Fifteen "excuses" do not create a startup from Paul Graham
Yevgeny Shadchnev published a translation of a wonderful article by Paul Graham about typical fictional reasons for not creating a startup. “There is nothing wrong with being unsure. If you are a hacker who thinks of establishing a company and you are in doubt about this big step, then you follow the path traveled by many. Larry and Sergey were not sure whether to base Google, and Jerry and Philo doubted whether to create Yahoo. In fact, it seems to me that the most successful startups come from doubting hackers than from the overcrowded guys from business. ”
(Paul Graham heads the investment incubator Y Combinator. This essay is based on presentations at Startup School 2007 and at the Faculty of Computer Science at Berkeley.)
Y Combinator has been around for a long time, so that you can make any conclusions about the results of the company. In our first stream, in 2005, there were eight companies. Apparently, of these eight at least four can be considered successful. Three were acquired: Reddit , which merged with Infogami, as well as another company that I cannot talk about right now. Another company of this stream is Loopt , which has everything so fine that they could sell themselves in the next 10 minutes if they wanted.
So, about half of the company's founders became rich two years later, at least in their representation. (One of the things that you understand when you become secure is that there are many degrees of wealth).
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I'm not sure that our success rate will remain at 50%. Maybe the first thread was an anomaly. However, we will certainly be able to keep the success rate at a level in excess of the often mentioned (and probably invented) 10%. I think it will be about 25%.
Even the founders of those companies that are considered unsuccessful are not too unhappy, apparently. Of those eight startups, three are probably dead. In two cases, the founders simply did other things at the end of the summer; I don't think they were too upset. The closest to the painful defeat was Kiko, who was pulled down by the Google Calendar after a year of hard work. However, they were satisfied: they sold their software on eBay for a quarter of a million and, having paid off business angels, they kept about their annual salary [1]. They immediately launched a new, much more interesting startup Justin.tv .
So, much more interesting statistics: 0% of the founders experienced something terrible. Yes, there were ups and downs, like every startup, but I do not think that at least one of them exchanged this experience for work in the office compartment (cubicle). And this statistic is probably not an anomaly. Whatever our success rate, the percentage of people who would regret that they did not go to regular work would be almost zero.
Most of all I don’t understand why a lot more people do not start a company? If practically no one regrets about this step and a significant percentage of these people become rich, why doesn’t everyone dream of their company? Many people think that we receive thousands of applications every thread. In fact, only a few hundred. Why don't the others apply? While it seems to everyone that startups appear like mushrooms after rain on every corner, their number is incomparable with the number of people who could do it. The vast majority of programmers are sent from the university to their compartment in the office and remain there.
One gets the feeling that people are not acting in their own interests. What's happening? However, I can give an answer. Due to the fact that Y Combinator works with start-ups at the very first stage, we have become world experts in the psychology of people who are not sure whether to establish a company.
There is nothing wrong with not being sure. If you are a hacker who thinks of establishing a company and you are in doubt about this big step, then you follow the path traveled by many. Larry and Sergey were not sure whether to base Google, and Jerry and Philo doubted whether to create Yahoo. In fact, it seems to me that the most successful startups are obtained by doubting hackers than by overcrowded optimism from business.
We have evidence. Many of those whom we financed admitted later that they decided to apply at the very last moment, sometimes a few hours before the deadline.
To deal with uncertainty, it is necessary to decompose it into components. Most people who do not want to do something have eight reasons for this, and they do not know which of these reasons is the main one. Some of them are justified, and some are not, but until you know the relative contribution of each of the reasons, you cannot understand how justified your insecurity is in general.
So, I'm going to talk about these eight reasons that keep people from setting up their company, and explain which ones are real. Then those who are only thinking about starting a company will be able to rate their feelings on this list.
I confess that my goal is to strengthen your self-confidence. However, there are two different differences from traditional self-confidence exercises. First, I have a reason to be very honest. Usually, people who develop confidence in you achieve their goals at the moment when you buy a book or pay for a seminar where they tell you how amazing you are. If I persuade to create a company of those people who should not do this, it will only add to my problems. If I can persuade too many to apply to Y Combinator, then I will have to read all these applications.
In addition, my approach will not be the same as usual: I will speak not in a positive way, but in a negative one. Instead of saying “come on, you can”, I will explain why you should not establish a company, and tell you why most of these reasons (but not all) can be ignored. We will start with the problem with which everyone is born.
1. Too young
Many people think that they are too young to start a company. Many of them are right. The median age on the planet is 27 years, so about a third of the population may reasonably state that they are too young.
Too young - how much is this? One of the goals of Y Combinator was to find the very lower bound on the age of the creators of startups. We always thought that investors are very conservative. They want to give money to professors, but they should finance postgraduate students, masters and even those who only receive undergraduate degrees.
The main thing that we understood, constantly lowering the age bar, is not where it is located, but how much it is blurred. Probably the lower limit is somewhere around 16 years old. However, we do not work with people under the age of 18, because it is impossible to conclude a contract with them. At the same time, the founder of our most successful company, Sam Altman, was at the age of 19 at the time of financing.
Sam Oltman, however, is not an indicator. When he was 19, it seemed that he had 40 years of experience. Many nineteen years of experience are twelve years old.
There is a reason why people at some point begin to call the special word “adult”. There is a line to go. Formally, this is 21 years, but different people cross it at very different moments of life. You are old enough to start a company, if you crossed this milestone, no matter how old you were.
How to find out? There are two tests that adults use. I realized that these tests exist after meeting with Sam Oltman, in fact. I noticed that I still had the feeling that I was talking to someone older than me. After that, I wondered what exactly gave me this feeling? What made him seem more mature?
The first test that adults use is the “I'm small!” Reflex. When you are a child and you are forced to do something very difficult, you can cry and cry out: “I'm just a little child!”. Most likely, adults will leave you alone. Children have a magical way out of many difficult situations: to say that they are just children. Adults are not supposed to behave this way. When they do, they ruthlessly get for it.
Another way to distinguish an adult is to see how he accepts the challenge. Anyone who has not grown up will respond to the challenge from an adult, recognizing his dominance. If an adult says “this is a stupid idea,” then the child either crawls, tails up, or begins to protest. However, protest is only the reverse side of submission. An adult way of responding to the “this is a stupid idea” position is to look into your eyes and ask: “Really? I wonder why?".
