Worthy: How to Start a Startup by Paul Graham (Essay)
This is the first piece of advice I read on starting a startup, and it may be the best. I find it hard to believe that there is a resource out there that is written so clearly. Even though written in March 2005, almost everything still applies to today’s startup culture. And I think it will still apply in 10 years. Keep this one handy.
Below I have mixed my notes with direct quotes from Graham. These are the most powerful takeaways from the essay in my eyes, from the perspective of someone just starting to do market research and build a small plan for his startup idea. Whether you’re in the same phase as me or a different one, I recommend reading the entire piece.
You need three things to create a successful startup: good people, something customers actually want, and frugality.
Your startup idea
You don’t need a brilliant idea to start a startup.
- For instance, there were already search engines around before Google started up. All Google did was clean up the experience. Everything else followed.
- One good idea doesn’t matter as much as the ability to create multiple good ideas. Because, chances are, your initial idea won’t pan out as you intend it to.
- Be prepared for your initial idea to change significantly or entirely. Don’t get tied to the emotion that it came from. Focus on what people need the most.
If you go to VC firms with a brilliant idea that you’ll tell them about if they sign a nondisclosure agreement, most will tell you to get lost. That shows how much a mere idea is worth. The market price is less than the inconvenience of signing an NDA.
Investors don’t care as much about an idea as they do about an idea man. Anyone can come up with a good idea. Very few can come up with many good ideas.
Ideally you want between two and four founders. In a technology startup, which most startups are, the founders should include technical people.
If you work your way down the Forbes 400 making an x next to the name of each person with an MBA, you’ll learn something important about business school. After Warren Buffett, you don’t hit another MBA till number 22, Phil Knight, the CEO of Nike. There are only 5 MBAs in the top 50.
What you notice in the Forbes 400 are a lot of people with technical backgrounds. Bill Gates, Steve Jobs, Larry Ellison, Michael Dell, Jeff Bezos, Gordon Moore. The rulers of the technology business tend to come from technology, not business.
Be frugal with funding
Aim for cool and cheap, not expensive and impressive.
Ever notice how much easier it is to hack at home than at work? So why not make work more like home?
- Coworking spaces have solved this problem for some people. They provide a space to escape and come together as a team but don’t have the soul-sucking vibe of a cubicle farm.
The key to productivity is for people to come back to work after dinner. Those hours after the phone stops ringing are by far the best for getting work done.
Who should start a startup?
Someone who is a good hacker, between about 23 and 38, and who wants to solve the money problem in one shot instead of getting paid gradually over a conventional working life.
- A “hacker” does not necessarily mean a programmer. This just means you’re a beast at what you do. Having a firm understanding of technology and what’s wrong with existing software is important though.
There could be ten times more startups than there are, and that would probably be a good thing.
I was, I now realize, exactly the right sort of person to start a startup. But the idea terrified me at first.
- Don’t get discouraged by the number of startups you see on AngelList, ProductHunt, and other startup directories. Sure, a lot of these will fail, but there is a growing demand for startups. And when you think you aren’t fit for starting a startup, that’s a good sign you are.
I don’t think the amount of bullshit you have to deal with in a startup is more than you’d endure in an ordinary working life. It’s probably less, in fact; it just seems like a lot because it’s compressed into a short period.