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This can be the same person. You want someone you know well, not someone you just met at a cofounder dating thing. Also, at some point, the expected value of the startup is likely to dip below the X axis. Cofounder breakups are one of the leading causes of death for early startups, and we see them happen very, very frequently in cases where the founders met for the express purpose of starting the company.
The best case, by far, is to have a good cofounder. The next best is to be a solo founder. The worse case, by far, is to have a bad cofounder. If things are not working out, you should part ways quickly. This is the only thing all great companies have in common. If you do not build a product users love you will eventually fail. Yet founders always look for some other trick.
Startups are the point in your life when tricks stop working. A great product is the only way to grow long-term. Eventually your company will get so big that all growth hacks stop working and you have to grow by people wanting to use your product.
This is the most important thing to understand about super-successful companies. There is no other way. Think about all of the really successful technology companies—they all do this. You should talk to your users and watch them use your product, figure out what parts are sub-par, and then make your product better.
Then do it again. This cycle should be the number one focus of the company, and it should drive everything else. The faster the repeat rate of this cycle, the better the company usually turns out. During YC, we tell founders they should be building product and talking to users, and not much else besides eating, sleeping, exercising, and spending time with their loved ones.
To do this cycle right, you have to get very close to your users. Literally watch them use your product. Sit in their office if you can. Value both what they tell you and what they actually do.
You should not put anyone between the founders and the users for as long as possible—that means the founders need to do sales, customer support, etc. Understand your users as well as you possibly can. Really figure out what they need, where to find them, and what makes them tick.
You usually need to recruit initial users one at a time Ben Silbermann used to approach strangers in coffee shops in Palo Alto and ask them to try Pinterest and then build things they ask for. Many founders hate this part, and just want to announce their product in the press. But that almost never works. Recruit users manually, and make the product so good the users you recruit tell their friends.
You also need to break things into very small pieces, and iterate and adapt as you go. In fact, simplicity is always good, and you should always keep your product and company as simple as possible. Some common questions we ask startups having problems: Are users using your product more than once?
Are your users fanatical about your product?
Would your users be truly bummed if your company went away? Are your users recommending you to other people without you asking them to do it? The best founders seem to care a little bit too much about product quality, even for seemingly unimportant details.
But it seems to work. You need to offer great support, great sales interactions, etc. You cannot outsource the work to someone else for a long time. This sounds obvious, but you have to make money. The only universal job description of a CEO is to make sure the company wins. You can do this as the founder even if you have a lot of flaws that would normally disqualify you as a CEO as long as you hire people that complement your own skills and let them do their jobs.
Founders and employees that are burn out nearly always work at startups without momentum. But how do you do it? The most important way is to make it your top priority.
The company does what the CEO measures. If you care about growth, and you set the execution bar, the rest of the company will focus on it. Here are a couple of examples. The founders of Airbnb drew a forward-looking graph of the growth they wanted to hit.
They posted this everywhere—on their fridge, above their desks, on their bathroom mirror. If they hit the number that week, great. If not, it was all they talked about. Mark Zuckerberg once said that one of the most important innovations at Facebook was their establishment of a growth group when growth slowed.
This group was and perhaps still is one of the most prestigious groups in the company—everyone knew how important it was. Talk as a company about how you could grow faster. Extreme internal transparency around metrics and financials is a good thing to do.
For some reason, founders are always really scared of this. The common mistake here is to focus on signups and ignore retention. But retention is as important to growth as new user acquisition. You should set aggressive but borderline achievable goals and review progress every month. Celebrate wins! There are a few traps that founders often fall into. One is that if the company is growing like crazy but everything seems incredibly broken and inefficient, everyone worries that things are going to come unraveled.
In practice, this seems to happen rarely Friendster is the most recent example of a startup dying because of technical debt that I can point to. My favorite investments are in companies that are growing really fast but incredibly un-optimized—they are deeply undervalued. A related trap is thinking about problems too far in the future—i. A good rule of thumb is to only think about how things will work at 10x your current scale. By the way, this is a really important example—have great customer support.
Humans are very bad at intuition around exponential growth. Remind your team of this, and that all giant companies started growing from small numbers. Some of the biggest traps are the things that founders believe will deliver growth but in practice almost never work and suck up a huge amount of time.
Beware of these and understand that they effectively never work. Instead get growth the same way all great companies have—by building a product users love, recruiting users manually first, and then testing lots of growth strategies ads, referral programs, sales and marketing, etc. Ask your customers where you can find more people like them. Remember that sales and marketing are not bad words. At least one founder has to get good at asking people to use your product and give you money.
For B2B products, I think the right answer is almost always to track revenue growth per month, and remember that the longer sales cycle means the first couple of months are going to look ugly though sometimes selling to startups as initial customers can solve this problem.
These words seem to really apply to the best founders I know. They are relentlessly focused on their product and growth. No great company I know of started doing multiple things at once—they start with a lot of conviction about one thing, and see it all the way through. You can do far fewer things than you think. A very, very common cause of startup death is doing too many of the wrong things.