Of course, there are a lot of adults who respond to challenges as children, but children who accept challenges as adults are rare. If you met such a child, then know that this is an adult, no matter how old he was.
2. Too little experience
I once wrote that the founders of the company should be at least 23 years old and they should have experience of several years working in a foreign company before creating their own. I do not think so anymore; The reason for this is the examples of the companies we financed.
I still think that 23 is better than 21. However, the best way to gain experience at 21 is to create a company. Paradoxically, but a fact: if you do not have enough experience to create a company, then you need to create a company and get it. It is much more efficient than going to a regular job. In fact, work in the company does not give you the experience to create your own: instead, you turn into a hand-made animal, which is convinced that you can work only in the office, and you need to receive tasks from the manager.
What convinced me of this was the founders of Kiko. They founded the company immediately after college. Due to lack of experience, they made a bunch of mistakes. However, a year later, when we financed their second startup, they became extremely brilliant. They were obviously not tame animals. They would never have become so if they had worked for a year at Microsoft, or even at Google. They would still be timid junior programmers.
So now I advise people to set up companies right after college. There is no better time to take risks than youth. Of course, there is a risk that nothing happens. But even failure will bring you closer to the ultimate goal than work.
I feel a little uncomfortable when I say this, because in fact I advise people to gain experience by failing for our money, but this is how it really is.
3. Too little resolve.
You need to be very determined to establish a successful company. This is probably the surest sign of future success.
Probably many are not decisive enough to create a company. It is difficult for me to talk about it with confidence, because I strive so much for success that it is difficult for me to imagine what is happening in the heads of people who are not so decisive. But I know that there are such people.
I think that many hackers underestimate their own confidence. Many became much more decisive, and this was evident when they founded their startup. I can cite as an example the many founders funded by us, who were once happy to sell a company for two million, and now they are seriously thinking about world domination.
How can you determine if you are decisive enough, even if Larry and Sergey themselves were not sure whether to create Google? I have an assumption: the criterion can be the confidence with which you work on your own projects. Perhaps Larry and Sergey were not sure that they needed to establish a company, they were not the submissive professorial assistants of the third plan, who humbly carried out orders from above. They worked on their own projects.
4. Too little mind
You may need to be only moderately smart to create a successful company. However, if you are worried about this, you are probably mistaken. If you have enough mind to worry that you may not have enough mind on the foundation of a startup, then most likely you will have enough of it.
In any case, to create your company a special mind is not necessary. However, not always. You need to know mathematics very well in order to create Mathematica. However, most companies are engaged in more mundane things, where the main criterion of success is effort, not brains. Perhaps Silicon Valley will change your understanding of this, because there is a cult of mind. People who lack intelligence are at least pretending to have it. However, if you think that in order to get rich you need brains, try to spend a couple of days in the most bizarre entertainment places in New York or Los Angeles.
If you think that you are not smart enough to establish a technologically complex startup, try writing software for businesses. Such startups are not based on technology, but on sales, and sales are primarily dependent on effort.
5. Too little business knowledge.
Another reason not to take into account. You absolutely do not need to know anything about business to establish a company. The main goal should be the product. All you need to know in this phase is how to create something that people need. If you succeed, you will have to think how to make money from it. However, it is easy and you will quickly figure it out.
I am often criticized for advising the founders to simply do something useful, and think about profit later. Yet empirical observations show that almost 100% of companies that create something popular earn money from it. People who buy companies tell me privately that they are buying companies not for profit, but for strategic value. In other words, for doing something useful. These people know that this rule will work for them: if the users love you, you can make money from this somehow, and if they don't, the most amazing business model will not save you.
So why do so many people criticize me? I think they simply cannot get used to the idea that a handful of twenty-year-olds could get rich, creating something cool, but not profitable. They just do not want it to be so. However, the likelihood of this does not depend on their desire.
At first, I was frustrated that they talked about me as about the irresponsible dressing up of the piper who led the promising founders into the abyss. Now I understand that such talk is a good sign.
The truest truths are those that most people do not believe in. These are like undervalued stocks. If you start with them, then all profits will be yours. Therefore, when you find a good idea that most people criticize, you must not only ignore them, but also work aggressively on this idea. In this case, you should look for ideas that will become popular, but of which it is unclear how to make money.
I am putting a round of financing on the fact that you cannot create something popular that we couldn’t come from.
6. No co-founder
Lack of co-founder is a big problem. Startup is too hard for one person. Although our opinion often differs from that of other investors, at this point we are all one. All investors, without exception, will be very enthusiastic in financing you with a co-founder than you alone.
We financed two singles, but both times we set the primary task of finding a co-founder, and they did. However, we asked them to do so before they applied. When the project is already funded, it’s easy to find a co-founder, so we wanted someone who would be sufficiently committed to this rather complicated business.
What if there is no co-founder? To find. This is more important than anything else. If there, where you live, there is no one who would create a company with you, move. If no one wants to work on your current idea, change the idea.
If you are still learning, you are surrounded by potential co-founders. After a few years it will be much harder to find them. Not only will you have a smaller sample, many will already have work and, maybe, even families that will have to be maintained. If you have fellow students with whom you discussed the ideas of creating a company, then keep in touch with them after uni: this will help hope not to die.
Perhaps you will find a co-founder at some conference or similar event. But I would not count on it too much. To understand whether this person is able to establish a company with you, you need to work with him. [2]
The main conclusion you have to do is not how to find a co-founder, but that you need to establish a company while you are young and surrounded by such people.
7. No idea
In a sense, the lack of an idea is not a problem, because most startups change their original idea anyway. On average, a startup in Y Combinator 70% of the initial idea is updated by the end of the third month. Sometimes the idea changes dramatically.
In fact, we are so convinced that the identities of the founders are much more important than the idea that we want to try something new in the next funding cycle. We will allow people to apply without any idea whatsoever. If you want, write in the application that you have no idea what you want to do. If you really represent something, then we will finance you in any case. We are sure that we will sit down and come up with some promising project.
In fact, this is indeed the case now. We do not pay too much attention to the idea, but ask more about it out of politeness. The most important question in the application that we really pay attention to is a story about what cool things you have already done. If you have already made the first version of what you want to make a startup, so much the better, but we are interested in the ability to create. The role of the lead developer in a popular open source project is almost an ideal necessary experience.
