Course "Blitzscaling" Lecture 2.2 Stages of growth startup "Stage of the family" (John Lilly and Sam Altman)
Lectures by Raidy Hoffman, John Lilly, Chris Ye and Allen Blue CS183C "Blitzscaling"
Lecture 1: Introduction
Lecture 2.1: Stages of growth of a startup, "family stage"
Lecture 2.2: Stages of growth startup, "family stage"
Lecture 3.1. Michael Dearing. A bit of the history of entrepreneurship and management
Lecture 3.2. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value
Lecture 4.2. Ann Mura-Ko: The Thunder Lizard Theory. Product, corporate and categorical value.
Lecture 4.3. Ann Mura-Ko: Questions and Answers with John Lilly
Abstract 2 lectures of the course at Stanford University CS183C "Blitzscaling", which Reid Hoffman, John Lilly, Chris Yeh and Allen Blue read. Mistakes and typos made by me. All this great stuff is wholly owned by Raid, John, Chris Ye and Allen.
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This lecture was held in the form of an interview with John Lilly with Sam Altman about the first stage of growth - the family stage. Below is the second part of the retelling of their conversation. Let me remind you of the first lecture that the stage of the family is the stage at which small teams create a product to fit the market.
John Lilly :
Paul Graham says that it is best to find ideas that others consider unsuccessful. What do you think about it?
Som Altman :
The goal should be to find really good ideas that seem unsuccessful on the part — such undervalued assets — and work on them. Such types of ideas have often led to huge profits for venture investors and for YCombinator in particular.
In practice, this is more difficult to achieve than in theory, because we are more dependent on the opinions of other people than on our own. It's hard enough to make yourself believe in an unpopular idea. The temptation to love what other people like is pretty strong.
The main thing that we don’t want to invest in is a derivative idea from the idea of ​​an existing large company. For example:
John Lilly :
How in your experience did the founders maintain their inner conviction?
Som Altman :
The faster you launch your product and get users who like your product, the easier it will be for you to ignore haters.
When Uber was launched, it looked weird, but they had a good base, they had a basic group of users who liked the product, so they could ignore the rest.
If the reason for your conviction is that you believe that there has been a major shift in the world (as for Uber, today everyone has a device with an Internet connection in their pocket), this will help you to keep your belief early on.
You can ignore everything else except users. If you can not create a product that will interest users, which they will love and start using on a permanent basis - then you have failed.
John Lilly :
From the moment you took over the leadership of YCombinator, you began to invest more in equipment. Do you think this is a new successful area?
Som Altman :
Everyone thinks that we will never understand hardware startups because they do not look like Internet startups.
We believe that hardware startups should be more like Internet startups. We attracted the founders of equipment companies to the same YCombinator program as Internet startups, and we saw that the first ones turned out to be strong enough competitors. No one wants to see his rival grow while you lag behind.
The main thing for a hardware startup is to understand what exactly you want to measure, and then increase this number by 10% every week. If you can maintain your growth at 10% per week for 3-4 years, then you will become a really large company. The moral is here: compound interest is a very powerful force.
It is too early to talk about this, but equipment companies believe that they work for us. As soon as the equipment start-up in which we invested becomes a large company, no one else will criticize us for not knowing what we are doing.
Som Altman :
It seems to me that Silicon Valley misunderstands the very concept of changing strategies.
We must understand failure, but understand that this is bad and should not be done again. Today, at start-up parties, failures are too much praised, and people flaunt their blunders. You do not have to blame yourself for your failures, but you shouldn’t boast about them either.
There are two types of strategy change that I saw in my work:
1. Changing strategy is a product that the founder wanted to create from the very beginning.
For example, the founders of Instagram originally created an application called Burbn, but when it didn’t work, Kevin (one of the original founders) wanted to create an application for photos, because he likes to photograph. That's why Instagram came out.
2. A change of strategy is the result of researching what is really worth creating instead of the first version.
For example, the founders of Airbnb initially created another startup that did not work, and used credit cards to finance their startup. When the time came to pay for the apartment, they did not have the money, but they had an extra bed in the house. Therefore, they surrendered a vacant room in their home to pay for housing.
Changing a strategy that has never worked in my experience is when a startup fails, and the team decides to sit down in front of the board and come up with something else. The problem in this case is that the team is trying in a hurry to find a new idea, and it is unlikely to be successful.
I believe that if your startup does not work, you should:
Som Altman :
If you want to join a startup, I would suggest:
John Lilly :
What does product focus mean to you?
Som Altman :
If you are really good, you can work 70-80 hours a week, the main question is how to spend these hours.
You have to spend 100% of your time communicating with users, creating a product and checking whether users like your product.
In every life of a startup, there comes a moment when you need to choose - create a product that many users will use, but they will just like it, or create a product that a small group of users will use, but they will all really LOVE your product.
You should always focus on users who love your product, and not on those who just like it. All the great companies that I came across adhered to this strategy.
