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  • That short.

  • Like, long introductions are no good.

  • Sam knows.

  • Alright, ready, everybody?

  • I'm not gonna ask if the mic is working like in

  • every talk so far.

  • I'll just assume it's working.

  • >> No!

  • >> No, fuck!

  • >> All right, well make it work somebody.

  • >> It works, it works

  • >> All right, this is like some kinda class tradition.

  • All right, all right.

  • I wrote out my talk and

  • afterwards in a couple days I will like turn it

  • from a talk into an essay and put it online.

  • So, you don't have to take notes, just, just listen.

  • All right.

  • So, one of the advantages of having kids is

  • that when you have to give advice to people,

  • you can ask yourself, what would I tell my own kids?

  • And actually, you find this really focuses you.

  • So, even though my kids are little.

  • My two year old today,

  • when I asked what he was gonna be after two?

  • He said a bat.

  • The correct answer was three.

  • But a bat is so much more interesting.

  • So even though my kids are little,

  • I already know what I would tell them about startups if

  • they were in college.

  • And so that is what I am gonna tell you.

  • So, you're literally getting what I

  • would give my own kids,

  • since most of you are young enough to be my own kids.

  • All right. So,

  • startups are very counterintuitive.

  • And I'm not sure exactly why,

  • it could be simply because knowledge about them has not

  • permeated our culture yet.

  • But, whatever the reason, this is an area where you

  • cannot trust you're intuitions all the time.

  • It's like skiing in that way.

  • Any of you guys learn to ski as adults?

  • You know, when you're skiing,

  • when you first try skiing and you want to slow down,

  • your first impulse is to lean back,

  • just like in everything else,

  • but lean back on skis and

  • you fly down the hill out of control, so, as I learned.

  • So, part of learning to ski is learning to

  • suppress that impulse.

  • Eventually, you get new habits.

  • But in the beginning there's this list of things you're

  • trying to remember as you start down the hill.

  • You know, like alternate feet, make s-turns,

  • do not drag the inside foot, all this stuff.

  • Well, startups are as unnatural as

  • skiing and there is a similar list of stuff you

  • have to remember for startups.

  • And what I’m gonna give you today is the beginning of

  • the list.

  • The list of the counterintuitive stuff you

  • have to remember to like prevent your

  • existing instincts from leading you astray.

  • The first thing on it, is the fact that I just

  • mentioned that startups are so weird that if you

  • follow your instincts they will lead you astray.

  • If you remember nothing more than that.

  • When you're about to make a mistake,

  • you may at least pause before making it.

  • When I was running Y Combinator,

  • we used to joke that our function was to tell

  • founders things they would ignore.

  • And it's really true.

  • Batch after batch, the YC partners warn founders about

  • mistakes they are about to make.

  • And the founders ignore them.

  • And they come back a year later and

  • say, I wish we'd listened.

  • But, that dude is in their cap table and

  • there's nothing they can do.

  • Why do founders persistently ignore the partner's advice?

  • Well, that's the thing about counterintuitive ideas, they

  • contradict your intuitions, so they seem wrong.

  • So, of course you're first impulse is to ignore them.

  • And in fact that is not just the curse of Y Combinator,

  • but to some extent our You don't need people to

  • give you advice that doesn't surprise you, right?

  • If founder's existing intuitions gave them

  • the right answers they wouldn't need us.

  • That's why there are a lot of ski instructors and

  • not a lot of running instructors.

  • You don't see those two words together,

  • running instructor, as much as you see ski instructor.

  • It's because skiing is counterintuitive.

  • So sorta, what YC is,

  • is like business ski instructors, except for

  • going up the slopes instead of down them.

  • Well, ideally,

  • you can however trust your instincts about people.

  • You, your life so far hasn't been much like

  • starting a startup, but all the interactions you've had

  • with people are just like the interactions you've had

  • with people in the business world.

  • So, in fact one of

  • the big mistakes that founders make is to not

  • trust their intuitions about people enough.

  • They meet someone who seems impressive, but

  • about whom they feel some misgivings.

  • And then later, when things blow up,

  • they tell themselves, they say, you know,

  • I knew there was something wrong about that guy, but

  • I ignored it because he seemed so impressive.

  • And there's a specific sub-case in business,

  • especially if you come from an engineering background as

  • I believe you all do.

  • You think business is supposed to be

  • this sorta slightly distasteful thing.

  • And so when you meet people who seem smart, but

  • somehow distasteful you think well,

  • okay this must be normal for business.

  • But it's not.

  • Just like pick people the way you would pick people if

  • you were picking friends.

  • This is one of those rare cases where it

  • works to be self indulgent.

  • Work with people you genuinely like and respect

  • and that you have known long enough to be sure.

  • Because there's a lot of people who

  • are really good at seeming likeable for a while.

  • Just wait till your interests are opposed and

  • then you'll see.

  • All right.

  • The second counterintuitive point is that, and this

  • will, might come as a little bit of a disappointment.

  • But what you need to succeed in a startup is

  • not expertise in startups.

  • That makes this class different from most other

  • classes you take.

  • You take a French class at the end of it you will

  • learn how to speak French if you do the work.

  • You may not sound exactly like a French person,

  • but pretty close, right?

  • This class can teach you about startups but

  • that is not what you need to know.

  • What you need to notice exceed in a startup is not

  • expertise in startups,

  • what you need is expertise in your own users.

  • Mark Zuckerberg did not succeed in

  • Facebook because he was an expert in startups.

