I am 

Sam Altman, I'm the President of Y Combinator.

Nine years ago, I was a Stanford student, and then I
dropped out of the company, and then I've been an in-
vestor for the last few. So YC, we've been teaching people
how to start startups for nine years. Most of it's pretty
specific to the startups but thirty percent of it is pretty
generally applicable.
And so we think we can teach that thirty percent in this
class. And even though that's only thirty percent of the way
there, hopefully, it will still be really helpful. We've taught a
lot of this class at YC and it's all been off the record. And
this is the first time a lot of what we teach is going to be on
the record. We've invited some of our guest speakers to
come and give the same talks they give at YC. We've now
funded 725 companies and so we're pretty sure a lot of this
advice we give is pretty good. We can't fund every startup
yet, but we can hopefully make this advice very generally
available.
I'm only teaching three.

Counting YC itself, every guest speaker has been involved

in the creation of a billion plus dollar company. So the ad-
vice shouldn't be that theoretical, it's all been people who
have done it. All of the advice in this class is geared towards
people starting a business where the goal is hyper-growth
and eventually building a very large company. Much of it
doesn't apply in other cases and I want to warn people up
front, that if you try to do these things in a lot of big compa-
nies or non-startups, it won't work. It should still be interest-
ing, I really think that startups are the way of the future and
it's worth trying to understand them, but startups are very
different from normal companies. So over the course of to-
day and Thursday, I'm going to try to give an overview of the
four areas in which you need to excel at in order to maxi-
mize your success as a startup. And then throughout the
course, the guest speakers are going to drill into all of these
in more detail.

Ideas, Products, Teams, and Execution Part I

So the four areas are: You need a great idea, a great prod-
uct, a great team, and great execution. These overlap
somewhat, but I'm going to have to talk about them some-
what individually to make it make sense.
You may still fail. The outcome is something like idea x
product x execution x team x luck, where luck is a random
number between zero and ten thousand. Literally that much.
But if you do really well in the four areas you can control,
you have a good chance at at least some amount of suc-
cess.One of the exciting things about startups is that they
are a surprisingly even playing field. Young and inexperi-
enced, you can do this. Old and experienced, you can do
this, too. And one of the things that I particularly like about
startups is that some of the things that are bad in other work
situations, like being poor and unknown, are actually huge
assets when it comes to starting a startup.

WHY TO START STARTUP?

Before we jump in on the how, I want to talk about why you
should start a startup. I'm somewhat hesitant to be doing
this class at all because you should never start a startup just
for the sake of doing so. There are much easier ways to be-
come rich and everyone who starts a startup always says,
always, that they couldn't have imagined how hard and
painful it was going to be. You should only start a startup if
you feel compelled by a particular problem and that you
think starting a company is the best way to solve it
.

The specific passion should come first, and the startup sec-
ond. In fact, all of the classes we have at YC follow this.

2. WHEN IDEA AND EXECUTION OVERLAP EACH

OTHER.
The first of the four areas: a great idea. It's become popular
in recent years to say that the idea doesn't matter. In fact,
it's uncool to spend a lot of time thinking about the idea for a
startup. You're just supposed to start, throw stuff at the wall,
see what sticks, and not even spend any time thinking about
if it will be valuable if it works. And pivots are supposed to
be great, the more pivots the better. So this isn't totally
wrong, things do evolve in ways you can't totally predict.
And there's a limit to how much you can figure out without
actually getting a product in the hands of the users. And
great execution is at least ten times as important and a hun-
dred times harder than a great idea.
But the pendulum has swung way out of whack. A bad idea
is still bad and the pivot-happy world we're in today feels
suboptimal. Great execution towards a terrible idea will get
you nowhere.There are exceptions, of course, but most
great companies start with a great idea, not a pivot.
If you look at successful pivots, they almost always are a
pivot into something the founders themselves wanted
, not a random made up idea. Airbnb happened because
Brian Chesky couldn't pay his rent, but he had some extra
space. In general though if you look at the track record of
pivots, they don't become big companies. I myself used to
believe ideas didn't matter that much, but I'm very sure
that's wrong now.
The definition of the idea, as we talk about it, is very broad.
It includes the size and the growth of the market, the growth
strategy for the company, the defensibility strategy, and so
on. When you're evaluating an idea, you need to think
through all these things, not just the product. If it works out,
you're going to be working on this for ten years so it's worth
some real up front time to think through the up front value
and the defensibility of the business. Even though plans
themselves are worthless, the exercise of planning is really
valuable and totally missing in most startups today.Long-
term thinking is so rare anywhere, but especially in star-
tups. There is a huge advantage if you do it. Remember that
the idea will expand and become more ambitious as you go.
You certainly don't need to have everything figured out in
your path to world domination, but you really want a nice
kernel to start with. You want something that can develop in
interesting ways.
As you're thinking through ideas, another thing we see that
founders get wrong all the time is that someday you need to
build a business that is difficult to replicate

. This is an important part of a good idea.