John Lilly :
What is YCslump?
Som Altman :
After the day of the demonstration, everything changes. Startups work really well when the founders push the gas pedal to the floor, but it also creates a lot of commitment that you need to deal with.
Most of the founders believe that they can focus on growth, stop and deal with obligations, and then return to growth again. It never works.
There is such a famous quote: "growth solves all problems." This is not so true, and when you stop focusing on growth, it brings a lot more problems.
The bottom line is that you need to devote some time to putting your obligations in order, but you should not throw at it all the time intended for growth. This is another reason why having employees makes such a transition more difficult - because workers feel this change of direction earlier than the founders.
The fact is that at each stage there will be crises, and over time it will get worse. The compromise here is to keep large aspects in order, and let small ones be in disarray.
There is another concept that I call “false work.” Here is a great way to demonstrate it:
Sit at the table, work on the product, talk to users, etc. All this will look boring for a TV show, but it is really important to do. What is shown on TV is fun, but it will lead you nowhere.
John Lilly :
From what you have noticed, where are the best founders making mistakes?
Som Altman :
One of the main mistakes is when the founders fall in love with their public image. They worry about how to get on the list of 30 successful people under 30, they speak at conferences and attend events to strengthen business ties.
Gradually, they begin to spend more time away from the office than in it, and they are moving away from what really matters.
Secondly, all the great founders make the second mistake. Too long waiting to dismiss a person.
I believe that many founders do this because this is not a lesson to learn. You have to go through it yourself and understand it. It is unpleasant when you make a mistake, and you have to survive this disgusting moment when you need to dismiss your employee.
John Lilly :
This may be because many of the founders believe that they can fix it, and they think that they can make a difference if the worker cannot cope with it.
Som Altman :
The best way that I have found is to understand that in fact you harm the employee more if you leave him in the position. People understand when something goes wrong, and it is better to finish it earlier and help them find another place for which they are more suitable. It is better to have 1 month break in the resume than 1 year of unsuccessful work.
Lecture 1: Introduction
Lecture 2.1: Stages of growth of a startup, "family stage"
Lecture 2.2: Stages of growth startup, "family stage"
Lecture 3.1. Michael Dearing. A bit of the history of entrepreneurship and management
Lecture 3.2. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value
Lecture 4.2. Ann Mura-Ko: The Thunder Lizard Theory. Product, corporate and categorical value.
Lecture 4.3. Ann Mura-Ko: Questions and Answers with John Lilly
Abstract 2 lectures of the course at Stanford University CS183C "Blitzscaling", which Reid Hoffman, John Lilly, Chris Yeh and Allen Blue read. Mistakes and typos made by me. All this great stuff is wholly owned by Raid, John, Chris Ye and Allen.
')
This lecture was held in the form of an interview with John Lilly with Sam Altman about the first stage of growth - the family stage. Below is the second part of the retelling of their conversation. Let me remind you of the first lecture that the stage of the family is the stage at which small teams create a product to fit the market.
Iii. Questions about the idea
John Lilly :
Paul Graham says that it is best to find ideas that others consider unsuccessful. What do you think about it?
Som Altman :
The goal should be to find really good ideas that seem unsuccessful on the part — such undervalued assets — and work on them. Such types of ideas have often led to huge profits for venture investors and for YCombinator in particular.
In practice, this is more difficult to achieve than in theory, because we are more dependent on the opinions of other people than on our own. It's hard enough to make yourself believe in an unpopular idea. The temptation to love what other people like is pretty strong.
The main thing that we don’t want to invest in is a derivative idea from the idea of ​​an existing large company. For example:
- In 2006, everyone tried to invest in a new Facebook.
- In 2009-2011, everyone was still trying to invest in a new Facebook.
- The companies that were worth considering between 2009 and 2011 were Uber and Airbnb, which were not at all like Facebook.
- The next $ 100 billion company will most likely not be at all like Uber.
- The goal should be to invent, find and create the next company for $ 100 billion, which will not resemble existing companies at all.
- Although this idea will seem unsuccessful at the moment, you need inner conviction to stick to this idea, because everyone will tell you that you better create a company for which there is a demand now.
John Lilly :
How in your experience did the founders maintain their inner conviction?
Som Altman :
The faster you launch your product and get users who like your product, the easier it will be for you to ignore haters.
When Uber was launched, it looked weird, but they had a good base, they had a basic group of users who liked the product, so they could ignore the rest.
If the reason for your conviction is that you believe that there has been a major shift in the world (as for Uber, today everyone has a device with an Internet connection in their pocket), this will help you to keep your belief early on.
You can ignore everything else except users. If you can not create a product that will interest users, which they will love and start using on a permanent basis - then you have failed.
John Lilly :
From the moment you took over the leadership of YCombinator, you began to invest more in equipment. Do you think this is a new successful area?
Som Altman :
Everyone thinks that we will never understand hardware startups because they do not look like Internet startups.
