Startup Playbook: Introduction

• Startup Playbook, written by Sam Altman and illustrated by Gregory Koberger
• The playbook aims to provide general advice for new startups, distilling insights from Y Combinator (YC)
• It covers creating a product that users love and scaling the user base accordingly

Introduction

• One-on-one advice is crucial for startups
• Scaling Y Combinator can be achieved by providing a "playbook" containing general advice
• This playbook focuses on starting a startup, with potential for a follow-up on scaling later
• The goal is to make users love something and then acquire more users
• Begin with early adopters who love your product and recommend it

The Startup Graveyard

• Many startups fail because founders skip user love
• It's preferable to have a small group of users who love the product
• Getting users from "like" to "love" is harder than getting new users
• Starting a startup is difficult
• Founders often underestimate the work and intensity it takes
• Joining an early-stage startup with rocketship trajectory is financially better
• Starting a startup is not a big career risk, especially for tech-skilled individuals

Key Elements for Success

• A great idea (including a great market) is vital
• A great team and a great product is required
• Great execution must be present

Part I: The Idea

• YC companies are asked what they are building and why
• Clear and concise answers are important for evaluation
• Founders should communicate needs effectively for recruiting, fundraising, and sales
• Ideas should be clear
• Complex ideas can indicate unclear thinking or a made-up problem
• Ideas should excite some people immediately
• A question to ask is who desperately needs the product
• The ideal target user is you, otherwise knowing and understanding them well is key
• If a company has users: how many, and how fast is it growing? Also, why it isn't growing faster, and whether users love the product

Testing an Idea

• Work backwards from a perfect experience to a kernel
• Launch the idea to see what happens
• Try to sell it before you write code
• Former is better for consumer ideas; latter better for enterprise
• Test biotech and hard tech ideas by talking to potential customers, and finding the smallest subset of technology to build first
• Let the idea evolve based on user feedback

Key Points

• Startups require long hours and effort
• Founders and employees must share the mission
• Founders should want monopoly over their company in a good, ethical way
• Focus on ethical ways to become difficult to copy
• Ask how big the market will be in ten years
• Prefer new to derivative

New vs. Derivative

• Great companies start with something fundamentally new
• One acceptable definition of new is 10x better
• Something new and hard is easier than something derivative and easy
• People will offer help to those doing something new
• The best ideas sound bad
• Don't be too secretive, even if it sounds worth stealing
• Tell people the idea
• Almost everyone will dislike the idea
• Being able to develop self-belief helps to ward off haters

Building a Company

• The idea comes first
• Startups should help to get the idea to reality
• Promising teams with no ideas failed
• Good founders usually have lots of ideas
• Pliable pivoting is dangerous, avoid it by not trying to come up with ideas and learn about things that seem inefficient
• Also, focus on major technological shifts
• Work on projects you find interesting, which leads to new ideas

Part II: A Great Team

• Mediocre teams do not build great companies
• Strength is looked for in both founders and employees

Qualities of a Great Founder

• Unstoppability
• Determination
• Formidability
• Resourcefulness
• Intelligence
• Passion
• Being low-stress helps others want to work with the founder
• Rigidity and flexibility is key: good to have both strong beliefs and willingness to learn new things
• Best founders are very responsive, reflecting decisiveness, focus, intensity, and ability to get things done
• Communication skills are key for a founder
• Tech startups need at least one founder who can build the product or service, and at least one founder that is good at sales to consumers
• Choosing a cofounder is one of the most important decisions
• You should know your cofounder well
• Cofounder breakups is one of the main causes of death for startups

Best Practices

• Having a good cofounder is best
• Having a solo founder is next best
• Having a bad cofounder is the worst
• Deal with equity splits early
• Nearly equal splits can be improved by adding one share to one person

Part III: A Great Product

• Have a great product. That is the most important key.
• If you don't build products users love, you will eventually fail
• Long-term growth only happens because people want to use the product
• Build a product improvement engine that talks to users, observes users, and makes incremental improvements
• Improving a product 5% each week will compound
• Build product and talking to users, foregoing things like sleep and exercise

Cycle Management

• Get close to users, watch their patterns, and value their actions
• Do not place anyone between the founders and the users
• Founders need to handle sales, customer support, and more
• Understand users, identify what is needed, and find where they are located
• Practice being Non-scalable
• Recruit users manually and make a very good product for those users to recommend to their personal friends

Keys to Growth

• Iterate by not planning too far out
• Simplify
• Common questions:
  • Do users use the product more than once?
  • Are they fanatical?
  • Would they be bummed if the product went away?
  • Are they recommending product without prompting?
  • B2B: 10 paying customers?
• Make your product better
• Very often the product simply is not good enough