Prioritization is critical and hard. They get things done very quickly.
Great founders listen to all of the advice and then quickly make their own decisions. You have to pick the right things. I have never, not once, seen a slow-moving founder be really successful. You are not different from other startups. You still have to stay focused and move fast.
Companies building rockets and nuclear reactors still manage to do this. When you find something that works, keep going. The extreme cases—early-stage founders with their own publicists—that one would think only exist in TV shows actually exist in real life, and they almost always fail. Focus and intensity will win out in the long run. A CEO has to 1 set the vision and strategy for the company, 2 evangelize the company to everyone, 3 hire and manage the team, especially in areas where you yourself have gaps 4 raise money, and 5 set the execution quality bar.
In addition to these, find whatever parts of the business you love the most, and stay engaged there. If you are successful, it will take over your life to a degree you cannot imagine—the company will be on your mind all the time. You can have one other big thing—your family, doing lots of triathlons, whatever—but probably not much more than that. You have to always be on, and there are a lot of decisions only you can make, no matter how good you get at delegation.
You should aim to be super responsive to your team and the outside world, always be clear on the strategy and priorities, show up to everything important, and execute quickly especially when it comes to making decisions others are blocked on. If the team sees you doing these things, they will do them too.
Managing your own psychology is both really hard and really important. Being a CEO is lonely. A successful startup takes a very long time—certainly much longer than most founders think at the outset. You cannot treat it as an all-nighter. You have to eat well, sleep well, and exercise. You have to spend time with your family and friends. Everything will feel broken all the time—the diversity and magnitude of the disasters will surprise you.
In any case, just keep going. Agile development works hand-in-hand with customer development. They had a vision of building robotic lawn mowers for commercial spaces. But then they began to talk to farmers and found a huge demand for an automated way to kill weeds without chemicals. Filling it became their new product focus, and within 10 weeks Blue River had built and tested a prototype.
The team expected to have a commercial product ready just nine months after that. Quick, Responsive Development In contrast to traditional product development, in which each stage occurs in linear order and lasts for months, agile development builds products in short, repeated cycles.
The lean start-up methodology makes those concepts obsolete because it holds that in most industries customer feedback matters more than secrecy and that constant feedback yields better results than cadenced unveilings. Those two fundamental precepts crystallized for me during my career as an entrepreneur.
When I shifted into teaching, a decade ago, I came up with the formula for customer development described earlier. In , I invested in a start-up founded by Eric Ries and Will Harvey and, as a condition of my investment, insisted that they take my course. In , I wrote The Four Steps to the Epiphany, articulating for the first time that start-ups were not smaller versions of large companies and laying out the customer development process in detail.
In , Alexander Osterwalder and Yves Pigneur gave entrepreneurs the standard framework for business model canvases in Business Model Generation. In Eric published an overview in The Lean Startup. The lean start-up method is now being taught at more than 25 universities and through a popular online course at Udacity.
At such gatherings a roomful of start-up teams can cycle through half a dozen potential product ideas in a matter of hours. Creating an Entrepreneurial, Innovation-Based Economy While some adherents claim that the lean process can make individual start-ups more successful, I believe that claim is too grandiose.
Success is predicated on too many factors for one methodology to guarantee that any single start-up will be a winner. A lower start-up failure rate could have profound economic consequences. Today the forces of disruption, globalization, and regulation are buffeting the economies of every country.
Established industries are rapidly shedding jobs, many of which will never return. Employment growth in the 21st century will have to come from new ventures, so we all have a vested interest in fostering an environment that helps them succeed, grow, and hire more workers.
Only after quick rounds of experimentation and feedback reveal a model that works do lean founders focus on execution. The high cost of getting the first customer and the even higher cost of getting the product wrong. Long technology development cycles. The limited number of people with an appetite for the risks inherent in founding or working at a start-up.
The structure of the venture capital industry, in which a small number of firms each needed to invest big sums in a handful of start-ups to have a chance at significant returns. The concentration of real expertise in how to build start-ups, which in the United States was mostly found in pockets on the East and West coasts.
This is less an issue in Europe and other parts of the world, but even overseas there are geographic entrepreneurial hot spots.
The lean approach reduces the first two constraints by helping new ventures launch products that customers actually want, far more quickly and cheaply than traditional methods, and the third by making start-ups less risky. And it has emerged at a time when other business and technology trends are likewise breaking down the barriers to start-up formation. The combination of all these forces is altering the entrepreneurial landscape.
Today open source software, like GitHub, and cloud services, such as site Web Services, have slashed the cost of software development from millions of dollars to thousands. Hardware start-ups no longer have to build their own factories, since offshore manufacturers are so easily accessible.
Once its founders had finished testing and iterating on the design of their wired dollhouse kit, they sent the specs off to a contract manufacturer in China. Three weeks later the first products arrived. Large companies, such as GE and Intuit, have begun to implement them.
Another important trend is the decentralization of access to financing. Venture capital used to be a tight club of formal firms clustered near Silicon Valley, Boston, and New York.