Paul Graham's Essays

1. 0:01 – 8:51

   How to Do What You Love

   1. DSDavid Senra0:01

      How to do what you love. To do something well, you have to like it. That idea is not exactly novel. We've got it down to just four words, do what you love. But it's not enough just to tell people that. Doing what you love is complicated. When I was a kid, it seemed as if work and fun were opposites by definition. Life had two states. Some of the time, adults were making you do things, and that was called work. The rest of the time, you could do what you wanted, and that was called playing. Work was pretty much defined as not fun, and it did not seem to be an accident. School, it was implied, was tedious because it was preparation for grown-up work. If we make kids work on dull stuff, it might be wise to tell them that tediousness is not the defining quality of work, and indeed, that the reason they have to work on dull stuff now is so that they can work on more interesting stuff later. Once, when I was about nine or ten, my father told me that I could be whatever I wanted when I grew up, so long as I enjoyed it. I didn't think he meant work could literally be fun, fun like playing. It took me years to grasp that. It was not until I was in college that the idea of work finally broke free from the idea of making a living. Then the important question became not how to make money, but what to work on. The definition of work was now to make some original contribution to the world, and in the process, not to starve. How much are you supposed to like what you do? Unless you know that, you don't know when to stop searching. And if, like most people, you underestimate it, you tend to stop searching too early. You'll end up doing something chosen for you by your parents, or the desire to make money, or prestige, or sheer inertia. Here is an upper bound. Do what you love doesn't mean do what you would like to do most this second. Even Einstein probably had moments when he wanted to have a cup of coffee but told himself he ought to finish what he was working on first. It used to perplex me when I read about people who liked what they did so much that there was nothing they'd rather do. There didn't seem to be any sort of work that I like that much. If I had a choice of A, spending the next hour working on something, or B, be teleported to Rome and spend the next hour wandering about, was there any sort of work I'd prefer? Honestly, no. But the fact is, almost anyone would rather, at any given moment, float about in the Caribbean, or have sex, or eat some delicious food than work on hard problems. Doing what you love doesn't mean do what makes you happiest this second, but what will make you happiest over some longer period. Unproductive pleasures pale eventually. After a while, you get tired of lying on the beach. If you want to stay happy, you have to do something. As a lower bound, you have to like your work more than any unproductive pleasure. You have to like what you do enough that the concept of quote-unquote spare time seems mistaken, which is not to say that you have to spend all your time working. You can only work so much before you get tired and start to screw up. Then you want to do something else, even something mindless. But you don't regard this time as the prize and the time you spend working as the pain you endure to earn it. I put the lower bound there for practical reasons. If your work is not your favorite thing to do, you'll have terrible problems with procrastination. You will have to force yourself to work, and when you resort to that, the results are distinctly inferior. To be happy, I think you have to be doing something you not only enjoy but admire. You have to be able to say at the end, wow, that's pretty cool. What you should not do, I think, is worry about the opinion of anyone beyond your friends. You should not worry about prestige. Prestige is the opinion of the rest of the world. When you can ask the opinions of peoples whose judgment you respect, what does it add to consider the opinions of people you don't even know? This is easy advice to give. It's hard to follow. If you do anything well enough, you'll make it prestigious. Plenty of things we now consider prestigious were anything but at first. Jazz comes to mind, though almost any established art form would do. So just do what you like and let prestige take care of itself. The other big force leading people astray is money. The test of whether people love what they do is whether they'd do it even if they weren't paid for it, even if they had to work at another job to make a living. With such powerful forces leading us astray, it's not surprising we find it so hard to discover what we like to work on. Most people are doomed in childhood by accepting the axiom that work equals pain. Those who escape this are nearly all lured onto the rocks by prestige or money. How many people even discover something they love to work on? A few hundred thousand perhaps out of billions. It's hard to find work you love. It must be if so few do. So don't underestimate this task, and don't feel bad if you haven't succeeded yet. In fact, if you admit to yourself that you're discontented, you're a step ahead of most people who are still in denial. Although great work takes less discipline than people think, because the way to do great work is to find something you like so much that you don't have to force yourself to do it, finding work you love does usually require discipline. Is there some test you can use to keep yourself honest? Always produce. For example, if you have a day job you don't take seriously because you plan to be a novelist, are you producing? Are you writing pages of fiction, however bad they may be? As long as you're producing, you'll know you're not merely using the hazy vision of the grand novel you plan to write one day as an opiate. Always produce is also a heuristic for finding work you love. It will automatically push you away from things you think you're supposed to work on towards things that you actually like. Always produce will discover your life's work the way water, with the aid of gravity, finds the hole in your roof. This may be my favorite line of the entire essay. You have to make a conscious effort to keep your ideas about what you want from being contaminated by what seems possible. One has to make a living, and it's hard to get paid for doing work you love. And then he goes into one reason why it's so difficult to find work that you love to do is the fact that we usually have to decide what we're gonna do way too early. A friend of mine who is a quite successful doctor complains constantly about her job. When people applying to medical school ask her for advice, she wants to shake them and yell, "Don't do it," but she never does. How did she get into this fix? In high school, she already wanted to be a doctor, and she is so ambitious and determined that she overcame every obstacle along the way, including, unfortunately, not liking it. Now, she has a life chosen for her by a high school kid. When you're young, you're given the impression that you'll get enough information to make each choice before you need to make it. But this is certainly not so with work. When you're deciding what to do, you have to operate on ridiculously incomplete information. In the design of lives, as in the design of most other things, you get better results if you use flexible media. Your best bet may be to choose a type of work that could turn into either an organic or two-job career. That is probably part of the reason I chose computers. You can be a professor or you can make a lot of money, or morph into any number of other kinds of work. It is also wise early on to seek jobs that let you do many different things so you can learn faster what various kinds of work are like. It is harder than it looks. Constraints give your life shape. Remove them, and most people have no idea what to do. Look at what happens to those who win lotteries or inherit money. Much as everyone thinks they want financial security, the happiest people are not those who have it, but those who like what they do. Whichever route you take, expect a struggle. Finding work you love is very difficult. Most people fail. Even if you succeed, it's rare to be free to work on what you want until your 30s or 40s. But if you have the destination in sight, you'll be more likely to arrive at it. If you know you can love work, you're in the home stretch. And if you know what work you love, you're practically there. That was an excerpt from an essay that changed my life. It's called How to Do What You Love, and it was written by Paul Graham.

2. 8:51 – 11:52

   Why Senra Is Covering Graham and How the Essay Changed His Life

   1. DSDavid Senra8:51

      So I've been reading Paul Graham’s essays for years. I think they are the most influential writing for technology startups ever, and they've had a profound impact on me personally as well. So in case you don't know who Paul Graham is, he's a programmer, a writer. He founded this company called Viaweb. Uh, I think within two years, they sold it for close to $50 million to Yahoo. This happened back in the late '90s. Then in the early to mid-2000s, he founds another company called Y Combinator, which turned out to be this giant machine that made it easier to start a company and to get funding, and really just make it easier to allow more people to run experiments that hopefully turn into successful companies. And so this episode's gonna be a little different from what I normally do. Obviously, normally, I read a book, and then I tell you what I learned. This, I, I've been working on it for a, a few weeks, and originally put all of his essays into, like, this giant PDF, and I was trying to work my way through it. And I was like, "You know what? This doesn't feel like what I... The normal process I do for Founders." So what I did is actually bought a printer. I did not have a printer. [laughs] So I bought a printer, and then I just started printing out his essays individually. [laughs] And it didn't take me long, it took me a day, to realize, oh, no, [laughs] 'cause not only has he been writing essays, and they're amazing essays, for over 20 years. So I start printing them out, and I'm like, oh, my God, I'm... I, I had to... Literally ran out of ink the first day. And he is such a gifted writer that as you start working your way through these essays, this is why it's taken weeks for me to do this, there's no fluff. So as a result, I have a ton of highlights and notes. This is gonna wind up being two episodes. And in the show notes, you're gonna find timestamps and links to... 'Cause you can read all of his essays for free online. You're gonna s- find timestamps and links to every single essay that I talk about. And so the reason I started this podcast with How to Do What You Love is because that essay changed my life. I remember exactly where I was. I was up one night. It was July 2018. I know it's not the first time I read the, the essay. M- might have been second, third, I can't actually remember. But I remember distinctly reading it and just snapping. And you can see this in the upload dates of Founders Podcast. Before July 2018, for the previous, like, two, two and a half years, my uploads and the, the, the rate I was making podcasts was completely intermittent. There was nothing you could even call consistency at, at, at, by any definition. I was just making the podcast 'cause I like to make the podcast. I thought it was interesting. But I was hesitating 'cause I had no idea how the hell to turn it into a business and t- where I can actually do what I love to do. And if you were to print that essay out, it is nine pages, 10 pages with footnotes, of him telling you, "Hey, this is really important to figure out. It's not easy to do. So few people do it, but it'll change your life." And so what I decided that night was that I was gonna focus 100% on Founders, and that I was willing to spend my last dollar in savings to try to make this work. I thought if I gave it my full attention and pursued what I was genuinely interested in, something I would work on seven days a week because I felt compelled to, that I would find a way to make it work. But that decision, that, like, s- that snapping, that pushing me over the edge, I don't think would've happened without reading this essay.

