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Startup Playbook
WrittenbySamAltmanIllustratedbyGregoryKoberger

Wespendalotoftimeadvisingstartups.Thoughoneononeadvicewillalways
becrucial,wethoughtitmighthelpusscaleYCombinatorifwecoulddistillthe
mostgeneralizablepartsofthisadviceintoasortofplaybookwecouldgiveYC
andYCFellowshipcompanies.
Thenwethoughtweshouldjustgiveittoeveryone.
Thisismeantforpeoplenewtotheworldofstartups.Mostofthiswillnotbenew
topeoplewhohavereadalotofwhatYCpartnershavewrittenthegoalistoget
itintooneplace.
TheremaybeapartIIonhowtoscaleastartuplaterthismostlycovershowto
startone.

PartI:TheIdea

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PartII:AGreatTeam

PartIII:AGreatProduct

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PartIV:GreatExecution

ClosingThought

Yourgoalasastartupistomakesomethinguserslove.Ifyoudothat,thenyou
havetofigureouthowtogetalotmoreusers.Butthisfirstpartiscriticalthink
aboutthereallysuccessfulcompaniesoftoday.Theyallstartedwithaproduct
thattheirearlyuserslovedsomuchtheytoldotherpeopleaboutit.Ifyoufailto
dothis,youwillfail.Ifyoudeceiveyourselfandthinkyourusersloveyour
productwhentheydont,youwillstillfail.
Thestartupgraveyardislitteredwithpeoplewhothoughttheycouldskipthis
step.
Itsmuchbettertofirstmakeaproductasmallnumberofuserslovethana
productthatalargenumberofuserslike.Eventhoughthetotalamountof
positivefeelingisthesame,itsmucheasiertogetmoreusersthantogofrom
liketolove.
Awordofwarningaboutchoosingtostartastartup:Itsucks!Oneofthemost
consistentpiecesoffeedbackwegetfromYCfoundersisitsharderthanthey
couldhaveeverimagined,becausetheydidnthaveaframeworkforthesortof
workandintensityastartupentails.Joininganearlystagestartupthatsona
rocketshiptrajectoryisusuallyamuchbetterfinancialdeal.
Ontheotherhand,startingastartupisnotinfactveryriskytoyourcareerif
yourereallygoodattechnology,therewillbejobopportunitiesifyoufail.Most
peopleareverybadatevaluatingrisk.Ipersonallythinktheriskieroptionis
havinganideaorprojectyourereallypassionateaboutandworkingatasafe,
easy,unfulfillingjobinstead.
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Tohaveasuccessfulstartup,youneed:agreatidea(includingagreatmarket),a
greatteam,agreatproduct,andgreatexecution.
OneofthefirstthingsweaskYCcompaniesiswhattheyrebuildingandwhy.
Welookforclear,conciseanswershere.Thisisbothtoevaluateyouasa
founderandtheideaitself.Itsimportanttobeabletothinkandcommunicate
clearlyasafounderyoullneeditforrecruiting,raisingmoney,selling,etc.
Ideasingeneralneedtobecleartospread,andcomplexideasarealmost
alwaysasignofmuddledthinkingoramadeupproblem.Iftheideadoesnot
reallyexciteatleastsomepeoplethefirsttimetheyhearit,thatsbad.
Anotherthingweaskiswhodesperatelyneedstheproduct.
Inthebestcase,youyourselfarethetargetuser.Inthesecondbestcase,you
understandthetargetuserextremelywell.
Ifacompanyalreadyhasusers,weaskhowmanyandhowfastthatnumberis
growing.Wetrytofigureoutwhyitsnotgrowingfaster,andweespeciallytryto
figureoutifusersreallylovetheproduct.Usuallythismeanstheyretellingtheir
friendstousetheproductwithoutpromptingfromthecompany.Wealsoaskif
thecompanyisgeneratingrevenue,andifnot,whynot.
Ifthecompanydoesntyethaveusers,wetrytofigureouttheminimumthingto
buildfirsttotestthehypothesisi.e.,ifweworkbackwardsfromtheperfect
experience,wetrytofigureoutwhatkerneltostartwith.
Thewaytotestanideaistoeitherlaunchitandseewhathappensortrytosellit
(e.g.trytogetaletterofintentbeforeyouwritealineofcode.)Theformerworks
betterforconsumerideas(usersmaytellyoutheywilluseit,butinpracticeit
wontcutthroughtheclutter)andthelatterworksbetterforenterpriseideas(ifa
companytellsyoutheywillbuysomething,thengobuildit.)Specifically,ifyou
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areanenterprisecompany,oneofthefirstquestionswellaskyouisifyouhave
aletterofintentfromacustomersayingtheyllbuywhatyourebuilding.Formost
biotechandhardtechcompanies,thewaytotestanideaistofirsttalkto
potentialcustomersandthenfigureoutthesmallestsubsetofthetechnologyyou
canbuildfirst.
Itsimportanttoletyourideaevolveasyougetfeedbackfromusers.Andits
criticalyouunderstandyourusersreallywellyouneedthistoevaluateanidea,
buildagreatproduct,andbuildagreatcompany.
Asmentionedearlier,startupsarereallyhard.Theytakeaverylongtime,and
consistentintenseeffort.Thefoundersandemployeesneedtohaveashared
senseofmissiontosustainthem.Soweaskwhyfounderswanttostartthis
particularcompany.
Wealsoaskhowthecompanywillonedaybeamonopoly.Therearealotof
differenttermsforthis,butweusePeterThiels.Obviously,wedontwantyour
companytobehaveinanunethicalwayagainstcompetitors.Instead,were
lookingforbusinessesthatgetmorepowerfulwithscaleandthataredifficultto
copy.
Finally,weaskaboutthemarket.Weaskhowbigitistoday,howfastits
growing,andwhyitsgoingtobebigintenyears.Wetrytounderstandwhythe
marketisgoingtogrowquickly,andwhyitsagoodmarketforastartuptogo
after.Welikeitwhenmajortechnologicalshiftsarejuststartingthatmostpeople
haventrealizedyetbigcompaniesarebadataddressingthose.Andsomewhat
counterintuitively,thebestanswerisgoingafteralargepartofasmallmarket.
Afewotherthoughtsonideas:

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Wegreatlyprefersomethingnewtosomethingderivative.Mostreallybig
companiesstartwithsomethingfundamentallynew(oneacceptabledefinitionof
newis10xbetter.)Iftherearetenothercompaniesstartingatthesametimewith
thesameplan,anditsoundsawholelotlikesomethingthatalreadyexists,we
areskeptical.
Oneimportantcounterintuitivereasonforthisisthatitseasiertodosomething
newandhardthansomethingderivativeandeasy.Peoplewillwanttohelpyou
andjoinyouifitstheformertheywillnotifitsthelatter.
Thebestideassoundbadbutareinfactgood.Soyoudontneedtobetoo
secretivewithyourideaifitsactuallyagoodidea,itlikelywontsoundlikeits
worthstealing.Evenifitdoessoundlikeitsworthstealing,thereareatleasta
thousandtimesmorepeoplethathavegoodideasthanpeoplewhoarewillingto
dothekindofworkittakestoturnagreatideaintoagreatcompany.Andifyou
tellpeoplewhatyouredoing,theymighthelp.
Speakingoftellingpeopleyourideawhileitsimportanttheideareallyexcites
somepeoplethefirsttimetheyhearit,almosteveryoneisgoingtotellyouthat
yourideasucks.Maybetheyareright.Maybetheyarenotgoodatevaluating
startups,ormaybetheyarejustjealous.Whateverthereasonis,itwillhappena
lot,itwillhurt,andevenifyouthinkyourenotgoingtobeaffectedbyit,youstill
willbe.Thefasteryoucandevelopselfbeliefandnotgetdraggeddowntoo
muchbyhaters,thebetteroffyoullbe.Nomatterhowsuccessfulyouare,the
haterswillnevergoaway.
Whatifyoudonthaveanideabutwanttostartastartup?Maybeyoushouldnt.
Itssomuchbetteriftheideacomesfirstandthestartupisthewaytogetthe
ideaoutintotheworld.

