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Paul Graham ( @paulg) co-founded Y-Combinator in 2005.
YC has been used to launch over 2,000 companies, including Stripe, Airbnb, Dropbox, Twitch, and Reddit.
According to Paul, these are the 3 things you need to build a successful startup.
YC has been used to launch over 2,000 companies, including Stripe, Airbnb, Dropbox, Twitch, and Reddit.
According to Paul, these are the 3 things you need to build a successful startup.
Graham believes that most startups fail because they fail at one of these.
If you can do all three, you will probably succeed.
If you can do all three, you will probably succeed.
Graham believes that too many startups focus too much on the initial idea.
Contrary to popular belief, a startup doesn’t need a brilliant idea to be successful.
But that’s not what matters.
Contrary to popular belief, a startup doesn’t need a brilliant idea to be successful.
But that’s not what matters.
Graham writes, “ What matters is not ideas, but people who have them. Good people can fix bad ideas, but good ideas can’t save bad people.”
1. People
Paul learned one trick when building his startup that has stayed with him since.
When hiring or building a startup, can you describe that person as an “animal”?
Meaning, someone who passes right through professional and crosses over into obsessive.
Paul learned one trick when building his startup that has stayed with him since.
When hiring or building a startup, can you describe that person as an “animal”?
Meaning, someone who passes right through professional and crosses over into obsessive.
Graham also believes that most startups should have more than one founder.
Ideally between 2-4 founders.
Of those 2-4 founders, it is crucial to have a founder who understands what the customer wants.
Ideally between 2-4 founders.
Of those 2-4 founders, it is crucial to have a founder who understands what the customer wants.
He says this is the most important issue for tech startups and the rock that sinks most of them.
2. What Customers Want
Startups are not the only ones who have to worry about this.
Most businesses fail because they don’t give customers what they want.
Startups are not the only ones who have to worry about this.
Most businesses fail because they don’t give customers what they want.
You always hear different reasons why startups fail but Graham writes, “Can you think of one that had a massively popular product and still failed?”
The real problem for startups is that customers didn’t want the product.
The real problem for startups is that customers didn’t want the product.
Graham writes that “the only way to make something customers want is to get a prototype in front of them and refine it based on their reactions.”
The other approach Graham writes about is the “Hail Mary” approach.
Spending ample time, money, and resources on a product that nobody wants because no prototype was released.
This is not recommended by Graham.
Spending ample time, money, and resources on a product that nobody wants because no prototype was released.
This is not recommended by Graham.
Graham recommends for the best odds of building something that customers want is by starting in niche markets.
Why?
Because startups make money by offering something better than people had before, and so, the best opportunities are where things suck the most.
Why?
Because startups make money by offering something better than people had before, and so, the best opportunities are where things suck the most.
Graham says, “if you build the simple, inexpensive option, you’ll not find it easier to sell at first, but you’ll also be in the best position to conquer the rest of the market.”
3. Not spending money
Money is needed to make these things happen.
But the key is not spending it.
According to Graham, this is the common denominator in startups that fail.
They run out of money.
Money is needed to make these things happen.
But the key is not spending it.
According to Graham, this is the common denominator in startups that fail.
They run out of money.
He believes many startups try to “get big fast.”
Either getting a lot of customers fast or hiring too many people, too fast.
Either getting a lot of customers fast or hiring too many people, too fast.
The reasoning is because when you get too big too fast (either customers or staff) then it’s very hard to make changes to the product.
This allows you to understand the product, space, and customers better than anyone else.
This allows you to understand the product, space, and customers better than anyone else.
That’s the key to success as a startup.
Graham states, “to make something users love, you have to understand them. And the bigger you are, the harder that is.”
His advice?
“Get Big Slow”
Graham states, “to make something users love, you have to understand them. And the bigger you are, the harder that is.”
His advice?
“Get Big Slow”
These are the three things needed to build a successful startup, according to Paul Graham.
Paul says, "If there is one message I'd like to get across about startups, that's it. There is no magically difficult step that requires brilliance to solve."
Paul says, "If there is one message I'd like to get across about startups, that's it. There is no magically difficult step that requires brilliance to solve."