  • He succeeded despite being a complete noob at startups.

  • I mean, Facebook was

  • first incorporated as a Florida LLC.

  • Even you guys know better than that.

  • He succeeded despite being a complete noob at startups

  • because he understood his users very well.

  • Most of you don't know the mechanics of

  • raising an Angel round.

  • Right, and if you feel bad about that, don't, because I

  • can tell you Mark Zuckerberg probably doesn't know

  • the mechanics of raising an Angel round either.

  • If he was even paying attention when Ron Conway

  • wrote him the big check,

  • he has probably forgotten about it by now.

  • In fact, I worry, it's not merely unnecessary for

  • people to learn in detail about the mechanics of

  • starting a startup, but possibly somewhat dangerous.

  • Because another of the characteristic mistakes of

  • young founders starting startups is to go through

  • the motions of starting a startup.

  • They come up with some plausible sounding idea.

  • They raise funding at a nice valuation.

  • They rent a nice office in Soma,

  • hire a bunch of their friends.

  • And then the next step, after rent a nice

  • office in Soma and hire a bunch of their friends,

  • is gradually realize how completely fucked they are.

  • Because while imitating all the outward forms of

  • starting a startup,

  • they have neglected the one thing that's actually

  • essential which is to make something people want.

  • By the way, that's the only use of that swear word

  • except for the initial one that was involuntary.

  • And I did check with Sam whether it would be okay.

  • He said he had done it several times.

  • I mean, used the word.

  • >> We saw this happen so often, No, I mean people

  • going through the motions of starting a startup.

  • >> That we made up a name for it.

  • Playing house.

  • Eventually, I realized why it was happening.

  • The reason young founders go through the motions of

  • starting a startup is

  • because that is what they have been trained to do for

  • their whole lives up to this point.

  • Think about what it takes to get into college.

  • Extracurricular activities, check.

  • Right?

  • Even in college classes, most of the work you do is

  • as artificial as running laps.

  • And I am not attacking the educational system for

  • being this way.

  • Inevitably, the work that you do to learn something is

  • gonna have some amount of fakeness to it.

  • And if you measure people's performance,

  • they will inevitably exploit the difference.

  • To the degree that what you're measuring is

  • largely an artifact of the fakeness.

  • And I confess that I did this myself in college.

  • In fact, here is a useful tip on getting good grades.

  • I found that in a lot of classes there might only be

  • 20 or 30 ideas that actually,

  • had the right shape to make good exam questions.

  • And so the way I studied for exams in these classes was

  • not to master the material in the class.

  • But to try and

  • figure out what the exam questions would be and

  • work out the answers in advance.

  • Unlike, for me the test was not like what my

  • answers would be on the exam.

  • For me the test was.

  • Which of my exam questions would turn up

  • on the exam, right?

  • So I would get my grade instantly.

  • I would walk into the exam and

  • look at the questions and

  • see how many I got right essentially.

  • >> It works in a lot of classes,

  • especially CS classes.

  • I remember Automata Theory, there's only a few

  • things that make sense to ask about Automata Theory.

  • So, it's not surprising that after being effectively

  • trained for their whole lives to play such games,

  • young founders first impulse upon starting a startup is

  • to figure out what the tricks are.

  • For this new game,

  • what are the extracurricular activities of startups,

  • what are the things that I have to do.

  • They always wanna know since,

  • since apparently the measure of success for

  • a startup is fundraisingn another noob mistake.

  • They always wanna know, what are the tricks for

  • convincing investors.

  • And we have to tell them,

  • the best way to convince investors,

  • is to start a startup that's actually doing well, meaning

  • growing fast, and then simply tell investors so.

  • So then they ask, okay, what are the tricks for

  • growing fast?

  • Alright? And

  • this is exacerbated by the existence of this term,

  • growth hacks.

  • Right?

  • Whenever you hear anybody talk about growth hacks,

  • just mentally translate it in your mind to bullshit.

  • Because what we tell them is the way to make your startup

  • grow is to make something that users really love.

  • Right, and then tell them about it.

  • So that's what you have to do.

  • That is growth hacks right there.

  • So many of the conversations the YC partners have with

  • the founders begin with the founders saying a sentence

  • that begins with, how do I.

  • And the partner is answering with a sentence that begins

  • with, just.

  • Right, why do they make things so complicated?

  • The reason, I realized,

  • after years of being puzzled by this,

  • is they're looking for the trick,

  • they've been trained to look for the trick.

  • So, this is the third thing.

  • The third counterintuitive thing to

  • remember about startups.

  • Starting a startup is

  • where gaming the system stops working.

  • Gaming the system may continue to work if you go

  • to work for a big company.

  • Depending on how broken the company is you may be able

  • to succeed by sucking up to the right person.

  • Giving the impression of productivity by sending

  • emails late at night.

  • Or if your smart enough,

  • changing the clock on your computer,

  • cause whose going to check the headers, right?

  • But, I like an audience I tell jokes like that to and

  • they laugh.

  • Over in the business school, headers, okay.

  • God this thing is being recorded,

  • I just realized that.

  • All right, from now on,

  • we are sticking strictly to the script.

  • >> All right.

  • But in startups, that does not work.

  • There is no boss to trick.

  • There's no, how can you trick people if

  • there's no one to trick?

  • There's only users.

  • And all users care about is whether your software.

  • Does what they want, right?

  • They're like sharks.