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Weoncetriedanexperimentwherewefundedabunchofpromisingfounding
teamswithnoideasinthehopestheywouldlandonapromisingideaafterwe
fundedthem.
Allofthemfailed.Ithinkpartoftheproblemisthatgoodfounderstendtohave
lotsofgoodideas(toomany,usually).Butanevenbiggerproblemisthatonce
youhaveastartupyouhavetohurrytocomeupwithanidea,andbecauseits
alreadyanofficialcompanytheideacantbetoocrazy.Youendupwithplausible
soundingbutderivativeideas.Thisisthedangerofpivots.
Soitsbetternottotrytooactivelytoforceyourselftocomeupwithstartupideas.
Instead,learnaboutalotofdifferentthings.Practicenoticingproblems,things
thatseeminefficient,andmajortechnologicalshifts.Workonprojectsyoufind
interesting(http://blog.samaltman.com/projectsandcompanies).Gooutofyour
waytohangaroundsmart,interestingpeople.Atsomepoint,ideaswillemerge.
Mediocreteamsdonotbuildgreatcompanies.Oneofthethingswelookatthe
mostisthestrengthofthefounders.WhenIusedtodolaterstageinvesting,I
lookedequallyhardatthestrengthoftheemployeesthefoundershired.
Whatmakesagreatfounder?Themostimportantcharacteristicsareoneslike
unstoppability,determination,formidability,andresourcefulness.Intelligenceand
passionalsorankveryhighly.Theseareallmuchmoreimportantthan
experienceandcertainlyexpertisewithlanguageXandframeworkY.
Wehavenoticedthemostsuccessfulfoundersarethesortofpeoplewhoare
lowstresstoworkwithbecauseyoufeelheorshewillgetitdone,nomatter
whatitis.Sometimesyoucansucceedthroughsheerforceofwill.
Goodfoundershaveanumberofseeminglycontradictorytraits.Oneimportant
exampleisrigidityandflexibility.Youwanttohavestrongbeliefsaboutthecore
ofthecompanyanditsmission,butstillbeveryflexibleandwillingtolearnnew
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thingswhenitcomestoalmosteverythingelse.
Thebestfoundersareunusuallyresponsive.Thisisanindicatorofdecisiveness,
focus,intensity,andtheabilitytogetthingsdone.
Foundersthatarehardtotalktoarealmostalwaysbad.Communicationisavery
importantskillforfoundersinfact,Ithinkthisisthemostimportantrarely
discussedfounderskill.
Techstartupsneedatleastonefounderwhocanbuildthecompanysproductor
service,andatleastonefounderwhois(orcanbecome)goodatsalesand
talkingtousers.Thiscanbethesameperson.
Considerthesecriteriawhenyourechoosingacofounderitsoneofthemost
importantdecisionsyoullmake,anditsoftendonefairlyrandomly.Youwant
someoneyouknowwell,notsomeoneyoujustmetatacofounderdatingthing.
Youcanevaluateanyoneyoumightworkwithbetterwithmoredata,andyou
reallydontwanttogetthisonewrong.Also,atsomepoint,theexpectedvalueof
thestartupislikelytodipbelowtheXaxis.Ifyouhaveapreexistingrelationship
withyourcofounders,noneofyouwillwanttolettheotherdownandyoullkeep
going.Cofounderbreakupsareoneoftheleadingcausesofdeathforearly
startups,andweseethemhappenvery,veryfrequentlyincaseswherethe
foundersmetfortheexpresspurposeofstartingthecompany.
Thebestcase,byfar,istohaveagoodcofounder.Thenextbestistobeasolo
founder.Theworsecase,byfar,istohaveabadcofounder.Ifthingsarenot
workingout,youshouldpartwaysquickly.
Aquicknoteonequity:theconversationabouttheequitysplitdoesnotgeteasier
withtimeitsbettertosetitearlyon.Nearlyequalisbest,thoughperhapsinthe
caseoftwofoundersitsbesttohaveonepersonwithoneextrasharetoprevent
deadlockswhenthecofoundershaveafallout.
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Hereisthesecrettosuccess:haveagreatproduct.Thisistheonlythingall
greatcompanieshaveincommon.
Ifyoudonotbuildaproductusersloveyouwilleventuallyfail.Yetfounders
alwayslookforsomeothertrick.Startupsarethepointinyourlifewhentricks
stopworking.
Agreatproductistheonlywaytogrowlongterm.Eventuallyyourcompanywill
getsobigthatallgrowthhacksstopworkingandyouhavetogrowbypeople
wantingtouseyourproduct.Thisisthemostimportantthingtounderstandabout
supersuccessfulcompanies.Thereisnootherway.Thinkaboutallofthereally
successfultechnologycompaniestheyalldothis.
Youwanttobuildaproductimprovementengineinyourcompany.Youshould
talktoyourusersandwatchthemuseyourproduct,figureoutwhatpartsare
subpar,andthenmakeyourproductbetter.Thendoitagain.Thiscycleshould
bethenumberonefocusofthecompany,anditshoulddriveeverythingelse.If
youimproveyourproduct5%everyweek,itwillreallycompound.
Thefastertherepeatrateofthiscycle,thebetterthecompanyusuallyturnsout.
DuringYC,wetellfounderstheyshouldbebuildingproductandtalkingtousers,
andnotmuchelsebesideseating,sleeping,exercising,andspendingtimewith
theirlovedones.
Todothiscycleright,youhavetogetveryclosetoyourusers.Literallywatch
themuseyourproduct.Sitintheirofficeifyoucan.Valuebothwhattheytellyou
andwhattheyactuallydo.Youshouldnotputanyonebetweenthefoundersand
theusersforaslongaspossiblethatmeansthefoundersneedtodosales,
customersupport,etc.
Understandyourusersaswellasyoupossiblycan.Reallyfigureoutwhatthey
need,wheretofindthem,andwhatmakesthemtick.
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Dothingsthatdontscalehasrightfullybecomeamantraforstartups.You
usuallyneedtorecruitinitialusersoneatatime(BenSilbermannusedto
approachstrangersincoffeeshopsinPaloAltoandaskthemtotryPinterest)
andthenbuildthingstheyaskfor.Manyfoundershatethispart,andjustwantto
announcetheirproductinthepress.Butthatalmostneverworks.Recruitusers
manually,andmaketheproductsogoodtheusersyourecruittelltheirfriends.
Youalsoneedtobreakthingsintoverysmallpieces,anditerateandadaptas
yougo.Donttrytoplantoofarout,anddefinitelydontbatcheverythingintoone
bigpublicrelease.Youwanttostartwithsomethingverysimpleaslittlesurface
areaaspossibleandlaunchitsoonerthanyoudthink.Infact,simplicityis
alwaysgood,andyoushouldalwayskeepyourproductandcompanyassimple
aspossible.
Somecommonquestionsweaskstartupshavingproblems:Areusersusingyour
productmorethanonce?Areyourusersfanaticalaboutyourproduct?Would
yourusersbetrulybummedifyourcompanywentaway?Areyourusers
recommendingyoutootherpeoplewithoutyouaskingthemtodoit?Ifyourea
B2Bcompany,doyouhaveatleast10payingcustomers?
Ifnot,thenthatsoftentheunderlyingproblem,andwetellcompaniestomake
theirproductbetter.Iamskepticalaboutmostexcusesforwhyacompanyisnt
growingveryoftentherealreasonisthattheproductjustisntgoodenough.
Whenstartupsarentsurewhattodonextwiththeirproduct,oriftheirproduct
isntgoodenough,wesendthemtogotalktotheirusers.Thisdoesntworkin
everycaseitsdefinitelytruethatpeoplewouldhaveaskedFordforfaster
horsesbutitworkssurprisinglyoften.Infact,moregenerally,whentheresa
disagreementaboutanythinginthecompany,talktoyourusers.

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Thebestfoundersseemtocarealittlebittoomuchaboutproductquality,even
forseeminglyunimportantdetails.Butitseemstowork.Bytheway,product
includesallinteractionsauserhaswiththecompany.Youneedtooffergreat
support,greatsalesinteractions,etc.
Remember,ifyouhaventmadeagreatproduct,nothingelsewillsaveyou.
Althoughitsnecessarytobuildagreatproduct,yourenotdoneafterthat.You
stillhavetoturnitintoagreatcompany,andyouhavetodoityourselfthe
fantasyofhiringanexperiencedmanagertodoallthisworkisbothextremely
prevalentandagraveyardforfailedcompanies.Youcannotoutsourcethework
tosomeoneelseforalongtime.
Thissoundsobvious,butyouhavetomakemoney.Thiswouldbeagoodtimeto
startthinkingabouthowthatsgoingtowork.
TheonlyuniversaljobdescriptionofaCEOistomakesurethecompanywins.
Youcandothisasthefounderevenifyouhavealotofflawsthatwouldnormally
disqualifyyouasaCEOaslongasyouhirepeoplethatcomplementyourown
skillsandletthemdotheirjobs.ThatexperiencedCEOwithafancyMBAmay
nothavetheskillgapsyouhave,butheorshewontunderstandtheusersas
well,wonthavethesameproductinstincts,andwontcareasmuch.
Growthandmomentumarethekeystogreatexecution.Growth(aslongasitis
notselldollarbillsfor90centsgrowth)solvesallproblems,andlackofgrowth
isnotsolvablebyanythingbutgrowth.Ifyouregrowing,itfeelslikeyoure
winning,andpeoplearehappy.Ifyouregrowing,therearenewrolesand
responsibilitiesallthetime,andpeoplefeelliketheircareersareadvancing.If
yourenotgrowing,itfeelslikeyourelosing,andpeopleareunhappyandleave.
Ifyourenotgrowing,peoplejustfightoverresponsibilitiesandblame.

