Summary:
Paul Graham (Y Combinator) says four principles determine which startups work and which fail: "Make something people want"; "Be willing to change your ideas" (cfr. Reddit); "Don't worry too much about the money" (probably only applies to web startups); and "Be benevolent." Being benevolent is particularly powerful: keeps morale and energy of employees high; people (customers) will rally around you with ideas, improvements, and word-of-mouth marketing; and it helps the founders to be more decisive: if you make every decision based on doing whatever is best for your users, it's that much easier to make decisions. (Published: 18/07/08)
Notes:
- Paul Graham
- Y Combinator
- Silicon Valley & Cambridge, Mass.
- Seed funding and hands-on advice to startups
- Invests a little money (<$20,000) and takes a small equity stake (~6%)
- Funds companies in batches
- Four principles that determine which startups work and which fail:
- "Make something people want."
- entrepreneurs often fall in love with what technology can do as opposed to what customers need
- good question: "What are people forced to do now because what you plan to do doesn't exist yet?"
- "Be willing to let your ideas change."
- a great idea isn't always the original idea
- successful startups often make dramatic changes not just in strategies and tactics, but in the very essence of what they do
- e.g. founders of Reddit originally wanted to help people order fast food on their cell phones
- "Don't worry too much about the money."
- applies mostly to web startups
- it's become cheap to buy equipment, reach customers, and generate buzz on the Web
- power of investors and VCs is on the wane
- "It's so much easier to get the money you need than to make something great."
- "Unlike back in the mid-90s, you've got the MBAs working for the technologists, rather than the other way around."
- "Be benevolent"
- in terms of how you do business
- act in the long-term best interest of customers, as opposed to the short-term best interests of yourselves
- most important rule for starting a company (the "Golden Rule")
- cfr. Google: "Don't be evil."
- benevolence is powerful for three reasons:
- keeps morale and energy high
- in an age of constant disruption and realignment, employees want to be the "good guys" in their field
- makes sense for companies to act that way
- people will rally around you with ideas, improvements, and word-of-mouth marketing
- more than ever companies require the active participation of customers, suppliers and industry enthusiasts
- helps founders to be more decisive
- if you make every decision based on doing whatever is best for your users, it's that much easier to make decisions
