good product, etc.”
      • “if you don’t invest in the basis of huge flaws, you miss out on all of the outliers”
  • Be able to say in one compelling sentence WHAT YOUR PRODUCT DOES
    • The VC should be able to picture what you do in their minds
  • Do not procrastinate
    • you have to make decisions (hire, fire, change course, etc.
  • Build a great team
  • The kind of businesses that VC’s love are the ones that are moving in the right direction and could be self sustaining – just need a bit more growth
  • Bootstrap as long as you can
  • The key to success is “be so good they can’t ignore you.” investors will throw their money at you.
    • you are almost always better off making your business better than your making your pitch better
  • Raising money is not actually a success, it just enables you to get to the next step
  • The single biggest thing people are missing:
    • the relationship between risk and cash
      • the risk between both raising and spending cash
  • When you agree with an investor:
    • get everything in writing
    • send a follow up email discussing the specifics
      • following up on things they said they would do
      • valuation #’s
      • etc…
  • SV Angel invests in 1 in every 30 they look at
    • They do a lot of research before even calling the founders. If they request a meeting, they are far on their way to investing with you.
  • Top tier VC’s only invest if:
    • The company has seed investing (angel investors)
      • Except when they have worked with the founder in the past
      • A lot of their contacts come through their network
  • Terms and negotiation
    • The most important thing at the seed stage is picking the right seed investors
      • YC does a good job of telling you who good investors are
  • Selling equity in the seed round
    • for series A, you will probably sell between 20-30% of the company
    • Ask “at what point does my ownership start to demotivate me?”
      • if you give 40% in the angel round, you have doomed yourself. by the time you get to the next few rounds you are at 5%. doesn’t leave much for the founder and their team.
      • Don’t sell too much of the company in early rounds
  • Most successful rounds
    • Conrad – investment in Google
    • Marc – investment in AirBnB
  • When you start a company, you need to find someone as good or better than you to be your cofounder
  • How do you know when to avoid an investor
    • no domain expertise in your company
    • cannot help you w/ connections
    • if they are in it just to make money
  • Finding an investment partner is much more important than the check. Think of it more as a marriage – an investment for life (SV Angel)
  • Ask:
    • Do you respect this person?
    • Do you think you can learn a lot from them?
    • Would you want them involved with the company even if they didn’t have a checkbook attached to them?
  • Conflict policy
    • SV angel has a conflict policy – they do not invest in companies that have a direct conflict with others they are invested in.
    • There needs to be a high level of trust with investors
  • Marc Andreessen has been on boards for 20+ years and has never been in a vote that mattered. It is always a clear decision.



Week 4 Lecture: Do things that don’t Scale/PR/How to Get Started

Speaker – Stanley Tang

  • Do things that don’t scale
  • Rapid launch
    • They launched an early prototype of their business in one day. It was really crude and not user friendly, but it got the job done and was a great proof of concept fro them.
  • 3 Things he learned starting DoorDash
    • Test your hypothesis
    • Launch Fast
    • Do things that don’t scale
      • This is one of your biggest competitive advantages

Speaker – Walker Williams

  • mainly wants to focus on things that don’t scale
    • Find your first users
      • there is no silver bullet for user acquisition
      • When you first launch your company, it will be a new product so it will be a really tough sell for the first users.
        • Do not expect a fast ROI on your time
        • Avoid giving your product away for free. The users must value your product.
    • Turning those users into champions
      • Delight your users with experiences they will remember
      • Talk to your users – constantly and for as long as possible
        • Run customer service as long as possible
        • Proactively reach out to current an churned customers
        • Social media/communities
      • Problems are inevitable, do whatever it takes to make them right
    • Finding product/market fit
      • The product you launch with will not be the product that finds market fit
      • Optimize for speed over scalability/clean code
      • Only worry about the next order of magnitude. Don’t worry about a million users if you are working on a thousand
        • Necessity is the mother of invention: you’ll find a way to make it work
      • Do things that don’t scale as long as you possibly can. This is a huge competitive advantage
        • Talk to users
        • Move fast in development