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Foundersandemployeesthatareburntoutnearlyalwaysworkatstartups
withoutmomentum.Itshardtooverstatehowdemoralizingitis.
TheprimedirectiveofgreatexecutionisNeverlosemomentum.Buthowdo
youdoit?
Themostimportantwayistomakeityourtoppriority.Thecompanydoeswhat
theCEOmeasures.Itsvaluabletohaveasinglemetricthatthecompany
optimizes,anditsworthtimetofigureouttherightgrowthmetric.Ifyoucare
aboutgrowth,andyousettheexecutionbar,therestofthecompanywillfocus
onit.
Hereareacoupleofexamples.
ThefoundersofAirbnbdrewaforwardlookinggraphofthegrowththeywanted
tohit.Theypostedthiseverywhereontheirfridge,abovetheirdesks,ontheir
bathroommirror.Iftheyhitthenumberthatweek,great.Ifnot,itwasallthey
talkedabout.
MarkZuckerbergoncesaidthatoneofthemostimportantinnovationsat
Facebookwastheirestablishmentofagrowthgroupwhengrowthslowed.This
groupwas(andperhapsstillis)oneofthemostprestigiousgroupsinthe
companyeveryoneknewhowimportantitwas.
Keepalistofwhatsblockinggrowth.Talkasacompanyabouthowyoucould
growfaster.Ifyouknowwhatthelimitersare,youllnaturallythinkabouthowto
addressthem.
Foranythingyouconsiderdoing,askyourselfIsthisthebestwaytooptimize
growth?Forexample,goingtoaconferenceisnotusuallythebestwayto
optimizegrowth,unlessyouexpecttosellalotthere.

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Extremeinternaltransparencyaroundmetrics(andfinancials)isagoodthingto
do.Forsomereason,foundersarealwaysreallyscaredofthis.Butitsgreatfor
keepingthewholecompanyfocusedongrowth.Thereseemstobeadirect
correlationbetweenhowfocusedonmetricsemployeesatacompanyareand
howwelltheyredoing.Ifyouhidethemetrics,itshardforpeopletofocuson
them.
Speakingofmetrics,dontfoolyourselfwithvanitymetrics.Thecommonmistake
hereistofocusonsignupsandignoreretention.Butretentionisasimportantto
growthasnewuseracquisition.
Itsalsoimportanttoestablishaninternalcadencetokeepmomentum.Youwant
tohaveadrumbeatofprogressnewfeatures,customers,hires,revenue
milestones,partnerships,etcthatyoucantalkaboutinternallyandexternally.
Youshouldsetaggressivebutborderlineachievablegoalsandreviewprogress
everymonth.Celebratewins!Talkinternallyaboutstrategyallthetime,tell
everyonewhatyourehearingfromcustomers,etc.Themoreinformationyou
shareinternallygoodandbadthebetteryoullbe.
Thereareafewtrapsthatfoundersoftenfallinto.Oneisthatifthecompanyis
growinglikecrazybuteverythingseemsincrediblybrokenandinefficient,
everyoneworriesthatthingsaregoingtocomeunraveled.Inpractice,thisseems
tohappenrarely(Friendsteristhemostrecentexampleofastartupdying
becauseoftechnicaldebtthatIcanpointto.)Counterintuitively,itturnsoutthat
itsgoodifyouregrowingfastbutnothingisoptimizedallyouneedtodoisfixit
togetmoregrowth!Myfavoriteinvestmentsareincompaniesthataregrowing
reallyfastbutincrediblyunoptimizedtheyaredeeplyundervalued.
Arelatedtrapisthinkingaboutproblemstoofarinthefuturei.e.Howarewe
goingtodothisatmassivescale?Theansweristofigureitoutwhenyouget
there.Farmorestartupsdiewhiledebatingthisquestionthandiebecausethey
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didntthinkaboutitenough.Agoodruleofthumbistoonlythinkabouthow
thingswillworkat10xyourcurrentscale.Mostearlystagestartupsshouldput
Dothingsthatdontscaleupontheirwallandlivebyit.Asanexample,great
startupsalwayshavegreatcustomerserviceintheearlydays,andbadstartups
worryabouttheimpactontheuniteconomicsandthatitwontscale.Butgreat
customerservicemakesforpassionateearlyusers,andastheproductgets
betteryouneedlesssupport,becauseyoullknowwhatcustomerscommonly
strugglewithandimprovetheproduct/experienceinthoseareas.(Bytheway,
thisisareallyimportantexamplehavegreatcustomersupport.)
TheresabigcatchtothisDothingsthatdontscaledoesnotexcuseyoufrom
havingtoeventuallymakemoney.Itsoktohavebaduniteconomicsintheearly
days,butyouhavetohaveagoodreasonforwhytheuniteconomicsaregoing
toworkoutlater.
Anothertrapisgettingdemoralizedbecausegrowthisbadinabsolutenumbers
eventhoughitsgoodonapercentagebasis.Humansareverybadatintuition
aroundexponentialgrowth.Remindyourteamofthis,andthatallgiant
companiesstartedgrowingfromsmallnumbers.
Someofthebiggesttrapsarethethingsthatfoundersbelievewilldelivergrowth
butinpracticealmostneverworkandsuckupahugeamountoftime.Common
examplesaredealswithothercompaniesandthebigpresslaunch.Bewareof
theseandunderstandthattheyeffectivelyneverwork.Insteadgetgrowththe
samewayallgreatcompanieshavebybuildingaproductuserslove,recruiting
usersmanuallyfirst,andthentestinglotsofgrowthstrategies(ads,referral
programs,salesandmarketing,etc.)anddoingmoreofwhatworks.Askyour
customerswhereyoucanfindmorepeoplelikethem.
Rememberthatsalesandmarketingarenotbadwords.Thoughneitherwillsave
youifyoudonthaveagreatproduct,theycanbothhelpaccelerategrowth
substantially.Ifyoureanenterprisecompany,itslikelyarequirementthatyour
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companygetgoodatthese.
Dontbeafraidofsalesespecially.Atleastonefounderhastogetgoodatasking
peopletouseyourproductandgiveyoumoney.
AlexSchultzgavealectureongrowthforconsumerproducts
(http://startupclass.samaltman.com/courses/lec06/)thatswellworthwatching.
ForB2Bproducts,Ithinktherightanswerisalmostalwaystotrackrevenue
growthpermonth,andrememberthatthelongersalescyclemeansthefirst
coupleofmonthsaregoingtolookugly(thoughsometimessellingtostartupsas
initialcustomerscansolvethisproblem).
IfIhadtodistillmyadviceabouthowtooperatedowntoonlytwowords,Idpick
focusandintensity.ThesewordsseemtoreallyapplytothebestfoundersI
know.
Theyarerelentlesslyfocusedontheirproductandgrowth.Theydonttrytodo
everythinginfact,theysaynoalot(thisishardbecausethesortofpeoplethat
startcompaniesarethesortofpeoplethatlikedoingnewthings.)
Asageneralrule,dontletyourcompanystartdoingthenextthinguntilyouve
dominatedthefirstthing.NogreatcompanyIknowofstarteddoingmultiple
thingsatoncetheystartwithalotofconvictionaboutonething,andseeitall
thewaythrough.Youcandofarfewerthingsthanyouthink.Avery,very
commoncauseofstartupdeathisdoingtoomanyofthewrongthings.
Prioritizationiscriticalandhard.(Equallyimportanttosettingthecompanys
prioritiesissettingyourowntacticalpriorities.WhatIvefoundworksbestforme
personallyisapenandpaperlistforeachdaywith~3majortasksand~30
minorones,andanannualtodolistofoverallgoals.)

