Honestly, it's not really a checklist. PG enumerates some of the most important qualities in an interview. There was content in the interview that's rather difficult to express in writing, particularly the parts about friends sticking together and founder-groups with no apparent leader.
"No apparent leader" is easy to say, but during the video PG describes his observations of that leadership vacancy in a number of different ways. You can intuitively understand what sort of leadership he's talking about, in a way that "we don't like not knowing who to address a question to" doesn't really convey. (ie, it's nothing about the artist not wearing a "hi I'm the artist" nametag.) And it doesn't have to be a super-charismatic visionary who also knows everything, just someone who is more assertive and capable of driving the others.
IMO it sounded like she was bored/dismissive during most of his replies. Like she'd rather be interviewing an NBA star or something and just wanted to get this shit over with.
This does not convey the sentiment that Paul expressed.
I took away : friends will work on a project through the bad times out of loyalty (which happens to be a good thing), while co founders who were not friends will bail at the point when the walls come crashing down.
Also, he stated that every startup will go through such a phase, where it seems that there's really no point in continuing. Even with startups that are bound to be really successful, the founders first have to find some way to get through that rut. If the founders were already good friends, they will pull each other through it, if for no other reason but because they enjoy working together.
Samuel_Michon, That's what I said... (almost) since you misstated one of the points 'if for no other reason than the co founders like working with each other' when PG actually said they will continue to work out of loyalty and not wanting to let their friend down.
Didn't mean to criticize you. I personally found it quite enlightening to hear Graham say that every startup will eventually go through a tough phase, whether or not the business has any chance of making it -- I felt that little nugget of truth needed some attention.
Everything else I said in that post were my own words, especially the reasoning on why good friends stick it out. I find it kind of negative to simply put it on guilt -- I choose to believe that good friends work together and help each other out because they like each other, not because of fear of losing a friendship.
Sure, but it's nothing that we haven't heard before. Every startup faces moments of uncertainty and the feeling of impending doom, and founders that know each other are more likely to stick through hard times due to the pair bond. See, if the only thing holding two people together is the potential success of the startup, they're more likely to jump ship when the going gets tough. If the founders are friends, they'll weather the storm out of sake of the friendship, and have greater chance of getting lucky.
So...
PM me if you are interested in working on a side project together and nurturing a friendship based on shared values.
Yeah, we've heard this from day 1. What was interesting to me was to hear PG say that even they underestimated how important the people are compared to the initial idea. Compared to the first batches he said the application form now has a lot more questions about the people, and a lot fewer about what they plan to do.
I think anyone who is in the HN environment has already realized that the people and, likely more importantly, the ability to execute* is the #1 secret in a successful startup. People outside the HN circle don't understand this though. I have friends who are still looking for that perfect idea and then they'll start working on something on the side. I just don't see it working that way, instead you keep working on the side until you morph whatever you have into that perfect idea.
*Execution really is king, but is greatly helped by being smart and fast. Basically if you have all three you can take a whim idea do it quickly and see 'what if.' The faster that someone can iterate through that process the more chances they can give themselves at finding a good business.
hmm...
I don't think as an entrepreneur we should seek to optimize these metrics. These rules are ideal for Paul since they reduces his risk for investing, which is necessary as a prudent investor. Y-Combinator would be over the moon if 6 out of ten start-ups were successful. If you were one of those 4 who didn't make it, it would be devastating for you.
Ultimately as the entrepreneur your rules should be gear towards gaining traction. Think about it, you would be over the moon if 6 out of 10 persons sign-up. Gaining customers is your way of reducing risk. Concoct your rules for reducing your risk. I think Eric Reis, Steve Blank and the lean start-up movement are doing a great job at this.
So my advice is don't try to focus on meeting this check list but focus on obtaining traction. Oddly enough, all investors love traction.
This isn't my entire checklist. The interview wasn't even about checklists. They just stuck that word in the title to get traffic. If you describe something as a checklist, then everyone wants to see what it is to see if they're missing anything. Much like the list-of-n-things.
There is actually a really good reason not to start a start-up with friends, you might find that your friendship is the victim of either the success or the failure of your start-up.
So what? You may just discover that your friendship isn't that strong. If it is, it will endure and grow, whether your business succeeds or fails.
I wonder why people are so afraid to put their relationships on trial. An old adage says that you should not trust a friend of yours until you have tested it.
