Y Combinator, one of the most visible and successful incubator programs in Silicon Valley, held its annual Startup School last week. Startup School is a half day of talks by some of the most visible and successful entrepreneurs in the Valley, and is held on the Stanford Campus. This year, the roster of speakers started with Mark Zuckerberg, and included Ben Silbermann, the founder of Pinterest, Travis Kalanick, cofounder of Uber (a smartphone-based car service), and Tom Preston-Werner, the founder of GitHub, in addition to legendary investors Ben Horowitz and Ron Conway. Here are what I consider the seven crucial takeaways for entrepreneurs.
1) No one ever ends up where they start out. Silbermann left his job to do a startup almost 18 months before he arrived at the concept for Pinterest, and then it was a surprise. He always thought he’d need a technical co-founder, and he didn’t. The concept turned out to be visual and not technology based at all.
2) The straight-up hockey stick of users is a rare occurrence. Having read about Facebook, Silbermann said he was depressed when at the end of its startup phase Pinterest only had 3000 users. It couldn’t spread by any kind of online or offline marketing; it had to spread virally, and in his case that was slow. Users introduced it to other users, but at their own pace. When Pinterest “burst” on the startup scene, it was already three or four years old.
3) Investors often don’t “get” new concepts, but that doesn’t mean they don’t invest. Ron Conway, a man-of-a-certain-age with white hair who started and sold Altos Computers in the days when you couldn’t get venture capital without traction AND profit, never understood Facebook or Twitter. He just understood large numbers of users, and that’s why he jumped in. He never invests in the concept, anyway–just in the person. He already knew Twitter’s Ev Williams and Biz Stone from Odeo, and he already knew Sean Parker from Napster. Parker was president of Facebook when Conway invested. He didn’t know Zuckerberg, but since he knew Parker, he was in. Google, on the other hand, was a concept he did get, because he understood search and he knew it had a monetization model.
4) People are the most important attribute of a company. Although many myths about founders say they labor alone, the fact is they usually surround themselves with people who can either help or check their judgment. It is impossible to take a company very far without a team, and the team should be people with different skills than the founder’s. Startups happen in an ecosystem, not a garage, even if their office is in a garage.
5) At some point, you get past the Minimum Viable Product, and you need people who understand how to develop and improve products. For scalability, product is important. It’s got to be reliable, and do a big job for the customer that the customer (or someone else) is willing to pay for. At the beginning, the product has to work. As you go on, the product has to ship on time and do everything it’s supposed to. This is the point where processes and procedures come into play.
6) Every company has a philosophy, even if it’s not expressed. So it’s best to articulate your company’s philosophy immediately at the beginning of the journey. Do you want to change the world? Do you want to make people happy? Have fun? Lower their costs? Take away their pain? Who are you and what is your philosophy? Once there are processes and procedures, people and customers, it is too late to “install” a philosophy; your company will already have one.
7) It’s harder to start a company than you ever guessed. Even if you think it’s hard now, it will be harder.
[Image: Flickr user Zen Sutherland]