I want to make this point again because it is so important:

the idea should come first and the startup should come sec-
ond. Wait to start a startup until you come up with an idea
you feel compelled to explore. This is also the way to
choose between ideas. If you have several ideas, work on
the one that you think about most often when you're not try-
ing to think about work. What we hear again and again from
founders is that they wish they had waited until they came
up with an idea they really loved.Another way of looking at
this is that the best companies are almost always mission
oriented. It's difficult to get large groups of people to ex-
treme level of focus and productivity that you need for a
startup to be successful, unless the company feels like an
importantcompany feels like it has an important mis-
sion. And it's usually really hard to get that without a great
founding idea.

THE COMPANY SHOULD FEEL LIKE AN IMPORTANT

MISSION.
A related advantage of mission oriented ideas is that you
yourself will be dedicated to them. It takes years and years,
usually a decade, to build a great startup. If you don't love
and believe in what you're building, you're likely to give up at
some point along the way. There's no way I know of to get
through the pain of a startup without the belief that the mis-
sion really matters. A lot of founders, especially students,
believe that their startups will only take two to three years
and then after that they'll work on what they're really pas-
sionate about. That almost never works. Good startups usu-
ally take ten years.

A third advantage of mission oriented companies is that

people outside the company are more willing to help
you. You'll get more support on a hard, important project,
than a derivative one. When it comes to starting a startup,
it's easier to found a hard startup than an easy startup. This
is one of those counter-intuitive things that takes people a
long time to understand. It's difficult to overstate how impor-
tant being mission driven is, so I want to state it one last
time: derivative companies, companies that copy an existing
idea with very few new insights, don't excite people and they
don't compel the teams to work hard enough to be success-
ful.
Paul Graham is going to talk about how to get startup ideas
next week. It's something that a lot of founders struggle with,
but it's something I believe you can get better at with prac-
tice and it's definitely worth trying to get better at with prac-
tice. The hardest part about coming up with great ideas, is
that the best ideas often look terrible at the beginning. The
thirteenth search engine, and without all the features of a
web portal?

 Most people thought that was pointless. Search was done,

and anyways, it didn't matter that much. Portals were where
the value was at. The tenth social network, and limited only
to college students with no money? Also terrible. MySpace
has won and who wants college students as customers?
Or a way to stay on strangers' couches . That just sounds
terrible all around.

These all sounded really bad but they turned out to be

good. If they sounded really good, there would be too many
people working on them.

As Peter Thiel is going to discuss in the fifth class, you want

an idea that turns into a monopoly. But you can't get a mo-
nopoly right away in a big market. You have to find a small
market in which you can get a monopoly and then quickly
expand. This is why some great startup ideas look really
bad at the beginning. It's good if you can say something
like, "Today, only this small subset of users are going to use
my product, but I'm going to get all of them, and in the fu-
ture, almost everyone is going to use my product."
Here is the theme that is going to come up a lot: you need
conviction in your own beliefs and a willingness to ignore
others' naysaying. The hard part is that this is a very fine
line. There's right on one side of it, and crazy on the other.
But keep in mind that if you do come up with a great idea,
most people are going to think it's bad. You should be happy
about that, it means they won't compete with you.

This also another reason why it's not really dangerous to tell
people your idea. The truly good ideas don't sound like
they're worth stealing. You want an idea where you can say,
"I know it sounds like a bad idea, but here's specifically why
it's actually a great one." You want to sound crazy, but you
want to actually be right. And you want an idea that not
many other people are working on. And it's okay if it doesn't
sound big at first

A common mistake among founders, especially first time

founders, is that they think the first version of their product -
the first version of their idea - needs to sound really big. But
it doesn't. It needs to take over a small specific market and
expand from there. That's how most great companies get
started. Unpopular but right is what you're going for. You
want something that sounds like a bad idea, but is a good
idea.

You also really want to take the time to think about how the
market is going to evolve. You need a market that's going to
be big in 10 years. Most investors are obsessed with the
market size today, and they don't think at all about how the
market is going to evolve. In fact, I think this is one of the
biggest systemic mistakes that investors make. They think
about the growth of the start-up itself, they don't think about
the growth of the market.

