“If things are not failing, you are not innovating enough.” ~ Elon Musk, CEO of SpaceX and Tesla Motors
Course Curated By: Dr. G. Danford (London Business School MBA, Helsinki School of Economics PhD)
20 Startup sessions covering all the topics you need to know to begin, and accelerate your startup. Speakers from startups, venture capital companies, business schools, corporations, accelerators and more.
BEFORE YOU BEGIN: We recommend that you test your understanding of this sessions content.
WHY? Because the MOST VALID method for measuring learning is to compare results from a pre/post test of content.
- The six startup lessons.
- Why intuition can lead founders astray.
- Why expertise in understanding users (customers) is vital.
- Why ‘gaming-the-system’ doesn’t work in startups.
- The personal difficulties of starting a startup.
- Should you start a startup?
- Different ways of getting startup ideas.
LEARNING MOMENTS from this session:
- Every time you come to an important decision you should map out the inputs of that decision in a diary, in order to better see the incompleteness of the story you’re telling your-self.
- If you always follow your instincts, those instincts will frequently lead you astray.
- Expertise in starting a company is not what you need to succeed. Expertise (mechanics) of startups is not necessary. What you need is domain knowledge.
- It’s almost impossible to trick the user.
- The startup will take over your life and there is a serious personal opportunity cost.
- By making the decision to start, you can only guess as to what the outcome will be.
- The very best ideas are often a result of founder side projects (a hobby, a passion…) and frequently those side projects are outlier ideas.
- A startup is: purpose, product, customers and team.
- ‘If you wait until you are ready, it is almost certainly too late’.
1.2 Confidence and Decision Making
Tech companies analyze their users’ data, so why don’t we as founders gather greater data about our own behavior. For example we could start with keeping a decision-making notebook. Every time we come to an important decision we could map out the inputs of that decision in our diary, and better see the incompleteness of the story we’re telling our-self. Alternatively, we could re-frame our questions. We almost never do this. Lastly, it always helps to acknowledge that we bring all sorts of un-examined assumptions into any decision. We all carry biases within our biases, therefore, it helps to apply an open, innovative mind when examining our blind spots (design thinking). And one final thing (according to Prof. Daniel Kahneman), we should be more aware of the way incentives shape our biases.
While we tell ourselves the simplest stories about our situations, life…and innovation etc…is much more messy.
Over Optimistic? (2:00)
Professor Daniel Kahneman (Nobel Laureate)
NOTE: this video will start and stop at the pre-assigned times 0:46-2:53
1.3 Five Startup Lessons
Paul Graham (Co-founder, Y Combinator)
Y Combinator has invested in over 80 companies including; Dropbox, Airbnb, Stripe, Reddit, Zenefits, Instacart and Weebly. The combined market capitalization of YC companies is over $30B.
LESSON ONE: If you follow your instincts, those instincts will frequently lead you astray. You need not remember anything more from this session. Just try to remember in the future, when you are about to make an important decision (or mistake), stop and take a deep breath and consider that rule. When Paul Graham was running Y Combinator his job was to remind founders (who did not take that breath) of things they would ignore, just because of that ‘false’ instinct. Founders frequently neglect this advice because it contradicts their intuition. However, founders need someone to give them this advice, more often than not the advice surprises them. However, there is one occasion where following your intuition makes sense and that is; you can trust your intuition about people. Many founders make the mistake of not trusting their intuition when it regards people.
‘Picking people to work with, in the same way you would pick friends, is one intuition that works quite well. Therefore, you should work with people you like, respect, and have known for a reasonable period of time’.
LESSON TWO: Expertise is not what you need to succeed in a startup. Expertise in the mechanics of startups is not necessary. Quite frequently founders ‘go through the motions or mechanics’ of starting a startup. At Y Combinator they call this ‘Playing House’. Alternatively, what you should really do is get to know the domain (industry structure, market space, business processes and use cases) within which you are operating, and you need to cultivate expertise on that domain and its users. Therefore, understanding the mechanics of startup fund raising, and HOW to do other things is not as relevant as cultivating expertise on the user (domain) in addition to asking a lot of why’s…
Playing House: Paul Graham (3:30)
NOTE: this video will start and stop at the pre-assigned times 5:24-9:01
LESSON THREE: Gaming-the-system’ (bending the rules, abusing, cheating, milking, playing, or working the system) does NOT work in a startup. There are no superiors to trick in a startup, there are only users, and users only care about what they want, and if your offering meets their needs. You can (at least once) trick investors or suppliers, but it’s almost impossible to trick the user.
LESSON FOUR: Startups have a 25 hour workday, and will consume everything you have to give. In other words, the startup will take over your life. There is a serious opportunity cost (cost incurred by not enjoying benefit of second best choice) to the founders and other participants in a startup. Furthermore, the blood-sweat-and-tears you will go through are concealed from almost everyone (it’s lonely at the top). There is no glory for most startups, it never gets easy, and the nature of problems encountered during the journey change every minute, hour and day…
LESSON FIVE: Should you start? The dilemma is that you do not, will not, and cannot with 100% certainty, know. By making the decision to start, you can only guess as to what the outcome will be…and trying to guess the outcome is frugal? It’s just a guess. Even Paul Graham (Y Combinator) can not always guess what a founder will eventually become (tough, ambitious…). Furthermore, there is no, or very little, correlation between the attitude of the founder (or for that matter the opinion of the Incubator staff) and how things will play-out (success is elusive, even if one has a great attitude).