3. 11:52 – 16:09

   What Doesn't Seem Like Work

   1. DSDavid Senra11:52

      So with that, I wanna jump into his essay, What Doesn't Seem Like Work. My father's a mathematician. He was one of those lucky people who knew early on what they wanna do. When you talk to him about his childhood, there's a clear watershed moment at about age 12, when he said he got interested in maths. He grew up in a small Welsh seacoast town. As we retraced his walk to school on Google Street View, he said that it had been nice growing up in the country. "Didn't it get boring when you got to be about 15?" I asked. "No," he said. "By then I was interested in maths." And so Paul goes into what one of the things he learned from this conversation that he's having with his father. Few people know so early or so, or so certainly what they wanna work on. But talking to my father reminded me of a heuristic the rest of us can use. If something that seems like work to other people doesn't seem like work to you, that's something you're well-suited for. For example, a lot of programmers... Actually, let me pause it before I go into he, he's gonna talk about what this is for him, which is programming. That when I got to this section, this is exact- When you read about, I did a, I read, I think, a 700, 600 or 700-page biography of, uh, Michael Jordan. Then I read, like, his 200-page autobiography. This is episode 212 of Founders and 213. If you haven't listened to them, uh, go back 'cause they were some of my favorite episodes I've ever made. But what you hear is everybody around Michael Jordan says stuff like, "He's the most-- Michael Jordan's the most driven person I've ever met. He's the hardest working person I've ever met. He's got the best work ethic I've ever met." But if you ask Jordan, he says he doesn't like working at all and that everything he did, it felt like play. It just looked like work to other people. So there's a-- Paul has seen, not only has he got a lifetime of experience, right? But he has seen Y Combinator's funded thousands of, of startups. So he has, like, this encyclopedic knowledge because he's just been exposed to th- to these examples over and over again. There's so many times when I'm reading, uh, his essays that I'm like, "Yep, I, I saw the exact same thing by reading hundreds of biographies," and that's one of them right there. Uh, if something that seems like work to other people doesn't seem like work to you, that's something you're well-suited for. For example, a lot of programmers I know, including me, actually like debugging. It's not something people tend to volunteer. One likes it the way one likes popping zits. But you may have to like debugging to like programming, considering the degree to which programming consists of it. The stranger your tastes seem to other people, the stronger evidence they probably are what you should do. It seemed curious that the same task could be painful to one person and pleasant to another, but I didn't realize it at the time what this imbalance implied because I wasn't looking for it. I'm gonna pause there again. I, I don't wanna make too much of this about me, but there's so many times where I'm like, "Yep, I know exactly what you're talking about." Specifically my, in, in my life, I don't think I'm unique at all to the, the response of that res- uh, like identifying with what Paul's explained to us. Obviously, I just started it saying, "Hey, this, this essay pushed me over the edge and really changed my life." I feel the same way about reading. So, uh, in some degree, I'm almost like a bad person to, uh, to ask for, like, book recommendations from or-- because I, I didn't know this. What he's saying is like, I didn't... It seemed curious. The same task could be painful to one person and pleasant to another because I like, I guess, I... It's not even a guess. I definitely like reading more than most other people do. And so I'll recommend a book that I enjoy, that I learned something from, and somebody will tell me, "Oh, that's boring." And I was like, I didn't understand that at the time. I was like, "Oh, I must have a higher tolerance for boredom because I don't f- I didn't find it boring." And so it says, "It seems curious that the same task could be painful to one person," boring is obviously a, a form of pain to some degree, "and pleasant to another. But I didn't realize at the time what this imbalance implied because I wasn't looking for it. I didn't realize how hard it can be to decide what you should work on." Bringing this to your attention too because I'm reading from an essay he wrote in January 2015. I started the podcast with an essay he wrote in January 2006. This is almost 10 years different, and yet the idea is the same thing. It's, like, very hard to find out what you should work on. But it's extremely important to figure this out. Maybe we should spend more time thinking about it. Maybe we should come up with ways to fi- to make it easier for people to do this. Uh, so it says, "How hard it can be to decide what you wanna work on, and that sometimes you have to figure out from subtle clues like a detective solving a case in a mystery novel. So I bet it would help a lot of people to ask themselves about this explicitly. What seems like work to other people that doesn't seem like work to you?"

4. 16:09 – 24:00

   How Not To Die: Survival and Demoralization

   1. DSDavid Senra16:09

      Okay, so let's go to an essay that he wrote in August 2007. It's called Ho- How Not To Die. Uh, this is one of my favorite, uh, essays of his. I have writing all over the thing. Um, so it starts out with, "Hey, this is a talk that I gave at the last Y Combinator di- dinner of the summer. Usually, we do not have a speaker at the last dinner. It's more of a party. But it seemed worth spoiling the atmosphere if I could save some of the startups from, from preventable deaths." So that's why it's called How Not To Die. "So at the last minute, I cooked up this rather grim talk. I didn't mean this as an essay. I wrote it down because I only had two hours before dinner, and I think fastest while writing." And I don't know if it's in this essay or other ones, but what Paul has a great, uh, ability to do, 'cause think about it, he's taking something he's think, thought about for a very long time, maybe distilled it down to, you know, two pages, sometimes 10 pages. Uh, I think one of them, I think the longest one's something like 20 pages long. But then he's able to distill that even down further to a line. There's lines that I read that I'll never forget. Uh, he's got this idea of running upstairs, which I'll get to later, or being hard to kill. It's like he's very gifted at taking complex information and breaking it down on, like, an aphorism level so then you can actually carry it with you and remember it in, whenever you need it in the future. Uh, so it says, "A couple of days ago, I told a reporter that we expected about a third of the companies that we funded to succeed. Actually, I was being conservative. I, I'm hoping it might be as much as half. Wouldn't it be amazing if we could achieve a 50% success rate?" Remember, these are all, these are very early companies, like ver- at the very, very beginning. So of course, you're gonna have a ton that just go out of business. Another way of saying that is half of you are going to die. So remember, he's talking to a room full of companies that they're trying to help grow, they, they all gave initial funding to, and then they bundle that with advice and all the other things that Y Combinator does today. So it says, "Another way of saying that is that half of you are going to die. Phrased that way, it doesn't sound good at all. In fact, it's kind of weird when you think about it because our definition of success is that the founders get rich. If half the startups we fund succeed, then half of you are going to get rich, and the other half of you are going to get nothing." So there's a bunch of things that popped to mind when I read that paragraph. The first one comes from Charles de Gaulle. Uh, I did a podcast on his biography, uh, episode 224. Uh, it says, and his, one of my favorite quotes of his was, "All that matters is to survive." The rest is just words. And so Paul Graham's saying, "Hey, this is-- There's a binary outcome here. If a, if a startup succeeds and survives, the founders are gonna get rich. If not, they're gonna die and get nothing," right? So all that matters s- is to survive. The rest is just words. And then, uh, it made me think of what Warren Buffett says, "In order to suc- to succeed, you must first survive." And it also made me think of what Ed Thorp said, that you need to avoid ruin at all costs. So at its core, the idea that Paul is explaining in this paragraph, we've seen over and over again. You got Buffett, Thorp, de Gaulle all saying the same thing. If you can just avoid dying, you will get rich. This sounds like a joke, but it's actually a pretty good description of what happens in a typical startup. You may have heard that quote about luck consisting of opportunity meeting preparation. You've now done the preparation. The work you've done so far has, in effect, put you in a position to get lucky. You can now get rich by not letting your company die. That is more than most people have. And then he goes back to the grim part. We've seen a bunch of startups die. They generally don't die loudly and heroically. Mostly, they crawl off somewhere and die. When startups die, the official cause of death is always either running out of money or a critical founder bailing. Often, the two occur simultaneously. But I think the underlying cause is usually that they've become demoralized. You rarely hear of a startup that's working around the clock doing deals and pumping out new features and dies because they can't pay their bills and their ISP unplugs their server. And then he gets into a main theme of his essays about just how painful and how difficult it is to create a company. If so many startups get demoralized and fail when merely by hanging on they could get rich, you have to assume that running a startup can be demoralizing. That is certainly true. I've been there, and that is why I've never done another startup. And then he goes into the point. He's like, knowing that this is gonna be painful and going to be difficult is helpful. Like, it, it should not be surprising to you. The way you and I have talked about this in the past over and over again is that excellence is the capacity to take pain. That is a fantastic quote from the founder of Four Seasons. If you know it's going to feel terrible sometimes, then when it feels terrible, you won't think, "Ouch, this feels terrible. I give up." It feels that way for everyone. Another feeling that will seem alarming but is in fact normal in a startup is the feeling that what, that what you're doing isn't working. The reason you can expect to feel this way is what you do probably will not work. Startups almost never get it right the first time. Much more commonly, you launch something and no one cares. Don't assume when this happens that you've failed. It is nor- That's normal for startups. But don't sit around and do nothing. Iterate. So then he goes into some ideas on how to avoid death, how to avoid your company dying. Let me mention some things not to do. The number one thing not to do is other things. If you find yourself saying a sentence that ends with, "But we're gonna keep working on a startup," you are in big trouble. "Bob's going to grad school, but we're gonna keep working on a startup." You may as well just translate it to, "We're giving up on the startup, but we're not willing to admit that to ourselves." A startup is so hard that working on it cannot be preceded by but. Don't start other projects. Distraction is fatal to startups. And this part was actually interesting on, like, how to kind of reverse hack your own human psychology so you don't quit, and it's by just not wanting to be embarrassed by other people. Uh, one of the most interesting things we've discov- discovered from working on Y Combinator is that founders are more motivated by the fear of looking bad than the, than by the hope of getting millions of dollars. So if you wanna get millions of dollars, put yourself in a position where failure will be public and humiliating. So he tells the, the, the, uh, this quick story of the founders of something called Octopart, and somehow one of the founders [chuckles] winds up getting on the cover of Newsweek with, uh, the word billionaire print- printed across his chest. And so then Paul makes the point. He's like, "Well, he can't fail now. [chuckles] At least he's not gonna give up on his own." He's like, everyone he knows has seen that picture. And so it says at, at this point, he has committed to fight to the death. And he also ta- talks about the change. I shouldn't be laughing, but I, I completely understand what he's saying here. Uh, but the change that this can cause in their demeanor, unfortunately, uh, when we first knew them, they were light-hearted, cheery guys. Now when we talk to them, they seem grimly determined. I feel kind of bad that we've transformed these guys from light-hearted, hearted to grimly determined, but that comes with the territory. If a startup succeeds, you get millions of dollars, and you don't get that kind of money just by asking for it. You have to assume it takes some amount of pain. And so his whole point is, like, this public humiliation. He's like, they're r- it's gonna put them in a position to be willing to endure m- more pain. They're not gonna just crawl off and die. And if they can just stay in the game long enough, even if they have to change their idea, they're more likely to succeed. And then he just has a line about them, but I wrote it's really a predictor of success to, I think, y- all of us, you and I included, right? They're smart, they're working in a promising field, and they just cannot give up. And then Paul ends this essay. There's so many times I'm, uh, I've probably repeated on this podcast where it's like, I just love the way he ended this essay. And this is just fantastic advice. So I will tell you now, bad shit is coming. It always is in a startup. The odds of getting from launch to liquidity without some kind of disaster happening are one in a thousand, so don't get demoralized. When the disaster strike, strikes, just say to yourself, "Okay, this is what Paul was talking about. What did he say to do? Oh yeah, don't give up."