I care much more about the growth rate of the market than
its current size, and I also care if there's any reason it's go-
ing to top out. You should think about this. I prefer to invest
in a company that's going after a small, but rapidly growing
market, than a big, but slow-growing market.

One of the big advantages of these sorts of markets - these

smaller, rapidly growing markets - is that customers are usu-
ally pretty desperate for a solution, and they'll put up with an
imperfect, but rapidly improving product. A big advantage of
being a student - one of the two biggest advantages - is that
you probably have better intuition about which markets are
likely to start growing rapidly than older people do. Another
thing that students usually don't understand, or it takes
awhile, [is that] you can not create a market that does not
want to exist. You can basically change everything in a
start-up but the market, so you should actually do some
thinking to be sure - or be as sure as you can be - that the
market you're going after is going to grow and be there.

There are a lot of different ways to talk about the right kind
of market. For example, surfing some one else's wave, step-
ping into an up elevator, or being part of a movement, but all
of this is just a way of saying that you want a market that's
going to grow really quickly. It may seem small today, it may
be small today, but you know - and other people don't - that
it's going to grow really fast.
So think about where this is happening in the world. You
need this sort of tailwind to make a startup successful.

The exciting thing is the there are probably more of

these tailwinds now then ever before. As Marc Andreessen
says, software is eating the world. Its just everywhere, there
are so many great ideas out there. You just have to pick
one, and find one that you really care about.

Another version of this, that gets down to the same idea, is

Sequoia's famous question: Why now? Why is this the per-
fect time for this particular idea, and to start this particular
company. Why couldn't it be done two years ago, and why
will two years in the future be too late?

For the most successful startups we've been involved with,

they've all had a great idea and a great answer to this ques-
tion. And if you don't you should be at least somewhat sus-
picious about it.

In general, its best if you're building something that you

yourself need. You'll understand it much better than if you
have to understand it by talking to a customer to build the
very first version. If you don't need it yourself, and you're
building something someone else needs, realize that you're
at a big disadvantage, and get very very close to your cus-
tomers. Try to work in their office, if you can, and if not, talk
to them multiple times a day.
Another somewhat counterintuitive thing about good startup
ideas is that they're almost always very easy to explain and
very easy to understand. If it takes more then a sentence to
explain what you're doing, that's almost always a sign that
its too complicated. It should be a clearly articulated vision
with a small number of words. And the best ideas are usu-
ally very different from existing companies, [either] in one
important way, like Google being a search engine that
worked just really well, and none of the other stuff of the
portals, or totally new, like SpaceX. Any company that's a
clone of something else, that already exists, with some
small or made up differentiator—like X, beautiful design, or
Y for people that like red wine instead—that usually fails.

So as I mentioned, one of the great things about being a

student is that you've got a very good perspective on new
technology. And learning to have good ideas takes a while,
so start working on that right now. That's one thing we hear
from people all the time, that they wish they had done more
of as a student.

The other is meeting potential cofounders. You have no idea

how good of an environment you're in right now, for meeting
people you can start a company with down the road. And
the one thing that we always tell college students is that
more important then any particular startup is getting to know
potential cofounders.

So I want to finish this section of my talk with a quote from

50 Cent.

 This is from when he was asked about Vitamin Water. I

won't read it, it's up there, but it's about the importance of
thinking about what customers want, and thinking about the
demands of the market. Most people don't do this—most
students especially don't do this. If you can just do this one
thing, if you can just learn to think about the market first,
you'll have a big leg up on most people starting startups.
And this is probably the thing we see wrong with Y Combi-
nator apps most frequently, is that people have not thought
about the market first, and what people want first.
PRODUCT
So for the next section, I'm going to talk about building a
great product. And here, again, I'm going to use a very
broad definition of product. It includes customer support, the
copy you write explaining the product, anything involved in
your customer's interaction in what you built for them.

To build a really great company, you first have to turn a

great idea into a great product. This is really hard, but its
crucially important, and fortunately its pretty fun. Although
great products are always new to the world, and its hard to
give you advice about what to build, there are enough com-
monalities that we can give you a lot of advice about how to
build it.

One of the most important tasks for a founder is to make

sure that the company builds a great product. Until you build
a great product, nothing else matters. When really success-
ful startup founders tell the story of their early days its al-
most always sitting in front of the computer working on their
product, or talking to their customers. That's pretty much all
the time. They do very little else, and you should be very
skeptical if your time allocation is much different. Most other
problems that founders are trying to solve, raising money,
getting more press, hiring, business development, et cetera,
these are significantly easier when you have a great prod-
uct. Its really important to take care of that first. Step one is
to build something that users love.
 At YC, we tell founders to work on their product, talk to
users, exercise, eat and sleep, and very little else. All the
other stuff I just mentioned—PR, conferences, recruiting ad-
visers, doing partnerships—you should ignore all of that,
and just build a product and get it as good as possible by
talking to your users.