  • Sharks are, like, too stupid to fool.

  • You can't, like, wave a red flag at a shark and fool it,

  • it's like, meat or no meat.

  • So, you have to have something people want.

  • And you only prosper to the extend that you do.

  • The dangerous thing is,

  • particularly for you guys, the dangerous thing is

  • that faking does work to some extent with investors.

  • You, if you're really good at

  • knowing what you're talking about.

  • You can fool investors for

  • one, maybe two rounds of funding.

  • But it's not in your interest to.

  • I mean, you're all doing this for equity.

  • You're playing a confidence trick on yourself.

  • You're wasting your own time,

  • because the startup is doomed.

  • And all you're doing is,

  • you're just gonna waste your time writing it down.

  • So, stop looking for the trick.

  • There are tricks in the startups,

  • as there are in any domain.

  • But they are an order of magnitude less

  • important than solving the real problem.

  • Someone who knows zero about fund raising but

  • has made something users really love will have

  • an easier time raising money.

  • Than someone who knows every trick in the book, but

  • has a flat usage graph.

  • Though in a sense it's bad news that

  • gaming the startups stops works gaming the system,

  • stops working now.

  • In a sense that you're deprived of one of your most

  • powerful weapons and

  • afterall something you have spent 20 years mastering.

  • It is something, I find it very exciting.

  • That there even exists parts of the world

  • where gaming the system is not how you win.

  • I would have been really excited in college if I had

  • explicitly realized that there were parts of

  • the world where

  • gaming the system matters less than others.

  • And some where it hardly matters at all.

  • But there are, and this is one of the most important

  • things to think about when you're planning your future.

  • Got that, okay.

  • How do you win at each type of the work?

  • And what do you want to win by doing?

  • So, that brings us to

  • our fourth counterintuitive point.

  • Startups are all consuming.

  • If you start a start up, it will take over your life

  • to a degree that you cannot imagine.

  • And if it succeeds, it will take over your life for

  • a long time.

  • For several years, at the very least.

  • Maybe a decade.

  • Maybe the rest of your working life.

  • So there's a real opportunity cost here,

  • it may seem to you that Larry Page has an enviable

  • life, but

  • there are parts of it that are definitely unenviable.

  • The way the world looks to him,

  • is that he started running as fast as he could at

  • age 25.

  • And he has not stopped to catch his breath since.

  • Every day, shit happens within the Google empire

  • that only the emperor can deal with.

  • And he, as the emperor, has to deal with it.

  • If he goes on vacation for

  • even a week, a whole backlog of shit accumulates.

  • And he has to bear this uncomplainingly, because,

  • number one, as the company's daddy,

  • he can never show fear or weakness.

  • And number two, if you're a billionaire,

  • you get zero, actually less than zero sympathy if you

  • complain about having a difficult life.

  • Which has this strange side effect

  • that the difficulty of being a successful startup founder

  • is concealed from almost everyone who's done it.

  • People who win the hundred meters in the Olympics,

  • like they walk up to them and

  • they're going like, right.

  • Larry Page is doing that too, but

  • you never get to see it.

  • All right, where are we?

  • Y Combinator has now funded several companies that

  • could be called big successes.

  • And in every single case,

  • the founders say the same thing,

  • it never gets any easier.

  • The nature of the problems change.

  • So, you may be worrying about more

  • glamorous problems like construction delays in

  • your new London offices, rather than the broken air

  • conditioner in your studio apartment.

  • But the total volume of worry never decreases,

  • if anything, it increases.

  • Starting a successful startup is similar to

  • having kids, in that it's like a button you press,

  • that changes your life irrevocably.

  • And while it is, like,

  • honestly the best thing in the world having kids.

  • If you take away one thing from this lecture,

  • remember that.

  • >> There are a lot of things that are easier to do

  • after you, before you have kids, then after.

  • Many of which will make you a better parent,

  • when you do have kids.

  • And so, in rich countries,

  • most people delay pushing the button for a while.

  • And I'm sure you

  • are all intimately familiar with that procedure.

  • Yet, when it comes to starting startups,

  • a lot of people seem to think they're supposed to

  • start them in college.

  • Are you crazy?

  • And what are the universities thinking?

  • They go out of their way to ensure that their

  • students are well supplied with contraceptives.

  • And yet they're starting up entrepreneurship programs

  • and startup incubators left and right.

  • >> To be fair,

  • the universities have their hand forced here.

  • A lot of incoming students are interested in startups.

  • Universities are at least defacto,

  • supposed to prepare you for your career.

  • And so, if you're interested in startups, it seems like

  • universities are supposed to teach you about startups.

  • And if they don't,

  • maybe they loose applicants to universities.

  • You do claim to do that.

  • So, can universities teach you about startups?

  • Well, if not what are we doing here?

  • >> Yes and no, as I explain, they can teach you about

  • startups, but this is not what you need to know.

  • Essentially, what universe, if you wanna learn French,

  • universities can teach you linguistics.

  • That's what this is.

  • This is a linguistics class.

  • Right? We're teaching you

  • about how to learn languages.

  • And what you need to know is like,

  • how to learn a particular language?

  • What you need to know, are the needs of your own users.

  • You can't learn those,

  • until you actually start the company.

  • And starting a company,

  • which means that starting a startup is something, and

  • you can intrinsically only learn by doing it.

  • And you can't do that in college for

  • the reason I just explained,

  • that startups take over your entire life.