5. 24:00 – 30:59

   Why to Start a Startup in a Bad Economy

   1. DSDavid Senra24:00

      Okay, so the next essay I wanna talk about is Why to Start a Startup in a Bad Economy. It was written in October 2008, right when the, the great financial c- uh, crisis, right? And I just think there is specifically, uh, you know, right now it's a weird economic time that I just happen to be recording this in, but specifically for, for technology startups unfortunately is terrible. At least in comparison to, you know, where things have been in the last few years. And I just think a lot of the ideas, like he's gonna start this essay saying, "Everybody says it's so terrible, this terrible time for startups in October 2008," and they compare it to the 1970s, and he's like, "Oh, you mean when Microsoft and Apple were founded?" So again, main theme of this podcast is, uh, hi- history doesn't repeat, human nature does. And so I just... I think there's gonna be information in here that is valuable to people trying to operate in current day, okay? And whether it's you listen to this now, you listen to it 15 years from now, recessions, difficult economic times, that is, you know, normal. It happens over and over again. In fact, I wish we used to call them, if you study, uh, f- uh, like back in the 1800s and early 1900s, they didn't call them recessions and depressions. They called them financial panics, which I think is just a fantastic name, but has nothing to do with what we're talking about. So let me jump into the essay. "The economic situation is apparently so grim that some experts fear that we may be in for a stretch as bad as the mid-'70s, when Microsoft and Apple were founded. As those examples suggest, a recession may not be such a bad time to start a startup. I'm not claiming it's a particularly good time either. The truth is more boring. The state of the economy doesn't matter much either way." And I love what he's about to say here. There's a reason this com- this podcast is called Founders and not Companies. I believe in the power of the individual, that people make all the difference, right? "If we learn one thing from funding so many startups, it's that they succeed or fail based on the qualities of the founders. The economy is a rounding error compared to the founders." What popped to my mind when he said that, "There are no shortcuts around quality, and quality starts with people." That is one of my favorite Steve Jobs quotes. "There are no shortcuts around quality, and quality starts with people, which means that what matters is who you are, not when you do it." Yes, I lo- I just l-... I'm gonna stop repeating myself. You obviously know I love his writing [laughs] because I'm doing an entire probably two-part podcast series. This might have to be three parts. Hopefully not. There's just so much to get to. "Which means what matters is who you are, not when you do it. If you're the right sort of person, you will win even in a bad economy. So if you want to improve your chances, you should think far more about who you can recruit as a co-founder than the state of the economy. And if you're worried about threats to the survival..." Oh my God, this is so good too. "And if you're worried about threats to the survival of your company, don't look for them in the news. Look in the mirror." And because Paul's focus is on startups, investors play a large part of that. You'll read his essays, like what pops up a lot is... At least this is my impression, and I talked to somebody yesterday that knows more than I do. I don't wanna say who it is because it was a private conversation, and I didn't ask if I could put it on the podcast. But, and I, like he, he is very familiar with Paul Graham's writing, and I was like, "What do you think he thinks of venture, like VC?" And he said [chuckles] he doesn't like it, so much so that he like essentially created almost like a new form of it. And in some ways, like I'm not really a, a good person to comment on this because I know nothing about it. All I can say is from reading, you know, spending weeks now reading Paul's words, he just has a lot of criticisms. He, like he s- he sees a lot of bad behavior in, uh, like the investor community, specifically around private companies. There's a line, I don't know if it's in this, this one or later, but I, I came to the realization because he just repeats this in different essays in different ways. I was like, oh, like Paul's, uh, opportunity with Y Combinator was very similar to Walt Disney's, uh, opportunity with amusement parks, where Disney's like, "The reason I have an opportunity to do something really great is because the standard way of doing things left so much room for improvement." And so we get into this right now because he talks about, hey, it's, we're in, in a financial crisis right now in t- 2008. Your big problem is n- you know, is not that you're gonna start a company. It's like investors are doing the exact opposite behavior that they should be doing. He says, "Investors are more of a problem. Startups generally need to raise some amount of external funding, and investors tend to be less willing to invest in bad times. They shouldn't be. Everyone knows you're supposed to buy when times are bad and sell when times are good. But of course, what makes investing so counterintuitive is that in equity markets, good times are defined as everyone thinking it's the time to buy. You have to be contrarian to be correct, and by definition, only a minority of investors can be. So just as investors in 1999 were tripping over one another trying to buy into lousy startups, investors in 2009 will presumably be reluctant to invest even in good ones." When I got to that line, made me think of one of my favorite things that Warren Buffett ever said in his shareholder letters. Uh, he talks about the difference of like the financial security and like fortress that Berkshire has built, uh, how it's so different to most other people, and it allows him to, quote, "We play offense while others scramble for survival." Back to Paul. He says, "You are going to have to adapt to this, th- but that's nothing new. Startups always have to adapt to the whims of investors. Ask any founder in any economy if they describe investors as fickle, and watch the face they make." So then this is absolutely excellent. I love this. This is what I was mentioning earlier, how, uh, one line is just gonna stick in my mind. So he says, "The way to make y- uh, a startup recession-proof is to do exactly what you should do anyway. Run it as cheaply as possible. For years, I've been telling founders that the surest route to success is to be the cockroaches of the corporate world. The immediate cause of death in a startup is always running out of money. So the cheaper your company is to operate, the harder it is to kill." Be hard to kill is the metaphor there. Frugality is just a main reoccurring theme in the history of entrepreneurship. I, I said before if you could search every single, uh, like, uh, episode of Founders, I think like the word frugal or frugality might be the most repeated phrase, and I just love the way that Paul put that. You should be running... You should be doing... You... How to make your startup recession-proof is to do exactly what you should be doing anyways. Run it as cheaply as possible. The cheaper your company is to operate, the harder it is to kill. Another great line here. "Another advantage of bad times is that there's less competition. Technology trains leave the station at regular intervals. If everyone else is cowering in a corner, you may have the whole car to yourself." And I love the idea behind, uh, this next paragraph. "You're an investor too. As a founder, you're buying stock with work." The reason Larry and Sergey are so rich is not so much that they've done work worth tens of billions of dollars, but that they were the first investors in Google, and like any investor, you should buy when times are bad. And then he goes back to the theme that really it's always the people that matter, and this is how he ends the essay. So maybe a recession is a good time to start a startup. It's hard to say whether advantages like a lack of competition outweigh disadvantages like reluctant investors. But it doesn't matter much either way. It's the people that matter. And for a given set of people working on a given technology, the time to act is always now.

6. 30:59 – 32:51

   Relentlessly Resourceful

   1. DSDavid Senra30:59

      Okay, I wanna move on to his essay called Relentlessly Resourceful. The note I put at the very top of this page is, "This is one of those ideas that once it gets in your head, it never lets you go. I finally got a good startup founder down to just two words, relentlessly resourceful. Till then, the best I'd manage was to get the opposite quality down to one, hapless. Hapless implies passivity. To be hapless is to be battered by circumstances, to let the world have its way with you instead of you having your way with the world. It's not hard to express the quality we're looking for in metaphors. The best is probably a running back. A good running back is not merely determined, but flexible as well. They wanna get downfield, but they adapt their plans on the fly. I have figured out how to express this quality directly. I was writing a talk for investors, and I had to explain what to look for in founders. What, what would someone who was the opposite of hapless be like? They'd be relentlessly resourceful. Not merely relentless. That's not enough to make things go your way except in a few mostly uninterest- uninteresting domains. In any interesting domain, the difficulties will be novel, which means you cannot simply plow through them, so you have to be resourceful. You have to keep trying new things. Be relentlessly resourceful. Resourcefulness implies the obstacles are external, which they generally are in startups. Relentlessly resourceful is the recipe for success. I think that is the best short description we'll find of what makes a good startup founder. I doubt it could be made more precise. You can even use it, use it tactically. If I were running a startup, this would be the phrase I would tape to the mirror. Make something people want is the destination, but be relentlessly resourceful is how you get there."