Customer Communication

• Talk to users, even when it feels like faster horses situation
• Great founders care about product quality, including seemingly unimportant details
• Product includes all user interactions with the company.
• Making great product is the key

Part IV: Great Execution

• Build a great product, then turn it into great company, with good effort
• You cannot outsource the work for a long time
• Making money, think about how to do it
• A CEO makes sure a company wins
• The founder hires people to complement their skills (even with flaws)
• A CEO evangelizes strategy, handles hiring and managing teams, making sure the company stays in control, especially in areas where you are at a loss
• Raises money
• Sets execution quality bar

CEO Considerations

• Find parts of the business you enjoy and stay engaged there
• Being a CEO is an intense job
• Your company will be on the CEO's mind all the time
• Extreme strategy and intensity is not good for work-life balance
• A CEO has to be always on
• Lots of decisions need to be made personally
• Be responsive to team (internal and external)
• Clear strategy and quick execution

Management Psychology

• Manage your psychology since it's hard
• Highs and lows are very intense
• Try to stay level
• Have relationships with other CEOs
• Successful startup requires long time
• Eat well, sleep well, and exercise

Keys To Success

• Fix problems with smile on face
• Reassure the team
• Keep growing
• Make it happen, or figure out how to do it without
• Strive to "get things done"
• Be a direct team member
• Do not be a jerk

Corporate Strategy

• Distort reality for others but not for yourself
• Be paranoid about what can go wrong
• Be persistent
• Be optimistic
• Make a choice to improve the lives of others with the company
• Easy in theory, hard in short-term
• Don't lose sight of long-term and trust vision
• Define the mission and define the values

Mission and Values

• Everyone needs to first buy in, then sell to others
• Write culture values and mission down early
• Building a company is like building a company
• People need to connect to a higher purpose
• One mistake made is to innovate in well-trodden areas
• Put creative energies into the product and service you're building

Part IV: Hiring & Managing

• Hiring is key to building great company
• Don't hire right away
• Employees add complexity and communication overhead
• Want to join the best people who want rocket ships

Recruiting Qualities

• Possess equity, trust, and responsibility
• Go after people that you wouldn't be able to get
• When hiring and you get to product-market fit, spend roughly 25% of your time doing it

Best Hiring Practices

• Recruit, namely being a CEO
• Don’t compromise on quality
• Good company with good people, infectious
• Bad company with bad people is infectious
• Never recover from bad employees
• Trust your gut – no doubt
• Do not hire chronically negative
• Value aptitude over experience
• Hire people you like; often together
• Try a small project together full-time

Importance of Investing

• Invest in good management
• Find mentors
• Easy to lose employees quickly
• Be a good recruiter for the world, but it won't matter still
• Principles are well-covered
• Important is avoid to “go in hero mode”
• Resist that and be willing to be late on projects to have a well-functioning team

Leadership

• Speak of managing things
• Have everyone in the same office
• Remote well for bigger companies but has not been a recipe for startup success
• Fire toxic quickly, no matter how good they are

Part IV: Execution - Competitors

• First-time founders think these are a cause of death
• 99% die from suicide versus 99% die from murder by competitors
• The best way to deal with suicide is to prevent it with an internal focus

Competitor Strategy

• Ignore competitors 99% of the time
• Do not worry about noise and raises
• Focus rather on shipping real product
• Press releases are easier than code and making great product
• Be like Henry Ford, and don't be bothered by anyone
• All giants have faced the same before, counter moves exist

Part IV: Making Money

• Get people to pay you to deliver those goods or services
• Many forget to account on how much it costs to deliver, so that should be accounted for
• Product must have people sharing within friends
• If paid product < $1000 Life Time Value (LTV), do not afford sales
• Direct sales only if:
  • Paid value
  • < $1000 LTV
• Experiment using:
  • SEO/SEM, ads, and mailings
• Repay customer action cost (CAC) in 3 months
• Good book: Hacking Sales

Business Strategy

• Get Ramen strategy
• Ramen make founders able to live with, and free from the whims of capital markets
• Observe cash flow.

