Startup Playbook. The Ultimate Startup Startup Guide by Y Combinator (Part 1)

We spend a lot of time advising startups. Although the advice given tête-à-tête is always more important and weightier, we decided that publishing a kind of how-to advice could help us scale the Y Combinator.

This guide is intended for newcomers to a start-up party, and most of the steps described below may turn out to be wild accordion babayanas for experienced startups, and I will not discover America for those who follow YC materials. Maybe in the next part of this guide I will tell you how to scale a startup.
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The goal of a startup is to acquire loyal users. If it works, then you need to figure out how to get more users. This is the first, and perhaps the most critical part of the launch of truly successful companies. All successful startups started with a product that was so loved by the first users that they told everyone around about it. If you are not able to achieve this, you will fail. If you are fooling yourself into believing that users like your product, and this is actually not the case, you will fail.

The startup industry is littered with "corpses" of the founders, who believed that they could skip this step.

It is much better to launch a product for a small group of fans than for a wide audience of relatively loyal users. Even if the total number of positive attitudes is the same, it is much easier to simply increase the audience than to achieve the transition of users from “like” to “I'm a fan”.

Immediately warn you that starting hard. “It turned out to be much harder than I could have imagined,” - this is the most frequent feedback that we get at YC, although joining a startup in the early stages is usually a much better financial deal.

On the other hand, a startup bears not very big risks to your career. If you are really good, you will always have the opportunity to find a job, if not burn out. Most people take risks very poorly. I personally think that the more risky option is an idea or a project that you are really passionate about and are working on it at the expense of your employer's time.

In order for a startup to succeed, we need: a great idea (always in a big market niche), a great team, a great product, and a masterful performance.

PART I "IDEA"

^{Illustrated by Gregory Koberger}

“What” and “why” are one of the first questions to startups in YC. We are waiting for short and accurate answers to these questions. Thus, we value the idea and you as the founder. Thinking and communication skills are very important for any founder, and will be needed for hiring, fundraising, sales, and more. In order to spread, ideas must be transparent and understandable, since complex ideas are almost always problematic and are a sign of confused thinking. If the idea does not immediately catch at least some people who hear it for the first time, this is very bad.

We are also concerned about who the target audience of the product is and desperately needs it. The best case, if you yourself enter the target audience. It is also nice if you clearly understand the target user, but do not enter the target group yourself.

If the company already has users, we ask how much and how quickly their number is growing. We find out why the audience is not growing faster, and especially trying to find out whether existing users really love the product. Usually this means that users tell the product to their friends without urging and requests from the company. We are also interested in whether the company is already earning, and if not, why.

If there are no users yet, we figure out the minimum requirements hypothetically, reversibly based on ideal experience.

First, it would be nice to test the idea in order to get confirmation of its viability. In this case, first it is better to check the consumer version, and then the corporate one. In particular, if you are planning to work in B2B, one of the first questions will be whether you have a letter of intent .

For most biotechnology and technology companies, validating an idea is communicating with potential customers to find out the minimum necessary product feature set. At this stage, for the development of ideas is very important to get feedback. The concept of the actual needs of users is necessary to develop a great product and build a cool company.

As mentioned earlier, starting up startups is really difficult. They take a lot of time and effort. The founders and employees should have a common goal . Therefore, we ask why the founders want to establish this particular company. We also ask how a company can one day become a monopolist. There are many different terms for this, but we use those proposed by Peter Thiel. Of course, we don’t need the company to behave unethically towards competitors; instead, we are trying to find promising businesses for scale that are difficult to repeat.

Finally, we are interested in the market niche, how big it is today, how fast it is growing, and why it will become huge in ten years. We are trying to understand why the market will quickly grow and what it is good for subsequent startups. We like the beginning of the main technological changes in the industry, when no one yet understands the prospects, and the major players are skeptical. And paradoxically, most of the small market answers best to the questions asked.

A few other thoughts about ideas:

We like everything new. Most large companies started with something fundamentally new. We doubt the expediency of a startup if there are ten other companies simultaneously developing similar products. Other things being equal, people will want to be with you in the event that you create something new and more difficult to implement than something derivative and easy to implement.

The best ideas often sound crazy, but really good. Do not carefully hide the card, trying to protect themselves from theft, if the idea is cool, it is unlikely to look decent for theft because of its improbability. Even if the idea is similar to what is possible to steal, it is unlikely to happen. There are always a thousand times more people with good ideas than people who are able to realize a great idea, turning it into a big business. Therefore, by sharing ideas with people, you are more likely to help than to have an idea stolen.

When talking about your ideas, be prepared for what they would be called settling. Perhaps this is true. Perhaps, the interlocutors do not understand startups, and maybe they are just jealous. Regardless of the reasons, this will happen often and will be unpleasant, and even if you think that this does not concern you, you will still experience. Therefore, the sooner you gain confidence in yourself, the better. No matter how successful you are, there will always be haters.

What to do if there are no ideas, but there is a desire to stir up something? Maybe it's still not worth it? Much better when the idea is primary, and a startup is just a way to implement it. We once conducted an experiment in which we financed many promising teams without any ideas in the hope that they would appear. But the miracle did not happen, no one could. I think that part of the problem is that good founders, as a rule, always have a lot of good ideas (as a rule, too many). But an even greater problem is the need for forcing a rush. When you are trying to quickly come up with something, the ideas that come in the presence of a ready-made company cannot be insane enough, which ultimately leads to a secondary idea. And this is a high probability pivot .

So it is better not to try to force yourself to be creative. Instead, you should learn, in practice, noticing problems, things that seem inefficient, and major technological advances. While working on projects you can find something interesting. Spin in a circle of smart interesting people and at some instant ideas will surely appear.

To be continued...