7. 32:51 – 40:26

   The Anatomy of Determination

   1. DSDavid Senra32:51

      Okay, so the next essay I wanna go over is called The Anatomy of Determination. There is actually... I'll leave it in the show notes. I have, um, I have, like, uh, personal notes, uh, on like 300... I think it was like 300 podcasts and lectures on entrepreneurship. According to this, I took these notes in September 26th, 2018. Uh, it's a, a conversation, uh, on the Y Combinator podcast with Paul Graham. Just gonna read, uh, this highlight that I think I've mentioned to you a, a few times. But I think reading it up front will give you an idea of, uh, like what this essay is about and Paul's perspective. And again, I think it's really interesting, something you and I talk about, repetition is persuasive. You have to be prepared all in your company. It's like you have a core set of beliefs and ideas. You're gonna have to repeat them for decade after decade. Jeff Bezos, David Ogilvy, Warren Buffett, Steve Jobs, they all do this. You see Paul doing it here because the essay I hold in my hand is written in September 2009, and I think this, this, uh, conversation with him... Let me see. I took notes on it 2018. It was published, uh, August 31st, 2018. So almost 10 years apart from when he's writing this essay to, again, saying, repeating, uh, an idea about why he feels it's more important to be determined than smart. So he says, "It turns out it is much more important to be determined than smart. If you imagine this hypothetical person that is 100 out of 100 for smart and 100 out of 100 for determination, and then you start taking away determination, it doesn't take very long until you have this ineffectual but brilliant person. Whereas if you take someone who's super determined and you take away smartness, eventually you'll get to a guy who owns a lot of taxi medallions or a trash hauling business but is still rich. Important note, it only takes one person of the founding team to be super determined." So I will leave this, if you're curious, if you wanna read my, through my notebook. And I've started to add to it, uh, kinda like let, left alone for like a year or two or something like that. But now I've been slowly adding more, uh, notes to it. Anyways, the link will be down below. So let's get to the essay. He says, "We spent a lot of time trying to learn how to predict which startups will succeed. We learned quickly that the most important predictor of success is determination. At first we thought it might be intelligence. Everyone likes to believe that's what makes startups succeed. It makes a better story that a company won because its founders were so smart. While it certainly helps to be smart, it's not the deciding factor. There are plenty of people as smart as Bill Gates who achieve nothing. In most domains, talent is overrated compared to determination." And then I love this line, "After a while, determination starts to look like talent." And another great line, "I cannot think of any field in which determination is overrated." And then he continues. This is the next page. Uh, "The simplest form of determination is sheer willfulness. Willfulness. When you want something, you must have it no matter what. A good deal of willfulness must be inborn because it's common to see families where one sibling has much more of it than another. I don't think there's much you can do to make a weak-willed person stronger willed. Being stronger willed, strong willed is not enough. You also have to be hard on yourself. Someone who was strong willed but self-indulgent would not be called determined. Determination implies your willfulness is balanced by discipline." That word balance is a significant one. So this is where it really gets into, like you really have to pay attention to what he's saying. "The stronger your will, the less anyone will be able to argue with you except yourself. And someone has to argue with you because everyone has base impulses. And if you have more will than discipline, you will just give in to them." And a way to think about that on a more simple basis is this next line. "The more willful you are, the more dangerous it is to be undisciplined." And then this next paragraph I wrote down, this is a very novel thought. This may be why high levels of achievement are so difficult to maintain over a long period of time. The dangers of indiscipline increase with temptation. If you're sufficiently determined to achieve great things, this will probably increase the number of temptations around you. That's a very interesting idea. I'm gonna read the whole thing again. The dangers of indiscipline increase with temptation. If you're sufficiently determined to achieve great things, this will probably increase the number of temptations around you. Okay, so then he goes into the role that ambition plays in all of this. So far he's been talking about determination and willfulness, and then discipline. Then he says there's one other major component of determination, ambition. If willfulness and discipline are what get you to your destination, ambition is how you choose it. Ambition seems to be quite malleable. There's a lot you can do to increase it. This is a very excellent point. I'm going to, so in, uh, in all of his essays, he leaves footnotes. So I'm gonna read this paragraph, then I'm gonna read the footnote right after it. Ambitious people are rare. So if everyone is mixed together randomly, as they tend to be early in people's lives, then the ambitious ones won't have many other, or many ambitious peers. When you take people like this and you put them together with other ambitious people. So that is another main theme of Paul's, uh, essays, is the importance of founders, ambitious people in general, to be around, uh, other people like them. So a huge component of YC is, like, that they're constantly getting together. There's, like, a community around them. He talks about, like, being i- in, like, a, either in the same city as people or in, like, physical events. He just, it's, it is very... I don't even know why I say surprising, but it was surprising how much he mentions this idea. It's like there's a huge benefit to being around people and, that are like you, because being a founder and being interested in this stuff is weird. And it also, in this case, what he's about to tell us here is, like, it just, it takes you up another level, right? So it says, uh, "When you take people like this and put them together with other ambitious people, they bloom like dying plants given water." Fantastic writing. Probably most ambitious people are starved for the sort of encouragement that they would get from ambitious peers, whatever their age. And so this is the footnote on that paragraph, which means one of the best ways to help a society generally is to create events and institutions that bring ambitious people together. It's like pulling the control rods out of a reactor. The energy they emit encourages other ambitious people instead of being absorbed [chuckles] by the normal people that they're usually surrounded with. What I wrote here, and I don't know if I'll do this idea, but I wonder if there's, like, a benefit to having, like, an in-person version of Founders Podcast. 'Cause Paul tells us right here is, like, one of the best ways to help societies generally create events and institutions that bring ambitious people together. I'd have a hard time understanding why somebody that's not ambitious would be even listening to this. Back to Paul. Achievements also tend to increase your ambition. So here in sum is how determination seems to work. It c- See, this is what I mean about he just takes this unbelievably complicated idea, and yet, like, you finish reading this paragraph, you're like, "Okay, I have a better, deeper understanding of what it mean. Like, what does discipline mean? What does determination mean? How does it all relate together?" I don't think I would've been able to come up with this on my own. Even if you kind of understand on, like, a subconscious level, it, it helps r- it, to me, helps me a lot seeing it written in, you know, on a page. Uh, so here in sum is how determination seems to work. It consists of willfulness balanced with discipline aimed by ambition. And fortunately, at least two of these qualities, or two of these three qualities, can be cultivated. You may be able to increase your strength of will somewhat. You can definitely learn self-discipline, and almost everyone is practically malnourished when it comes to ambition. And he's tying this all into achievement, right? And he goes back to that main theme. It's like, man, how do you do what you love? Because you're just gonna go so, so much deeper and so much further automatically, right? There's a third factor in achievement, how much you like the work. If you really love working on something, you don't need determination to drive you. It's what you would do anyway.