Your job is to build something that users love. Very few

companies that go on to be super successful get there with-
out first doing this. A lot of good-on-paper startups fail be-
cause they merely make something that people like. Making
something that people want, but only a medium amount, is a
great way to fail, and not understand why you're failing. So
these are the two jobs

Something that we say at YC a lot is that its better to

build something that a small number of users love, then
a large number of users like. Of course, it would be best
to build something that a small number of users love,
but opportunities to do that for v1 are rare, and they're
usually not available to startups. So in practice you end
up choosing the gray or the orange.
You make something that a lot of users like a little bit, or
something that a small number of users love a lot. This is a
very important piece of advice. Build something that a small
number of users love.

 It is much easier to expand from something that small num-

ber of people love, to something that a lot of people love,
then from something that a lot of people like to a lot of peo-
ple love. If you get right, you can get a lot of other things
wrong. If you don't get this right, you can get everything else
right, and you'll probably still fail. So when you start on the
startup, this is the only thing you need to care about until its
working.
So you have a choice in a startup. The best thing of all
worlds is to build a product that a lot of people really love. In
practice, you can't usually do that, because if there's an op-
portunity like that, Google or Facebook will do it. So there's
like a limit to the area under the curve, of what you can
build. So you can build something that a large number of
users like a little bit, or a small number of users love a lot.
So like the total amount of love is the same, its just a ques-
tion of how its distributed. [audience laughter] And there's
like this law of conservation of how much happiness you can
put in the world, with the first product of a startup.

And so startups always struggle, with which of those two

they should go. And they seem equal, right? Because the
area under the curve is the same. But we've seen this time
and again, that they're not. And that it's so much easier to
expand, once you've got something that some people love,
you can expand that into something that a lot of other peo-
ple love. But if you start with ambivalence, or weak enthusi-
asm, and try to expand that, you'll never get up to a lot of
people loving it. So the advice is: find a small group of
users, and make them love what you're doing

One way that you know when this is working, is that you'll
get growth by word of mouth. If you get something people
love, people will tell their friends about it. This works for con-
sumer product and enterprise products as well. When peo-
ple really love something, they'll tell their friends about it,
and you'll see organic growth.
If you find yourself talking about how it's okay that you're not
growing—because there's a big partnership that's going to
come save you or something like that—its almost always a
sign of real trouble.

Sales and marketing are really important, and we're going to

have two classes on them later. But if you don’t have some
early organic growth then your product probably isn’t good
enough yet. A great product is the secret to long term
growth hacking. You should get that right before anything
else. It doesn't get easier to put off making a great product.
If you try to build a growth machine before you have a prod-
uct that some people really love, you're almost certainly go-
ing to waste your time. Breakout companies almost always
have a product that's so good, it grows by word of mouth.
Over the long run, great product win. Don't worry about your
competitors raising a lot of money, or what they might do in
the future. They probably aren't very good anyway. Very few
startups die from competition. Most die because they them-
selves fail to make something users love, they spend their
time on other things.

So worry about this above all else.

Another piece of advice to make something that users

love: start with something simple. Its much much easier
to make a great product if you have something simple.

 Even if your eventual plans are super complex, and hope-

fully they are, you can almost always start with a smaller
subset of the problem then you think is the smallest, and its
hard to build a great product, so you want to start with as lit-
tle surface area as possible.
Think about the really successful companies, and what they
started with, think about products you really love. They're
generally incredibly simple to use, and especially to get
started using. The first version of Facebook was almost
comically simple. The first version of Google was just a web-
page with a textbox and two buttons; but it returned the best
results, and that's why users loved it. The iPhone is far sim-
pler to use then any smartphone that ever came before it,
and it was the first one users really loved.

Another reason that simple's good is because it forces you

to do one thing extremely well and you have to do that to
make something that people love.

The word fanatical comes up again and again when you lis-
ten to successful founders talk about how they think about
their product. Founders talk about being fanatical in how
they care about the quality of the small details. Fanatical in
getting the copy that they use to explain the product just
right. and fanatical in the way that they think about customer
support. In fact, one thing that correlates with success
among the YC companies is the founders that hook
up Pagerduty to their ticketing system, so that even if the
user emails in the middle of the night when the founder's
asleep, they still get a response within an hour.

