Lecture 1: Startup Ideas, Team & Execution.

Summary of Sam Altman's Class on "Ideas, Team & Execution", the full version can be viewed here:

http://startupclass.samaltman.com/courses/lec02/

Website: www.ghacklabs.com Twitter: @GHackLabs Email: luke@ghacklabs.com

1 By: Luke Fitzpatrick

Dealing with Burnout• The canonical advice is to go

on vacation - this doesn't work.

• What you do, just keep on going.

• Rely on people.

• The way through burnout is to address challenges, to address the things that are going wrong - and you'll eventually feel better.

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Cofounder Relationships

• Are the most important relationships in the company.

• The number one cause of early startup death, is cofounders fighting.

• A lot of people choose their cofounder with even less importance than hiring. Don't do this!

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For some reason, students are really bad at choosing cofounders.

"Hey, I'm looking for a cofounder, we don't know each other. Let's start a company!"

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The ideal cofounder = James Bond.Cofounders need to be unflappable, tough, they know what to do in every

situation. They act quickly, they're decisive, they're creative, they're ready for anything.

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What works from YC

experience• Software people, should start

software companies. Media people should start media companies.

• 2-3 people seems to be the perfect number to start a startup. One obviously not great, five really bad, four sometimes works.

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You want to be proud of how much you can get done with a small number of employees.

Many of the best YC companies had a really small number of employees within there first year. Sometimes none besides the founders. They really try to stay

small as long as possible. 7

Airbnb Example• Spent five months interviewing

their first employee.

• Before they hired a single person, they wrote down a list of the culture values that they wanted every Airbnb employee to have.

• One of these values was, you had to "bleed" Air BNB.

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Hiring• The first hires REALLY matter. They define your company.

• If you hire mediocre people, they will KILL your startup.

• Instead, you want people that BELIEVE in it, almost as much as you do.

• Airbnb: The first 50 employees felt like they were part of the founding team.

• By having an extremely high hiring bar, by hiring slowly, it ensures everyone believes in your mission.

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Different Startup Modes = Focus

• Hiring Mode: When you are in hiring mode, it should be your number one priority to get the best people.

• Product Mode: When you are in product mode, your product should be your number one priority.

• Fundraising Mode: When you are in fundraising mode, fundraising should be your number one priority.

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Advice From YCWork on a project first with your founders.

Tip: This is one of their application questions. 11

The Animal Test

• There is a famous test by Paul Graham, called the Animal Test. Here's the link: http://www.paulgraham.com/start.html

• The idea is you should be able to describe any employee as an animal.

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YC Views On Equity• Founders screw this up, all the time.

• As a rough estimate, you should give about ten percent to your first ten hires.

• Founders are usually very stingy with equity to employees, but very generous to investors. It should be the other way around.

• Employees will add more value over time, investors just write checks.

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Fight with investors to reduce equity, give more to your

team. The most successful YC startups do this.

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Treat Your Team How You Would Like to be Treated

• When you hire people, you have to retain them.

• You have to make sure your employees are happy and feel valued.

• Praise your team, give them credit, give them equity incentives.

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Don't Micromanage• Give people small areas of responsibility.

• As a first time Founder, be aware that you are going to be a terrible manager.

• Dan Pink, talks about 3 things that make people do great work: autonomy, mastery & purpose. Here's the link: https://m.youtube.com/watch?v=wdzHgN7_Hs8

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Mediocre Founders

Spend a lot of time talking about grand

plans, but they never make a decision.

They're a talking about, I could do this thing, or I could do that thing. They go backwards

and forwards but never act on it.

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The Best Founders

Work on things that seem small, but they move very quickly.

They get things done really quickly.

If every time you talk to a founder, and they have gotten things done, it's the

best indicator that they will be successful.

The best founders, usually respond to email quickly, make decisions the

most quickly, they're generally quick in all of these areas.

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Facebook's Growth Slowed• Mark made a Growth Group in 2008. They worked

on small things to make Facebook grow faster.

• All of these things seemed small, but it got the growth of the company back up.

• It turned around the dynamic of the company. Went from a place that everyone was feeling bad, and momentum was gone, back to a place where everyone was winning.

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