Whether common sense or counter-intuitive, the guidance below will help most startups find their path to success.
ycombinator has some excellent advice for startups and should be your go to.
The first thing is to launch their product as soon as possible, since this is the only method to fully comprehend consumers' problems and whether or not their solution meets those needs. Surprisingly, releasing an inferior product as quickly as possible and then talking to clients and improving is far better than waiting to develop the "perfect" product. This is true as long as the item has a “quantum of usefulness” for consumers who value it over any flaws it might have.
After they've launched, you should take actions that don't scale (Do Things That Don't Scale by Paul Graham1).
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Many startup consultants push businesses to expand too rapidly. This will necessitate the creation of technology and procedures to handle that growth, which, if done prematurely, will be a waste of time and money. This technique is frequently unsuccessful, and even startup death may result.
Instead, get your first customer in any way possible, including by manual labor that can't be handled for more than 10 or 100 consumers. At this point, entrepreneurs are still trying to figure out what needs to be built and the best approach to do so. For example, when Airbnb was first founded, the company offered its customers "professionally" taken photographs of their homes and apartments to improve the appeal of their listings to renters.
The two of them, therefore, went out and shot the photographs for themselves. Conversations with their clients got even better, as did their listings' rankings and conversions. This was completely scalable, but it allowed them to figure out how to create a vibrant marketplace.
It's very difficult to understand exactly what users want because they're always talking about new features. When it comes to selecting products or features for development, one piece of advice that YC partner Paul Buchheit (PB) constantly gives is for entrepreneurs to seek the "90/10 solution." That is, seek for a method to do 90% of what you want with just 10% of the work/effort/time. If you look hard enough, you'll always find a 90-10 solution. Most significantly, getting a 90% solution to an actual client issue that is immediately available is preferable than achieving 100%.
There are frequently many distractions when a firm begins to expand. Conferences, dinners, meetings with venture capitalists or corporate development specialists from large companies, and so on are all potential sources of distraction.
It's good advice for entrepreneurs not to lose sight of the most essential duties for an early-stage firm: writing code and interacting with users. To make anything that consumers want, a business must first develop something, get in touch with its customers to find out if it meets their demands, and then incorporate their comments into the product. The time it takes to complete these tasks should be minimal. Almost all of your attention and energy should go into them. This cycle never ends for great businesses. Similarly, as your business grows, you'll encounter many instances when founders are forced to choose between several possibilities for their company's future. It's nearly always better to choose the more challenging route, says Sam Altman. It is truly amazing how frequently founders can sidestep issues like these and focus on other things. Sam refers to this as "fake work," because it is generally more enjoyable than real labor.
When it comes to clients, most entrepreneurs are unaware that customers have the option to reject them.
Often having a small group of customers who love you is superior to a big group who simply tolerate you.
In other words, recruiting ten consumers with a major problem is far better than 1000 people with an annoying issue.
When it comes to selecting your clients, there are always risks of making errors. It's also essential for startups to get rid of their customers, especially when they're not performing as well as anticipated. Customers who cost more than they provide in revenue or knowledge may be a waste of money. For example, only after Justin.tv/Twitch focused their attention on video game broadcasters rather than those attempting to stream copywritten material did they achieve huge success.
Growth is always a priority for startups, since a company that does not expand is almost certain to fail.
Many people do not understand, however, how and when to develop. YC is often criticized for encouraging businesses to grow at all costs, but companies should interact with their customers, develop what they want, and iterate quickly.
These three actions will naturally lead to growth. Growth, on the other hand, is not always the best option. It makes little sense to expand if you haven't yet discovered a product or service that your consumers want. The product might be excellent, but if the negatives outweigh the advantages, it will be discarded.
Also, growth just drains cash from a firm if it has an unsuccessful product. It never makes good business sense to take 80 cents from a customer and then give them back a dollar. The notion that unit economics are important should not come as a surprise, but too many businesses seem to overlook it.
The first instinct of a startup entrepreneur is to do more, which is typically the best solution.
Founders are frequently enticed to pursue large contracts with big corporations, which represent fantastic business validation relationships. However, the results of transactions between huge businesses and tiny startups are rarely positive for the startup.
They're too time-consuming, too expensive, and frequently fail. The hardest aspect of running a business is deciding what to do because you'll have an unending list of possibilities. It is critical for a startup to pick the one or two crucial metrics it will use to evaluate success extremely early, then decide what to do based almost entirely on how the activity will impact those metrics. When your early-stage product isn't working, it's tempting to immediately build new features to address every issue the consumer seems to have rather than talking with them and focusing on the most pressing concern they have.
It's difficult for startup founders to believe that they shouldn't be concerned if their firm appears to be severely damaged. Even those that will eventually become billion-dollar businesses have serious, fundamental issues. It's not whether you're damaged at the start that matters, but rather what the founders do about the inevitable issues. As a founder, your position will appear to be continuously righting a capsized ship. This is to be expected.
It's tough for a new business owner not to worry about competition, both actual and potential. It turns out that thinking about your competitors is usually a terrible idea.
Competitive dynamics will be critical to your company's success or failure at some point in the future, but it is unlikely to be true in the early years.
A few words on fundraising. The first and most important advice is to raise money as quickly as possible, then get back to work. It's often simple to tell when a firm is raising cash by looking at their growth curve, which flattens out, and when they're fundraising. Understanding this distinction is critical since it will allow you to better evaluate investment opportunities and make more intelligent judgments. It's also important to understand that the meaning of valuation isn't always connected with success or even the probability of succeeding. Some of Y Combinator's most successful firms were founded on small seed rounds (Airbnb, Dropbox, Twitch, to name a few). It's good to remember that the money you raise isn't your own; you have a fiduciary and ethical/moral duty to spend it solely in the interests of your company.
It's also critical to remain sane throughout the inevitable craziness that comes with starting a business.
As a result, entrepreneurs should take rest, spend time with family and friends, get enough sleep, and exercise in between periods of excessively intense, concentrated work. Finally, a word about failure. It appears that most firms fail rapidly because founders fall out. The importance of your cofounders' relationships overshadows everything you know. In reality, being kind may be one of the most important things you can do to help your business succeed and flourish in life. (Paul Graham's book Mean People Fail recommends that you read) It turns out that being nice is one of the best ways to ensure your company's success.
The Pocket Guide of YC Advice: A Handy CompanionLaunch now
- Make something that people desire
- Make things that don't scale a priority
- Find 90/10 solution
- Find at least 10 and up to 100 consumers who appreciate your product
- Every startup has a rough patch at some point in its life
- Talk to people and write code
- "It’s not your money"
- The result of a fantastic product is growth, not the precursor
- Don't expand your staff or product until you've established something that people want
- The odds of obtaining a good result are not the same as financial worth
- If you can, avoid lengthy contracts with large clients
- Avoid dealing with big company corporate development issues; they'll only consume time
- Unless they are the greatest method to attract consumers, avoid meetings
- Before you can produce a product-market fit, you must first figure out how to do things that don't scale. Stay small and nimble
- At any one point in time, a startup may only address one issue
- Relationships between founders are more important than you may believe
- Sometimes you have to let go of your clients (you might be killing them)
- Ignore your competition; you'll have a better chance of committing suicide than murder
- Many businesses fail because they run out of money
- It's important not to be a jerk. Or, at the very least, don't be a dick
- Sleep and exercise regularly - treat yourself well
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