  • If you start a startup in college,

  • If you start up a startup as a student,

  • you can't start up a startup as a student, because if

  • you start a startup you're not a student anymore.

  • You may be nominally a student, but

  • you won't even be that for much longer.

  • So, given this dichotomy,

  • which of the two paths should you take?

  • Be a real student and not start a startup or

  • start a real startup and not be a student.

  • Well I can answer that one for you.

  • I'm talking to my own kids here.

  • Do not start a startup in college.

  • I hope I'm not disappointing anyone, seriously, honestly.

  • Starting a startup could be a component of

  • a good life for

  • a lot of ambitious people, but this is just part of

  • a much bigger problem that your trying to solve.

  • How to have a good life, right, and

  • though starting a startup could be a good thing to

  • do at some point, 20 is not the optimal time to do it.

  • There are things, that, that you can’t, there are things

  • you can do in your early 20’s, that you cannot do as

  • well before or after, like plunge deeply into

  • projects on a whim that seem like they have no payoff.

  • Or travel super cheaply with no sense of a deadline.

  • In fact those are really just isomorphic shapes in

  • different domains.

  • For unambitious people this sort of thing can

  • be the dreaded failure to launch.

  • But for the ambitious ones,

  • it's a really valuable sort of exploration.

  • And if you start a startup at 20,

  • and you're sufficiently successful,

  • you will never get to do it.

  • Mark Zuckerberg will never get to

  • bum around a foreign country.

  • He can, if he goes to a foreign country,

  • it's either as a defacto state visit, or, like,

  • he's hiding out incognito at the George Cinc in Paris.

  • Right?

  • But he's never gonna get to just, like,

  • backpack around Thailand if that's still what people do.

  • Do people still backpack around Thailand?

  • >> Yes. >> Okay, well there,

  • that's the first real sign of enthusiasm I've seen from

  • this audience.

  • I should have given this talk in Thailand.

  • >> All right, he can do things that you can't do,

  • like charter jets to fly him to foreign countries,

  • really big jets.

  • But success has taken a lot of

  • the serendipity out of his life.

  • Facebook is running him as much as he

  • is running Facebook.

  • And while it can be really cool to be in the grip of

  • some project you consider your life's work,

  • there are advantages to serendipity.

  • And among other things, it gives you more options to

  • choose your life's work from.

  • There's not even a trade-off here.

  • You're not sacrificing anything if

  • you forego starting a startup at 20,

  • cuz you'll be more likely to succeed if you wait.

  • In the unlikely case that you're 20,

  • like astronomically unlikely case, that you're 20 and you

  • have some side project that takes off like Facebook did.

  • Then you face the choice of either running with it or

  • not, and maybe it's reasonable to run with it.

  • But usually the way startups take off is for

  • the founders to make them take off.

  • It's gratuitously stupid to do that at 20.

  • So should you do it at any age?

  • I realize, I've made Starting a startup sound

  • kind of hard.

  • If I haven't, let me try again.

  • Starting a startup is really hard.

  • What if it's too hard?

  • What if you're not up to this challenge?

  • The answer is the fifth counter-intuitive point.

  • You can't tell.

  • Your life, so far,

  • has given you some idea what your prospects might be,

  • if you wanted to become a mathematician, or

  • a professional football player.

  • Boy, it's not every audience you could say that to.

  • But unless you have had a very strange life,

  • indeed, you

  • have not done much that's like starting a startup.

  • Meaning, starting a startup will change you a lot

  • if it works out.

  • So, what you're trying to estimate is not just what

  • you are, but what you could become, and who can do that?

  • Well, not me, for the last nine years,

  • it was my job to try and guess whether people would.

  • Guess is, I wrote predicted here and

  • it came out as guess.

  • That's a very informative Freudian slip.

  • >> Seriously, it's easy to tell how smart people are in

  • ten minutes.

  • You know, hit a few tennis balls over the net and

  • do they hit them back at you or into the net.

  • But, the hard part was, and the most important part was

  • predicting how tough and ambitious they would become.

  • There may be no one at this point who

  • has more experience than me at doing this.

  • And I can tell you

  • how much an expert can know about that.

  • The answer is, not much.

  • I learned from experience to keep a completely open

  • mind about which startup in each batch,

  • which startups would turn out to be the stars.

  • The founders sometimes thought they knew.

  • Some arrived feeling confident that they

  • would ace Y Combinator,

  • just as they had aced every one of the few, easy,

  • artificial tests they had faced in life so far.

  • Others arrived wondering what mistake could cause

  • them to be admitted and

  • hoping that no one would discover it.

  • But there's little to no correlation between these

  • attitudes in how things turn out.

  • I've read the same is true in the military that

  • the swaggering recruits are no more likely to

  • turn out to be really tough than the quiet ones.

  • And probably for the same reason that the tests are so

  • different from the tests in people's previous lives.

  • If you're absolutely terrified of

  • starting a startup, you probably shouldn't do it,

  • unless you're one of those people who

  • gets off on doing things you're afraid of.

  • Otherwise, if you're merely unsure of

  • whether you're gonna be able to do it,

  • the only way to find out is to try, just not now.

  • So, if you wanna startup one day, if you wanna start

  • a startup one day, what do you do now in college?

  • There are only two things you need initially,

  • an idea, and co-founders.

  • And the MO for getting them both is the same,

  • which leads to our sixth, sixth and

  • last counter-intuitive point.

  • The way to get startup ideas,

  • is not to try to think of startup ideas.