Startup Difficulty: Paul Graham (4:30)
NOTE: this video will start and stop at the pre-assigned times 14:30-19:05
Take A Pomodoro Break Now (5 min. to relax & reflect)
Learning always benefits from short breaks.
1.4 Necessary Qualities of Founders?
Qualities of entrepreneurs (Steve Blank):
- Agile thinking (ability to move quickly and easily).
- Tenacious (locking on to something and not giving up).
- Relentless (persistent, non-stop, endless).
- Resilient (knocked down frequently, but despite that, getting up and doing it again and again…).
- Curious (a broad range of skills, ability to master pattern recognition).
- Possibly a dysfunctional family history (a survivor, or someone who has made a long-hard journey). The ability to shut out all the noise around you. However, when the startup growth stabilizes and enters execution-mode, these characteristics are not always suitable.
100% Genius? (4:00)
Steve Blank (Stanford University)
NOTE: this video will start and stop at the pre-assigned times 11:59-16:05
1.5 Startup Lessons (cont.)
LESSON SIX: To get an idea, do not try to simply think of ideas. A better method is to take a step back from the obvious. The very best ideas are often a result of founder side projects (a hobby, a passion…) and frequently those side projects are outlier ideas (disruptive, abstract ideas etc.). If one is still in college or studying, the preferred thing to do if you want to be a startup founder is to learn powerful things.
The one component of entrepreneurship that matters most is domain expertise (authority in a particular area). ‘At its best, starting a startup is merely an ulterior motive for curiosity. You will do that best if you introduce the ulterior motive at the end of the process’.
Startup Idea: Paul Graham (4:00)
NOTE: this video will start and stop at the pre-assigned times 24:20-28:37
1.6 Timing Is Everything!
Startups can change the world and make the world a better place. However, execution matters a lot. The idea also matters a lot. However, timing might matter even more. The best way to really assess timing is to carefully look at whether the users are ready for what you have to offer them. Remember when doing that, to be really honest about it, and do not be in denial about any results that you observe. You may have an idea that you love, and you may want to push that idea forward, however you have to be very, very honest about the viability of that idea (after analyzing users).
The 5 Success Factors (Bill Gross)
- 42% Timing (too early, early, too late).
- 32% Team/Execution (efficiency/effectiveness, adaptability).
- 28% Idea ‘Truth’ Outlier (novelty/differentiation, ‘truth’ no one sees, competitive moats).
- 24% Business Model (clear path to generating customer revenue).
- 14% Funding (raising money for initial funding, follow-on, and growth).
Bill Gross (founder Idealab)
NOTE: this video will start and stop at the pre-assigned times 6:48-11:02
1.7 What Is A Startup?
‘If you wait until you are ready, it is almost certainly too late’ ~Seth Godin
- Is Defining Purpose: The best businesses aren’t profit-driven or even product-driven; they’re purpose driven, and are about the need to make an impact, not just an IPO; about doing good and not just being fast. Founders should repeatedly ask themselves a series of questions. Why are we here? If we disappeared, who would miss us and why? What business are we really in? What are we willing to sacrifice? How can we experiment better?
- Is Building Product: Enthusiasm of the creators and usability of the product are the twin ideals behind great product development. First try to get one product right, then think about a portfolio or range. Great product creators are not just makers but curators of great user experiences. The iterative process is as important as the prototypes and products.
- Is Serving Customers: Startups need to earn customer trust and loyalty the hard and long way, through commitment, service, conversation and authenticity, even in the face of mistakes. Hear your users talking…listen. Listen no matter how much it slows you down. Invite your customers into your story.
- Is Leading The Team: The leader’s job is to help everyone around them do their job better. Servant leadership is the only sane way to run a company. Create a culture of trust via transparency, share information, allow for open feedback, have regular meetings online and offline. Remember that creative employees are driven by passion, by integrity, and by quality. As the company scales, direction and clarity need to be spelt out via effective communication, otherwise time is lost. Company cultures need to have a good combination of “nudge” and “push” via distributed decision making.
- Remember! When you are about to make an important decision (or mistake), stop, take a deep breath, and carefully consider the fallacy of your instincts.
- Quite frequently founders ‘go through the motions or mechanics’ of starting a startup ‘Playing House’.
- Gaming-the-system’ (bending the rules, abusing, cheating, milking, playing, or working the system) does NOT work
- Startups have a 25 hour workday.
- Should you start? The dilemma is that you do not, will not, and cannot with 100% certainty, know.
- The most important quality of a startup founder is ‘agile thinking’, the ability to move quickly and easily.
- Outlier ideas are often the best source of ideas (disruptive, abstract ideas etc.).
- 42% of startups succeed due to the proper timing (not too early, not early, not too late).
- The best businesses aren’t profit-driven or even product-driven; they’re purpose driven, and are about the need to make an impact.
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Paul Graham’s blog (founder- Y Combinator)
NEXT Session: Idea, Team, Execution 2/20
Presenter: Sam Altman (President, Y Combinator)
CONTENT: Choosing co-founders (B. Altman, President, Y Combinator), forming a successful team (Michael Skok, Harvard i-lab), ideas vs. execution, the benefit of myoptic thinking, focus and more. LINK for 2/20 Below