YC: Essential tips for startups17 minutes of reading

YC: Essential tips for startups

Author: Geoff Ralston, Michael Seibel

Many of the tips we give startups are tactical; Means helpful on a daily or weekly basis, but some advice is more fundamental. We've rounded up what we at Y Combinator (YC) consider to be the most important and transformative advice for startups. Whether it's common sense or counterintuitive, the tips below will help most startups find their way to success.

The first thing we always tell founders is to launch their product immediately; simply because this is the only way to fully understand the customer's problems and whether the product meets their needs. Surprisingly, it is much better to bring an average product to market as soon as possible, then talk to the customer and do it again, than waiting to build a “perfect” product. This is true as long as the product contains a “quantity of conveniences” for the customer whose value outweighs any possible problems.

Once launched, we advise founders to do things that don't scale (hard to scale) (Do Things That Don't Scale — Paul Graham). Many startup advisors convince startups to scale too soon. This requires building the technology and processes to support that scale, which too soon will be a waste of time and effort. This strategy often leads to failure and even death of the startup. Instead, we tell startups to get their first customer at all costs, even by manual means that can't be applied to 10 customers, let alone 100 or 1000. client.

At this stage, the founders are still trying to figure out what to build, and the best way to do that is talk directly with customers. For example, the original Airbnb founders offered to "professionally" photograph the homes and apartments of their early customers to make their listings more attractive to tenants. Then they went and took those pictures themselves. The listings on their website improved, the conversion rate improved, and they had interesting conversations with their customers. This is absolutely difficult to roll out, but has proven essential in learning how to create a vibrant exchange.

Talking to users often creates a long and complex list of features to develop. One piece of advice that YC partner - American computer engineer and businessman - Paul Buchheit (PB) always gives in this case is: look for “90/10 solution”. That is, find a way you can accomplish 90% what you want with just 10% work/effort/time. If you search hard, there's almost always a 90/10 solution. Most importantly, a 90% solution to a real customer problem that is available immediately is much better than a 100% solution that takes a long time to build.

When companies start to grow, there are often a lot of potential distractions. Seminars, dinner parties, meeting with venture capitalists (VCs) or other types of business development of large companies (Don't Talk to Corp Dev – Paul Graham), pursuing journalism etc (YC co-founder, Jessica Livingston, has made a pretty comprehensive list of the wrong things to focus on.How Not To Fail – Jessica Livingston]) We always remind founders that the most important task for an early-stage company is to code and talk to users. For any company, software or not, this means making something people want: you have to launch something, chat with your users to see if it works. their needs or not, then take their feedback and repeat. These tasks will take up almost all of your time/concentration. For great companies, the cycle never ends. Likewise, as your company grows, there will be times when founders are forced to choose between multiple paths for the company. Sam Altman has always pointed out that it is almost always better to take the more ambitious route. The fact that founders often avoid solving these kinds of problems and focus on other things is truly extraordinary. Sam calls this a “fake job,” because it tends to be more interesting than the real job (The Post YC Slump – Sam Altman).

“…a small group of customers who really like you is better than a large group that only slightly likes you.”

When it comes to customers, most founders don't realize that they have as much right to choose their customers as their customers choose them. We often say that a small group of customers who really like you is better than a large group that only slightly likes you. In other words, it is much better to attract 10 more customers with pressing problems than 1000 customers with only fleeting problems. It is quite easy to make mistakes when choosing customers, so Sometimes abandoning your customers is also very important for startups. Some customers can cost much more than they bring in in terms of revenue or learning. For example, Justin.tv/Twitch only had breakthrough success when they focused their efforts on streamers and away from people trying to stream copyrighted content (Users You Don't Want — Michael Seibel).