So much for Y Combinator. But is it just that in other cases? Because in a sense, this is a problem. If you create a startup without an idea, then what will you do?
So, a short recipe for creating ideas for startups. Find something in your life that you lack and satisfy this need, no matter how specific it is. Steve Wozniak created a computer for himself. Who could have imagined that such a large number of people would also need a personal computer? A narrow but existing need is better than a potentially common but hypothetical necessity. Even if you are missing a girl on Saturday night and you know how to solve this issue with the help of software, you are already on the right track, because many people have such a problem.
8. No space for new startups.
Many people look at the increasing number of new startups and think: "This can no longer continue." They mistakenly mean that there is some kind of limit on the number of startups, but there is none. Nobody sets a limit on the number of people who work in companies with thousands of employees. Why should there be a limit on the number of people who work in companies with only five employees? [3]
Practically everyone who works satisfies some need. The division of the company into small parts does not lead to the disappearance of needs. Existing needs would be better served by a network of startups than by several giant, hierarchical corporations, but I do not think that this would lead to a decrease in demand, because meeting existing needs provokes new needs. Anyway, this is true with individuals. And nothing wrong with that. We take for granted what medieval kings would consider insane luxury. There is no absolute standard for material well-being. Health care is one of its components and this is another black hole. In the foreseeable future, people will have a desire to increase their material well-being, which means that there is no limit to the amount of work for companies,in particular, for startups.
The misconception that there are too many startups is usually not explicit. They say this indirectly, for example, “there are a finite number of startups that Yahoo, Google and Microsoft can acquire.” Perhaps only the list of sinks is slightly longer. And then, whatever you think about other companies, Google is not fools. Companies buy startups because they create something valuable. And why should there be some kind of limit on the number of startups that create something valuable, except for the limit on the amount of money that people want to make? Perhaps there is some limit on the number of companies that a single acquirer can absorb, but if a startup represents some potential value that its owners are willing to sell for immediate payment, the acquirers will somehow cope with this.Markets are pretty smart in this regard.
9. It is necessary to have a family.
But this is already serious. I would not advise anyone who has a family to get involved in a startup. I do not want to say that this is a bad idea, I just do not want to take responsibility for such advice. I am ready to take responsibility for the 22-year-old guys who, in case of a defeat, will learn a lot and will not lose the chance to go to work at Microsoft if they want. But I am not ready to put mothers in a difficult position.
If you have a family and a desire to create a startup, then you can engage in consulting with the goal of one day moving on to creating a product. The chances of creating something revolutionary in this way are rather low. Google you will never get on this scheme. On the other hand, you will never be left without income.
Another way to reduce risks is to join an existing startup instead of creating your own. Being one of the first employees is almost like being a founder, experiencing ups and downs. You will be approximately 1 / n ^ 2nd founder, where n is your number as an employee.
As in the question about the co-founder, the main conclusion that needs to be made is that you need to create startups while you are young.
10. Financial independence
This is my personal reason not to create a startup. Startups are stressful. Why is it needed if you have money? For each “incorrigible founder of companies,” twenty normal entrepreneurs who will say: “Create a new company? Have you lost your mind? ”
I was close to creating a new company a couple of times, but every time I thought better of it, because I don’t want to work hard without straining for four years of my life. I know this business too well to understand that a startup cannot be created without a certain effort. It is the ability to take on insanely hard work that makes a good founder so dangerous.
However, with retirement there are problems. Like many other people, I love working. One of the weird things that you learn when you become rich is that many of the people you would like to work with are not rich. They have to work on something to pay the bills. So if you want them to be your colleagues, you will also have to work on something that allows you to pay bills, although you can afford not to. I think this motive is driven by many of those who create one company after another.
That is why I enjoy working in Y Combinator so much. This is a reason to work with interesting people on what I like.
11. Not ready to make commitments
For me personally, this was a reason not to establish a company when I was not yet 30. Like many people at this age, I valued freedom above all. I did not want to do anything that would limit me for more than a few months. Moreover, I did not want to do what promised to absorb my whole life without a trace, as it happens with startups. And that's fine.If you want to spend time traveling, or playing in a group, or doing something else, this is a perfectly normal reason not to start a company.
If you create a successful startup, it will take you three or four years. (If you create an unsuccessful one, you will get off much faster). Therefore you should not get involved in it if you are not ready to commitments for such a period. However, keep in mind that if you find a regular job, it may take the same several years, and you will have much less free time than you expected. So if you are ready to hang a badge with your last name to go to a career counseling seminar, you are probably ready to start a company.
12. Order needed
I was told that there are people who should have order in their life. I think this is a beautiful description of the fact that they need someone who would lead them. I believe that such people exist. There is much empirical evidence: armies, religious worship, etc. Perhaps these people even make up the majority.
If you are from these people, then do not create a startup. Moreover, do not even go there to work. In a normal startup, no one will tell you what to do. Of course, someone will take the position of director, but until the number of employees exceeds a dozen, no one should direct anyone. This is too inefficient. Everyone should do what he should do without instructions from above.
If you think this is a direct path to chaos, imagine a football team. Eleven people work in fairly sophisticated combinations and, at the same time, with rare exceptions, no one directs anyone. A journalist once asked David Beckham if there were any language problems in Real Madrid, all in a team were players from about eight countries. He said that there was never any problem. All players were at such a high level that they did not have to talk. They just did the right thing.
How to determine that you think independently enough to create a company? If inside you there is a desire to bristle at the mere thought that this is not so, then you are probably ready to start a startup.
13. Fear of uncertainty
Perhaps some people do not create startups, because they do not like uncertainty. If you go to work at Microsoft, you can fairly accurately predict how the next few years will pass. Moreover, it is even very accurate to predict this. If you create a startup, anything can happen.
Well, if you care about uncertainty, then I can solve this problem. If you create a startup, then you are most likely to fail. Seriously, this is not the worst way to think about this experience in general. Hope for the best, but prepare for the worst. At worst, it will be interesting, at best - get rich.
No one will scold you if your startup goes to the bottom, if you, of course, put enough effort into it. Maybe there used to be a time when employers regarded this experience as a disadvantage, but not now. I asked the managers of large companies and they told me that with great pleasure they would hire someone who created an unsuccessful startup than someone who worked at that time in a large corporation. Investors will not consider this to be your disadvantage either, unless the startup has, of course, gone to the bottom because of your laziness or incredible stupidity. I was told that in other places - in Europe, for example - such a failure is equated with shame.