We believe that hardware startups should be more like Internet startups. We attracted the founders of equipment companies to the same YCombinator program as Internet startups, and we saw that the first ones turned out to be strong enough competitors. No one wants to see his rival grow while you lag behind.
The main thing for a hardware startup is to understand what exactly you want to measure, and then increase this number by 10% every week. If you can maintain your growth at 10% per week for 3-4 years, then you will become a really large company. The moral is here: compound interest is a very powerful force.
It is too early to talk about this, but equipment companies believe that they work for us. As soon as the equipment start-up in which we invested becomes a large company, no one else will criticize us for not knowing what we are doing.
Iv. Questions about changing strategies
Som Altman :
It seems to me that Silicon Valley misunderstands the very concept of changing strategies.
We must understand failure, but understand that this is bad and should not be done again. Today, at start-up parties, failures are too much praised, and people flaunt their blunders. You do not have to blame yourself for your failures, but you shouldn’t boast about them either.
There are two types of strategy change that I saw in my work:
1. Changing strategy is a product that the founder wanted to create from the very beginning.
For example, the founders of Instagram originally created an application called Burbn, but when it didn’t work, Kevin (one of the original founders) wanted to create an application for photos, because he likes to photograph. That's why Instagram came out.
2. A change of strategy is the result of researching what is really worth creating instead of the first version.
For example, the founders of Airbnb initially created another startup that did not work, and used credit cards to finance their startup. When the time came to pay for the apartment, they did not have the money, but they had an extra bed in the house. Therefore, they surrendered a vacant room in their home to pay for housing.
Changing a strategy that has never worked in my experience is when a startup fails, and the team decides to sit down in front of the board and come up with something else. The problem in this case is that the team is trying in a hurry to find a new idea, and it is unlikely to be successful.
I believe that if your startup does not work, you should:
- Close company
- Return the remaining money to investors
- Go on a trip
- Return when you have a new idea.
- Work on it.
V. Career Tips
Som Altman :
If you want to join a startup, I would suggest:
- Join the most successful startup that grows the fastest of all, in which you can get.
- The lessons you get from working in a large, expanding company will be invaluable.
- This is the best way to learn before opening your own startup that will be better than others.
Vi. Product
John Lilly :
What does product focus mean to you?
Som Altman :
If you are really good, you can work 70-80 hours a week, the main question is how to spend these hours.
You have to spend 100% of your time communicating with users, creating a product and checking whether users like your product.
In every life of a startup, there comes a moment when you need to choose - create a product that many users will use, but they will just like it, or create a product that a small group of users will use, but they will all really LOVE your product.
You should always focus on users who love your product, and not on those who just like it. All the great companies that I came across adhered to this strategy.
John Lilly :
What is YCslump?
Som Altman :
After the day of the demonstration, everything changes. Startups work really well when the founders push the gas pedal to the floor, but it also creates a lot of commitment that you need to deal with.
Most of the founders believe that they can focus on growth, stop and deal with obligations, and then return to growth again. It never works.
There is such a famous quote: "growth solves all problems." This is not so true, and when you stop focusing on growth, it brings a lot more problems.
The bottom line is that you need to devote some time to putting your obligations in order, but you should not throw at it all the time intended for growth. This is another reason why having employees makes such a transition more difficult - because workers feel this change of direction earlier than the founders.
The fact is that at each stage there will be crises, and over time it will get worse. The compromise here is to keep large aspects in order, and let small ones be in disarray.
There is another concept that I call “false work.” Here is a great way to demonstrate it:
- Watch some fancy Silicon Valley TV show
- Think about what would look good on TV
- Do not do anything that is necessary.
Sit at the table, work on the product, talk to users, etc. All this will look boring for a TV show, but it is really important to do. What is shown on TV is fun, but it will lead you nowhere.
Vi. Life experience
John Lilly :
From what you have noticed, where are the best founders making mistakes?
Som Altman :
One of the main mistakes is when the founders fall in love with their public image. They worry about how to get on the list of 30 successful people under 30, they speak at conferences and attend events to strengthen business ties.
Gradually, they begin to spend more time away from the office than in it, and they are moving away from what really matters.
Secondly, all the great founders make the second mistake. Too long waiting to dismiss a person.
I believe that many founders do this because this is not a lesson to learn. You have to go through it yourself and understand it. It is unpleasant when you make a mistake, and you have to survive this disgusting moment when you need to dismiss your employee.
John Lilly :
This may be because many of the founders believe that they can fix it, and they think that they can make a difference if the worker cannot cope with it.
Som Altman :
The best way that I have found is to understand that in fact you harm the employee more if you leave him in the position. People understand when something goes wrong, and it is better to finish it earlier and help them find another place for which they are more suitable. It is better to have 1 month break in the resume than 1 year of unsuccessful work.
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→ Automation of sales and service transactions with legal entities. Without intermediary in the calculations.
Source: https://habr.com/ru/post/297120/
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