Part IV: Fundraising

• All startups raise money at some point
• Raise money when needed on good terms
• Do not throw money at problems
• Too much bad is almost always bad
• Successful raising is from having success as good company
• Optimizing only really matters for 5% of the time
• Investors are looking for success, but able to grow with outside capital

Key Investment Points:

• Being “really successful” is what's important
• Investors can fail with Google fear, and obviously with an overvalued sense
• Is a bad idea when not in good condition
• Struggle when asking is bad also, but good companies look bad at first
• Parallel is extremely conversing for best results
• Easy to attract investors, but they may not want to spend their time for a halt to the process during fundraising

Fundraising Tactics

• VCs do not know most about each industry
• Complicated compound round is best to avoid
• Focus on getting that, good attention
• Stay available when you focus on best use
• Good essay is what it takes to have a tactical round/raise if you incorporate for that

Closing Thought

• Thousands have every great idea
• One of them has to become successful
• Has to be due to good execution
• Is a grind, like a way out to make those ideas to be true
• Always need best product
• Great team
• Strong execution

Appendix 1: Projects and Companies

• Refer to a project is offended in early days
• Has been a good company
• Companies is a far better belief
• All as long as one does
• Focus is most important when one runs a company by the product that needs building
• Great expectation needs flexibility

Best Advice (Project vs Company)

• Crazy ideas are a company if isn't hobby
• Limits on people that want to work and help someone who cares if you are going to be ok to fail
• You work if one doesn't care about derivative but rather plausible for crap
• Project is when can experiment
• Has company and clock is ticking then people expect results
• That is dangerous especially people want results

Qualities of a Company

• The best out of ideas when don't sound very good
• Sometimes so inconsequential for founders to defend them from others
• Pressure form expectation subtle kills the magic, that's subtle
• Most are subtle
• You will not be successful
• Not one founder is successful in an organization by themselves
• You need assistance

Appendix 2: How to hire

• After more money is raised
• The big issues are going to be hiring
• Really important to hire better quality work

General Advice For Recruitment:

• Focus on 1/3 of your time
• In general
• CEO is most focused on his time
• 500 employees then go meet with everybody
• Learn the job first, before one does ever give something

How To Be Smart (Recruitment)

• Role is smart and very effective to one another
• Interview what they've done, ask about most impressive projects
• Spend their time is during average
• See all that what they do most to that as one gives the credit
• Solve it in interview

Recruitment Tips

• What is check to help know what they've done
• Look for 6-months to hire people, if smart will work
• Rather audition rather than going to interview
• Learn on how someone works with one another
• What will work, when do you know to do when comes it by night/weekend
• PR releases, report it and do that

Important Considerations:

• Pay these people by agreement (contractor, normal contractor)
• Know much of what happens, working with a great person
• Look what is comes together with how to hire people
• Use personnel by using more network with people
• You work what happened and by least as many if that's a point
• Get the word out (more)
• Most startups that you hire, look to how you hire best possible
• Get name out there to what's to look for, if it happens or not (to work one way)

More Keys to Success

• Mission important, not surprise to much of what to sell with them
• Other can find that, do a good way and team for being best you can do
• As founder, understand excited about your company
• Want more with more candidates then it helps to sell
• Slightly overqualified can handle growth as startup

Hire The Good People

• Help one closer
• Report with CEO to see the other way
• The Sunday Tests see person like
• Important right culture and work at
• Diversity of thoughts
• Be like
• Set more values what has to factor by all in
• They buy in in this what it should be

Values and Culture

• “Decision making framework to that of make, founder, to look with all in all to look what's has comes with the conflicting customer satisfiers"
• Faith as to follow, otherwise can be someone to let do
• To be on, but can work

Notes

• See, if people that are fired
• Work is too important as being on point still
• Compromise it in general if going to hire too
• Single bad hire kills team and can make worse
• Have best team to attract
• With all equity but in best way
• For you, with exception of other help
• I tell then

Best Practices

• Be one top and not upset and it's how to make sense to help
• Pay good to give you the chance to get there by 20 if a way as one follows
• Help for having the lot worth less of what should

Key Principles

• Get better and has you a bad thing and all this
• What one need to focus with this and learn to try one's gut
• There are things that should be looked on and don't make up things
• Look for title
• Don't look with high on levels to the title
• Work if you look on all around
• Be to be to recruit what one helps
• Hard way to to start work so one day has to start now.

Start of Appendix 3

• Recruiting transactional
• What you feel the one
• Should hire to all what one know
• There what is more help
• Good people hires you, see as well

Be Cautious

• Bad is that when doesn't gets learn of time
• Be not to get best do well and follow to hire
• Get all well to do in interviews
• What you let and will well is on way
• They aren't there to do it
• You're what comes when not as one works in hire
• It works that one should let things be
• Put it then do in rigors
• Make hires you work by and see
• Positive results with it all one sees
• Organized hires coordinate the way one sees things