Growth has always been a focus of startups, as a startup that doesn't grow will often be a failure. However, how and when to grow is often misunderstood. YC is sometimes criticized for driving growth companies at all costs, but in reality, we push companies to talk to their customers, build what they want, and iterate quickly. Growth is the natural outcome of successfully doing these three things. However, Growth is not always the right choice. If you haven't created what your customers want - in other words, haven't found a product market fit yet, there's no point in growth.The Real Product Market Fit — Michael Seibel). Poor retention is always the result. Also, if you have an unprofitable product, growth just drains the company's cash. As PB said, “it never makes sense to take 80 cents from a customer and then give them $1 back.” The fact that unit economics is so important comes as no surprise, yet too many startups seem to forget this basic fact (Unit Economics – Sam Altman).

“…it makes no sense to take 80 cents from a customer and then give them $1 back.” -PB

The intuition of startup founders will always be: do more, while the best strategy is often to do less. For example, founders are often tempted to pursue large deals with large companies that represent excellent, recognized relationships. However, deals between large companies and small startups rarely end well for startups. They take too long, cost too much, and often fail altogether. One of the hardest things about starting a business is choosing what to do, as you will always have an endless list of possible things to do (Startup Priorities — Geoff Ralston). It is important that very early on, a startup chooses one or two key metrics that they will use to measure success., then founders should choose what to do almost entirely based on the impact that work has on the metrics. When your early-stage product is not well received, you tend to immediately build new features to solve any problems the customer seems to have instead of talking to the customer and just focusing to the most pressing problems they face.

Founders are often surprised to learn that they shouldn't be alarmed if their company appears to be in a serious crisis. It turns out that nearly every startup has fundamental and profound problems, even those that would later become billion-dollar companies. Success is not determined by whether you have problems in the beginning or not, but by what founders do to solve the inevitable problems. Your job as a founder seems to be constantly trying to flip a capsized ship. This is normal.

It is very difficult for a new startup founder not to be obsessed with the competition, both reality and potential. Actually Spending time worrying about your competitors is almost always a pretty bad idea. We always like to say that startups often die by killing themselves, not by being killed. There comes a time when competitive dynamics become critically important to your company's success or failure, but that's very unlikely to be true in the first year or two.

“…Business valuation does not imply success or even represent a probability of success.”

A few words about raising capital (A Guide to Seed Fundraising — Geoff Ralston). The first and best advice is to raise money as quickly as possible and then get back to work. It is easy to see when a company is raising money by looking at their growth curve and when it is flat they are raising money. Equally important is to understand that business valuation does not imply success or even represent a probability of success (Fundraising Rounds are not Milestones — Michael Seibel). Some of Y Combinator's best companies have raised capital from very small initial valuations (Airbnb, Dropbox, Twitch, all good examples). By the way, the important thing to remember is the amount you call is NOT your money. You have a moral and fiduciary duty to spend that money to improve your company's prospects.

It's also important to stay sane in the inevitable madness of startup life. So we always tell founders to make sure they have time to rest, spend time with friends and family, get enough sleep and exercise in between intense and intense work. stress. Finally, a brief word about failure. Most companies fail quickly because the founders don't get along. Relationships with your co-founders are more important than you think, and open, honest communication between founders makes future collapses much less likely. In fact, one of the best things you can do to start a successful business, and more than a success in life, is simply please be nice (Mean People Fail — Paul Graham).

YC's Pocket Guide to Essential Tips

  • Product launch now
  • Build what people want
  • Do things that don't scale
  • Find a solution 90/10
  • Find 10 -100 customers who love your product
  • All startups have serious problems at some point
  • Code – talk to your users
  • "It's not your money."
  • Growth is the result of a great product, not a precursor
  • Don't scale your team/product until you've built what others want
  • Valuation does not mean success or even show the possibility of success
  • Avoid lengthy negotiations with large customers if you can
  • Avoid big company development requirements – they will just be a waste of time
  • Avoid seminars unless they are the best way to get customers
  • Before product market fit – do the hard things to scale: stay small/flexible
  • Startup can only solve one problem well at a time
  • Relationships between co-founders are more important than you think
  • Sometimes you need to get rid of your customers (they might be killing you)
  • Ignore your competitors, you're more likely to die by killing yourself than being killed
  • Most companies don't die from running out of money
  • Please be nice! Or at least don't be a bad guy
  • Get enough sleep and exercise – take care of yourself

Source: Y Combinator

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