14. Not understanding what you are avoiding.
One of the reasons why founders who have worked a couple of years after uni work better than those who create a startup right after graduation is the awareness of what is being avoided. If a startup fails, then they will have to go to regular work, and they know what a nightmare it is.
If you have summer internships behind your back, then you probably think that you know what it is like to work in a company. You are probably mistaken. Summer internships at technology companies is not a real job. If you worked as a waiter in the summer, this is a job. Technology companies do not recruit students as a source of cheap labor. They take you on an internship in the hope that you will come to them to work after graduation. If you do something useful during your internship, it will be cool, but they don’t count on it too much.
This will all change as soon as you finish university. You will need to earn your money. Most companies do boring things, so you too have to do boring things. Uncomplicated, compared to the uni, but boring. At first, it will seem cool to you to get paid for relatively simple things, while at the university you worked hard and still paid money for it. However, it will pass in a few months. Over time, any desire to work on stupid tasks will pass, no matter how much money they pay for it and no matter how easily they get it.
And this is not the worst. The worst thing about normal work is that you have to be there at certain hours. Even in Google, apparently, it is. And this means, as any working person will tell you, that there will be moments when you are not in the mood to work, but you will have to sit in front of the monitor and pretend that you are working. For those who like to work, like most hackers, this is torture.
There is no such thing in a startup. Most of them have no concept of office hours. Work and life are just mixed up. However, the fact that no one looks askance, if you live at work is good. In a startup, most of the time, you can do whatever you want. If you are a founder, then most of the time you will want to work. But you will never have to pretend that you are working.
If you fall asleep in the middle of the day in a big company, it will seem unprofessional. If you fall asleep in a startup after dinner, your friends will simply decide that you are tired.
15. Parents want you to become a doctor.
A significant number of potential founders do not create start-ups, because their parents discourage them. I do not want to say that they do not need to listen. Families have their own traditions; Who am I to argue with them? But I’ll give you a couple of reasons why a safe career is not exactly what your parents really want for you.
Firstly, parents are more conservative about children than they would be about themselves. This is actually quite rational behavior in this situation. Parents end up sharing more of the suffering of children than success. Most parents have nothing against it, this is their job; however, this makes them unnecessarily conservative. But delusion due to excessive conservatism is still a delusion. Almost everywhere, reward is proportional to risk. Therefore, keeping children from risk, parents, without knowing it, deprive themselves of rewards. If they understood this, they would be more relaxed about risk taking.
Secondly, parents can often be mistaken because they, as generals, always fight like the last time. If they want you to become a doctor, then most likely they do not want you to help the sick, but that you have a paid and prestigious job. [4] But not so prestigious and highly paid as in those years when their opinion was formed. When I was a child in the seventies, to be a doctor was to be someone. Doctors were somehow inevitably associated with tennis and Mercedes 450 SL. All this is no longer relevant.
Parents who want you to become a doctor do not always understand how much has changed. Would they be very upset if you were Steve Jobs? I think that the opinion of parents should be treated no more than the wishes of the new functionality in the program. Even if they are obviously asking for something, do not rush to fulfill the desire, but rather think what they really need and how best to meet this need.
16. Search for work accepted.
This is the last and probably the most important reason why people get a job: this is accepted. Traditions are an insanely strong incentive, because they affect you, while you don’t think about it.
Practically for everyone except the bandits, it is obvious that if you need money, you need to look for work. In fact, this tradition of all a hundred years. Prior to this, all traditionally engaged in farming. Relying on a tradition that is only a hundred years old is not a good idea. In the scale of history, everything changes very quickly.
Perhaps we are now on the verge of another such change. I read quite a few works on the history of economics and understand well how startups work, and it seems to me that we are now going through a similar transition as a century ago, when there was a shift from farming to manufacturing.
You know what?If you were living at the time when this change began (approximately the 11th century in Europe), then any person who went to the city to earn money seemed crazy. And although it was forbidden for the serfs to leave the feudal estate, it was not so difficult to escape - there were no armed guards around the perimeter. What prevented many peasants from entering the city was the seemingly insane risks. Leave your piece of land? Leave the people with whom you grew up to live in a giant city, where there will be three or four thousand strangers? How to live? Where to take food if you have not grown it?
Once it seemed strange, but now we make a living with our mind. When thinking about how scary to start a company, remember how scary it was once our ancestors to do what we are doing now. Strange as it may seem, those who are trying to convince you to live as before know best of all. How can Larry and Sergey invite you to work if they themselves have never been hired workers?
Today we look back at the medieval peasants and wonder: how did they tolerate it? How sad it was, probably, to spud the same beds all my life without hope of the best, remaining at the mercy of the feudal lords and priests, who took away all the surplus and demanded respect for themselves as the main ones. I will not be surprised if one day people will look at our today's "ordinary" work with the same look. How sad it must be, every day to go to work in your office compartment of the soulless office complex and get tasks from who you should call your boss and who, having called you to your office, ask you to sit down and you will sit down! Imagine you need permission to publish software to users. Imagine that your mood deteriorates on Sunday evening,because the weekend is over and you have to get up and go to work. How did they tolerate it?
The idea that we are on the verge of the same transition as the transition from farming to production, captures. Therefore, I am interested in startups. Startups are not interesting because they allow you to get rich - I don't give a damn about stock speculation, for example. They are about the same as puzzles. There is a lot going on in the startup world. Perhaps they represent a rare, historical transition from one way of creating value to another.
That is what makes us work in Y Combinator. We want to make money, even if it would be the only goal, we would hardly have stopped, but this is not the main task. There were only a few great economic changes in human history. To help one of them happen would be awesome.
Notes
1. The only ones who lost are us. Business angels had a convertible debt obligation, so they were the first to gain access to the proceeds from the auction. Y Combinator received only 38 cents on a dollar invested.
2. Perhaps the best experience of this kind is working on open source projects, but they do not imply frequent meetings. Perhaps starting such a project is a good idea.
3. There must be big companies to buy start-ups, so the number of big companies cannot drop to zero.
4. Thought experiment. If doctors were doing the same thing, but would be outcasts, earning pennies, would parents still like this career for children?
Thanks to Trevor Blackwell, Jessica Livingston and Robert Morris for reading draft essays, the founders of Zenter for permission to use their product that will kill PowerPoint, although it has not yet been released, as well as the Ming-Hay Luk from Berkeley CSUA for inviting me to speak.