8. 40:26 – 49:33

   What Startups Are Really Like: Co-founders and Total Immersion

   1. DSDavid Senra40:26

      Okay, so now this [laughs] this essay's gonna take a while, some time to get through. It is called What Startups Are Really Like. It was written in October 2009, and Paul says this is an essay derived from a talk at the 2009 Startup School. And so he's like, "I wasn't sure what to talk about, so I decided to ask the founders of the startups that we had funded what I had not written about yet." And as a way to find good ideas, he sends an email. He, so he says, uh, "I've, I've sent all the founders an email asking what surprised them about starting a startup." And so I'm just gonna run through some of the highlights that really jumped out at me. Before he gets into the list, number one is be careful with co-founders, which I'll get to in a second, but the paragraph before that was interesting. He says, "There were very clear patterns in the responses. It was remarkable how often several people had been surprised by exactly the same thing." So I pull that out because I feel like w- like I discover the exact same phenomenon by reading hundreds of biographies of entrepreneurs, right? And you hear this 'cause, like, I, sometimes I get excited. It's like I just flip my, like I kinda lose my shit because it, it's extremely exciting when some of the most formidable people in, in history that did not know each other, that did not, weren't even alive at the same time, worked in different industries, different parts of the, um, lived in different parts of the world, and yet they came to the same conclusion through, you know, trial and error and, and building their, uh, not, in building their company and, and doing their work. And so it's, again, Paul has, like, this almost like a, if you ever played video games, like, um, uh, I don't know if they still do this, but when I was a kid, there was, like, this God-level view, right, where you could see everything going on in the game. I think Paul has a lot of that because he just sees thousands and th- very few people are gonna be exposed to the same stuff he is, right? So he's like, "There's very, very, very clear patterns in the responses. It's remarkable how s- how often several people have been surprised by exactly the same thing." Number one, be careful with co-founders. This was the surprise mentioned by the most founders. Think about that. That is crazy. What people wish they paid more attention to when choosing co-founders was character and commitment, not ability. I think Paul says it here, but if not, uh, the best way I heard to just describe, it's like you pick your co-founder like you'd pick somebody you're gonna get married to. It's not like a light decision, right? What people wish they paid more attention to when choosing co-founders was character and commitment, not ability. This was particularly true when the startups, with the startups that failed. The lesson, don't pick co-founders who will flake. Here is a typical response. So, um, you have Paul writing. I'll tell you when it's Paul speaking, and then in the essay, he has quotes from these emails that he got back from the founder. So this is an example. This is, he doesn't tell you who the founder is, but he tells you what they said. You haven't seen someone's true colors unless you've worked with them on a startup. So then Paul says, we've learned this lesson a long time ago. If you look at the YC application, there are more questions about the commitment and relationships of their founders than their ability. Paul continues, founders of successful startups talked about how hard they worked to maintain their relationship. This is an excerpt from an email that Paul, uh, includes about a founder answering this question. And this founder says, one thing that surprised me is how the relationship of startup founders goes from a friendship to a marriage. My relationship with my co-founder went from just being friends to seeing each other all the time, fretting over the finances, and cleaning up shit. And the startup was our baby. I summed it up once like this. It's like we're married, but we're not fucking. Back to Paul. Several people use the word married. It is far more intense relationship than you usually see between co-workers. So this relationship has to be built of top quality materials and carefully maintained. It is the basis of everything. So when I got to this section, it made me think of this text conversation. So, uh, I became friends through the podcast with this founder. He's actually a two-time, uh, founder, YC founder. His name is John Coogan. He's also my favorite, uh, educational YouTuber. He makes excellent videos. I'll link below with one that I've probably sent to a dozen people. It's called The Entire History of Silicon Valley. But anyways, John texts me because he was working on a video. He's got this idea, and he was asking about, like, is there historical precedence of two successful founders working together on a new project after an acquisition? And based on his research, he seems, he said it seems like it always failed. And I went through every single episode, like the episode titles, just trying to see if I come up with anything. So I'm just gonna read you this long text, like, thought that I, that I sent him. And it's not specific to, you know, founders, one founder buying another company's, f- another founder's company and then working together. This kind of clear, uh, theme in the history of entrepreneurship. And it says, my gu- my initial guess is no because it tends to evolve into one clear main founder. And even if the co-founder or the partner stays, it's usually in a, it's clearly in a subordinate role. I immediately think of Andrew Carnegie and Henry Clay Frick, both two super successful founders. Andrew buys Henry's company. Episode 73 is on this, what happened. I go, episode 73 is on a book called Meet You in Hell about their partnership and then their bitter, bitter lifelong rivalry. Years after their fight. Meet You in Hell, the title comes from Andrew, you know, they're like, "Hey, we're both old men. Let's bury the hatchet." And Henry Clay Frick was not having it, wrote him back a letter. He's like, "Nope, we're not squashing the beef, and I'll meet you in hell." And then I just go through, like, all these examples. Henry Ford bought out all of his investors. Steve Jobs was in complete control, as was Edwin Land. Rockefeller had partners, but they all deferred to him, and he owned the most equity. J.P. Morgan ran his entire show. Same with Jay Gould and Cornelius Vanderbilt. Wilbur Wright was clearly the main founder of the, uh, of the Wright brothers. Sam Walton and Jeff Bezos and Enzo Ferrari and Estée Lauder, clearly the main person running their companies. I can't even think of many acquisitions that go well. Trader Joe's sells and gets kicked out of his company. Paul Orefice sells to Kinko's, sells Kinko's to FedEx and hates it and won't even go into the store anymore. Henry Leland sells to Cadillac, sells Cadillac to the founder of GM and then leaves to start Lincoln Motors and then sells to Henry Ford. Leland didn't like either acquisition. I just went through 200 episodes, and I can't find one. And so back to Paul's point here, hey, he's saying it over and over again. It's extremely hard to pick a good f- co-founder. It's extremely hard to stay together. It's a very important decision. Take your time with it, I think is what Paul's point. And then once you do make the, the, the decision, make sure you, you spend a lot of time maintaining that relationship because what he says, it's the basis of everything. Next main theme from these emails, startups take over your life. Running a startup is not like having a job or being a student because it never stops. And this is what the email says. I didn't realize it would spend almost every waking moment either working or thinking about our startup. You enter a whole different way of life when it's your company versus working for someone else's company. And then Paul says, in the best case, total immersion can be exciting. Here's an example of that. It's surprising how much you become consumed by your startup i- in that you think about it day and night, but never once does it feel like work. So I mentioned to you before, I have all these weird ways to brainwash myself. These videos I watch, these clips I watch over and over again, these quotes I st- save on my phone. One of them is, uh, Conor McGregor talking about total immersion at the beginning of his career. There's a fantastic documentary on Netflix. I think it's called, like, Notorious or something like that. And it shows Conor McGregor when he was on welfare. He was living with his parents, couldn't pay his bills, and, you know, he just keeps saying, he's like, "I'm gonna make it. I'm gonna dedicate my entire life. I'm not gonna think about anything else." Like, and he would, like, talk about visualization. He's just like, "I know I'm gonna be a champion one day. I know I'm gonna have more money than, like, than I, than I know what to do with. I'm gonna be able to take care of my entire family." And it's crazy 'cause he's saying these things when he's going, he's, like, leafing through mail, and it's, like, you know, bill collector after bill collector after bill collector. And so one quote that I saved from Conor McGregor, this video says, again, how he used total, essentially this idea of total immersion. In whatever you do, you've gotta be a little bit gone to it. You are not all there. You've gotta be almost insane to your craft. Not a lot of people can understand that. That's why I don't know about anything else. I do not pay attention to nothing else. Normal society is like, let's talk about this. He's talking about, like, sports, current events, stuff like that. So he says, normal society is, uh, is, says, let's talk about this. Let's engage in this. I can't do it. People are talking to me, and in my head, I'm deep in a sequence on the mat, meaning training for fighting, right? They're trying to talk to him about current events and sports, and in his mind, he's just like, "What's that sequence? What do I have to do next?" He goes, "People are talking to me. In my head, I'm deep in a sequence on the map. I cannot pay attention to nothing else." And that's difficult too, because I think that's the natural like inclination for a lot of people that are running their companies, and when you have kids, you have a family, like I mean, a lot, large part of Founders Podcast is us watching these incredibly intelligent, incredibly formidable people mess this area of their life up. They can't turn it off, and it's probably easier to fall into that trap with the last line of that email. It's like, well, never once does it feel like work. Next reoccurring theme is it's an emotional rollercoaster. You and I have talked about that ad nauseam. In a startup, things seem great one moment and hopeless the next. This is an email from a founder. The emotional ups and downs were the biggest surprise for me. One day we'd think of ourselves as the next Google, the next we'd be pondering how to let our loved ones know of our utter, other f- utter failure and on and on and on. Next theme, it can be fun. This is Paul speaking. The good news is the highs are also very high, and what founders tend to like is, uh, like most, is the freedom. This is what one of the founders said. I'm surprised by how much better it feels to be working on something that is challenging and creative and something I believe in.

9. 49:33 – 55:38

   What Startups Are Really Like: Persistence, Iteration and Customers

   1. DSDavid Senra49:33

      Next theme, persistence is the key. A lot of founders are surprised at how important persistence was in startups. A quote from an email, everyone said how determined and resilient you must be, but going through it made me realize that the determination required was still understated. Back to Paul. And also by the degree to which persistence alone was able to dissolve obstacles. When I got to this part, this is when I wrote, Paul has said determination was a better predictor of success than intelligence. I already read that to you earlier. So it's, uh, this is an email. It says, "If you are persistent, even problems that seem out of your control seem to work themselves out." Several founders mentioned specifically how much more important persistence was than intelligence. This is an example of that. I've been surprised again and again by just how much more important persistence is than raw intelligence. Remember, the name of this essay is What Startups Are Really Like. Number six, think long term. You need persistence because everything takes longer than you expect. A lot of people were surprised by that. A founder says, "I'm continually surprised by how long everything can take." Paul says, "One reason founders are surprised is that because they work fast, they expect everyone else to." And then another reason they're surprised by how long everything takes is because a lot of them are overconfident. I think the reason most founders are surprised by how long it takes is that they're overconfident. They think they're going to be an instant success like YouTube or Facebook. You tell them only one out of a hundred successful startups has a trajectory like that, and they think, "Yep, we're gonna be that one." And so then Paul says, maybe they'll listen to one of the more successful founders. This is what one of the more successful founders told Paul. The top thing I didn't understand before going into it is that persistence is the name of the game. It's going to be a really long journey. Journey. Number seven is lots of little things. I really like what this founder says here, grind over glamour. Uh, Paul says, we often emphasize how rarely startups win simply because they hit on some magic idea. I think founders have now gotten that into their heads. But a lot were surprised to find this also applies within the startup. You have to do a lot of different little things. This is a email from a founder. It is much more of a grind than glamorous. You will more likely fi- you will more likely find me tracking down a bug rather than having a brilliant f- bri- than having brilliant flashes of some strategic insight. Uh, another email from a founder, I learnt, uh, never to bet on any one feature or deal or anything to bring you success. It's never just a single thing. Everything is just incremental, and you just keep going. You just keep doing lots and lots of these little things until you strike something. Uh, number eight, start with something minimal. You should release fast and iterate. It is a m- it is practically a mantra at Y Combinator. Email from a founder, build the absolute smallest thing that can be considered a complete application and ship it. Number nine, engage users. Just one sentence here, and I think, uh, Estée Lauder was a master at this. Product development is a conversation with the user. So again, Estée Lauder, if... She's the, the example that comes to mind when I think about just how to interact with your customers, how to do things that don't scale. If you don't know what I'm talking about, uh, and why Estée Lauder is a master at this, listen to episode 217. That is by far one of my most popular episodes. I have a ton of people, uh, that have told me they listened to it multiple times. The next one is change your idea. Paul says we've always encouraged founders to see a startup idea as a hypothesis rather than a blueprint. Mere determination without flexibility is a greedy algorithm that may get you nothing more than a mediocre local maxim. And so one of the founders emailed Paul, said, when someone is determined, there's still a danger that they'll follow a long, hard path that ultimately leads nowhere. One founder put it very succinctly, fast iteration is the key to success. And then Paul says, experienced founders learn to keep an open mind. This is a f- uh, an, an excerpt from an email on that. I don't laugh at ideas anymore because I realize how terrible I was at knowing if they were good or not. You can never tell what will work. Number 11 is don't worry about competitors. This made me think of one of my favorite, uh, Edwin Land quotes that I've been repeating a lot lately, that the best way to keep a secret is to shout it from the rooftops. When you think you've got a great idea, it's sort of like having a guilty conscience about something. All someone has to do is look at you funny, and you think, oh my God, they know. Those alarms are almost always false. One reason people overreact to competitors is that they overvalue ideas. If ideas really were the key, a competitor with the same idea would be a real threat. But it's usually execution that matters. Paul actually has a great way to describe this in that talk from the Y Combinator podcast I referenced earlier when he was talking about, hey, this is why determination is more important than intelligence. He also talks about, he's like, just focus on your customer, not your competition, and he says, what makes companies fail most of the time is poor execution by the founders. A lot of times founders w- are worried about competition. YC has founded 1900 plus companies at the time. This is several years ago. One was killed by competitors. You have the same protection against competitors that light aircraft have against crashing into other light aircraft. Do you know what that protection is? Space is large. Number 12, it's hard to get users. A lot of founders complained about hard, how hard it was to get users. This is a complicated topic. When you can't get users And another way to think about this when you can't get customers, it's hard to say whether the problem is lack of exposure or whether the product is simply bad. The sharpest criticism of YC came from a founder who said we did not focus enough on customer acquisition. This is what the founder said. YC preaches make something people want. There is very little focus on the cost of customer acquisition. And that's actually something I learned from Steve Jobs because he talks a lot about the importance of product, the importance of talent. But if you saw how he spent his time too, he talked about the importance of marketing and then having innovations in not only marketing but in product marketing and distribution. And I remember reading something from him and the note I left myself was because he talked about he wants every single person in the world to have an Apple device. And to do that, Apple must not only make great products, but they must become a great marketing company. And they weren't at the time he was saying this, right? And the way I interpreted what he was saying in the context of that book was if you believe your product will improve the life of your customer, then you have a moral obligation to get good at marketing.

