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  • Welcome.

  • Can I turn this on?

  • Maybe, all right.

  • >> Can people hear in the back?

  • >> Can you guys hear me?

  • Is the mic on?

  • No, ah, maybe you can ask them to turn it on.

  • Maybe we can get a bigger, ah, there we go.

  • All right.

  • Maybe we can get a bigger auditorium, we'll see.

  • So welcome to CS183B.

  • I'm Sam Altman.

  • I'm the President of Y Combinator.

  • Nine years ago, I was a Stanford student and

  • then I dropped out to start a company.

  • And then I've been an investor for the last few.

  • So, at YC, we've been teaching people how to

  • start startups for nine years.

  • Most of it's very hands on and

  • specific to the startups.

  • But, 30% of it is pretty generally applicable.

  • And so, we think that we

  • can teach that 30% in this class.

  • And even though that's only 30% of the way

  • there hopefully it'll still be really helpful.

  • We've taught a lot of this at YC already, but

  • it's all been off the record.

  • And this is the first time that a lot of what we

  • teach in YC is gonna be on the record.

  • So we've invited some of our best speakers to come and

  • give the same talks they give at YC.

  • We've now funded 720 companies.

  • And so, we're pretty sure

  • that a lot of this advice is pretty good.

  • We can't fund every startup yet, but we can

  • hopefully make this advice very generally available.

  • Guest speakers are gonna teach 17 of the 20 classes.

  • I'm only teaching three.

  • Counting YC itself,

  • every guest speaker has been involved in the creation of

  • a billion plus dollar company.

  • So the advice shouldn't be that theoretical.

  • It's all been, it's all from people who have done it.

  • All of the advice in

  • this class is geared towards people starting a business

  • where the goal was hyper-growth.

  • And eventually building a very large company.

  • Much of it doesn't apply in other cases and

  • I wanna warn people up front.

  • That if you try and

  • do these things in a lot of big companies or

  • non startups, it won't work.

  • It should still be interesting.

  • I, I really do think that startups are the way of

  • the future and it's worth trying to understand them.

  • But startups are very different

  • than normal companies.

  • So over the course of today and

  • Thursday, I'm gonna try to give an overview of the four

  • areas that you need to excel at in order to

  • maximize your chances of success at a startup.

  • And then throughout the course, the guest speakers

  • are gonna drill into all of these in more detail.

  • So the four areas, you need a great idea,

  • a great product, a great team and great execution.

  • These overlap somewhat, but I'm gonna have to talk about

  • them somewhat individually to make it make sense.

  • You may still fail.

  • The outcome is something like idea times product

  • times execution times team times luck,

  • where luck is the random number between 0 and 10,000.

  • Literally that much.

  • But if you do really well in the four areas you can

  • control, you have a good chance of at

  • least some amount of success.

  • One of the exciting things about startups, is

  • that they are surprisingly even playing field.

  • Young and inexperienced, you can do this.

  • Old and very experienced, you can do this too.

  • And one of the things that I particularly like about

  • startups is that some of the things that are bad in

  • other work situations, like being poor and unknown are

  • actually huge assets when it comes to starting a startup.

  • Before we jump in on the how.

  • I want to talk about why you should start a startup.

  • I'm somewhat hesitant to be doing this class at all,

  • because you should never start a startup just for

  • the sake of doing so.

  • There are much easier ways to get rich and

  • everyone who starts a startup always says,

  • always, that they couldn't have imagined how hard and

  • painful it was going to be.

  • You should only start a startup if you com,

  • feel compelled by a particular problem.

  • And that you think starting a company is

  • the best way to solve it.

  • The specific passion should come first and

  • the startup second.

  • In fact, all of

  • the big successes we have at YC followed this.

  • So, for the second half of today's lecture,

  • Dustin Moskovitz the co-founder of Facebook and

  • Asana, is going to take over and

  • talk about why to start a startup.

  • We're so surprised by the amount of

  • attention that this class got.

  • That we wanna make sure we

  • spend a lot of time on the why.

  • Okay. So

  • the first of the four areas.

  • A great idea.

  • It's become popular in

  • recent years to say that the idea doesn't matter.

  • In fact, it's almost uncool to spend a lot of time

  • thinking about the idea for a startup.

  • You're just supposed to start.

  • Throw stuff at the walls.

  • See what sticks.

  • And not even spend any time thinking about if

  • it'll be valuable if it works.

  • And pivots are supposed to be great.

  • The more pivots, the better.

  • So this isn't totally wrong.

  • Things do evolve in

  • ways that are difficult to predict.

  • And there's a limit to how much you can figure out,

  • without actually getting a product in

  • the hands of users.

  • And great execution is at

  • least ten times more important and

  • a hundred times harder than a good idea.

  • But the pendulum has swung way out of whack here.

  • A bad idea is still bad.

  • In the pivot happy world that we're in today,

  • it feels really sub optimal.

  • Great execution towards a terrible idea

  • will get you nowhere.

  • There are exceptions, of course.

  • But most great companies start with

  • a great idea, not a pivot.

  • If you look at successful pivots, they almost always

  • are a pivot into something the founders

  • themselves wanted, not a random made up idea.

  • Airbnb happened because Brian Chesky couldn't pay

  • his rent, but he did have some extra space.

  • In general, though,

  • if you look at the track record of pivots,

  • they don't become big companies.

  • I myself used to believe ideas didn't matter that

  • much, but I'm very sure that's wrong now.

  • The definition of the idea,

  • as we talk about it, is very broad.

  • It includes the size and the growth of the market,

  • the growth strategy for the company,

  • the defensibility strategy and so on.

  • When you're evaluating an idea,

  • you need to think through all these things,

  • not just the product.

  • If it works out, you're gonna be working on this for

  • ten years.

  • So it's worth some real upfront time

  • to think we've a long term value in

  • the defensibility of the business.

  • Even though plans themselves are worthless,

  • to exercise a planning is really valuable and

  • totally missing in most startups today.

  • Long term thinking is so where,

  • anywhere, but especially in startups.

  • That it's a huge advantage if you do it.

  • Remember that the idea will expand and

  • become more ambitious as you go.

  • You certainly don't need to have everything figured out,

  • in a path from here to world domination.

  • But you really want a nice kernel to start with.

  • >> You want something that can develop in