The original article by Paul Graham can be found here (eng.) And here (rus.).
Translation: Eugene shadtchnev Shadchnev.
(Paul Graham heads the investment incubator Y Combinator. This essay is based on presentations at Startup School 2007 and at the Faculty of Computer Science at Berkeley.)
Y Combinator has been around for a long time, so that you can make any conclusions about the results of the company. In our first stream, in 2005, there were eight companies. Apparently, of these eight at least four can be considered successful. Three were acquired: Reddit , which merged with Infogami, as well as another company that I cannot talk about right now. Another company of this stream is Loopt , which has everything so fine that they could sell themselves in the next 10 minutes if they wanted.
So, about half of the company's founders became rich two years later, at least in their representation. (One of the things that you understand when you become secure is that there are many degrees of wealth).
')
I'm not sure that our success rate will remain at 50%. Maybe the first thread was an anomaly. However, we will certainly be able to keep the success rate at a level in excess of the often mentioned (and probably invented) 10%. I think it will be about 25%.
Even the founders of those companies that are considered unsuccessful are not too unhappy, apparently. Of those eight startups, three are probably dead. In two cases, the founders simply did other things at the end of the summer; I don't think they were too upset. The closest to the painful defeat was Kiko, who was pulled down by the Google Calendar after a year of hard work. However, they were satisfied: they sold their software on eBay for a quarter of a million and, having paid off business angels, they kept about their annual salary [1]. They immediately launched a new, much more interesting startup Justin.tv .
So, much more interesting statistics: 0% of the founders experienced something terrible. Yes, there were ups and downs, like every startup, but I do not think that at least one of them exchanged this experience for work in the office compartment (cubicle). And this statistic is probably not an anomaly. Whatever our success rate, the percentage of people who would regret that they did not go to regular work would be almost zero.
Most of all I don’t understand why a lot more people do not start a company? If practically no one regrets about this step and a significant percentage of these people become rich, why doesn’t everyone dream of their company? Many people think that we receive thousands of applications every thread. In fact, only a few hundred. Why don't the others apply? While it seems to everyone that startups appear like mushrooms after rain on every corner, their number is incomparable with the number of people who could do it. The vast majority of programmers are sent from the university to their compartment in the office and remain there.
One gets the feeling that people are not acting in their own interests. What's happening? However, I can give an answer. Due to the fact that Y Combinator works with start-ups at the very first stage, we have become world experts in the psychology of people who are not sure whether to establish a company.
There is nothing wrong with not being sure. If you are a hacker who thinks of establishing a company and you are in doubt about this big step, then you follow the path traveled by many. Larry and Sergey were not sure whether to base Google, and Jerry and Philo doubted whether to create Yahoo. In fact, it seems to me that the most successful startups are obtained by doubting hackers than by overcrowded optimism from business.
We have evidence. Many of those whom we financed admitted later that they decided to apply at the very last moment, sometimes a few hours before the deadline.
To deal with uncertainty, it is necessary to decompose it into components. Most people who do not want to do something have eight reasons for this, and they do not know which of these reasons is the main one. Some of them are justified, and some are not, but until you know the relative contribution of each of the reasons, you cannot understand how justified your insecurity is in general.
So, I'm going to talk about these eight reasons that keep people from setting up their company, and explain which ones are real. Then those who are only thinking about starting a company will be able to rate their feelings on this list.
I confess that my goal is to strengthen your self-confidence. However, there are two different differences from traditional self-confidence exercises. First, I have a reason to be very honest. Usually, people who develop confidence in you achieve their goals at the moment when you buy a book or pay for a seminar where they tell you how amazing you are. If I persuade to create a company of those people who should not do this, it will only add to my problems. If I can persuade too many to apply to Y Combinator, then I will have to read all these applications.
In addition, my approach will not be the same as usual: I will speak not in a positive way, but in a negative one. Instead of saying “come on, you can”, I will explain why you should not establish a company, and tell you why most of these reasons (but not all) can be ignored. We will start with the problem with which everyone is born.
1. Too young
Many people think that they are too young to start a company. Many of them are right. The median age on the planet is 27 years, so about a third of the population may reasonably state that they are too young.
Too young - how much is this? One of the goals of Y Combinator was to find the very lower bound on the age of the creators of startups. We always thought that investors are very conservative. They want to give money to professors, but they should finance postgraduate students, masters and even those who only receive undergraduate degrees.
The main thing that we understood, constantly lowering the age bar, is not where it is located, but how much it is blurred. Probably the lower limit is somewhere around 16 years old. However, we do not work with people under the age of 18, because it is impossible to conclude a contract with them. At the same time, the founder of our most successful company, Sam Altman, was at the age of 19 at the time of financing.
Sam Oltman, however, is not an indicator. When he was 19, it seemed that he had 40 years of experience. Many nineteen years of experience are twelve years old.
There is a reason why people at some point begin to call the special word “adult”. There is a line to go. Formally, this is 21 years, but different people cross it at very different moments of life. You are old enough to start a company, if you crossed this milestone, no matter how old you were.
How to find out? There are two tests that adults use. I realized that these tests exist after meeting with Sam Oltman, in fact. I noticed that I still had the feeling that I was talking to someone older than me. After that, I wondered what exactly gave me this feeling? What made him seem more mature?
The first test that adults use is the “I'm small!” Reflex. When you are a child and you are forced to do something very difficult, you can cry and cry out: “I'm just a little child!”. Most likely, adults will leave you alone. Children have a magical way out of many difficult situations: to say that they are just children. Adults are not supposed to behave this way. When they do, they ruthlessly get for it.
Another way to distinguish an adult is to see how he accepts the challenge. Anyone who has not grown up will respond to the challenge from an adult, recognizing his dominance. If an adult says “this is a stupid idea,” then the child either crawls, tails up, or begins to protest. However, protest is only the reverse side of submission. An adult way of responding to the “this is a stupid idea” position is to look into your eyes and ask: “Really? I wonder why?".
Of course, there are a lot of adults who respond to challenges as children, but children who accept challenges as adults are rare. If you met such a child, then know that this is an adult, no matter how old he was.
2. Too little experience
I once wrote that the founders of the company should be at least 23 years old and they should have experience of several years working in a foreign company before creating their own. I do not think so anymore; The reason for this is the examples of the companies we financed.