10. 55:38 – 1:02:14

    Deals, Investors, Luck and Community

    1. DSDavid Senra55:38

       Number 13, this is actually repeated a few times through different essays. Expect the worst with deals. Deals fall through. That is a constant of the startup world. Startups are powerless. And they also apply not only to deals with bigger companies, but they say this applies to investors too. This is a founder's email about dealing with an investor. In retrospect, it would have been much better if we had operated under the assumption that we would never get any additional outside investment. That is something that Paul repeats a lot. In fact, let me get to this right now so I don't forget to bring it up. Somebody asked him if you were 22 years old or just graduated college today, what would you do with your life? And I think this applies to more than just 22-year-olds. But he says, if I were 22, if I was starting a startup, I would certainly apply to YC, which is not that surprising since it was designed to be what I wish I had had when I did start one. But assuming I got in, I would not get sucked into raising a huge amount on demo day. Okay. And so this is what he would do if he was starting a company now. I would raise maybe $500,000. I'd keep the company small for the first year. I would work closely with users to make something amazing. And otherwise, I would stay off of Silicon Valley's radar. In other words, I'd be the opposite of a scenester. Ideally, I would get to profitability on that initial 500K. Later, I could raise more if I felt like it or not, but it would be on my terms. At every point, this is, I think, the part I actually found most interesting personally. At every point in the company's growth, I'd keep the company as small as I could. I'd always want people to be surprised by how few employees we had. Fewer employees equal lower costs and less need to turn into a manager. And so that popped to mind when you have this email from the founder saying it would have been much better if we had operated under the assumption that we would never get any additional outside capital. And so then Paul adds on to that, my advice is generally pessimistic. Assume you won't get money. And if someone does offer you any, assume you'll never get any more of it. And then he talks about, hey, founders don't take this advice. They don't listen to me. Why do founders ignore me? Mostly because they're optimistic by nature. The mistake is to be optimistic about things you can't control. That is excellent. So that's why his whole point is like you need to be in charge of your own destiny. And then once you're in there, you have a lot more options and you get to pick and choose what's best for you and your company. Number 14, investors are clueless. A lot of founders mentioned how surprised they were by the cluelessness of investors. This is what founders said. They don't even know about the stuff they've invested in. I met some investors that had invested in a hardware device. And when I asked them to demo the device, they had difficulty switching it on. And then another founder says, investors don't know half the time what they're talking about. A few were great, but 95% of the investors we dealt with were unprofessional. They didn't seem to be very good at business or have any kind of creative vision. They said angels were generally much better to talk to. Number 15, you may have to play games. One founder said the thing that surprised him most was, quote, the degree to which feigning certitude impressed investors. I don't think this just works in investors. I think it works in human nature. Something that Nolan Bushnell, who's the founder of Atari and Steve Jobs' mentor, picked up on. He hired Steve when he was like 19 years old to work at Atari. And some of the advice that he gave Steve was, he says, I taught him that if you act like you can do something, then it will work. I told him, pretend to be completely in control and people will assume that you are. Number 16, luck is a big factor. If you think about famous startups, it's pretty clear how big a role luck plays. Where would Microsoft be if IBM insisted on an exclusive license for DOS? Paul makes that point with Bill Gates specifically a few times where he's like, listen, without that, yeah, Bill Gates is smart. He'd be unbelievably rich. But the reason he's at the top of the world's richest people list is because of this things that were like mistakes that IBM made and that he obviously capitalized and executed on well. But he says he still would have been rich. He just would have been further down the list. Paul's got a fantastic, he actually has a great way to put this. He has this, and eventually I'm going to get to the essay. I don't know if I'll get into this episode or the next one, but it's called How to Make Wealth. And he describes the role of luck in company building. He says there is a large random multiplier in the success of any company. And so then he goes back to this. He says, actually, the best motto would be to say that the outcome is the product of skill, determination, and luck. Number 17, the value of community. This is something he repeats in different variations throughout a bunch of different essays. This is one of the founders saying the benefit of the community that YC provides founders, the immense value of peer group of YC companies that are all facing, or excuse me, the immense value of the peer group of YC companies and facing similar obstacles at similar times. That is why I actually think, obviously, it's very valuable in person. It's why my number one recommendation, my number one book recommendation is Against the Odds, an autobiography by James Dyson. The last time I read it, I read it a few times, it was episode 200, because I think James can serve as a mentor in a historical context about how difficult and lonely the job of a founder can be. So I think it's like you're going to find that reading that book, there's a lot of good information on company building in there, but I think you'll find it comforting. You'll be like, oh, okay, the way I feel and the difficulty I'm going through and the pain I'm enduring is not unique to me. And then Paul talks about the value of community. It's like one of the reasons he likes being part of the world because of this, this world is because even as people get super successful, they're still trying to help. I think Bob Noyce, the founder of Intel, talked about this the best. I think he said something like, uh, after he got successful as an entrepreneur, he tried to help and mentor a bunch of people. He mentored, you know, Steve Jobs, he mentored Nolan Bushnell, a bunch of other founders, and he said something that was like, "Restocking the fish..." or, "Restocking the stream that I fished from," I think is the way he put it. So, uh, Paul says, "This is one of the reasons I like being part of this world. Creating wealth is not a zero-sum game, so you don't have to stab people in the back to win." And then what I love about how he ends not only this essay, but another one, so he's like, "Listen, this is very complicated, difficult, and a lot of this you're just not gonna be able to get until you actually do it." And so he calls this part the super pattern, and it's really w- about why people don't listen to the advice that he gives, right? Uh, "One's first thought when looking at all... at them," meaning all these, like, these problems that people ran into, or, like, what running startups are like. "One, one's first thought when looking at them all is to ask if there's a super pattern, a pattern to the patterns. I saw it immediately. These are supposed to be the surprises, the things I didn't tell people. What do they all have in common? They're all things that I tell people." And he gets to the heart of the matter right here. "People just don't seem to get how different it is until they do it."

