Lecture 3 - Before the Startup (Paul Graham)

1. PGPaul Graham0:02

   Get that short. Like n-- like long introductions are no good. Um, Sam knows. Uh, all right. Ready, everybody? I'm not gonna ask if the mic is working like in every talk so far. Um, I'll just assume it's working.

2. SPSpeaker0:17

   No. No.

3. PGPaul Graham0:17

   I'm just-- No, fuck! [laughing] All right, well, make it work, somebody.

4. SPSpeaker0:24

   It works. It works.

5. PGPaul Graham0:25

   [laughs] All right. This is like some kind of class tradition. Um, all right, all right. Uh, I wrote out my talk, um, and afterwards, in a couple days, I will, like, turn it from a talk into an essay and put it online so you don't have to take notes. Just, just listen. Um, all right. So one of the advantages of having kids is that when you have to give advice to people, you can ask yourself, "What would I tell my own kids?" And actually, you find this really focuses you. Um, so even though my kids are little, uh, my two-year-old today, when asked what he was gonna be after two, said, "A bat." Um.

6. SPSpeaker1:02

   [laughs]

7. PGPaul Graham1:03

   The correct answer was three, but a bat is so much more interesting. Um, so even though my kids are little, I already know what I would tell them about startups if they were in college. Um, and so that is what I'm going to tell you. So you're literally getting what I would give my own kids, um, since most of you are young enough to be my own kids. All right. So startups are very counterintuitive, and I'm not sure exactly why. It could be simply because knowledge about them has not permeated our culture yet. But whatever the reason, this is an area where you cannot trust your intuitions all the time. It's like skiing in that way. Any of you guys learn to ski as adults? You know, when you're skiing, when you first try skiing and you wanna slow down, your first impulse is to lean back, just like in everything else. But lean back on skis and you fly down the hill out of control, so as I learned. Um, so part of learning to ski is learning to suppress that impulse. Eventually, you get new habits. But in the beginning, there's this list of things you're trying to remember as you start down the hill. You know, like alternate feet, make S-turns, do not drag the inside foot, all this stuff. Um, well, startups are as unnatural as skiing, and there is a similar list of stuff you have to remember for startups. And what I'm gonna give you today, um, is the beginning of the list, the list of the counterintuitive stuff you have to remember to, like, prevent your existing instincts from leading you astray. The first thing on it is the fact I just mentioned, that startups are so weird that if you follow your instincts, they will lead you astray. If you remember nothing more than that, uh, when you're about to make a mistake, you may at least pause before making it. When I was running Y Combinator, we used to joke that, um, our function was to tell founders things they would ignore. Um, and it's really true. Batch after batch, the YC partners warn founders about mistakes they are about to make, and the founders ignore them, and they come back a year later and say, "I wish we'd listened." Um, but that dude is in their cap table. There's nothing they can do. Um, why do founders persistently ignore the partners' advice? Well, that's the thing about counterintuitive ideas. They contradict your intuitions. So, um, they seem wrong. So of course, your first impulse to ignore th-- is to ignore them. And in fact, that is not just the curse of Y Combinator, but to some extent, our raison d'être. You don't need people to give you advice that doesn't surprise you, right? Um, if founders' existing intuitions gave them the right answers, they wouldn't need us. That's why there are a lot of ski instructors and not many running instructors, right? Like that, you don't see those two words together, running instructor, as much as you see ski instructor. Um, it's because skiing is counterintuitive. So sort of what, um, what YC is, is like, uh, business ski instructors, except for going up slopes instead of down them. Um, well, ideally. Uh. [laughs] You can, however, trust your instincts about people. You-- Your life so far hasn't been much like starting a startup, but all the interactions you've had with people are just like the interactions you have with people in the business world. So in fact, one of the big mistakes that founders make is not to un-- trust their intuitions about people enough. They meet someone who seems impressive but about whom they feel some misgivings, um, and then later, when things blow up, they tell them-- they say, "You know, I knew there was something wrong about that guy, but I ignored it because he seemed so impressive." Um, and there's this, a specific sub-case in business, especially if you ha-- come from an engineering background, as I believe you all do. You think business is supposed to be this sort of slightly distasteful thing. And so when you meet people who seem smart but somehow distasteful, you think, "Well, okay, this must be normal for business." But [chuckles] it's not. Just, like, pick people the way you would pick people if you were, um, picking friends. Um, this is one of those rare cases where it works to be self-indulgent. Work with people you genuinely like and respect and that you have known long enough to be sure because there's a lot of people who are really good at seeming likable for a while. Um, just wait till your interests are opposed, and then you'll see. All right. Um, the second counterintuitive point is that, uh, and this will-- might come as a little bit of a disappointment, um, but what you need to succeed in a startup is not expertise in startups. That makes this class different from most other classes you take. If you take a French class, at the end of it, you will learn how to speak French if you do the work. You may not sound exactly like a French person, but pretty close, right? Um, this class can teach you about startups, but that is not what you need to know. What you need to know to succeed in a startup is not expertise in startups. What you need is expertise in your own users. Mark Zuckerberg did not succeed in [chuckles] Facebook because he was an expert in startups. He succeeded despite being a complete noob at startups. I mean, Facebook was first incorporated as a Florida LLC.Even you guys know better than that. Um.