I still think that 23 is better than 21. However, the best way to gain experience at 21 is to create a company. Paradoxically, but a fact: if you do not have enough experience to create a company, then you need to create a company and get it. It is much more efficient than going to a regular job. In fact, work in the company does not give you the experience to create your own: instead, you turn into a hand-made animal, which is convinced that you can work only in the office, and you need to receive tasks from the manager.
What convinced me of this was the founders of Kiko. They founded the company immediately after college. Due to lack of experience, they made a bunch of mistakes. However, a year later, when we financed their second startup, they became extremely brilliant. They were obviously not tame animals. They would never have become so if they had worked for a year at Microsoft, or even at Google. They would still be timid junior programmers.
So now I advise people to set up companies right after college. There is no better time to take risks than youth. Of course, there is a risk that nothing happens. But even failure will bring you closer to the ultimate goal than work.
I feel a little uncomfortable when I say this, because in fact I advise people to gain experience by failing for our money, but this is how it really is.
3. Too little resolve.
You need to be very determined to establish a successful company. This is probably the surest sign of future success.
Probably many are not decisive enough to create a company. It is difficult for me to talk about it with confidence, because I strive so much for success that it is difficult for me to imagine what is happening in the heads of people who are not so decisive. But I know that there are such people.
I think that many hackers underestimate their own confidence. Many became much more decisive, and this was evident when they founded their startup. I can cite as an example the many founders funded by us, who were once happy to sell a company for two million, and now they are seriously thinking about world domination.
How can you determine if you are decisive enough, even if Larry and Sergey themselves were not sure whether to create Google? I have an assumption: the criterion can be the confidence with which you work on your own projects. Perhaps Larry and Sergey were not sure that they needed to establish a company, they were not the submissive professorial assistants of the third plan, who humbly carried out orders from above. They worked on their own projects.
4. Too little mind
You may need to be only moderately smart to create a successful company. However, if you are worried about this, you are probably mistaken. If you have enough mind to worry that you may not have enough mind on the foundation of a startup, then most likely you will have enough of it.
In any case, to create your company a special mind is not necessary. However, not always. You need to know mathematics very well in order to create Mathematica. However, most companies are engaged in more mundane things, where the main criterion of success is effort, not brains. Perhaps Silicon Valley will change your understanding of this, because there is a cult of mind. People who lack intelligence are at least pretending to have it. However, if you think that in order to get rich you need brains, try to spend a couple of days in the most bizarre entertainment places in New York or Los Angeles.
If you think that you are not smart enough to establish a technologically complex startup, try writing software for businesses. Such startups are not based on technology, but on sales, and sales are primarily dependent on effort.
5. Too little business knowledge.
Another reason not to take into account. You absolutely do not need to know anything about business to establish a company. The main goal should be the product. All you need to know in this phase is how to create something that people need. If you succeed, you will have to think how to make money from it. However, it is easy and you will quickly figure it out.
I am often criticized for advising the founders to simply do something useful, and think about profit later. Yet empirical observations show that almost 100% of companies that create something popular earn money from it. People who buy companies tell me privately that they are buying companies not for profit, but for strategic value. In other words, for doing something useful. These people know that this rule will work for them: if the users love you, you can make money from this somehow, and if they don't, the most amazing business model will not save you.
So why do so many people criticize me? I think they simply cannot get used to the idea that a handful of twenty-year-olds could get rich, creating something cool, but not profitable. They just do not want it to be so. However, the likelihood of this does not depend on their desire.
At first, I was frustrated that they talked about me as about the irresponsible dressing up of the piper who led the promising founders into the abyss. Now I understand that such talk is a good sign.
The truest truths are those that most people do not believe in. These are like undervalued stocks. If you start with them, then all profits will be yours. Therefore, when you find a good idea that most people criticize, you must not only ignore them, but also work aggressively on this idea. In this case, you should look for ideas that will become popular, but of which it is unclear how to make money.
I am putting a round of financing on the fact that you cannot create something popular that we couldn’t come from.
6. No co-founder
Lack of co-founder is a big problem. Startup is too hard for one person. Although our opinion often differs from that of other investors, at this point we are all one. All investors, without exception, will be very enthusiastic in financing you with a co-founder than you alone.
We financed two singles, but both times we set the primary task of finding a co-founder, and they did. However, we asked them to do so before they applied. When the project is already funded, it’s easy to find a co-founder, so we wanted someone who would be sufficiently committed to this rather complicated business.
What if there is no co-founder? To find. This is more important than anything else. If there, where you live, there is no one who would create a company with you, move. If no one wants to work on your current idea, change the idea.
If you are still learning, you are surrounded by potential co-founders. After a few years it will be much harder to find them. Not only will you have a smaller sample, many will already have work and, maybe, even families that will have to be maintained. If you have fellow students with whom you discussed the ideas of creating a company, then keep in touch with them after uni: this will help hope not to die.
Perhaps you will find a co-founder at some conference or similar event. But I would not count on it too much. To understand whether this person is able to establish a company with you, you need to work with him. [2]
The main conclusion you have to do is not how to find a co-founder, but that you need to establish a company while you are young and surrounded by such people.
7. No idea
In a sense, the lack of an idea is not a problem, because most startups change their original idea anyway. On average, a startup in Y Combinator 70% of the initial idea is updated by the end of the third month. Sometimes the idea changes dramatically.
In fact, we are so convinced that the identities of the founders are much more important than the idea that we want to try something new in the next funding cycle. We will allow people to apply without any idea whatsoever. If you want, write in the application that you have no idea what you want to do. If you really represent something, then we will finance you in any case. We are sure that we will sit down and come up with some promising project.
In fact, this is indeed the case now. We do not pay too much attention to the idea, but ask more about it out of politeness. The most important question in the application that we really pay attention to is a story about what cool things you have already done. If you have already made the first version of what you want to make a startup, so much the better, but we are interested in the ability to create. The role of the lead developer in a popular open source project is almost an ideal necessary experience.
So much for Y Combinator. But is it just that in other cases? Because in a sense, this is a problem. If you create a startup without an idea, then what will you do?
So, a short recipe for creating ideas for startups. Find something in your life that you lack and satisfy this need, no matter how specific it is. Steve Wozniak created a computer for himself. Who could have imagined that such a large number of people would also need a personal computer? A narrow but existing need is better than a potentially common but hypothetical necessity. Even if you are missing a girl on Saturday night and you know how to solve this issue with the help of software, you are already on the right track, because many people have such a problem.