Companies actually do this in the early days. Their founders

feel physical pain when the product sucks and they want to
wake up and fix it. They don't ship crap, and if they do, they
fix it very very quickly. And it definitely takes some level of
fanaticism to build great products.

You need some users to help with the feedback cycle, but
the way you should get those users is manually—you
should go recruit them by hand. Don't do things like buy
Google ads in the early days, to get initial users. You don't
need very many, you just need ones that will give you feed-
back everyday, and eventually love your product. So instead
of trying to get them on Google Adwords, just the few peo-
ple, in the world, that would be good users. Recruit them by
hand.

Ben Silbermann, when everyone thought Pinterest was a

joke, recruited the initial Pinterest users by chatting up
strangers in coffee shops. He really did, he just walked
around Palo Alto and said "Will you please use my prod-
uct?" He also used to run around the Apple store in Palo
Alto, and he would like set all the browsers to the Pinterest
homepage real quick, before they caught him and kicked
him out, (laughter) and so that when people walked in they
were like "Oh, what's this?". This is an important example of
doing things that don't scale.

 If you haven't read Paul Graham's essay on that topic

, you definitely should.

So get users manually and remember that the goal is to get

a small group of them to love you. Understand that group
extremely well, get extremely close to them. Listen to them
and you'll almost always find out that they're very willing to
give you feedback. Even if you're building the product for
yourself, listen to outside users, and they'll tell you how to
make a product they'll pay for. Do whatever you need to
make them love you, and make them know what you're do-
ing. Because they'll also be the advocates that help you get
your next users.
You want to build an engine in the company that transforms
feedback from users into product decisions. Then get it back
in from of the users and repeat. Ask them what the like and
don't like, and watch them use it. Ask them what they'd pay
for. Ask them if they'd be really bummed if your company
went away. Ask them what would make them recommend
the product to their friends, and ask them if they'd recom-
mended it to any yet.

You should make this feedback loop as tight as possible. If

your product gets 10 percent better every week, that com-
pounds really quickly. One of the advantages of software
startups is just how short you can make the feedback loop.
It can be measured in hours, and the best companies usu-
ally have the tightest feedback loop. You should try to keep
this going for all of your company's life, but its really impor-
tant in the early days.

The good news is that all this is doable. Its hard, it takes a
lot of effort, but there's no magic. The plan is at least is
straightforward, and you will eventually get to a great prod-
uct.

Great founders don't put anyone between themselves and

their users. The founders of these companies do things like
sales and customer support themselves in the early days.
Its critical to get this loop embedded in the culture. In fact, a
specific problem we always see with Stanford startups, for
some reason, is that the students try to hire sales and cus-
tomer support people right away, and you've got to do this
yourself, its the only way.
You really need to use metrics to keep yourself honest on
this. It really is true that the company will build whatever the
CEO decides to measure. If you're building an Internet ser-
vice, ignore things like total registrations—don't talk about
them, don't let anyone in the company talk about them—and
look at growth and active users, activity levels, cohort reten-
tion, revenue, net promoter scores, these things that matter.
And then be brutally honest if they're not going in the right
direction. Startups live on growth, its the indicator of a great
product.

So this about wraps up the overview on building a great

product. I want to emphasize again, that if you don't get this
right, nothing else we talk about in the class will matter. You
can basically ignore everything else in the class until this is
working well. On the positive side, this is one of the most fun
parts of building a startup.

So I'm going to pause here, we'll pick back up with the rest
of this on Thursday, and now Dustin is going to talk
about why you should start a startup. Thank you for coming,
Dustin.
Why To Start A Startup

But yeah, Sam asked me to talk about why you should start
a startup. There's a bunch of common reasons that people
have, that I hear all the time for why you might start a
startup. Its important to know what reason is yours, because
some of them only make sense in certain contexts, some of
them will actually, like, lead you astray. You may have been
mislead by the way that Hollywood or the press likes to ro-
manticize entrepreneurship, so I want to try to illuminate
some of those potential fallacies, so you guys can make the
decision in a clear way. And then I'll talk about the reason I
like best for actually starting a startup, its very related to a
lot of what Sam just talked about. But surprisingly, I don't
think its the most common reason. Usually people have one
of these other reasons, or, you know, they just want to start
a company for the sake of starting a company.

So the 4 common reasons, just to enumerate them, are it's

glamorous, you'll get to be the boss, you'll have flexibility,
especially over your schedule, and you'll have the chance to
have bigger impact and make more money then you might
by joining a later stage company.