8. SPSpeaker6:23

   [laughs]

9. PGPaul Graham6:24

   He succeeded despite being a complete noob at startups because he understood his users very well. Most of you don't know the mechanics of raising an angel round, right? Um, and if you feel bad about that, don't because I can tell you Mark Zuckerberg probably doesn't know the mechanics of raising on a- an angel round either. If he was even paying attention when Ron Conway wrote him the big check, um, he has probably forgotten about it by now. In fact, I worry it's not merely unnecessary for people to learn in detail about the mechanics of starting a startup, but possibly somewhat dangerous because another of the characteristic mistakes of young founders starting startups is to go through the motions of starting a startup. They come up with some plausible-sounding idea. Um, they raise funding at a nice valuation. They rent a nice office in Soma, hire a bunch of their friends, and then the next step after r- r- uh, r- rent a nice office in Soma and hire a bunch of their friends is gradually realize how completely fucked they are because while imitating all the outward forms of starting a startup, they have neglected the one thing that's actually essential, which is to make something people want. By the way, that's the only use of that swear word, except for the initial one that was involuntary. Um.

10. SPSpeaker7:46

    [laughs]

11. PGPaul Graham7:46

    And I did check with Sam whether it would be okay. Um, he said he had done it several times. I mean, used the word. Ugh.

12. SPSpeaker7:55

    [laughs]

13. PGPaul Graham8:04

    We saw this happen so often [laughs]

14. SPSpeaker8:06

    [laughs]

15. PGPaul Graham8:07

    No, I mean people going through the motions of starting a startup.

16. SPSpeaker8:10

    [laughs]

17. PGPaul Graham8:10

    Um, that we made up a name for it, playing house. Eventually, I realized why it was happening. The reason young founders go through the motions of starting a startup is because that is what they have been trained to do for their whole lives up to this point. Think about what it takes to get into college. Extracurricular activities. Check. Right? Um, even in college classes, most of the work you do is as artificial as running laps, and I am not attacking the educational system for being this way. Uh, inevitably, the work that you do to learn something is gonna have some amount of fakeness to it, and if you measure people's performance, they will inevitably exploit the difference to the degree that what you're measuring is largely an artifact of the fakeness. And I confess that I did this myself in college. In fact, here is a useful tip on getting good grades. Um, I found that in a lot of classes, there might only be twenty or thirty ideas that actually had the right shape to make good exam questions. And so the way I studied for exams in these classes was not to master the material in the class but to try and figure out what the exam questions would be and work out the answers in advance. And like, for me, the test was not like what my answers would be on the exam. For me, the test was which of my exam questions would turn up on the exam, right? [laughs] So I would, I would get my grade instantly. I would walk into the exam and look at the questions and see how many I got right, essentially. Um.