8. No space for new startups.
Many people look at the increasing number of new startups and think: "This can no longer continue." They mistakenly mean that there is some kind of limit on the number of startups, but there is none. Nobody sets a limit on the number of people who work in companies with thousands of employees. Why should there be a limit on the number of people who work in companies with only five employees? [3]
Practically everyone who works satisfies some need. The division of the company into small parts does not lead to the disappearance of needs. Existing needs would be better served by a network of startups than by several giant, hierarchical corporations, but I do not think that this would lead to a decrease in demand, because meeting existing needs provokes new needs. Anyway, this is true with individuals. And nothing wrong with that. We take for granted what medieval kings would consider insane luxury. There is no absolute standard for material well-being. Health care is one of its components and this is another black hole. In the foreseeable future, people will have a desire to increase their material well-being, which means that there is no limit to the amount of work for companies,in particular, for startups.
The misconception that there are too many startups is usually not explicit. They say this indirectly, for example, “there are a finite number of startups that Yahoo, Google and Microsoft can acquire.” Perhaps only the list of sinks is slightly longer. And then, whatever you think about other companies, Google is not fools. Companies buy startups because they create something valuable. And why should there be some kind of limit on the number of startups that create something valuable, except for the limit on the amount of money that people want to make? Perhaps there is some limit on the number of companies that a single acquirer can absorb, but if a startup represents some potential value that its owners are willing to sell for immediate payment, the acquirers will somehow cope with this.Markets are pretty smart in this regard.
9. It is necessary to have a family.
But this is already serious. I would not advise anyone who has a family to get involved in a startup. I do not want to say that this is a bad idea, I just do not want to take responsibility for such advice. I am ready to take responsibility for the 22-year-old guys who, in case of a defeat, will learn a lot and will not lose the chance to go to work at Microsoft if they want. But I am not ready to put mothers in a difficult position.
If you have a family and a desire to create a startup, then you can engage in consulting with the goal of one day moving on to creating a product. The chances of creating something revolutionary in this way are rather low. Google you will never get on this scheme. On the other hand, you will never be left without income.
Another way to reduce risks is to join an existing startup instead of creating your own. Being one of the first employees is almost like being a founder, experiencing ups and downs. You will be approximately 1 / n ^ 2nd founder, where n is your number as an employee.
As in the question about the co-founder, the main conclusion that needs to be made is that you need to create startups while you are young.
10. Financial independence
This is my personal reason not to create a startup. Startups are stressful. Why is it needed if you have money? For each “incorrigible founder of companies,” twenty normal entrepreneurs who will say: “Create a new company? Have you lost your mind? ”
I was close to creating a new company a couple of times, but every time I thought better of it, because I don’t want to work hard without straining for four years of my life. I know this business too well to understand that a startup cannot be created without a certain effort. It is the ability to take on insanely hard work that makes a good founder so dangerous.
However, with retirement there are problems. Like many other people, I love working. One of the weird things that you learn when you become rich is that many of the people you would like to work with are not rich. They have to work on something to pay the bills. So if you want them to be your colleagues, you will also have to work on something that allows you to pay bills, although you can afford not to. I think this motive is driven by many of those who create one company after another.
That is why I enjoy working in Y Combinator so much. This is a reason to work with interesting people on what I like.
11. Not ready to make commitments
For me personally, this was a reason not to establish a company when I was not yet 30. Like many people at this age, I valued freedom above all. I did not want to do anything that would limit me for more than a few months. Moreover, I did not want to do what promised to absorb my whole life without a trace, as it happens with startups. And that's fine.If you want to spend time traveling, or playing in a group, or doing something else, this is a perfectly normal reason not to start a company.
If you create a successful startup, it will take you three or four years. (If you create an unsuccessful one, you will get off much faster). Therefore you should not get involved in it if you are not ready to commitments for such a period. However, keep in mind that if you find a regular job, it may take the same several years, and you will have much less free time than you expected. So if you are ready to hang a badge with your last name to go to a career counseling seminar, you are probably ready to start a company.
12. Order needed
I was told that there are people who should have order in their life. I think this is a beautiful description of the fact that they need someone who would lead them. I believe that such people exist. There is much empirical evidence: armies, religious worship, etc. Perhaps these people even make up the majority.
If you are from these people, then do not create a startup. Moreover, do not even go there to work. In a normal startup, no one will tell you what to do. Of course, someone will take the position of director, but until the number of employees exceeds a dozen, no one should direct anyone. This is too inefficient. Everyone should do what he should do without instructions from above.
If you think this is a direct path to chaos, imagine a football team. Eleven people work in fairly sophisticated combinations and, at the same time, with rare exceptions, no one directs anyone. A journalist once asked David Beckham if there were any language problems in Real Madrid, all in a team were players from about eight countries. He said that there was never any problem. All players were at such a high level that they did not have to talk. They just did the right thing.
How to determine that you think independently enough to create a company? If inside you there is a desire to bristle at the mere thought that this is not so, then you are probably ready to start a startup.
13. Fear of uncertainty
Perhaps some people do not create startups, because they do not like uncertainty. If you go to work at Microsoft, you can fairly accurately predict how the next few years will pass. Moreover, it is even very accurate to predict this. If you create a startup, anything can happen.
Well, if you care about uncertainty, then I can solve this problem. If you create a startup, then you are most likely to fail. Seriously, this is not the worst way to think about this experience in general. Hope for the best, but prepare for the worst. At worst, it will be interesting, at best - get rich.
No one will scold you if your startup goes to the bottom, if you, of course, put enough effort into it. Maybe there used to be a time when employers regarded this experience as a disadvantage, but not now. I asked the managers of large companies and they told me that with great pleasure they would hire someone who created an unsuccessful startup than someone who worked at that time in a large corporation. Investors will not consider this to be your disadvantage either, unless the startup has, of course, gone to the bottom because of your laziness or incredible stupidity. I was told that in other places - in Europe, for example - such a failure is equated with shame.
14. Not understanding what you are avoiding.
One of the reasons why founders who have worked a couple of years after uni work better than those who create a startup right after graduation is the awareness of what is being avoided. If a startup fails, then they will have to go to regular work, and they know what a nightmare it is.