Speaker – Justin Kan

  • Press should have a targeted audience and goals
    • investors
    • customers
    • industry
  • Focus on local press at first – you will likely be working in the local market anyways, so you do not need national press.
  • Types of stories
    • Product launches
    • Fundraising
    • Milestones/metrics
    • Business overviews
    • Stunts – example of “WePay” which dropped off an ice block with cash frozen in it at a PayPal developer conference
    • Hiring announcements
    • Contributed articles
  • Think about your story objectively. It doesn’t have to be completely original, just original enough
  • Mechanics of a story:
    • Think of a story
    • Get introduced: talk to a reporter – get reference from a friend who has recently been reported on
    • Set a date (4-7 days in advance)
    • Reach out (get a commitment to invest time)
    • Pitch
    • Follow up
    • Launch your news
  • Use the golden rule: help your friends get reporters, help reporters get good sources for stories


Creative Mornings With Ben Chestnut: Video Summary

Presenter – Ben Chestnut

If you start a business doing what you love, it will kill your passion. It is better to love what you do – wherever you are at, just be good at it, embrace it, and love it and eventually success will find you.

Examples of neat, creative and thoughtful things:

  • when you hit send button, a message pops up saying this is your moment of glory
  • The Mail Chimp has little messages like “you know why i am smiling? it is because i am not wearing any pants”
  • If you type in “boredom” an astroids game will pop up
  • They ship out random things to their customers: knitted hats, coloring book, T-Shirts for when a customer goes from free to paid service
  • Work in little easter eggs – fun stuff

The point is that people want to be creative: “Humans want to create lots of cool stuff, then they want to see other people using that stuff. A lot.” If you can create a business that takes advantage of this, you can have a creative business. The fundamental mistake businesses make is this: when the original entrepreneur starts to delegate and everyone at the company thinks like managers- which means defense mode. Then the creative people at the bottom think that they need to think like a manager to get ahead. If the managers had their way, everything would be perfectly efficient and nothing would ever be created. The key is to create chaos.

How to create chaos in a company? Innovation and creativity comes from assembling pieces from other stuff in weird ways- just keep making stuff. 2 weeks is an ideal timeline – keep it fast paced. You will be making parts, put it in the parts bin. Avoid meetings – he goes around like a bumble bee and keeps it in mind to figure out how to put the pieces together.

Instead of focusing on the work, focus on the entropy (‘waste’ or byproduct of production) or the chaos.

This was a really funny talk. He did a good job of telling his story – it is worth referencing back to for giving presentations. He incorporates a lot of humor and anecdotes while tying everything back to his message.



Week 4 Reading (Part 1): How to Start a Startup

“Your app makes me fat” – Serious Pony

There was a study by Professor Baba Shiv that found willpower and cognitive processing draw from the same pool of resources. The point of this article is to be cognizant of the fact that every time you give a user a decision, you are also depleting that user’s cognitive resources. Ask yourself when designing products if you are depleting your user’s resources for things that it shouldn’t be and if you can direct those resources to the features in your app that supports why they are using it in the first place. The author discusses the (ethical?) motives for content marketing (you know those stupid clickbait articles that don’t help anyone and cause mindless internet roaming). Think more about the users, this seems a bit ironic coming from the author, but “because on their deathbed, our users won’t be thinking, “If only I’d spent more time engaging with brands”


“What Makes a Design Seem ‘Intuitive’?” – Jared Spool

The need to be more intuitive is a common suggestion among usability tests. The reality is that “people intuit, not interfaces” and what they are really saying is “I want something I find intuitive.” In order to nail this down, we need to step back and think about our users. It is almost certain that there will be a wide range of user-knowledge levels from “no knowledge” to “all knowledge”. The ‘current knowledge point shows you how much knowledge your users have when they approach the interface. The other point that is useful to us is the target knowledge point, which represents how much specific knowledge the user needs to accomplish their objective. Both of these points are very important whenever a specific user tries to complete a specific task. The author has found, that by plotting the users on a graph you will find very clear clusters – or bunches of users with very similar current knowledge levels. The knowledge gap is what is between that you need to overcome: this is where the design has to happen. There are two ways to bridge the knowledge gap: train the user, so you are increasing their current knowledge point; or you can reduce the knowledge necessary (target knowledge). “Most good design involves both: users are trained (through explanatory text and other devices) while the designer reduces complexity, reducing the gap distance from both directions.”