So you guys are probably pretty familiar this concept, when I

wrote the Medium post

, which a lot of you guys read a year ago, I felt like the story
in the press was a little more unbalanced, entrepreneurship
got romanticized quite a bit. The movie The Social Net-
work came out, it had a lot of like bad aspects of what it like
to be an entrepreneur, but mainly it painted this picture of
like, there's a lot of partying and you just kind of move from
like one brilliant insight to another brilliant insight, and really
made it seem like this really cool thing to do.

And I think the reality is just not quite so glamorous, there's

an ugly side to being an entrepreneur, and more impor-
tantly, what you're actually spending your time on is just a
lot of hard work. Sam mentioned this, but your basically just
sitting at your desk, heads down, focused, answering cus-
tomer support emails, doing sales, figuring out hard engi-
neering problems. So its really important that you go in with
eyes wide open. And then its also quite stressful. This has
been a popular topic in the press lately: The Economist ac-
tually ran a story just last week called "Entreupeneurs
anonymous", and shows a founder like hiding under his
desk, talking about founder depression. So this is a very real
thing. Let's be real, if you start a company its going to be ex-
tremely hard.

Why is it so stressful? So a couple reasons. One is you've

got a lot of responsibility. People in any career have a fear
of failure, its kind of just like a dominant part of the part of
the psychology. But when you're an entrepreneur, you have
fear of failure on behalf of yourself and all of the people who
decided to follow you. So that's really stressful. In some
cases people are depending on you for their livelihood, even
when that's not true, they've decided to devote the best
years of their life to following you. So you're responsible for
the opportunity cost of their time. You're always on call, if
something comes up—maybe not always at 3 in the morn-
ing, but for some startups that's true—but if something im-
portant comes up, you're going to deal with it. That's kinda
the end of the story, doesn't matter if you're on vacation,
doesn't matter if its the weekend, you've got to always be on
the ball and be in a place mentally where you're prepared to
deal with those things. A sort of special example of this kind
of stress is fundraising.

So a scene from The Social Network. This is us partying

and working at the same time—somebody's spraying cham-
pagne everywhere—The Social Network spends a lot of
time painting these scenes. Mark's not in the scene, the
other thing they spend all their time on is painting him out to
be a huge jerk.

This is an actual scene from Palo Alto, he spent a lot of time

at this desk, head down and focused. Mark was still kinda a
jerk sometimes, but in this more like fun lovable way, and
not in a sociopathic, scorned lover way. So this is just him
signaling his intention to just be focused and keep working,
not be social.

So then there's the scene demonstrating the insight mo-

ment, it's kind of like out of A Beautiful Mind, they literally
stole that scene. So they like to paint that scene and jump to
these moments from other moments, with partying in be-
tween. But really we were just at that table the whole time.
So if you compare this photo, Mark is in the exact same po-
sition but he's wearing different clothes, so this is definitely a
different day. That's what it's actually like in person. I just
covered this bullet; this is the Economist article I was talking
about a second ago.

So another form of stress is unwanted media attention. So

part of it being glamorous is you get some positive media at-
tention sometimes, it's nice to be on the cover of Time and
to be the Person of the Year. It's maybe a little less nice to
be on the cover of People with one of your wedding photos.
It depends on who you are, I really hate it, but when Valley-
wag analyzes your lecture and tears you apart, you don't
want that, you definitely don't want that. Nobody wants that.

One thing I almost never hear people talk about is you're

much more committed. So if you're at a startup and it's very
stressful and things are not going well, you're unhappy, you
can just leave. For a founder, you can leave, but it's very un-
cool and pretty much a black eye for the rest of your career.
And so you really are committed for ten years if it's going
well and probably more like five years if it's not going well.
So three years to figure out it's not going well and then if you
find a nice landing for your company, another two years at
the acquiring company. If you leave before that, again it's
not only going to harm yourself financially but it's going to
harm all your employees. So if you're lucky and you have a
bad startup idea, you fail quickly, but most of the time it's not
like that.

I should say, I've had a lot of this stress in my own life, es-
pecially in the early years of Facebook, I got really un-
healthy, I wasn't exercising, I had a lot of anxiety actually
threw out my back, like almost every six months, when I was
twenty-one or twenty-two, which is pretty crazy. So if you do
start a company, be aware that you're going to deal with
this. You're going to have to actually manage this, it's one of
your core responsibilities. Ben Horowitz likes to say the
number one role of a CEO is managing your own psychol-
ogy, it's absolutely true, make sure you do it.

Another reason, especially if you're had another job at an-

other company, you start to develop this narrative, like the
people running this company are idiots, they're making all
these decisions and spending all their time in these stupid
ways, I'm gonna start a company and I'm going to do it bet-
ter. I'm going to set all the rules.