  • I've written a whole essay on this and

  • I'm not gonna repeat the whole thing here.

  • But the short version is that if you make

  • a conscious effort to try and think of startup ideas,

  • you will think of ideas that are not only bad, but

  • bad and plausible sounding.

  • Meaning you and everybody else will be fooled by them,

  • and you'll waste a lot of

  • time before realizing they're no good.

  • The way to come up with good startup ideas is

  • to take a step back.

  • Instead of trying to make a conscious effort to think of

  • startup ideas, turn your brain into the type that

  • has startup ideas unconsciously.

  • In fact, so

  • unconsciously that you don't even realize at first that

  • they're startup ideas.

  • This is not only possible, Yahoo, Google, Facebook, and

  • Apple all got started this way.

  • None of these companies were even supposed to be

  • companies at first, they were all just side projects.

  • The very best ideas almost have to

  • start as side projects, because they're always such

  • outliers that your conscious mind would reject.

  • As ideas for companies.

  • Okay?

  • So, how do you turn your mind into the kind that

  • has startup ideas unconsciously?

  • 1, learn about things that matter.

  • 2, work on problems that interest you.

  • 3, with people you like and respect.

  • That third part incidentally is

  • how you get co-founders at the same time as the idea.

  • The first time I wrote that paragraph,

  • instead of learn a lot about things that matter,

  • I wrote become good at some technology.

  • But that prescription, though sufficient,

  • is too narrow.

  • What was special about Brian Chesky and Joe Gebbia from

  • Airbnb was not they were experts in technology.

  • They went to art school.

  • They were experts in design, and

  • perhaps even more importantly,

  • they were really good at organizing people and

  • getting projects done.

  • So, you don't have to work on technology per se, so

  • long as you work on things that stretch you.

  • What kind of things are those?

  • Now, that is very hard to answer in the general case.

  • History is full of examples of young people who

  • were working on problems that no one else,

  • at the time, thought were important.

  • And in particular that their parents didn't think they

  • were important.

  • On the other hand, history is even fuller

  • of examples of parents who thought their kids were

  • wasting their time, and who were right, so.

  • >> How do you know if you're working on real stuff?

  • I mean when Twitch TV switched from being

  • Justin Dot TV to Twitch TV, and

  • they were gonna broadcast people playing video games,

  • I was like what?

  • But, turned out to be a good business.

  • Well, I know,

  • I know how I know, real problems are interesting.

  • And I'm self-indulgent.

  • I like, I'm always interested in

  • working on interesting things even if

  • no one else cares about them.

  • And I find it very hard to make myself work on boring

  • things even if they're supposed to be important.

  • My life is full of case after case where I

  • worked on things just cuz I was interested.

  • And they turned out to be

  • useful later in some worldly way.

  • Y Combinator itself is something I

  • only did because it seemed interesting.

  • So, I seem to

  • have some sort of internal compass that helps me out.

  • But, this is, for you, not me and

  • I don't know what you have in your heads.

  • Maybe if I think more about it I could come up with some

  • heuristics for recognizing genuinely interesting ideas.

  • But for now, all I can give you is the hopelessly

  • question begging advice, incidentally,

  • this is the actual meaning of the phrase,

  • begging the question.

  • The hopelessly question begging advice that if

  • you're interested in genuinely interesting

  • problems, gratifying your interest energetically is

  • the best way to prepare yourself for a start-up.

  • And, for that matter,

  • probably the best way to live.

  • But although I can't explain in

  • the general case what counts as an interesting problem,

  • I can tell you about a large subset of them.

  • If you think of technology as something

  • that's spreading like a sort of fractal stain,

  • every point on the edge that's moving,

  • represents an interesting problem.

  • Steam engines is not so

  • much, although maybe, you never know.

  • So, one guaranteed way to turn your mind into the type

  • that startup ideas form in unconsciously is to

  • get yourself to the leading edge of some technology, to,

  • as Paul Buchheit put it, live in the future.

  • And when you get there, ideas that seem uncannily

  • prescient to some people will seem obvious to you.

  • You may not realize they're startup ideas, but you'll

  • know they're something that ought to exist.

  • For example, back at Harvard,

  • back in the mid 90s,

  • a fellow grad student of my friends Robert and

  • Trevor, wrote his own voiceover IP software.

  • It wasn't meant to be a startup.

  • He never tried to turn it into one.

  • He just wanted to talk to his girlfriend in

  • Taiwan without paying for long distance calls.

  • And since he was an expert on networks,

  • it seemed obvious to him that the thing to do was to

  • turn the sound into packets and

  • ship them over the Internet for free.

  • Why didn't everybody do this?

  • Well because they weren't good at writing that kind

  • of software.

  • He never did anything with this.

  • He never tried to turn it into a startup.

  • But that is how all the best startups tend to happen.

  • So, strangely enough, the optimal thing to do in

  • college if you wanna be a successful startup founder,

  • is not some sort of new vocational version of

  • college focused on entrepreneurship.

  • It’s the classic version of college as education for

  • its own sake.

  • If you wanna start a startup, what you

  • should do in college is learn powerful things.

  • And if you have genuine intellectual curiosity,

  • that's what you'll naturally tend to

  • do if you just follow your own inclinations.

  • The component of entrepreneurship,

  • I can never quite say that word with a straight face,

  • that really matters is domain expertise.

  • Larry Page is Larry Page cuz he was an expert on search.