11. 1:02:14 – 1:06:16

    A Word to the Resourceful

    1. DSDavid Senra1:02:14

       Okay, let's jump to another essay. It's called A Word to the Resourceful. This is fantastic, and it fits on, like, a page and a half. Uh, he says, "I noticed a pattern in the least successful startups that we funded. They all seemed hard to talk to. It felt as if there was some kind of wall between us. I could never quite tell if they understood what I was saying." What was surprising and what... is what comes next, where he compares the opposite of this, and this is not what you'd expect it to be, uh, the, the opposite to be. Again, a word to the resourceful. This is what it's talking about. "This caught my attention because earlier we noticed a pattern among the most successful startups, and it seemed to hinge on a different quality. We found the startups that did the best were the ones with the sort of founders about whom we'd say they can take care of themselves." The startups that do the best, and as a, a, a, for the proxy that you and I are using this for here is, like, the kind of founders that we wanna be, right? So it's like the startups that do the best, the founders that are the best, right? Uh, so it says, uh, "The startups that do the best are fire and forget it, in the sense that all you have to do is give them a lead, and they'll close it, whatever type of lead it is." So I just wanna go over one line in that paragraph again. "We found the startups that did the best were the ones with the sort of founders about whom we'd say they can take care of themselves. It seemed odd that the outliers at the two ends of the spectrum," which is failure and success, right? "Could be detected by what appeared to be unrelated tests." This is why the... Exactly. That's exactly what I thought when I was reading this. I was like, "Oh, that's, that's odd. What's going on here?" "You'd expect that if the founders at one end were distinguished by the presence of quality X, at the other end, they'd be distinguished by the lack of X. Was there some kind of inverse relation between resourcefulness and being hard to talk to? It turns out there is, and the key to the mystery is the old adage, 'A word to the wise is sufficient.' If someone is wise, all you have to do is say one word to them, and they'll understand immediately. You don't have to explain in detail. They'll chase down all the implications." He doesn't say this, but what I... the way I think about what he's saying is they'll chase down all the implications on their own. Back to Paul. "In much the same way that all you have to do is give the right sort of founder a one-line intro to a VC, and he'll chase down the money. Understanding all the implications is a subset of resourcefulness." That is a really unique thought, and this is where... This is why Paul's writing makes you feel something. Paul's writing evokes emotion. It's just like, wait a minute. And it's, "In the same way that all you have to do is give the right sort of founder a one-line intro to a VC, and he'll chase down the money." And then the punchline right here is so fantastic. "Understanding all the implications is a subset of resourcefulness." That is a description of the successful founders. Then he ties it back to, okay, so what are the unsuccessful founders doing wrong? And therefore, you and I can be like, "Okay, what do we want to avoid?" "A better way to describe the situation would be to say that the unsuccessful founders had a sort of conservatism that comes from weakness. They traversed idea space as gingerly as a very old person traverses the physical world." Again, not only is he, uh, his writing evokes emotion, but he immediately puts... You read that, in your mind's eye, you see an old person, like, with a cane and a hunchback, right? So let me go over that. "A better way to describe the situation would be to say the unsuccessful founders had a sort of un-... a, a sort of con- con- conservatism that comes from weakness. They traversed idea space as gingerly as a very old person traver- traverses the physical world." And so he goes back to this. He... This is how he's gonna end the essay right here, and hopefully this, this makes sense. "So being hard to talk to was not what was killing the unsuccessful startups. It was a sign of an underlining, underlying lack of resourcefulness." That is what's killing them, a lack of resourcefulness. Uh, "As well as failing to chase down the implications of what was said to them. The unsuccessful founders would also fail down to chase funding and users," and our customers, whatever, "and source of new ideas. But the most immediate evidence I had that something was amiss was that I couldn't talk to them."

12. 1:06:16 – 1:13:41

    Do Things That Don't Scale: Recruiting and Delighting Users

    1. DSDavid Senra1:06:16

       Okay, so now we got to one of my absolute favorite essays of his called Do Things That Don't Scale. And so he writes, "A lot of would-be founders believe that startups either take off or don't. You build something, make it available, and if you, uh, and if you've made a b- better mousetrap, people beat a path to your door just as promised. Or they don't, in which case the market must not exist. Actually, startups take off because the founders make them take off." I had to double underline that one. That one's fantastic. He says, "Actually, startups take off because the founders make them take off. The most common unscalable thing founders have to do at the start is to recruit users manually." Nearly all startups have to. You cannot wait for users to come to you. So he's always gonna use the word users. You c- obviously, we could think about that as customers as well, okay? You have to go out and get them. Stripe is the most successful startup we funded, and... or is one of the most successful startups we funded, and the problem they solved was an urgent one. If anyone could have sat back and waited for users, it was Stripe. I love this story. I've mentioned this story on past podcasts a few times, too. But in fact, they're famous for aggressive early user acquisition. So they have a term. He says, "At YC, we use the term Collison Installation." Collison is the last name of the two brothers that founded Stripe, okay? So it says, "At YC, we use the term Collison Installation for the technique they invented. More diffident founders," meaning more default passive founders, right? "Would ask, 'Will you try our beta?' And if the answer is yes, they'll say, 'Great, we'll send you a link.' But the Collison brothers were not going to wait. When anyone agreed to try Stripe, they'd say, 'Right.' They would say, 'Right, then. Give me your laptop.' And they would set them up on the spot." That is the Collison Installation. That's fantastic. For a startup to succeed, at least one founder will have to spend a lot of time on sales and marketing. When I got to that section, it made me think of one of my favorite quotes from the book Zero to One by Peter Thiel. "Superior sales and distribution by itself can create a monopoly, even with no product differentiation. The converse is not true." That's crazy and true. Superior sales and distribution by itself can create a monopoly, even with no product differentiation. That's how important this is, right? The converse is not true. The other reason founders ignore this path is that the absolute number seems so small at first. This is why, again, I've already said it, I don't know, probably twice so far, you gotta go back and study Estée Lauder. She was a master at this. Everywhere she'd go, she would offer to i- on an individual basis, right? She's sitting on a train, she's sitting on a bus, wherever she's at, she's like, "Hey." She sees a woman sitting there. "Hey, do you mind if I do your makeup, if I beautify you?" Or I forgot the term she uses. And she would do, like, a one-on-one, you know, maybe five, 10 minutes. I don't even know how long it took. And then what would happen is, uh, she did at the beginning, uh, you know, when he's saying you have to do things that don't scale, one-on-one, uh, like make, makeovers is definitely not... That, that's a definition of thing that doesn't scale, right? But it does scale with time because she would say decades later, she would still be getting cards and letters in the mail from people that she took the time on an individual basis to provide a service for that are still customers. So think about that. Like, she recruited a, a user, a customer on a, on a bus 30 years earlier. That person is still a client of hers, still a customer of hers, still sending her information, or still sending her communication and letters and things. How many other people did that one customer recruit for Estée Lauder over three decades? Dozens, if not hundreds, if you could actually track it. It's m- maybe even thousands, right? If you think about everybody they recruit and who they recruit and so on and so forth. And that's the point. It's like it looks like it doesn't scale, but if they like what you do, it does, as long as you're willing to stay in the game long enough. I love this essay. Back to this. The, the other reason founders ignore this path is that absolute numbers seem so small at first. Estée Lauder, she didn't say, "Oh, I can't do this because if, if I do it for one person, I, I shouldn't be doing things for one person. I should be doing things for 1,000 at a time." Well, maybe that one person gets you 1,000 customers over time, right? You are doing it for 1,000. It just doesn't... It's just not obvious at the point, uh, at the time. This can't be how the big famous startups got started, they think. Uh, the mistake they make is to underestimate the power of compounding growth. We encourage every startup to measure their progress by weekly growth rate. And so his point here and what I wrote in the margin is humans do not understand this intuitively. We encourage every startup to measure their progress by weekly growth rate. If you have 100 users, you need to get 10 next week, 10 more next week to grow 10% a week. And while 110 might not seem much better than 100, if you keep going at 10% a week, you'll be surprised how big the numbers get. After a year, you'll have 14,000 users, and after two years, you'll have two million. Uh, almost all startups are fragile, uh, initially, and that's one of the biggest things inexperienced founders and investors, uh, and reporters and know-it-alls, he, he lists a bunch of people here, get wrong about them. They unconsciously judge larval startups by the standards of established ones. They're like someone looking at a newborn baby and concluding there's no way this tiny creature could ever accomplish anything. The question... Ah, this is so fantastic. The question to ask about early-stage startups is not is this company gonna take over the world, but how big could this company get if the founders did the right, if the founders did the right things? And the right things often seem laborious and inconsequential at the time. That is such a good line. Uh, he's gonna reference something that I talked about on, uh, Founders 140, which is the, the, the best Bill Gates biography that I've read so far, 'cause it covers just the 35 year, the first 35 years of his life. That's, uh, episode 140 if you haven't listened to it. Uh, so it says, "The right things can often seem laborious and inconsequential at the time. Microsoft cannot seem to be very impressive when it was just a couple of guys in Albuquerque writing basic interpreters for a market of a few thousand hobbyists, as computer users at the time were called. But in retrospect, that was the optimal path to dominating microcomputer software." So skipping ahead a little bit, he's like, "Listen, you should really just instead of trying to go wide, delight... Get a, get a, a few people to really love you than a bunch of people to kinda like you. You should take extraordinary measures not just to acquire users, but also to make them happy. For as long as they could, which turned out to be surprisingly long," uh, this company called Wufoo. "Wufoo sent every new user a handwritten thank you note. The first users should feel that signing up with you was one of the best choices they ever made. And you, in turn, should be racking your brains to think of new ways to delight them." And then just more great advice here. Another reason founders don't focus enough on individual customers is that they worry it won't scale. But when founders of larval startups worry about this, I point out that in their current state, they have nothing to lose. Maybe if they go out of their way to make existing users super happy, they'll one day have too many to do so much for. See if you can make that happen. And the fact that you can delight customers on a one-by-one basis when you're st- just starting out is actually an advantage that big companies do not have. Tim Cook of Apple doesn't send you a handwritten note after you buy a laptop. He can't, but you can. That's one advantage of being small. You can provide a level of service no big company can. And this is fantastic, and I never even thought about this. I was trying to think of a phrase to convey how extreme your attention to users should be, and I realized Steve Jobs had already done it, insanely great. Steve wasn't just using insanely as a synonym for very. He meant it more literally, that one should focus on quality of execution to a degree that in everyday life would be considered pathological. And he's gonna give some advice on how you go about doing this.

