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 know
to suceed 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, we’ll 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.