18. SPSpeaker9:41

    [laughs]

19. PGPaul Graham9:43

    It works in a lot of classes, especially CS classes. I remember automata theory. There's only a few things that make sense to ask about automata theory. Um, so it's not surprising that after being effectively trained for their whole lives to play such games, young founders' first impulse on starting a startup is to figure out what the tricks are for this new game. What are the extracurricular activities of startups? What are the things I have to do? Um, they always wanna know since, since apparently the measure of success for a startup is fundraising, another noob mistake, um, they always wanna know what are the tricks for convincing investors. And we have to tell them the best way to convince investors is to start a startup that's actually doing well, meaning growing fast, and then simply tell investors so. Um, so then they ask, "Okay, what are the tricks for growing fast?" Right? Um, and this is exacerbated by the existence of this term growth hacks, right? Whenever you hear anybody talk about growth hacks, just mentally translate it in your mind into bullshit, um, because what we tell them is the way to make your startup grow is to make something that users really love, right, and then tell them about it. Ugh, so that's what you have to do. That's growth hacks right there. Um, so, so many of the conversations the YC partners have with the founders begin with the founders saying a sentence that begins with "How do I..." and the partners answering with a sentence that begins with "Just..." Right? Why do they make things so complicated? The reason I realized after years of being puzzled by this is they're looking for the trick. They've been trained to look for the trick. So this is the third thing, the third counterintuitive thing to remember about startups. Starting a startup is where gaming the system stops working. Gaming the system may continue to work if you go to work for a big company. Depending on how broken the company is, you may be able to succeed by sucking up to the right person, um, giving the impression of productivity by sending emails late at night, um, or if you're smart enough, changing the clock on your computer, um, 'cause who's gonna check the headers, right? Um.

20. SPSpeaker11:55

    [laughs]

21. PGPaul Graham11:55

    But [laughs] I like an audience that I can tell jokes like that to and they laugh.

22. SPSpeaker11:59

    [laughs]

23. PGPaul Graham12:00

    Um, over in the business school, headers?

24. SPSpeaker12:03

    [laughs]

25. PGPaul Graham12:03

    Um, okay. God, this thing is being recorded.

26. SPSpeaker12:09

    [laughs]

27. PGPaul Graham12:11

    [laughs] I just realized that.

28. SPSpeaker12:15

    [laughs]

29. PGPaul Graham12:15

    All right. From now on, we are sticking strictly to the script. Um, all right. Um, but in startups, that does not work. There's no boss to trick.There's no how can you trick people if there's no one to trick? There's only users, and all users care about, um, is that, is whether your software does what they want, right? They're like sharks. Sharks are, like, too stupid to fool. You can't, like, wave a red flag at a shark and fool it. It's like meat or no meat. Um, so you have to have something that people want, and you only prosper to the extent that you do. The dangerous thing is, particularly for you guys, the dangerous thing is that faking does work to some extent with investors. You-- If you're really good at knowing what you're talking about, you can fool investors for one, maybe two rounds of funding. But it's not in your interest to. I mean, you're all doing this for equity. You're playing a confidence trick on yourself. You're wasting your own time because the startup is doomed, and all you're doing is you're just gonna waste your time writing it down. Um, so stop looking for the trick. There are tricks in startups, as there are in any domain, but they are an order of magnitude less important than solving the real problem. Someone who knows zero about fundraising but has made something users really love will have an easier time raising money than someone who knows every trick in the book but has a flat usage graph. Um, though in a sense it's bad news that gaming the startup stops work-- gaming the system stops working now, um, in the sense that you're deprived of one of your most powerful weapons and after all something you have spent twenty years mastering, um, it is something I find it very exciting, uh, that, that, that, that, that there even exist parts of the world where gaming the system is not how you win. I would have been really excited in college if I had explicitly realized that there are parts of the world where gaming the system matters less than others and some where it hardly matters at all. But there are, and this is one of the most important things to think about when you're planning your future. Um, got that? Okay. Um, h-how do you win at each type of work and what do you wanna win by doing? So, um, that brings us to our fourth counterintuitive point: startups are all-consuming. If you start a startup, it will take over your life to a degree that you cannot imagine. Um, and if it succeeds, it will take over your life for a long time, for several years at the very least, maybe a decade, maybe the rest of your working life. So there's a real opportunity cost here. It may seem to you that Larry Page has an enviable life, but there are parts of it that are definitely unenviable. The way the world looks to him is that he started running as fast as he could at age twenty-five, and he has not stopped to catch his breath since. Every day, shit happens within the Google empire that only the emperor can deal with, and he, as the emperor, has to deal with it. If he goes on vacation for even a week, a whole backlog of shit accumulates, and he has to bear this uncomplainingly because number one, as the company's daddy, he can never show fear or weakness and number two, if you're a billionaire you get zero, actually less than zero sympathy if you complain about having a difficult life.

30. SPSpeaker15:40

    [laughing]

Episode duration: 48:07