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Whilegreatfoundersdontdomanybigprojects,theydowhatevertheydovery
intensely.Theygetthingsdoneveryquickly.Theyaredecisive,whichishard
whenyourerunningastartupyouwillgetalotofconflictingadvice,both
becausetherearemultiplewaystodothingsandbecausetheresalotofbad
adviceoutthere.Greatfounderslistentoalloftheadviceandthenquicklymake
theirowndecisions.
Pleasenotethatthisdoesntmeandoingeverythingintenselythatsimpossible.
Youhavetopicktherightthings.AsPaulBuchheitsays,findwaystoget90%of
thevaluewith10%oftheeffort.Themarketdoesntcarehowhardyouworkit
onlycaresifyoudotherightthings.
Itsveryhardtobebothobsessedwithproductqualityandmoveveryquickly.
Butitsoneofthemostobvioustellsofagreatfounder.
Ihavenever,notonce,seenaslowmovingfounderbereallysuccessful.
Youarenotdifferentfromotherstartups.Youstillhavetostayfocusedandmove
fast.Companiesbuildingrocketsandnuclearreactorsstillmanagetodothis.All
failingcompanieshaveapetexplanationforwhytheyaredifferentanddont
havetomovefast.
Whenyoufindsomethingthatworks,keepgoing.Dontgetdistractedanddo
somethingelse.Donttakeyourfootoffthegas.
Dontgetcaughtupinearlysuccessyoudidntgetofftoapromisingstartby
goingtolotsofnetworkingeventsandspeakingonlotsofpanels.Startup
founderswhostarttohaveinitialsuccesshaveachoiceoftwopaths:eitherthey
keepdoingwhattheyredoing,ortheystartspendingalotoftimethinkingabout
theirpersonalbrandandenjoyingthestatusofbeingafounder.

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Itshardtoturndowntheconferencesandthepressprofilestheyfeelgood,
anditsespeciallyhardtowatchotherfoundersinyourspacegettheattention.
Butthiswontlastlong.Eventuallythepressfiguresoutwhoisactuallywinning,
andifyourcompanyisarealsuccess,youllhavemoreattentionthanyoullever
want.Theextremecasesearlystagefounderswiththeirownpubliciststhat
onewouldthinkonlyexistinTVshowsactuallyexistinreallife,andtheyalmost
alwaysfail.
Focusandintensitywillwinoutinthelongrun.(CharlieRoseoncesaidthat
thingsgetdoneintheworldthroughacombinationoffocusandpersonal
connections,andthatsalwaysstuckwithme.)
EarlierImentionedthattheonlyuniversaljobdescriptionoftheCEOistomake
surethecompanywins.Althoughthatstrue,Iwantedtotalkalittlemore
specificallyabouthowaCEOshouldspendhisorhertime.
ACEOhasto1)setthevisionandstrategyforthecompany,2)evangelizethe
companytoeveryone,3)hireandmanagetheteam,especiallyinareaswhere
youyourselfhavegaps4)raisemoney,and5)settheexecutionqualitybar.
Inadditiontothese,findwhateverpartsofthebusinessyoulovethemost,and
stayengagedthere.
AsImentionedatthebeginning,itsanintensejob.Ifyouaresuccessful,itwill
takeoveryourlifetoadegreeyoucannotimaginethecompanywillbeonyour
mindallthetime.Extremefocusandextremeintensitymeansitsnotthebest
choiceforworklifebalance.Youcanhaveoneotherbigthingyourfamily,
doinglotsoftriathlons,whateverbutprobablynotmuchmorethanthat.You
havetoalwaysbeon,andtherearealotofdecisionsonlyyoucanmake,no
matterhowgoodyougetatdelegation.