If you have summer internships behind your back, then you probably think that you know what it is like to work in a company. You are probably mistaken. Summer internships at technology companies is not a real job. If you worked as a waiter in the summer, this is a job. Technology companies do not recruit students as a source of cheap labor. They take you on an internship in the hope that you will come to them to work after graduation. If you do something useful during your internship, it will be cool, but they don’t count on it too much.
This will all change as soon as you finish university. You will need to earn your money. Most companies do boring things, so you too have to do boring things. Uncomplicated, compared to the uni, but boring. At first, it will seem cool to you to get paid for relatively simple things, while at the university you worked hard and still paid money for it. However, it will pass in a few months. Over time, any desire to work on stupid tasks will pass, no matter how much money they pay for it and no matter how easily they get it.
And this is not the worst. The worst thing about normal work is that you have to be there at certain hours. Even in Google, apparently, it is. And this means, as any working person will tell you, that there will be moments when you are not in the mood to work, but you will have to sit in front of the monitor and pretend that you are working. For those who like to work, like most hackers, this is torture.
There is no such thing in a startup. Most of them have no concept of office hours. Work and life are just mixed up. However, the fact that no one looks askance, if you live at work is good. In a startup, most of the time, you can do whatever you want. If you are a founder, then most of the time you will want to work. But you will never have to pretend that you are working.
If you fall asleep in the middle of the day in a big company, it will seem unprofessional. If you fall asleep in a startup after dinner, your friends will simply decide that you are tired.
15. Parents want you to become a doctor.
A significant number of potential founders do not create start-ups, because their parents discourage them. I do not want to say that they do not need to listen. Families have their own traditions; Who am I to argue with them? But I’ll give you a couple of reasons why a safe career is not exactly what your parents really want for you.
Firstly, parents are more conservative about children than they would be about themselves. This is actually quite rational behavior in this situation. Parents end up sharing more of the suffering of children than success. Most parents have nothing against it, this is their job; however, this makes them unnecessarily conservative. But delusion due to excessive conservatism is still a delusion. Almost everywhere, reward is proportional to risk. Therefore, keeping children from risk, parents, without knowing it, deprive themselves of rewards. If they understood this, they would be more relaxed about risk taking.
Secondly, parents can often be mistaken because they, as generals, always fight like the last time. If they want you to become a doctor, then most likely they do not want you to help the sick, but that you have a paid and prestigious job. [4] But not so prestigious and highly paid as in those years when their opinion was formed. When I was a child in the seventies, to be a doctor was to be someone. Doctors were somehow inevitably associated with tennis and Mercedes 450 SL. All this is no longer relevant.
Parents who want you to become a doctor do not always understand how much has changed. Would they be very upset if you were Steve Jobs? I think that the opinion of parents should be treated no more than the wishes of the new functionality in the program. Even if they are obviously asking for something, do not rush to fulfill the desire, but rather think what they really need and how best to meet this need.
16. Search for work accepted.
This is the last and probably the most important reason why people get a job: this is accepted. Traditions are an insanely strong incentive, because they affect you, while you don’t think about it.
Practically for everyone except the bandits, it is obvious that if you need money, you need to look for work. In fact, this tradition of all a hundred years. Prior to this, all traditionally engaged in farming. Relying on a tradition that is only a hundred years old is not a good idea. In the scale of history, everything changes very quickly.
Perhaps we are now on the verge of another such change. I read quite a few works on the history of economics and understand well how startups work, and it seems to me that we are now going through a similar transition as a century ago, when there was a shift from farming to manufacturing.
You know what?If you were living at the time when this change began (approximately the 11th century in Europe), then any person who went to the city to earn money seemed crazy. And although it was forbidden for the serfs to leave the feudal estate, it was not so difficult to escape - there were no armed guards around the perimeter. What prevented many peasants from entering the city was the seemingly insane risks. Leave your piece of land? Leave the people with whom you grew up to live in a giant city, where there will be three or four thousand strangers? How to live? Where to take food if you have not grown it?
Once it seemed strange, but now we make a living with our mind. When thinking about how scary to start a company, remember how scary it was once our ancestors to do what we are doing now. Strange as it may seem, those who are trying to convince you to live as before know best of all. How can Larry and Sergey invite you to work if they themselves have never been hired workers?
Today we look back at the medieval peasants and wonder: how did they tolerate it? How sad it was, probably, to spud the same beds all my life without hope of the best, remaining at the mercy of the feudal lords and priests, who took away all the surplus and demanded respect for themselves as the main ones. I will not be surprised if one day people will look at our today's "ordinary" work with the same look. How sad it must be, every day to go to work in your office compartment of the soulless office complex and get tasks from who you should call your boss and who, having called you to your office, ask you to sit down and you will sit down! Imagine you need permission to publish software to users. Imagine that your mood deteriorates on Sunday evening,because the weekend is over and you have to get up and go to work. How did they tolerate it?
The idea that we are on the verge of the same transition as the transition from farming to production, captures. Therefore, I am interested in startups. Startups are not interesting because they allow you to get rich - I don't give a damn about stock speculation, for example. They are about the same as puzzles. There is a lot going on in the startup world. Perhaps they represent a rare, historical transition from one way of creating value to another.
That is what makes us work in Y Combinator. We want to make money, even if it would be the only goal, we would hardly have stopped, but this is not the main task. There were only a few great economic changes in human history. To help one of them happen would be awesome.
Notes
1. The only ones who lost are us. Business angels had a convertible debt obligation, so they were the first to gain access to the proceeds from the auction. Y Combinator received only 38 cents on a dollar invested.
2. Perhaps the best experience of this kind is working on open source projects, but they do not imply frequent meetings. Perhaps starting such a project is a good idea.
3. There must be big companies to buy start-ups, so the number of big companies cannot drop to zero.
4. Thought experiment. If doctors were doing the same thing, but would be outcasts, earning pennies, would parents still like this career for children?
Thanks to Trevor Blackwell, Jessica Livingston and Robert Morris for reading draft essays, the founders of Zenter for permission to use their product that will kill PowerPoint, although it has not yet been released, as well as the Ming-Hay Luk from Berkeley CSUA for inviting me to speak.
The original article by Paul Graham can be found here (eng.) And here (rus.).
Translation: Eugene shadtchnev Shadchnev.
Source: https://habr.com/ru/post/30951/
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