  • And the way he became an expert on search,

  • was because he was genuinely interested in it,

  • not because of some ulterior motive.

  • At its best,

  • starting a startup is merely an ulterior motive for

  • curiosity and you'll do it best if you introduce

  • the ulterior motive at the end of the process.

  • So here, is the ultimate advice for young would-be

  • startup founders reduced to two words, just learn.

  • All right, how much time do we have left?

  • >> 18 minutes.

  • >> 18 minutes of questions, good god,

  • do you guys have the questions?

  • >> Sure, well start with, two questions online or

  • we can start with others.

  • >> You guys are in charge, whatever you wanna do.

  • >> Okay.

  • So, to start with, online questions.

  • The most voted question today was-

  • >> Do I have to repeat them, by the way?

  • >> Yeah. >> Okay.

  • >> How can a non-technical founder most

  • effectively contribute to a startup?

  • >> How can a non-technical founder most

  • effectively contribute to a startup?

  • Well, if the startup is,

  • if the startup is working in some domain.

  • If it's not a pure technology startup, but

  • is working in some very specific domain, like,

  • if it's Uber, right?

  • And the, and the non-technical founder was

  • an expert in the limo business, then,

  • actually, the non-technical founder would probably be

  • doing most of the work, recruiting drivers and

  • doing whatever else Uber has to do, right?

  • And the technical founder will be just writing

  • the iPhone app, which is probably less, well, iPhone

  • and Android app, hm, which is less than half of it.

  • If it's a purely technology startup, the,

  • the non-technical founder does sales.

  • And brings coffee and

  • cheeseburgers to the programmer.

  • >> Okay, next.

  • >> Oh, audience?

  • Okay, audience, yes?

  • >> Do you see,

  • any value in business school for people who want to

  • pursue entrepreneur, entrepreneurship?

  • >> Do I see any value in.

  • >> Or, if so, what value, I guess?

  • I'm hoping that's not.

  • >> Well, we probably won't have to get to

  • the second question.

  • >> Which I suppose is the answer to

  • your first question.

  • Okay, so the question is, is there any value in business

  • school if you're interested in entrepreneurship?

  • And, if so, what?

  • So, basically, no.

  • I mean, it sounds undiplomatic, but

  • the point, what business school was designed for

  • is to teach people management, right?

  • And management is a problem that you only have in

  • a startup if you're sufficiently successful.

  • So, really,

  • what you need to, what you need to know early on to

  • make a startup successful, is developing products.

  • You'd be better off going to design school,

  • if you want to go to some sort of school.

  • Although frankly,

  • the way to learn how to do it is just to do it,

  • you know?

  • One of the things I got wrong early on,

  • is that I advised people who were interested in starting

  • a startup to go work for some other company for

  • a few years before starting their own.

  • But, honestly, the best way to learn how to

  • start a startup is to try and start it.

  • You may not be successful, but

  • you'll learn faster if you just do it.

  • So, not really.

  • Business schools are trying really hard to do this, but

  • honestly, like, they were, they were designed to

  • train the officer corps of large companies, right?

  • Which is what business seemed to be,

  • back when it was a choice of either the officer corps of

  • large companies or Joe's Shoe Store.

  • And then, then there was this new thing, Apple,

  • which started out as small as Joe's Shoe Store and

  • then, like, turns into this giant mega-company.

  • But they weren't designed for that world.

  • And, like, they're good at what they're good at,

  • they should just be, do that and

  • screw this whole entrepreneurship thing,

  • just cuz it's cool.

  • Yes? >> You said, management

  • is a problem that you have only when you're successful.

  • >> Yes. >> So what about those first

  • two or three people as

  • a founder that you're trying to manage?

  • >> Okay, so management is a problem only if

  • you're successful.

  • What about those first two or three people?

  • Well, ideally, you're successful before you

  • even hire two or three people, right?

  • Didn't you say, Sam, that Airbnb took five months to

  • hire their first employee?

  • So ideally, you don't have even two or

  • three people for quite a while.

  • When you do, you can, you can sort of, the,

  • the first hires in a startup are almost like founders.

  • They should be motivated by the same things.

  • They can't be people, they can't be people you have to,

  • like, manage, right?

  • This is like that, this is not, like, The Office or

  • something like that.

  • These are your, these have to be your peers, really.

  • You shouldn't have to manage them much.

  • >> So it's just a big no-no, like if someone has to

  • be managed, no way they can be on the founding team?

  • >> Well, never say never.

  • I should repeat all these questions, so

  • if someone has to manage,

  • no way they should be on the founding team?

  • In, in the case where you're doing something where you

  • need some sort of super advanced technical thing.

  • And there's some boffin, if you know that word,

  • who knows this thing and nothing else in the world

  • including, like how to wipe his mouth.

  • Then it may be to your advantage to hire said

  • boffin and wipe his mouth for him.

  • But.

  • >> Okay.

  • >> As a general rule, you want people who are,

  • sort of self-motivated early on.

  • They should be just like founders.

  • Yes, questions?

  • In the far back?

  • >> Do you think we're currently in a bubble?

  • >> Do I think we're currently in a bubble?

  • Okay, so I'll give you two answers to this question.

  • One, ask me questions that are useful to this audience,

  • cuz these people are here to learn how to

  • start startups and I have in my head, like,

  • more data about that than anybody else.

  • And you're asking me the kind of questions a reporter

  • does cuz they can't think of anything interesting to ask.

  • But I will answer your question.