Sounds good, makes a lot of sense. If you've read my media

post, you'll know what's coming, I'll give you guys a second
to read this quote:
People have this vision of being the CEO of a company they
started and being on top of the pyramid. Some people are
motivated by that, but that’s not at all what it’s like.

What it’s really like: everyone else is your boss – all of your
employees, customers, partners, users, media are your
boss. I’ve never had more bosses and needed to account
for more people today.
The life of most CEOs is reporting to everyone else, at least
that’s what it feels like to me and most CEOs I know. If you
want to exercise power and authority over people, join the
military or go into politics. Don’t be an entrepreneur.
-Phil Libin, CEO Evernote
This really resonates with me. One thing to point out is that
the reality of these decision is nuanced. The people you
thought were idiots probably weren't idiots, they just had a
really difficult decision in front of them and people pulling
them in multiple directions. So the most common thing I
have to spend my time on and my energy on as a CEO is
dealing with the problems that other people are bringing to
me, the other priorities that people create, and it's usually in
the form of a conflict. People want to go in different direc-
tions or customers want different things. And I might have
my own opinions on that, but the game I'm playing is who do
I disappoint the least and just trying to navigate all these dif-
ficult situations.

And even on a day to day basis, I might come in on Monday

and have all these grand plans for how I'm going to improve
the company. But if an important employee is threatening to
quit, that's my number one priority. That's what I'm spending
my time on.

A subset of You're the Boss is you have flexibility, you have

control over your own schedule. This is a really attractive
idea. So here's the reality:
If you're going to be an entrepreneur, you will actually get
some flex time to be honest. You'll be able to work any 24
hours a day you want!
-Phil Libin
This truly resonates with me as well. Some of the reasons
for this again, you're always on call. So maybe you don't in-
tend to work all parts of the day, but you don't control which
ones.

You're a role model of the company, and this is super impor-

tant. So if you're an employee at a company, you might
have some good weeks and you might have some bad
weeks, some weeks when you're low energy and you might
want to take a couple days off. That's really bad if you're an
entrepreneur. Your team will really signal off of what you're
bringing to the table. So if you take your foot off the gas, so
will they.

You're always working anyways. If you're really passionate

about an idea, it's going to pull you towards it. If you're work-
ing with great investors, you're working with great partners,
they're going to be working really hard, they're going to want
you to be working really hard.

Some companies like to tell the story about you can have
your cake and eat it too, you can have like 4 days work
weeks maybe, if you're Tim Ferris maybe you can have a 12
hours work week. It's a really attractive idea and it does
work in a particular instance which is if you wanna actually
have a small business to go after in each market then you
are a small business entrepreneur, that makes little sense
but as soon as you get past like 2 or 3 people you really
need to step it up and be full-time committed.

You'll make more money and have more impact

This is the big one, the one I hear the most especially like
candidates applying to Asana, they tell me "You know I'd re-
ally like to work for much smaller companies or start my own
because then I have a much bigger slice of the pie or have
much more impact on how that company does and I'll have
more equity so I'll make more money as well". So let's ex-
amine when this might be true.

I'll explain these tables. They're a little complex but let's fo-
cus on the left first. These are just explaining Dropbox and
Facebook, these are their current valuations and this is how
much money you might make as employee number 100
coming into these companies especially if you're like an ex-
perienced, relatively experienced engineer, you have like 5
years of industry experience, you're pretty likely to have an
offer that's around 10 base points. If you joined Dropbox
couple years ago the upside you've already locked in is
about $10M and there's plenty more growth from there. If
you joined Facebook a couple years into its existence
you've already made around $200M, this is a huge number
and even if you joined Facebook as employee number
1000, so you joined like 2009, you still make $20M, that's a
giant number and that's how you should be benchmarking
when you're thinking about what you might make as an en-
trepreneur.

Moving over to the table on the right, these are two theoreti-
cal companies you might start. "Uber for Pet Sitting", pretty
good idea if you're really well suited to this you might have a
really good shot at building a $100M company and your
share of that company is likely to be around 10%; that cer-
tainly fluctuates a lot, some founders have more than this,
some founders have a lot less, but after multiple rounds of
dilution, multiple rounds of option pool creation you're pretty
likely to end up about here. If you have more than this I'd
recommend Sam's post on equity split between founders
and employees, you should be probably giving out more.
So basically if you're extremely confident in building a
$100M, which is a big ask, it should go without saying that
you should have a lot more confidence on Facebook in 2009
or Dropbox in 2014 than you might for a startup that doesn't
even exist yet, then this is worth doing. If you have a $100M
idea and you're pretty confident you can execute it I'd con-
sider that.

