I'm taking down notes for Sam Altman's class, How to Start a Startup and I figured I'd start sharing them. This is for the thirteenth lecture with the following notes:
How to be a Great Founder
Perception
- Perception of a founder:
- Elon Musk, Bill Gates, Steve Jobs, etc.
- An image of Superman/Superwoman
- Reality:
- Someone who deals with a lot of problems
- No one is generally "superpowered"
- You want to have a couple of "superpowers", something that gives you an edge
- Although, this is not a function of genius
- It's hard to tell the difference between genius/madness
- Potential skills of a founder:
- Founding Team
- Location
- Delegation
- Flexibility
- Vision
- Focus
- Confidence
- Evaluation
- Risk
- Persistence
- Data
- Time Horizon
- May seem like a super human task
- You don't necessarily want to score 10/10 in all the skills of a founder
Team
- It's usually best to have two/three people as the founders (broad set of skills to spread)
- You can compensate with other founders weaknesses
- Diversity of problems as a founder, you can go at them from different angles
- Have a high degree of trust with those co-founders (see previous lectures for more detail)
Location
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In order to be successful, I need to go where the strongest networks are where the particular kind of problem that I'm trying to solve.
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Silicon Valley is good for software products (not for all though!)
- This is due to various off-topic reasons
-
e.g. Groupon needed massive numbers of sales forces. Silicon Valley is suboptimal for plans where you want to rent a 20 storey building full of sales people. Groupon was required to be in Chicago which is good at this.
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What kinds of startups would someone be an idiot to do in SV?
- e.g. Designing a fashion company. Great idea, but there isn't a good network for it here!
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Should I be a contrarian?
- (A contrarian is a person who takes up a contrary position, a person who seems to be "contrary for the sake of being contrary,")
- Its hard to be contrarian and right.
- How does a smart person actually disagree with me?
- A really good contrarian idea: what would smart people (in that field) think is a good idea.
- In general, as a founder, it's good to be a contrarian.
Delegation
- Should I do the work or delegate the work?
- In truth: both
- Should I be recruiting people?
- Sometimes one at 100% or the other at 100%
Flexibility
- Should I be flexible or persistent?
- Again: both
- You get opinions from both ends of the spectrum on how to do this.
- Have an investment thesis (possibly contrarian) on why you think is potentially a good idea.
- Should include what you know that others don't know
- Do I have an increase in confidence or decreasing?
- If increasing, stay on track, be persistent
- If decreasing, you don't have to necessarily jump out
- What do we do to fix this? (flexibility)
Confident
- Should I be confident or cautious?
- Third time: both
- I have my vision of how the world should be BUT smart enough to listen to criticism, negative feedback, competitive entries.
- Is this changing my investment thesis?
Internally
- Should I focus internally or externally?
- People in the back haven't heard: both
- Internally: Build the product, ignore the world, ignore competitors
- Externally: Recruiting, meeting people, gathering network intelligence
Vision or Data
- Should I work by vision or data?
- Both
- Data: motivated by data, gather the data, be guided by the data
- Data only exists within the framework of a vision you are building to
Risk
- Should I take risks or minimize risks?
- Both
- You have to be a risk taker
- One of the skillsets you need to build on is, how do I make intelligent risks
- How do I minimize my other risks with this? (i.e. two birds with one stone)
Vision
- Should I focus on the short term or long term?
- Both
- Jump between the two
- Solve the problem that's immediately in front of you
- Short term: What do I need to be doing today? Have I made progress today?
- BUT, is it largely on path?
How do you know if you are a Great Founder?
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You should have some superpowers
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Useful to be a product person (in software especially)
-
Useful to have leadership and persuading people
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Recognizing whether you're on track or not (am I STILL on track with my thesis?)
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There's no one skillset
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There's an ability to learn and adapt, and the ability to constantly have a vision that drives you, and take input from all sources and take networks from around you. (!)
Questions
Q. How did you stick with a strategy to get your investment thesis?
Ans.
- The problems in 2003 were different from what we have now. They (LinkedIn) sent out invitations to different people, and got PR to get people.
- Now, how are you competing for potential customers?
- What is the hack that I know that others don't?
Q. How do you know if someone is a good founder or not?
Ans.
- I'm a believer of references
- Only meet with people through a reference
- It's a way to sort out time
- Network is really key
Q. Density of insight is a strong signal for great founders. Being able to distil a thesis into a concise sentence.
Ans.
- The ability to be coherent on what you're targetting.
- NOT a Swiss army knife approach
- Founders who have analyzed the problem in a good way
- Founders who do not have a good analysis, but have an instinct on what they're doing
Q. What kept you going with persistence (RE: LinkedIn)?
Ans.
- Believing the right economic system design was to have a public professional profile
- It may not have taken off the speed that we want
- It takes us longer to get there, but that's okay
Q. When you get a founder that you think is going to be good. What makes you get wrong about someone who looks good at first observation?
Ans.
- Conviction in the person when they're trying to reason with you is what you look for in a founder
- Sometimes you find people who have learned to mimic that behaviour. They look like they're thinking about the challenges that you're bringing up but they're actually ignoring you.
- Adaptability questions
- Is there an ego issue that might get in the way
Q. Co-founding team, how to evaluate how to be co-founders?
Ans.
- Serious trust
- People say don't invest in a husband-wife team (since personal dynamics can affect)
- You should ask: do they collaborate well? Do they help each other get to truth?
- Adjusting to what is the truth (i.e. people who work off each other)
Q. Different founder, different areas. How do you identify them?
Ans.
- This talk is about, what is unique to all founders as a whole (not specifically technology).
- Investors try to understand a domain so they cam better invest in that domain.
- Each domain has a set of attributes in that domain.
Q. How do you know when to stay in longer than expected? Or when do you pivot?
Ans.
- The part of the reason of having an investment thesis (IT)
- If your confidence in IT is decreasing for a very long time:
- You've gone into intense mode to see what could do to increase confidence
- When THAT starts failing, then you should consider pivoting.
- A frequent mistake: wait till everything has crashed into the wall. You waited way too long!
- Founders have no balance
- While you are working on this thing, you cannot remain balanced. It is 100% of you that goes into it.
- (This isn't forever, but maybe for a couple of years before you go off to do other things)
Q. How good is the startup eco-system in identifying contrarian opportunities?
Ans.
- Mixed.
- Generally, the system is good at it.
Q. What you do think about creating markets vs. covering them?
Ans.
- What would lead you to believe what would be a market there or not?
- What is it that you think you know that others don't know.
Q. When do you know someone long enough to ask someone to be their co-founder?
Ans.
- It's one of the risks that you take
- You're going to spend 20+ hours with this person, do you feel comfortable doing that?
- Have a set of robust conversations with this person that you can later bring up (re-iterating trust)