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Youshouldaimtobesuperresponsivetoyourteamandtheoutsideworld,
alwaysbeclearonthestrategyandpriorities,showuptoeverythingimportant,
andexecutequickly(especiallywhenitcomestomakingdecisionsothersare
blockedon.)Youshouldalsoadoptadowhateverittakesattitudetherewill
beplentyofunpleasantschleps.Iftheteamseesyoudoingthesethings,they
willdothemtoo.
Managingyourownpsychologyisbothreallyhardandreallyimportant.Its
becomeclichatthispoint,butitsreallytruetheemotionalhighsandlowsare
veryintense,andifyoudontfigureouthowtostaysomewhatlevelthrough
them,youregoingtostruggle.BeingaCEOislonely.Itsimportanttohave
relationshipswithotherCEOsyoucancallwheneverythingismeltingdown(one
oftheimportantaccidentaldiscoveriesofYCwasawayforfounderstohave
peers.)
Asuccessfulstartuptakesaverylongtimecertainlymuchlongerthanmost
foundersthinkattheoutset.Youcannottreatitasanallnighter.Youhavetoeat
well,sleepwell,andexercise.Youhavetospendtimewithyourfamilyand
friends.Youalsoneedtoworkinanareayoureactuallypassionateabout
nothingelsewillsustainyoufortenyears.
Everythingwillfeelbrokenallthetimethediversityandmagnitudeofthe
disasterswillsurpriseyou.Yourjobistofixthemwithasmileonyourfaceand
reassureyourteamthatitllallbeok.Usuallythingsarentasbadastheyseem,
butsometimestheyareinfactreallybad.Inanycase,justkeepgoing.Keep
growing.
TheCEOdoesntgettomakeexcuses.Lotsofbadandunfairthingsaregoingto
happen.Butdontletyourselfsay,andcertainlynottotheteam,ifonlywehad
moremoneyorifonlywehadanotherengineer.Eitherfigureoutawayto
makethathappen,orfigureoutwhattodowithoutit.Peoplewholetthemselves
makealotofexcusesusuallyfailingeneral,andstartupCEOswhodoitalmost
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alwaysfail.Letyourselffeelupsetattheinjusticefor1minute,andthenrealize
thatitsuptoyoutofigureoutasolution.StriveforpeopletosayXjust
somehowalwaysgetsthingsdonewhentalkingaboutyou.
Nofirsttimefounderknowswhatheorsheisdoing.Tothedegreeyou
understandthat,andaskforhelp,youllbebetteroff.Itsworththetime
investmenttolearntobecomeagoodleaderandmanager.Thebestwaytodo
thisistofindamentorreadingbooksdoesntseemtoworkaswell.
AsurprisingamountofouradviceatYCisoftheformjustaskthemorjustdo
it.Firsttimefoundersthinktheremustbesomesecretforwhenyouneed
somethingfromsomeoneoryouwanttodosomenewthing.Butagain,startups
arewheretricksstopworking.Justbedirect,bewillingtoaskforwhatyouwant,
anddontbeajerk.
Itsimportantthatyoudistortrealityforothersbutnotyourself.Youhaveto
convinceotherpeoplethatyourcompanyisprimedtobethemostimportant
startupofthedecade,butyouyourselfshouldbeparanoidabouteverythingthat
couldgowrong.
Bepersistent.Mostfoundersgiveuptooquicklyormoveontothenextproduct
tooquickly.Ifthingsgenerallyarentgoingwell,figureoutwhattherootcauseof
theproblemisandmakesureyouaddressthat.Ahugepartofbeinga
successfulstartupCEOisnotgivingup(althoughyoudontwanttobeobstinate
beyondallreasoneitherthisisanotherapparentcontradiction,andahard
judgmentcalltomake.)
Beoptimistic.AlthoughitspossiblethatthereisagreatpessimisticCEO
somewhereoutintheworld,Ihaventmethimorheryet.Abeliefthatthefuture
willbebetter,andthatthecompanywillplayanimportantroleinmakingthe
futurebetter,isimportantfortheCEOtohaveandtoinfecttherestofthe
companywith.Thisiseasyintheoryandhardinthepracticalrealityofshortterm
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challenges.Dontlosesightofthelongtermvision,andtrustthatthedaytoday
challengeswillsomedaybeforgottenandreplacedbymemoriesoftheyearto
yearprogress.
Amongyourmostimportantjobsaredefiningthemissionanddefiningthe
values.Thiscanfeelalittlehokey,butitsworthdoingearlyon.Whateveryouset
atthebeginningwillusuallystillbeinforceyearslater,andasyougrow,each
newpersonneedstofirstbuyinandthensellothersonthemissionandvalues
ofthecompany.Sowriteyourculturalvaluesandmissiondownearly.
AnotherclichthatIthinkisworthrepeating:Buildingacompanyissomewhat
likebuildingareligion.Ifpeopledontconnectwhattheyredoingdaytodaywith
ahigherpurposetheycareabout,theywillnotdoagreatjob.IthinkAirbnbhas
donethebestjobatthisintheYCnetwork,andIhighlyrecommendtakingalook
attheirculturalvalues.
OnemistakethatCEOsoftenmakeistoinnovateinwelltroddenareasof
businessinsteadofinnovatinginnewproductsandsolutions.Forexample,many
foundersthinkthattheyshouldspendtheirtimediscoveringnewwaystodoHR,
marketing,sales,financing,PR,etc.Thisisnearlyalwaysbad.Dowhatworksin
thewellestablishedareas,andfocusyourcreativeenergiesontheproductor
serviceyourebuilding.
Hiringisoneofyourmostimportantjobsandthekeytobuildingagreatcompany
(asopposedtoagreatproduct.)
Myfirstpieceofadviceabouthiringisdontdoit.Themostsuccessful
companiesweveworkedwithatYChavewaitedarelativelylongtimetostart
hiringemployees.Employeesareexpensive.Employeesaddorganizational
complexityandcommunicationoverhead.Therearethingsyoucansaytoyour

