Dharmesh Shah

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Startup School 2008: Key Takeaways

By Dharmesh Shah on April 22, 2008

The following is a guest article by Philip Crissman.  OnStartups partially sponsored Philip's trip to Startup School (hosted by Y Combinator) in exchange for capturing some key insights from the session to share with those of us that could not make it.  -Dharmesh

Startup School Takeaways

This is my attempt at a broad overview of the whole day; what I took away from each speaker. You'll notice that some of the takeaway's may contradict each other. Well, a few of the speakers seemed to contradict each other, which is a topic for another post. Here's a very broad summary of the day.

David Lawee, VP Corporate Development, Google; founder, XFire.
Main take-away: Hurry Up. David emphasized the role of speed in a startup, and how the modern timetable is considerably shorter than a more traditional "2 years until product launch" strategy. Your ability to turn on a dime and do things quickly is highlighted as a major advantage for the startup.

Sam Altman, Founder, Loopt.
Main take-away: If you can avoid having to raise money, then don't do it. If you do need to raise money, get it out of the way and get back to work; many startups have been sidetracked by the money-raising process, even fizzling out along the way.

Jack Sheridan, Lawyer, Wilson Sonsini.
Main take-away: Some legal decisions that you may make early on never go away; pay close attention to these sorts of issues.

  • Who owns the company
  • Who owns the technology (IP)
  • Who controls the company
  • Who gets what in a liquidity event (sale, IPO, etc.)

Paul Graham; Founder, ViaWeb, YCombinator.
Main take-away: Build something people want + Don't worry too much about money = Non-profit. Doing "good" is a strategy. The "Tamagotchi" effect -- making something that attracts users and a community gives you something to take care of; this can be a powerful motivator.

Greg McAdoo, Partner, Sequoia Capital.
Main take-away: Greg's wave & surfer metaphor. It takes a great surfer (entrepreneur) to ride a great wave (business/social/technology trend). The surfer has to pick the wave, but can't control the wave.
Know your market; as much about it as possible.
Have a market "whose hair is on fire" -- who needs your product badly, now.

David Heinemeier Hansson, creator, Ruby on Rails, partner, 37Signals:
Main take-away: Your odds are better to not try to be the next Facebook/YouTube/billion dollar acquisition. You can do very well just creating a great product and charging money (gasp!) for that product. Don't be in such a hurry, don't try to be so big, don't look for a wave.

Paul Buchheit: creator, Gmail, founder, FriendFeed.
Main take-away: On listening to users; listen != obey. Listening to your users, you don't necessarily do exactly what they tell you they want; interpret their feedback to try to determine what the real problem is. Then find a solution to that problem.

Jeff Bezos, Amazon.
Main take-away: Cloud computing will be increasingly important, and doesn't need to be an industry with a single winner. Unfortunately, aside from this, his talk was largely a commercial for Amazon Web Services. The insight into why cloud computing could be important was more interesting than the commercial; would have been nice to have more of that, or more practical entrepreneurial advice.

Mike Arrington, blogger, TechCrunch.
Main take-away: Getting press for your startup: have a compelling story. Stand out; stand out in a different way than other people have stood out (used Seth Godin's purple cow analogy).

Marc Andreesson, Founder, Netscape, Ning, etc.
Main take-away: Be so good they can't ignore you (via Steve Martin).
Be prepared for everything to look like it will fail... and nearly doing so. Don't quit.
Have a business model that doesn't depend on a great economy (especially right now).

Peter Norvig, Director of research, Google.
Main take-away: Start small, go fast, iterate rapidly. Leverage data; especially other people's data. A challenge: anyone can go out onto the web and get 1.7 billion words. Go get them and do something (analysis, algorithms, searching, etc.) with them.

Of course, there was much more in each talk. But those were the highlights, the main points, from where I sat. Full recorded talks can also be found at Omnisio.

Topics: ycombinator
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Stop Waiting For The Magical Startup Fairy

By Dharmesh Shah on April 21, 2008

I've been in the startup business for a while and it still amazes me how many founders (including me at various points in my life) have completely irrational views on how life at a startup is going to be. 

As it turns out, lots of success requires a sprinkling of luck to work, but counting on this luck to come up at the magical times is foolish.  So, stay up late at night working on the business and improving the product for customers -- not what deciding what you're going to wear to the startup ball when the magical startup fairy comes tapping at your window.  In other words, quit running advanced spreadsheet models on how your revenues are going to grow if you can get only 1 out of 4 users to tell their friends.  (See #1 below).

Founders:  Stop Hoping for Magic and Start Working

1.  Somebody's product is going to "go viral" this year.  Someone is also going to win the lottery.  Just not you.  Don't count on virality, but add some simple elements to your product that make them easy to spread.  This will increase the probability that your product will go viral to something slightly above zero (instead of zero).

2.  Venture capitalists are not swash-buckling risk-takers that are going to fall in love with your startup at first sight -- and write you a check.  Unnecessarily daring people do not become VCs -- the industry filters most of those out.   Work at not needing the money.  If you could use the money, get multiple VCs interested. 

3.  Smart people are not going to be lining up to work for your startup, without salary, just for the sheer thrill of "the startup life" and an ability to be associated with the brilliance that is your idea.  Be reasonable about it.  Expecting team members to take some risk for some time is fine.  But, that's not a great strategy to recruit a great team.

4.  Big company executives are not going to be inviting you into their wood-panelled offices with old leather chairs offering you increasingly lucrative partnership deals just because of "synergies" they might have with you.  Big companies have teams dedicated to keep an eye on startups like yours.  Just because they spend time with you doesn't mean you're getting a deal anytime soon.  Just because you get a deal, doesn't mean it's a good one.

5.  Google, Microsoft and others are not going to be falling all over themselves trying to acquire your company.  Acquisitions are great when you can get them.  But, they're usually complicated and take time.  Get great counsel.

Now, here's the good news.  If I happen to be wrong about any of the above ones and you do indeed get lucky on one of these things, the chances that you're going to get lucky on others goes up.  So, keep crankin'.  The magical startup fair may never show up, but you're better off not waiting for her anyways.

Topics: strategy
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