If you think you're the right entrepreneur to build "Uber for

Space Travel", that's a really huge idea, $2B idea, you're ac-
tually gonna have a pretty good return for that, you should
definitely do that, this is also the value only after 4 years and
this idea probably has legs, definitely go after that, if you're
thinking of building that you probably shouldn't even be in
this class right now, just go build that company.

So why is this financial reward and impact?

I really think that financial reward is very strongly correlated

with the impact we have on the world, if you don't believe
that let's talk through some specific examples and not think
about equity at all.

So why might joining a late-stage company actually might

have a lot of impacts, you get this force multiplier: they have
an existing mass user base, if it's Facebook it's a billion
users, if it's Google it's a billion users, they have existing in-
frastructures you get to build on, that's also increasingly true
for a new startup like AWS and all these awesome indepen-
dent service providers, but you usually get some micro-pro-
prietary technology and they maintain it for you, it's a pretty
great place to start. And you get to work with a team, it'll
help you leverage your ideas into something great.

So couple of specific examples, Bret Taylor came into

Google as around employee number 1500 and he invented
Google Maps, that's a product you guys probably use every
day, I used it to get here and it's used by hundreds of mil-
lions of people around the world. He didn't need to start a
company to do that, he happened to get a big financial re-
ward, but the point is yet again massive impact.

My cofounder Justin Rosenstein joined Google a little later

after Brett, he was a PM there, and just as a side project he
ended up prototyping a chat which used to be a stand-alone
app, integrated in Gmail as you see in the upper right there
and before he did that like you couldn't even think you could
chat over Ajax or chat in the browser at all and he just kinda
demonstrated it and showed it to his team and made it hap-
pen. This is probably a product most of you use almost ev-
eryday.

Perhaps even more impressively, shortly after that Justin left

and became employee around 250 at Facebook and he led
a hackaton project along with people like Andrew Bosworth
and Leah Pearlman to create the Like button, this is one of
the most popular elements anywhere on the web, totally
changed how people use it and then again didn't need to
start a company to do it and almost certainly would have
failed if he had tried because he really needed the distribu-
tion of Facebook to make it work.

So important to keep in mind the context for what kind of

company you're trying to start and like where you will actu-
ally be able to make it happen.
So what's the best reason?
Sam already talked about this a little bit, but basically you
can't not do it. You're super passionate about this idea,
you're the right person to do it, you've gotta make it happen.
So how does this break down?

This is a wordplay, you can't not do it in two ways. One is

you're so passionate about it that you have to do it and
you're going to do it anyways. This is really important be-
cause you'll need that passion to get through all of those
hard parts of being an entrepreneur that we talked about
earlier. You'll also need it to effectively recruit, candidates
can smell when you don't have passion and there are
enough entrepreneurs out there that do have passion so
they may as well work for one of those! So this is table
stakes for being an entrepreneur. Your subconscious can
also tell when you don't have passion, which can be a huge
problem.

The other way to interpret this is the world needs you to do

it. This is validation that the idea is important, that it's going
to make the world better, so the world needs it. If it's not
something the world needs, go do something the world
needs. Your time is really valuable, there are plenty of good
ideas out there, maybe it's not your own, maybe it's at an
existing company, but you may as well work on something
that's going to be good.

The second way to interpret this is that the world

needs you to do it. You're actually well suited for this prob-
lem in some way. If this isn't true, it may be a sign that your
time is better spent somewhere else. But best case scenario
if this isn't true, you outcompete the team for which it is true
and it's a suboptimal outcome for the world and that doesn't
feel very good.

So drawing this back to my own experience at Asana, Justin

and I were reluctant entrepreneurs before we founded
Asana, we were working at Facebook and we were working
on a great problem. We would basically work all day long on
our normal projects and then at night we would keep work-
ing on this internal task manager that was used internally at
the company and it was just because we were so passion-
ate about the idea, it was so clearly valuable that we
couldn't do anything else.

And at some point we had to have the hard conversation of

okay what does it mean if we don't actually start this com-
pany. We could see the impact it was having at Facebook,
we were convinced it was valuable to the world. We were
also convinced no one else was going to build it, the prob-
lem had been around a long time and we just kept seeing in-
cremental solutions to it and so we believed if we didn't
come out with the solution we thought was best, there would
be a lot of value left on the table. We couldn't stop working
on it and literally the idea was beating itself out of our chests
and forcing itself out into the world. And I think that's really
the feeling you should be looking for when you start a com-
pany, that's how you know you have the right idea.

I'll go ahead and stop there. I'll put some recommended

books up here.