13. 1:13:41 – 1:23:53

    Narrow Markets, Hands-On Tactics and Wrapping Up Part One

    1. DSDavid Senra1:13:41

       Sometimes the right unscalable trick is to focus on a deliberately narrow market. That's what Facebook did. At first it was just for Harvard students. In that form, it only had a potential market for a few thousand people. But because they felt it was really for them, a critical mass of them signed up. When I interviewed Mark Zuckerberg, he said that while it was a lot of work creating course lists for each school, doing that made sure... made students feel that the site was their natural home. And then he gives some ideas not only for people writing start, s- uh, software, but for physical products as well. For hardware startups, there's a variant of doing things that don't scale that we call pulling a Meraki. They got started, th- that's the name of the company. They got started by doing something that really doesn't scale. They assembled their routers themselves, and they had to do that because the minimum order for a factory, uh, production run is usually several hundred thousand dollars. And so they had to put these things together, and it was interesting. What he's about to say here is, like, doing things that don't scale is actually a form of education. Doing things that don't scale is a form of education. Uh, fabricating things yourself turns out to be valuable for hardware startups. You can tweak the design faster when you're, when you are the factory, and you learn things you would never have known otherwise. And then he says you can use consulting-like techniques to actually learn more and to do things that don't scale. What I wrote, uh, this is a long paragraph. I'm just gonna write, read to you what I wrote, uh, first. This is great. All of this centers on learning how to better serve your customer. Another consulting-like technique for recruiting initially lukewarm users is to use your software yourselves on their behalf. We did this at Viaweb, or we did that at Viaweb. When we approached merchants asking if they wanted to use our software to make online stores, some said no, but they'd let us make one for them. Since we would do anything to get users, we did. We felt pretty lame at the time. Instead of organizing big strategic e-commerce partnerships, we were trying to sell luggage and pens and men's shirts. But in retrospect, it was exactly the right thing to do because it taught us how it would feel for merchants to use our software. Sometimes the feedback loop was instantaneous. In the middle of building some merchant's site, I'd find I needed a feature that we didn't have, so I'd spend a couple hours implementing it, and then I'd resume building the site. And then he gives some anti-advice, which is sh- which is he's not a big believer in the big launch. I should mention one sort of initial tactic that usually doesn't work, the big launch. I occasionally meet founders who seem to believe startups are projectiles rather than powered aircraft. Powered aircraft is a great visual for a startup. Uh, I occasionally meet founders who seem to believe startups are projectiles rather than powered aircraft, and that they'll make it big only if they've launched with sufficient initial velocity. It's easy to see how little launches matter. Think of some successful startups. How many of their launches do you remember? All you need from a launch is some initial core set of users. And then he goes into, like, why do founders believe this? Because it's easier, right? It would be so much less work if you could get users merely by broadcasting your existence rather than recruiting them one at a time. But even if what you're building really is great, getting users will always be a gradual process, mainly because users have other things to think about. Thank God he said that. Mainly because other users have... We, y- like, you and I think about our company way more, 99, a thousand times more than anybody that loves our company does. And if you go back and watch, uh, what Steve Jobs said right when he came back to Apple, he said the same thing. He's like, "Listen, the world is complicated. It is noisy. We are not gonna get a chance to get people to remember much about us. No company is. So we have to be really clear about what we want them to know about us." I love what he said. He's like, "Listen, even if what you're building is really great, getting users is always gonna be a gradual process, mainly because users have other things to think about." Yes, they're thinking about themselves. He goes back to why people shoot for a big launch instead of the laborious task of doing things that don't scale. You have to make an extraordinary effort, and he italicized effort initially. Any strategy that omits the effort is suspect. I love this. Uh, Sam Walton, autobiography, Founders 234, if I'm not mistaken. He has like, at the end, he's like, you know, "Here's a, a list of 10 things that are, like, are, are really important to know as you build your company." And what I... The 10 things are great, obviously, right? I love what he said before the 10 things, though. He said he wouldn't even... Like, he wouldn't even put work hard on the list because he says if you didn't know that already and you weren't willing to, you wouldn't need his list anyways. Another way to think about this is what Jerry Seinfeld said about when he made his, his very successful show. He's like, the h- he's like, "I don't, I'm not into hacks." He's like, "The right way is the hard way." Or the, I think he said, "The hard way, the..." Yeah, the right way is the hard way. And you're seeing Paul say the same thing. He's like, "Forget the big launch. You have to make an extraordinary effort initially. Any strategy that omits effort is suspect." And then he ends on a fantastically unique Paul Graham idea. The need to do something unscalably laborious to get started is so nearly universal that it might be a good idea to stop thinking of startup ideas as scalers. Instead, we should try thinking of them as pairs of what you're going to build plus the unscalable things that you're going to do initially to get your company going. Think of it as a pair. What it, what are you gonna build plus the unscalable things that you're going to do initially to get your company going. I love this idea. Now that there are two components, you can try to be imaginative about the second as well as the first. Founders need to work hard in two dimensions. And that is where I'll leave it. I have a giant stack of his essays to get to. That will be a part two. I would normally say that's 275 books down, although technically this isn't a book. Although I'm interested, I wonder, because of Paul's relationship with Stripe, I wonder if there's anybody at Stripe Press that is thinking about turning... I would love, I know he did Hackers & Painters, but I would love, like, a book version of Paul's essays, and I'm sure I'm not the only one. So anyways, that's 275 kinda books, I guess podcasts down, 1,000 to go, and I will talk to you again in part two of Paul Graham's essays. Okay, so real quick. In case that you want to get access to my version of Readwise, which is called foundersnotes.com, you go to foundersnotes.com to sign up. That's founders with an S, just like the podcast, so foundersnotes.com. So when you sign up and you get access, I'm gonna tell you how, what, what are the features that I use the most. And so at the very top is the main feature, the one I use b- every day. And it says Search Highlights, and there's a search bar. And very simply, I just search by whatever keyword that I'm thinking about. So it could be about hiring, about marketing, about obsession. Uh, it could be about a specific entrepreneur like Rockefeller. Whatever I happen to be thinking about or whatever problem I need to solve at the pr- at the time. So, like, the, the greatest example, and I actually made, like, a 30-minute, like, short AMA about this. It was asked, like, how do history's greatest founders think about hiring? And so if you type hiring in that box, you'll see what, what did Jeff Bezos say about it? What did Thomas Edison say about it? What did the people that founded PayPal say about it? What did Estee Lauder say about it? And on and on and on. And so I think that's pretty self-explanatory. Again, this is a product for people already running successful companies, I think. I don't have to elaborate. You already know what the value of that would be. So the highlights feed is, uh, the search, excuse me, searching the highlights is what I use the most. Now, the s- the thing I use the second most is called the highlights feed. And the highlights feed, I'm loading it right now, essentially is just, like, these little almost, like, tweet-sized highlights from all different books. And so it is completely randomized, and it's almost like you have history's greatest entrepreneurs speaking to you. And then I just read through them and see what thoughts respond. So, like, the first thing that came up was actually, uh, it's actually a highlight from one of Warren Buffett's shareholder letters. He's talking about diversification and its relation to risk. The next highlight is a quote from Ed Catmull, the founder of Pixar, talking about he didn't even realize at the beginning of his company how poor the communication was and that there was things going on in his company that, that his, the peop- his employees were not telling him, and his thoughts on how to fix that. Then there's a quote from a book that I read, like, six years ago, and it's actually the, the biography of Alibaba, and he's talking about the importance of listening and that poor listeners actually have second-rate negotiation skills. And so that is the second most used feature for me personally. This might be different for you. Third feature, books. You have a list of, uh, all the books that are in there. I think right now it says I have 307 books in here. I still have a bunch I need to put in. And then that, that's very simple. Like, I just went through. The reason I reposted the Mike Bloomberg episode, for example, is 'cause I've been rereading the highlights. And so I went back. If I don't have time to reread the book, which I will in the future, but I just read through. I think I have, like, 44, uh, highlights of Bloomberg's autobiography in here. And you read through them, and you, there's just so many ideas, and y- this is happening in, like, 15 minutes. It's absolutely incredible. So that's self-explanatory. You can search by book. The last feature that I use the most is the favorites feature. You know, I have 20,000 highlights. It's, y- there's a ton of information in here. And so what I'll do is as I go back through the highlights, and I've done this forever, and that's why th- this number will always go up. I have 839 favorites now, but, you know, if you're listening to this months from now, it's, it's going to be higher. And, uh, whether it's through searching, whether it's through rereading the, the highlights on a specific book or through the highlights feed, which is the random, um, just showing me, like, the random highlights that I've done. If there's something that's like, "Damn, that's a good one. I really want to remember that," and so I, I highlight it, or actually, I favorite it, and then now that goes into the fav- favorites feed. So then I have an even more, like, specialized feed of ideas and highlights from different books all on one page. So again, need to reiter- reiterate, I think if you are like me, and there's a good chance that you're l- if you're listening to this, you're like me. If you're like me, you're already running suc- a successful company. I think it's a, it's a no-brainer. I would at least test it out for a year. There's a chance that you don't like it. I'm not gonna share that opinion with you because, like I said before, I listen to it, or excuse me, not listen to it. I use it every day, and I think what I, what this is gonna be good for and what I hope to do is, like, man, like, for a founder to just have a browser, this, this notebook sitting in a browser that they can tap into anytime, I think that's going to be very valuable. And I can say that because it's been very valuable for me. So hopefully that makes sense. If you wanna test it out, it is foundersnotes.com. Again, foundersnotes.com. And I also leave a link down in the show notes if you wanna grab the link from the podcast, the show notes on your podcast player. Foundersnotes.com

Episode duration: 1:23:54