You may discover that your friendship is that strong and that you find it awfully hard to have 'the talk' with your friend and as a result your company eventually founders. Or you might find that your friendship was plenty strong but not strong enough to survive the kind of hardships that a start-up can throw at it. And a whole pile of variations on those themes.
It's not nearly as simple as you make it out to be.
Unfortunately I have to concur with this from personal experience. However saying that it doesn't seem to have stopped me from trying again. That is until I run out of friends :)
Does "quite interesting" extend as far as revising your view about the primacy of Silicon Valley for startups? NYC seems to have supplanted Boston as the obvious runner-up, which is already the first tectonic shift in the startup lithosphere in a long time (decades?), so if any place is going to give SV a run for its money it would likely be NYC. Curious to know how significant you think the trend is or might get.
From my experience in London I'd say a major factor is the financial sector pulls in lots of ambitious talented developers and pays them well enough that they can easily afford to take time-off to work on their own thing.
In London at any startup event you go to in London I'd say around ~20-30% of the founders have backgrounds in the financial sector.
I think investment banks are more nurturing of that sort of behaviour than many other firms, they're willing to let people go off and experiment and then rehire them back if stuff doesn't work out for them. I left the bank I was working for, and they became my first client (on a consultancy basis) to help finance my startup and after the consultancy contract was over they gave me an open invite to call them if I ever wanted to come back. I know many other people who have similar stories.
I think he misinterpreted the Twitter question. She seemed to be asking whether he would reject a group with an idea as compelling as Twitter if the founders didn't have the right personalities.
"an idea as compelling as Twitter" - proof that something is a great idea like Twitter only becomes obvious in retrospect. If you heard a description of Twitter just before it launched, you probably wouldn't think it would work (or wouldn't know one way or the other). Hence the importance of the founding team and how well they execute the idea.
Well sure, that might be a good answer. Another good answer might be, "the execution is more important than the idea." I was just pointing out that he misinterpreted the question.
I founded a startup that was featured by the WSJ all by myself and have gone on to work on a new project which has some traction. I applied to YC with another idea and didn't "make the cut." I personally take that to be a greater challenge to succeede than any friendship or relationship could obligate me to. PG may have a checklist which works most of the time but I suspect that's the first step toward missing the outliers who define true success. No one's going to take the next Google seriously 'till its too late.
But for someone whose whole job is to find, and invest in, "the next Google", you'd think there could be some sort of recognizable features that a Bayesian classifier could learn as positive weights (as, if there weren't, that person would guess correctly at no greater a rate than chance, and would therefore be replaced by a small shell-script/die roll.) Those recognizable features should then be able to be decomposed into discrete features—which could be written down as a checklist.
To put it another way—there are only two ways to do a job whose output is boolean (invest/don't invest): either algorithmically, or randomly. Any judging algorithm can be approximated by a checklist.
GP's point is that the truly breakout success redefine what it means to be successful. e.g. Google wasn't taken seriously because there was no money on the internet, MS wasn't taken seriously cos there was no money in software, etc. etc. You don't see the revolution coming, you're in it or you're not.
With FUD and spin making such big motions on startups (see diaspora 2 months ago) you're as well off making random bets, bets on personality or some other arbitrary factor that works for you.
There isn't a winning strategy, or all invested startups would succeed, so it's pretty much a die roll. People like PG pick a few criteria that work for them and to some measure stack the deck in their favour, but it is and will always be a gamble.
Sure these are jobs in and of themselves but I'd think those would be the primary things everyone should be gunning for.
It's pretty clear that the "checklist" boils down to sizing up the founders (clear leader?) and sizing up the founders persistence. Persistent leaders usually end up getting traction some way with some product. So that would be my 2 classifiers.
I think PG is on the right track with his investing strategy.
Lets say his probability of finding the next Google with this rule was a arbitary value of 0.001. I wouldn't know its exact value but I'm assuming it's non-zero.
He would have to invest in 693 companies before he has a 50% chance of hitting a google. I don't think they have gone that far as yet. It's just a matter of time.
There are hundreds of thousands (millions?) of web companies, there is one google, and maybe 50 or so (extremely successful) companies where investors from a seed fund had a chance to get in on the bottom rung they way YC wants to have it.
The chances of finding 'the next google' are a lot smaller than what you think they are, but the chances of scoring a really big hit (on the order of 10's of millions in terms of ROI for YC) are pretty good.