The two conditions of “Intuitive”

  • Condition 1: Both the current knowledge point and the target knowledge point are identical. When the user walks up to the design, they know everything they need to operate it and complete their objective.
  • Condition 2: Current knowledge point and target knowledge point are separate, but the user is completely unaware the design is helping them bridge the gap. The user is being trained, but in a way that seems natural

The author compares learned current knowledge to the phone at a hotel. You pick up the receiver and know that you need to press 9 to call outside the hotel – we all picked it up somewhere along the way. In this particular hotel, however, you need to press 8 – which we would say is ‘not intuitive’ but they were able to supplement the ‘far less intuitive number with several signs saying what # to press to get out – this bridged the gap quickly by training the user up to the new requirement.

How to Make Design Seem Intuitive

You first need to determine where your current and target knowledge points are: what do they already know and what do they need to know? You can use field studies, watch potential users in their own environments, use site visits, etc. Usability testing is a favorite of the author’s – when users sit in front of the design, knowledge gaps become instantly visible. Also realize that ‘intuitive doesn’t always make sense’ – it might cost way more than it is worth to design the interface down and reduce the target knowledge. One example of this is that Amazon has a very intuitive return  process, but it is not intuitive to find a phone number where you can call a customer service #. Amazon doesn’t want phone calls, so they don’t make it intuitive to call them. Amazon designers have deliberately made the process of contacting them difficult, which encourages you to use their tools to figure it out.


“The trick is to let you hype write a check your product can cash” – TechCrunch

The press is a tool when you are a Startup, but you don’t want to rely on them too heavily in your growth strategy OR ignore them. Not all startups need them, some examples are Theranos and WhatsApp – the biggest advice the Startup class has is to NOT approach the media until you get traction. If you do decide to contact the press, this article is to help you make good decisions about it:

  • Know why you are courting media coverage from the start
    • getting early customers/users
    • Receiving resumes for potential hires
    • creating awareness among investors
    • boosting the morale of your team
    • raising awareness or providing social proof for potential business development partners
  • Press is about telling stories, and building relationships with press people early on can pay dividends, depending on the nature of your company and your strategy
  • 4 dealing with the press strategies that he has seen work and not work for founders. What he is trying to show is that it really doesn’t have a ton to do with press at the end of the day. The press is a good way to get ‘more tickets’ but doesn’t guarantee or predict anything
    • Startup gets  no press, gets no traction, dies
    • Startup gets press, gets no traction, dies
    • Startup gets press, gets traction, goes public, gets bought by Facebook
    • Startup gets no press, gets traction, goes public or gets bought by Facebook
  • The reality is that most startups fail (>90%) and about 74% of these fail because of premature scaling.
  • Whatever your position in the press cycle, always ask yourself the following questions:
    • What problem am I solving for my customers?
    • Does my startup have reason to exist?
    • How can i make my service even better?
    • Am I improving things for the economy and society at large?
  • Three questions he always asks founders in interviews:
    • Who is your closest competitor and what do you do differently?
    • What are the challenges of doing this?
    • What are your future plans?
  • Simple rule: avoid overpromising and underdelivering


BJ Fogg’s Behavior Model

What causes behavior change? The Fogg Behavior Model shows that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and Trigger. Designers can use this as a guide to identify what stops people from performing behaviors that designers seek. If users are not performing a target behavior, you can use the FBM to see what psychological element is missing. The FBM outlines:

  • Three core motivators (motivation) and each has 2 sides:
    • Sensation: pleasure or pain
    • Anticipation: Hope or Fear
    • Belonging: Social rejection or social acceptance
  • Six Simplicity Factors (Ability) – Simplicity is a function of your scarcest resource at that moment
  • Three types of Triggers – The smart persuader asks people to do simple things (click here, walk for 10 minutes, etc.)
    • Facilitator: high motivation, but low ability
    • Spark: High ability, but no motivation
    • Signal: High ability, High Motivation


Customer Intimacy and Other Value

The success of companies like Home Depot, Nike, and Dell can be explained by the fact that they were able to:

  1. Redefine value for customers in their respective markets (what they valued)
  2. Build powerful, cohesive business systems that could deliver more of that value than their competitors (how it was delivered)
  3. They raised customers’ expectations beyond the competitions’s reach (boosted the expectations)

Customers have changed how they define value in the marketplace. It used to be that they valued some combination of quality and price. Today, this concept of value includes convenience, after sale service, dependability, and so on. But that does not mean you necessarily have to ace all of these things. In fact the most successful companies recently have succeeded by narrowing their focus, not broadening it. They will focus on one of the three value disciplines: operational excellence, customer intimacy, or product leadership. Become the leader in one and meet industry standards on the others.

Masters of two – there are a few rare companies out there that have figured out how to excel at two of the value disciplines. For example, Staples is a leader in Operational Excellence and Customer Intimacy.



How to Start a Startup Lecture: How to Build Products Users Love

Presenter: Kevin Hale

  • He created the startup called WuFoo
    • They were fanatical about creating meaningful relationships with their customers.
    • New users = Dating
      • First impressions
    • Existing users = Marriage
    • Be unique – think about what the person’s face looks like when they are going through tough page. Be remarkable….Examples
      • Wufoo has a dinosaur icon, if you hover over it, it has “raaarrr” in text
      • Vimeo – if you type in “fart”, it make fart noises as you go up and down the page
      • Mailchimp makes all of their resources (how to articles) look like magazine articles
      • Change the origin story of how people are interacting with your stuff
      • Subscribe to “little big details” website
  • John Gottman
    • Couples fight about 5 things – you can compare these things to customer support when you are thinking about your products:
      • Money / cost/billing
      • Kids / Users’ clients
      • Sex / performance
      • Time / roadmap
      • Others / others (competition and partnerships)
    • Customer support is what is between every single interaction event.
    • Software engineers and designers are often divorced from their consequences of their actions
      • before launch, all you are doing is creating software: everything is perfect
      • after launch – reality sets in and they have to deal with all the “business crap”.
      • Created SDD: support driven development
        • You make everyone do customer support: creators = supporters
        • After 2 or 3 calls about the same thing, the engineer will just fix it
    • The 4 horsemen of why people break up
      • Criticism “you never…”
      • Contempt “purposeful insult”
      • Defensiveness “not trying to take accountability”
      • Stonewalling “shutting down” – one of the worst things we can do in a relationship
        • This happens with startups all the time “i don’t need to respond to this user”
        • AirBnB founders used to answer customer support themselves
        • WuFoo asked for their emotional state: excited, confused, worried, angry, etc… 75% of the people filled this out and it gave the users a chance to express their emotions without using normal ways (!!!!, ALL CAPS, curse words)
    • Relationships Atrophy
      • Relationships that go for a while 15-20 years then get divorced. You need to keep injecting energy into the equation.
        • WuFoo added a ‘since you’ve been gone’ screen that shows all of the things that have been updated in the application since the last time they have been there.
        • Everyone saying “thank you” – everyone would write a handwritten “thank you” note on Fridays to show users that they are appreciated around Christmas.
    • Discipline of market leaders: three ways to achieve market dominance
      • Best price
        • logistics focus
      • Best product
        • R&D focus
      • Best overall solution
        • Customer intimate
          • This one takes ZERO money to accomplish. You can do this at any point by having positive interactions with your customer


Startup = Growth: Paul Graham

Brief summary of the last article from week 3 of How to Start a Startup. This one is basically trying to convey what makes a startup different from a small business. Graham shows that the distinction between a small business and startup is the rate of growth. In order to hit the rate of growth required by startups, you need to have two key ingredients: 1) A product that people want; and 2) To reach and serve all of those people. He talks about a barbershop – it has something people want, but it is not scalable. Scalability is the key, but the product has to be worth peoples’ time/money. Startups, are designed to grow fast, and often fail fast.