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cofoundersthatyoucannotsaywithemployeesintheroom.Employeesalsoadd
inertiaitgetsexponentiallyhardertochangedirectionwithmorepeopleonthe
team.Resisttheurgetoderiveyourselfworthfromyournumberofemployees.
Thebestpeoplehavealotofopportunities.Theywanttojoinrocketships.Ifyou
havenothing,itshardtohirethem.Onceyoureobviouslywinning,theyllwantto
comejoinyou.
Itsworthrepeatingthatgreatpeoplehavealotofoptions,andyouneedgreat
peopletobuildagreatcompany.Begenerouswithequity,trust,and
responsibility.Bewillingtogoafterpeopleyoudontthinkyoullbeabletoget.
Rememberthatthekindofpeopleyouwanttohirecanstarttheirowncompanies
iftheywant.
Whenyouareinrecruitingmode(i.e.,fromwhenyougetproductmarketfittoT
infinity),youshouldspendabout25%ofyourtimeonit.Atleastonefounder,
usuallytheCEO,needstogetgreatatrecruiting.ItsmostCEOsnumberone
activitybytime.EveryonesaysthatCEOsshouldspendalotoftheirtime
recruiting,butinpractice,nonebutthebestdo.Theresprobablysomethingto
that.
Dontcompromiseonthequalityofpeopleyouhire.Everyoneknowsthis,and
yeteveryonecompromisesonthisatsomepointduringadesperateneed.
Everyonegoesontoregretit,anditsometimesalmostkillsthecompany.Good
andbadpeoplearebothinfectious,andifyoustartwithmediocrepeople,the
averagedoesnotusuallytrendup.Companiesthatstartoffwithmediocreearly
employeesalmostneverrecover.Trustyourgutonpeople.Ifyouhavedoubt,
thentheanswerisno.
Donothirechronicallynegativepeople.Theydonotfitwhatanearlystage
startupneedstherestoftheworldwillbepredictingyourdemiseeveryday,
andthecompanyneedstobeunitedinternallyinitsbelieftothecontrary.
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Valueaptitudeoverexperienceforalmostallroles.Lookforrawintelligenceand

atrackrecordofgettingthingsdone.Lookforpeopleyoulikeyoullbe
spendingalotoftimetogetherandoftenintensesituations.Forpeopleyoudont
alreadyknow,trytoworkonaprojecttogetherbeforetheyjoinfulltime.
Investinbecomingagoodmanager.Thisishardformostfounders,andits
definitelycounterintuitive.Butitsimportanttogetgoodatthis.Findmentorsthat
canhelpyouhere.Ifyoudonotgetgoodatthis,youwillloseemployeesquickly,
andifyoudontretainemployees,youcanbethebestrecruiterintheworldandit
stillwontmatter.Mostoftheprinciplesonbeingagoodmanagerarewell
covered,buttheonethatIneverseediscussedisdontgointoheromode.
Mostfirsttimemanagersfallvictimtothisatsomepointandtrytodoeverything
themselves,andbecomeunavailabletotheirstaff.Itusuallyendsinameltdown.
Resistalltemptationtoswitchintothismode,andbewillingtobelateonprojects
tohaveawellfunctioningteam.
Speakingofmanaging,tryhardtohaveeveryoneinthesameoffice.Forsome
reason,startupsalwayscompromiseonthis.Butnearlyallofthemostsuccessful
startupsstartedoffalltogether.Ithinkremoteworkcanworkwellforlarger
companiesbutithasnotbeenarecipeformassivesuccessforstartups.
Finally,firequickly.Everyoneknowsthisinprincipleandnoonedoesit.ButIfeel
Ishouldsayitanyway.Also,firepeoplewhoaretoxictotheculturenomatter
howgoodtheyareatwhattheydo.Cultureisdefinedbywhoyouhire,fire,and
promote.
Iwroteablogpostwithmoredetail.(http://blog.samaltman.com/howtohire)
Aquickwordaboutcompetitors:competitorsareastartupghoststory.Firsttime
foundersthinktheyarewhatkill99%ofstartups.But99%ofstartupsdiefrom
suicide,notmurder.Worryinsteadaboutallofyourinternalproblems.Ifyoufail,

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itwillverylikelybebecauseyoufailedtomakeagreatproductand/orfailedto
makeagreatcompany.
99%ofthetime,youshouldignorecompetitors.Especiallyignorethemwhen
theyraisealotofmoneyormakealotofnoiseinthepress.Donotworryabouta
competitoruntiltheyarebeatingyouwithareal,shippedproduct.Pressreleases
areeasiertowritethancode,whichiseasierstillthanmakingagreatproduct.In
thewordsofHenryFord:"Thecompetitortobefearedisonewhoneverbothers
aboutyouatall,butgoesonmakinghisownbusinessbetterallthetime."
Everygiantcompanyhasfacedworsecompetitivethreatsthanwhatyouare
facingnowwhentheyweresmall,andtheyallcameoutok.Thereisalwaysa
countermove.
Ohyes,makingmoney.Youneedtofigureouthowtodothat.
Theshortversionofthisisthatyouhavetogetpeopletopayyoumoremoney
thanitcostsyoutodeliveryourgood/service.Forsomereason,peoplealways
forgettotakeintoaccountthepartabouthowmuchitcoststodeliverit.
Ifyouhaveafreeproduct,dontplantogrowbybuyingusers.Thatsreallyhard
foradsupportedbusinesses.Youneedtomakesomethingpeoplesharewith
theirfriends.
Ifyouhaveapaidproductwithlessthana$1,000customerlifetimevalue(LTV),
yougenerallycannotaffordsales.Experimentwithdifferentuseracquisition
methodslikeSEO/SEM,ads,mailings,etc.,buttrytorepayyourcustomer
acquisitioncost(CAC)in3months.
Ifyouhaveapaidproductwithmorethana$1,000LTV(nettoyou)youmaybe
canafforddirectsalesifyourproductifyourproductiseasytosell.