  • There is a difference between prices merely being

  • high and a bubble.

  • A bubble is a very specific form of prices being high,

  • where people knowingly pay high prices for

  • something in the hope that they will be able to

  • unload it later on some greater fool.

  • Right? And

  • that's what happened in the late 90s.

  • Like, VCs knowingly invested in bullshit startups,

  • thinking that they would be

  • able to take those things public, and unload them onto

  • the retail investors before everything blew up.

  • And I was there, I was there for

  • that, at the epicenter of it all.

  • And that is not what's happening today.

  • Prices are high, valuations are high.

  • But valuations being high does not mean a bubble.

  • Every, every commodity has prices that go up and

  • down in some sort of sine wave.

  • Definitely, prices are high.

  • And so we tell people, if you raise money, don't think

  • the next time you raise money it's gonna be so easy.

  • Who knows, maybe between now and

  • then the Chinese economy will have exploded and

  • there's another giant disastrous recession.

  • Who knows, assume the worst, but bubble, no.

  • Yes?

  • >> I'm noticing a trend among young people and

  • successful entrepreneurs, where they don't want to

  • start one more great company,

  • they want to start like 20.

  • And so you're starting to see the rise of these labs

  • attempts where they're gonna try to launch a bunch

  • of stuff.

  • I don't know a really stellar example yet but.

  • >> Like ideal?

  • >> No like, like Idea lab, like new one.

  • There's >> Oh, yeah yeah.

  • So there's this new thing where people start labs that

  • are supposed to spin off startups, it might work.

  • That's how Twitter started.

  • In fact I meant Ideo Lab,

  • not Idea, that was another Freudian slip.

  • Because Twitter was not Twitter at first.

  • Twitter was the side project.

  • Side project at a company called Ideo that was

  • supposed to be in the podcasting business.

  • You're like podcasting business,

  • do those words even grammatically fit together?

  • The answer turned out to be no, as Evan discovered.

  • But like as a side project they spun off Twitter and

  • boy was that a dog wagging tail.

  • So people are starting these things that are supposed to

  • spin off startups, will it work?

  • Quite possibly, quite possibly,

  • if the right people do it.

  • You can't do it yet

  • though, cuz you have to do it with your own money.

  • Yes, far back?

  • >> Thanks so much.

  • I hate to step into sort of a gendered pitfall, but

  • what advice do you have for

  • female cofounders as they pursuing funding?

  • >> Female cofounders when you're pursuing funding,

  • well it probably is true that women have

  • a harder time raising money, right?

  • I've noticed this in empirically, and,

  • Jessica is just about to publish a bunch of

  • interviews with female founders.

  • And a lot of them said that they thought they had

  • a hard time, a harder time raising money too.

  • So, what I would, you remember I said,

  • like the way to raise money?

  • Make your startup actually do well.

  • Well, that's just especially true in that case.

  • If have any, if you, if you miss the ideal target

  • from the VC's point of view in any respect, the way to

  • solve that problem is make the startup do really well.

  • So in fact, there was a point like a year or

  • two ago when I tweeted this growth graph of this

  • company and I didn't say who they were.

  • But I knew it would start people asking and

  • it was actually a female founded startup that was

  • having trouble raising money but

  • their growth graphs were stupendous.

  • And so I tweeted it, knowing that, like, all these VC's

  • would start asking me who is that, right?

  • And, like, growth graphs have no gender, right?

  • So if they see the growth graph first,

  • let them fall in love with that.

  • Right?

  • So do well, which is good advice for

  • startups generally.

  • Yes?

  • >> What would you learn in college right now?

  • >> What?

  • >> What would you learn in college right now?

  • >> What would I learn in college?

  • Hm, literary theory?

  • No, just kidding.

  • >> Let's see, well, you know,

  • honestly, I think I might try and study physics.

  • I feel that's the thing I feel like I missed.

  • For some reason, like, I was all excited,

  • when I was a kid, computers were the thing,

  • maybe they still are, right?

  • So I sort of got very excited about writing code.

  • And you could do things with, you could do,

  • you could write real programs in your bedroom.

  • You can't like, build real linear accelerators.

  • Well maybe you can, so maybe, physics.

  • I feel kind of,

  • I always, I have this, I sort of look lon,

  • I notice I sort of look longingly at physics.

  • So maybe.

  • But I don't know if that's, what am I saying?

  • I'm saying, I was about to say, I don't know if

  • that's going to be helpful starting a startup and

  • I've just told you to follow you own curiosity!

  • So who cares if it's helpful?

  • It'll turn out to be helpful.

  • Questions?

  • >> Another question online,

  • what are your recurring systems in your work and

  • personal life that make you efficient?

  • Oh, boy, Ookay.

  • So what are my recurring systems in my work and

  • personal life that make me efficient?

  • Well, having kids is a good way to be efficient.

  • Cuz you have no time left, so if you wanna get anything

  • done, the amount of done you do per time is high.

  • >> So, actually many parents, many startup

  • founders who have kids have made that point explicitly.

  • It causes you to focus, because you have no choice.

  • Let's see but that's not, I wouldn't actually recommend

  • you having kids, just to have you more focused so,

  • let's see, you know, I don't think I'm very efficient.

  • I have two ways of getting work done.

  • One is, like, during Y Combinator,

  • the way I worked on Y Combinator was,

  • I was forced to, right?

  • Like, there was just,

  • I had to set the application deadline.