Ideas: When it comes to ideas, the constraints that ordinary companies have also protect them. This is the tradeoff: your barbershop only has to compete with the other ones down the road, but if you start a search engine you have to compete with the whole world. Businesses are designed by their niche, and they are protected by it – that is why a local bar (Bar + Neighborhood) is both defined AND protected by its geographical constraint. Startups on the other hand have to think of something fairly novel – something that has been overlooked. “successful startups happen because the founders are sufficiently different from other people that ideas few others can see seem obvious to them.” They find ideas in everyone else’s blind spot. It is a good combination to be good at technology and to face the problems that can be solved by it. Learning coding for example, then you will have the tools to recognize what problems can be solved. There are two connections Graham identified between the startup ideas and technology:

  1. Rapid change uncovers big soluble problems. This means you should stay at the edge of where the rapid improvement is. Ask yourself what markets are currently growing rapidly and you will find big soluble problems.
  2. Startups create new ways of doing things

Growth: There are 3 phases of growth-

  1. Initial, slow period where the startup is still trying to figure out what it is doing
  2. Once the startup figures it out, they start to grow rapidly
  3. Eventually, the startup grows up into a big company and growth slows due to it hitting the limits of the market it serves

If there is one number every founder should know, it is your weekly growth rate. Whether it is revenue, active users, etc. figure out what you can measure as a proxy for growth and set targets. A good growth rate at YC is 5-7% per week. The biggest thing is that it should be your one goal and single focus: “Just try to hit it every week.” if you hit it, nothing else matters that week, but if you miss it, you have failed at the only thing that mattered. This narrow focus can help the founders optimize their path to rapid growth rates and understanding what drives it. The other thing this forces, is that by having a growth number every week you need to hit: “it forces the founders to act. Acting vs. not acting is the high bit of succeeding” And 90% of the time, sitting around strategizing is just a form of procrastination- founders intuitions are usually pretty good when deciding what hill to climb. Optimizing for growth is also known to help discover startup ideas: just like the constraint small businesses have of being located in a particular neighborhood defines the bar, the constraint of growing at a certain rate can define the startup. This is because you will start with a plan and modify it as necessary to keep hitting your growth targets: anything that grows consistently at 10% per week is almost certainly a better idea than you started with. Richard Feynman said “The imagination of nature is greater than the imagination of man” which means that if you just keep following the truth you’ll discover cooler things than you could have ever made up: Graham relates this idea that for startups, growth is a constraint much like the truth: every successful startup is at least partly the product of the imagination of growth.

Value/Deals: Exponential growth is extremely powerful and difficult for people to wrap their heads around. on page 6 there is a good chart of what weekly growth rates translate to in annual terms. For example, a weekly growth rate of 7% is an annual growth rate of 33.7X. The test of any investment is the ratio of return to risk. While startups are risky, they also have the potential to return so much. The other reason VC’s love to invest in startups is that the founders cannot enrich themselves without enriching the investors. From a founder standpoint, why would you give up precious equity to a VC for cash? the reason is that if your idea is good enough, and you don’t grow fast enough, your competitors will. Slower growth is particularly dangerous in industries with network effects. With VC money, you can choose your growth rate.  For acquisitions, why would a company pay seemingly ridiculous “bubble type” valuations for startups? Most acquisitions have some component of fear, fear that the startup is growing too fast and will expand into the acquirer’s territory. This is what happened when Facebook bought Instagram, which everyone said was overvalued.

Overall, if you want to understand startups, you need to understand growth Growth drives everything in this world. Understanding growth is what starting a startup consists of. Starting a Startup is committing to solving a harder type of problem than ordinary businesses do.