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ButunlessyourLTVismorelike$5,000orhigher,itmaynotwork.Trysellingthe
productyourselffirsttolearnwhatworks.HackingSalesisausefulbooktoread.
Inanycase,trytogettoramenprofitabilityi.e.,makeenoughmoneysothat
thefounderscanliveonramenasquicklyasyoucan.Whenyougethere,you
controlyourowndestinyandarenolongeratthewhimsofinvestorsand
financialmarkets.
Watchyourcashflowobsessively.Althoughitsoundsunbelievable,weveseen
foundersrunoutofmoneywithoutbeingawareitwashappeninganumberof
times(andreadPaulGrahamsessay(http://paulgraham.com/aord.html)).
Moststartupsraisemoneyatsomepoint.
Youshouldraisemoneywhenyouneeditorwhenitsavailableongoodterms.
Becarefulnottoloseyoursenseoffrugalityortostartsolvingproblemsby
throwingmoneyatthem.Nothavingenoughmoneycanbebad,buthavingtoo
muchmoneyisalmostalwaysbad.
Thesecrettosuccessfullyraisingmoneyistohaveagoodcompany.Allofthe
otherstufffoundersdototrytooveroptimizetheprocessprobablyonlymatters
about5%ofthetime.Investorsarelookingforcompaniesthataregoingtobe
reallysuccessfulwhetherornottheyinvest,butthatcangrowfasterwithoutside
capital.Thereallysuccessfulpartisimportantbecauseinvestorsreturnsare
dominatedbythebigsuccesses,ifaninvestorbelievesyouhavea100%chance
ofcreatinga$10millioncompanybutalmostnochanceofbuildingalarger
company,he/shewillstillprobablynotinvestevenataverylowvaluation.Always
explainwhyyoucouldbeahugesuccess.
InvestorsaredrivenbythedualfearsofmissingthenextGoogle,andfearof
losingmoneyonsomethingthatinretrospectlooksobviouslystupid.(Forthe
bestcompanies,theyfearbothatthesametime.)
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Itisabadideatotrytoraisemoneywhenyourcompanyisntingoodenough
shapetoattractcapital.Youwillburnreputationandwastetime.
Dontgetdemoralizedifyoustruggletoraisemoney.Manyofthebest
companieshavestruggledwiththis,becausethebestcompaniessooftenlook
badatthebeginning(andtheynearlyalwayslookunfashionable.)When
investorstellyouno,believethenobutnotthereason.Andrememberthat
anythingbutyesisanoinvestorshaveawonderfulabilitytosaynoina
waythatsoundslikemaybeyes.
Itsreallyimportanttohavefundraisingconversationsinparalleldontgodown
alistofyourfavoriteinvestorssequentially.Thewaytogetinvestorstoactisfear
ofotherinvestorstakingawaytheiropportunity.
Viewfundraisingasanecessaryevilandsomethingtogetdoneasquicklyas
possible.Somefoundersfallinlovewithfundraisingthisisalwaysbad.Itsbest
tohavejustonefounderdoitsothecompanydoesntgrindtoahalt.
RememberthatmostVCsdontknowmuchaboutmostindustries.Metricsare
alwaysthemostconvincing.
Itsbeginningtochange,butmostinvestors(YCombinatorbeinganotable
exception)unfortunatelystillrequireintroductionsfrompeopleyoubothknowto
takeyouseriously.
Insistoncleanterms(complicatedtermscompoundandgetworseeachround)
butdontoveroptimize,especiallyonvaluation.Valuationissomething
quantitativetocompeteon,andsofounderslovetocompeteforthehighest
valuation.Butintermediatevaluationsdontmattermuch.
Thefirstcheckisthehardesttoget,sofocusyourenergiesongettingthat,which
usuallymeansfocusingyourattentiononwhoeverlovesyouthemost.Always
havemultipleplans,oneofwhichisnotraisinganything,andbeflexible
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dependingoninterestifyoucanputmoremoneytogooduse,anditsavailable
onreasonableterms,beopentotakingit.
Animportantkeytobeinggoodatpitchingistomakeyourstoryasclearand
easytounderstandaspossible.Ofcourse,themostimportantkeyistoactually
haveagoodcompany.Therearelotsofthoughtsaboutwhattoincludeina
pitch,butataminimumyouneedtohave:mission,problem,product/service,
businessmodel,team,marketandmarketgrowthrate,andfinancials.
Rememberthatthebarforeachroundoffundingismuchhigher.Ifyougotaway
withjustbeingacompellingpresenterforyourseedround,dontbesurprised
whenitdoesntworkforyourSeriesA.
Goodinvestorsreallydoaddalotofvalue.Badinvestorsdetractalot.Most
investorsfallinthemiddleandneitheraddnordetract.Investorsthatonlyinvest
asmallamountusuallydontdoanythingforyou(i.e.,bewarepartyrounds).
Greatboardmembersareoneofthebestoutsideforcingfunctionsfora
companyotherthanusers,andoutsideforcingfunctionsareworthmorethan
mostfoundersthink.Bewillingtoacceptalowervaluationtogetagreatboard
memberwhoiswillingtobeveryinvolved.
IthinkthisessaybyPaulGraham(http://paulgraham.com/fr.html)isthebest
thingoutthereonfundraising.
Rememberthatatleastathousandpeoplehaveeverygreatidea.Oneofthem
actuallybecomessuccessful.Thedifferencecomesdowntoexecution.Itsa
grind,andeveryonewishesthereweresomeotherwaytotransformideainto
success,butnoonehasfigureditoutyet.
Soallyouneedisagreatidea,agreatteam,agreatproduct,andgreat
execution.Soeasy!)

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ThankstoPaulBuchheit,EricaCarpenter,BrianChesky,AdamDAngelo,Paul
Graham,DrewHouston,JustinKan,MattKrisiloff,AaronLevie,GabrielLeydon,
JessicaLivingston,DustinMoskovitz,DavidRusenkoandColleenTaylorfor
contributingthoughtstothis.

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