  • And then people would apply, and then there would be

  • all of these applications that I'd have to

  • respond to by a certain time, so I had to read them.

  • And I knew if I

  • read them badly we would get bad startups, so

  • I tried really hard to read them well, right?

  • So I set up this situation that forced me to work.

  • The other kind of work I do is like writing essays.

  • And I do that involuntarily.

  • I'm like walking down the street and

  • the essay starts writing itself in my head.

  • And so really I either force myself to work on

  • less exciting things or,

  • I can't help working on exciting things, and I don't

  • have any useful techniques for making myself efficient.

  • Sorry.

  • If you work on things you like you don't have to

  • force yourself to be efficient.

  • Yes? >> When do you think is

  • a good time to turn a side project into a startup?

  • >> When is a good time to

  • turn a side project into a startup?

  • You will know.

  • Right?

  • >> What do has the properties

  • >> It starts, you,

  • you when you okay,

  • the question is when you turn a startup into,

  • a side project into a real startup.

  • You will know that it's becoming a real startup when

  • it takes over an alarming percentage of

  • your life, right?

  • Like when you find like, my God, I've just spent all day

  • working on this thing that's supposed to be

  • a side project, I'm gonna fail all my classes.

  • What am I gonna do?

  • Right?

  • Then maybe it's turning into a startup.

  • Yes? Wait, I already answered

  • your question.

  • I should ask, I should let somebody else ask one.

  • I may get back to you.

  • Yes?

  • >> I, I know you talked a lot earlier about

  • you'll know when you start doing extremely well.

  • But I feel like in a lot of cases,

  • it's just you have a grey line where it's like,

  • hey you have some users but maybe not as

  • explosive growth chart as to the right.

  • What would you do?

  • Or what would you recommend doing in those

  • situations specifically allocating time and

  • resources, how do you balance in?

  • >> Okay, when a startup is sort of

  • growing but not much.

  • >> Mm-hm. >> Didn't you tell them

  • they were supposed to redo things that don't scale?

  • >> Yeah. >> You sir,

  • have not done the readings.

  • >> And you are busted therefore.

  • Because I wrote a whole essay in answer to

  • that question.

  • That is it.

  • Do things that don't scale.

  • Just go read that.

  • Cuz I can't remember everything I said.

  • >> But it's about exactly that problem.

  • >> Yes, back there.

  • >> What kind of startup should not go

  • through incubation, in your opinion?

  • >> What kinda, you mean.

  • >> Well, yeah. >> Do you mean

  • incubation YC?

  • >> No, yeah, YC or.

  • >> What kind of startup should not through YC.

  • Definitely any that will fail.

  • >> And, or, if you'll succeed but

  • you're an intolerable person that also,

  • Sam would probably sooner do without.

  • Short of that, I cannot think of any,

  • because most, a large percentage of,

  • founders are often surprised by how large a percentage of

  • the problems that startups have are the same regardless

  • of what kind of thing they're working on.

  • And those tend to be kind of problems that YC helps with

  • the most not the ones that are domain specific.

  • So I can’t, is there, can you think of,

  • class of startups that YC wouldn't work for?

  • I can't.

  • I mean like we had fission and

  • fusion startups in the last batch.

  • Rather they had, yes?

  • >> You mentioned that it's good advice to

  • learn a lot about something that matters?

  • >> Yes. >> Some good strategies to

  • figure out what matters?

  • >> Well, If you think of,

  • okay, so how do you figure out what matters?

  • If you think of technology as something that's

  • spreading as a sort of fractal stain, anything on

  • the edge represents an interesting idea.

  • It sounds familiar.

  • So how do you figure out hmm?

  • Like I said, that was the problem.

  • You have correctly identified,

  • the thing where I didn't really answer the question,

  • where I gave this question begging answer.

  • I said, like I, just like,

  • I'm interested in interesting things.

  • If you're interested in interesting things,

  • work on them and things will all work out, right?

  • But how do you tell what is a real problem?

  • I don't know.

  • That's like important enough to

  • write a whole essay about, and I don't know the answer.

  • I probably should write something about that.

  • But I don't know!

  • I don't know.

  • I figured out a technique for

  • detecting whether you have a taste for

  • genuinely interesting problems, which is whether

  • you find working on boring things intolerable, right?

  • And there are known boring things,

  • like literary theory and

  • working in middle management in some large company.

  • So if you could tolerate those things,

  • then you must not,

  • you must either have stupendous self discipline,

  • or you don't have a taste for

  • genuinely interesting problems, and vice versa.

  • Yes? >> One more question.

  • >> Okay, one more question, it better be good.

  • >> I was wondering out, you know like Snapchat, like,

  • makes money >> Snapchat?

  • What do I know about Snapchat?

  • >> We didn't fund them.

  • How about another question?

  • All right go ahead.

  • >> You talked about hiring employees you like.

  • But it seems like that could read into a monoculture, and

  • there are a lot of benefits in being a monoculture, but

  • how do you feel about the blind spots that arise?

  • >> Okay, so if you hire people who

  • you like you might get a monoculture, and

  • how do you deal with the blind spots that arise?

  • Starting a startup is

  • something where many things will be going wrong.

  • You can't expect it to be perfect, and

  • the advantages of hiring people that you know and

  • like are far greater than, you know,

  • the small disadvantages of having some monoculture.

  • You look at it empirically all the most

  • successful startups someone just like hires all

  • their pals out of college.

  • All right you guys, thank you.

That short.

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