(2009-10-28) Graham Startups Really Like

Paul Graham on what Start Up-s are really like, given the "surprises" learned by Y-Combinator folks.

• importance of character/persistence of self and CoFounder

• importance of Minimum Viable Product mentality. Over-engineering is poison. It's not like doing extra work for extra credit. It's more like telling a lie that you then have to remember so you don't contradict it... It's so important to launch fast that it may be better to think of your initial version not as a product, but as a trick for getting users to start talking to you (Conversation, Iterative).

• importance of flexibility/pivot: Normally if you complain about something being hard, the general advice is to work harder. With a startup, I think you should find a problem that's easy for you to solve. Optimizing in solution-space is familiar and straightforward, but you can make enormous gains playing around in problem-space.

• difficulty in getting users: When you can't get users, it's hard to say whether the problem is lack of exposure, or whether the product's simply bad. Even good products can be blocked by switching or integration costs.

• difficulty in making deals (for investors or partners): The mistake is to be optimistic about things you can't control. By all means be optimistic about your ability to make something great. But you're asking for trouble if you're optimistic about big companies or investors... The best way for a startup to engage with slow-moving organizations is to fork off separate processes to deal with them. It's when they're on the Critical Path that they kill you - when you depend on closing a deal to move forward. It's worth taking extreme measures to avoid that.

• Venture Capital Game Playing: Because investors are so bad at judging you, you have to work harder than you should at selling yourself. One founder said the thing that surprised him most was "the degree to which feigning certitude impressed investors." This is the thing that has surprised me most about YC founders' experiences. This summer we invited some of the alumni to talk to the new startups about fundraising, and pretty much 100% of their advice was about investor psychology. I thought I was cynical about VCs, but the founders were much more cynical.

• The best model would be to say that the outcome is the product of skill, determination, and Luck. No matter how much skill and determination you have, if you roll a zero for Luck, the outcome is zero.

• Outside the startup world, startup founders get no respect... "It surprised me that being a startup founder does not get you more admiration from Women." I did know about that, but I'd forgotten.

These are supposed to be the surprises, the things I didn't tell people. What do they all have in common? They're all things I tell people... When I look at the responses, the common theme is that starting a startup was like I said, but way more so... Unconsciously, everyone expects a startup to be like a DayJob, and that explains most of the surprises.