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What Startups Are Really Like



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October 2009(This  essay is derived from a talk at the 2009 Startup School.)I wasn't sure what to talk about at Startup School, so I decided
to ask the founders of the startups we'd funded.  What hadn't I
written about yet?I'm in the unusual position of being able to test the essays I write
about startups.  I hope the ones on other topics are right, but I
have no way to test them.  The ones on startups get tested by about
70 people every 6 months.So I sent all the founders an email asking what surprised them about
starting a startup.  This amounts to asking what I got wrong, because
if I'd explained things well enough, nothing should have surprised
them.I'm proud to report I got one response saying:

    What surprised me the most is that everything was actually
    fairly predictable!

The bad news is that I got over 100 other responses listing the
surprises they encountered.There were very clear patterns in the responses; it was remarkable
how often several people had been surprised by exactly the same
thing.  These were the biggest:
1. Be Careful with CofoundersThis was the surprise mentioned by the most founders.  There were
two types of responses: that you have to be careful who you pick
as a cofounder, and that you have to work hard to maintain your
relationship.What people wished they'd paid more attention to when choosing
cofounders was character and commitment, not ability.  This was
particularly true with startups that failed.  The lesson: don't
pick cofounders who will flake.Here's a typical reponse:

    You haven't seen someone's true colors unless you've worked
    with them on a startup.

The reason character is so important is that it's tested more
severely than in most other situations.  One founder said explicitly
that the relationship between founders was more important than
ability:

    I would rather cofound a startup with a friend than a stranger
    with higher output.  Startups are so hard and emotional that
    the bonds and emotional and social support that come with
    friendship outweigh the extra output lost.

We learned this lesson a long time ago.  If you look at the YC
application, there are more questions about the commitment and
relationship of the founders than their ability.Founders of successful startups talked less about choosing cofounders
and more about how hard they worked to maintain their relationship.

    One thing that surprised me is how the relationship of startup
    founders goes from a friendship to a marriage.  My relationship
    with my cofounder 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."

Several people used that word "married."  It's a far more intense
relationship than you usually see between coworkers—partly because
the stresses are so much greater, and partly because at first the
founders are the whole company.  So this relationship has to be
built of top quality materials and carefully maintained.  It's the
basis of everything.
2. Startups Take Over Your LifeJust as the relationship between cofounders is more intense than
it usually is between coworkers, so is the relationship between the
founders and the company.  Running a startup is not like having a
job or being a student, because it never stops.  This is so foreign
to most people's experience that they don't get it till it happens.
[1]

    I didn't realize I 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 vs. working for
    someone else's company.

It's exacerbated by the fast pace of startups, which makes it seem
like time slows down:

    I think the thing that's been most surprising to me is how one's
    perspective on time shifts. Working on our startup, I remember
    time seeming to stretch out, so that a month was a huge interval.

In the best case, total immersion can be exciting:

    It's surprising how much you become consumed by your startup,
    in that you think about it day and night, but never once does
    it feel like "work."

Though I have to say, that quote is from someone we funded this
summer.  In a couple years he may not sound so chipper.
3. It's an Emotional Roller-coasterThis was another one lots of people were surprised about.  The ups
and downs were more extreme than they were prepared for.In a startup, things seem great one moment and hopeless the next.
And by next, I mean a couple hours later.

    The emotional ups and downs were the biggest surprise for me.
    One day, we'd think of ourselves as the next Google and dream
    of buying islands; the next, we'd be pondering how to let our
    loved ones know of our utter failure; and on and on.

The hard part, obviously, is the lows.  For a lot of founders that
was the big surprise:

    How hard it is to keep everyone motivated during rough days or
    weeks, i.e. how low the lows can be.

After a while, if you don't have significant success to cheer you
up, it wears you out:

    Your most basic advice to founders is "just don't die," but the
    energy to keep a company going in lieu of unburdening success
    isn't free; it is siphoned from the founders themselves.

There's a limit to how much you can take.  If you get to the point
where you can't keep working anymore, it's not the end of the world.
Plenty of famous founders have had some failures along the way.
4. It Can Be FunThe good news is, the highs are also very high.  Several founders
said what surprised them most about doing a startup was how fun it
was:

    I think you've left out just how fun it is to do a startup. I
    am more fulfilled in my work than pretty much any of my friends
    who did not start companies.

What they like most is the freedom:

    I'm surprised by how much better it feels to be working on
    something that is challenging and creative, something I believe
    in, as opposed to the hired-gun stuff I was doing before.  I
    knew it would feel better; what's surprising is how much better.

Frankly, though, if I've misled people here, I'm not eager to fix
that.  I'd rather have everyone think starting a startup is grim
and hard than have founders go into it expecting it to be fun, and
a few months later saying "This is supposed to be fun? Are you
kidding?"The truth is, it wouldn't be fun for most people.  A lot of what
we try to do in the application process is to weed out the people
who wouldn't like it, both for our sake and theirs.The best way to put it might be that starting a startup is fun the
way a survivalist training course would be fun, if you're into that
sort of thing.  Which is to say, not at all, if you're not.
5. Persistence Is the KeyA lot of founders were surprised how important persistence was in
startups. It was both a negative and a positive surprise: they were
surprised both by the degree of persistence required

    Everyone said how determined and resilient you must be, but
    going through it made me realize that the determination required
    was still understated.

and also by the degree to which persistence alone was able to
dissolve obstacles:

    If you are persistent, even problems that seem out of your
    control (i.e. immigration) seem to work themselves out.

Several founders mentioned specifically how much more important
persistence was than intelligence.

    I've been surprised again and again by just how much more
    important persistence is than raw intelligence.

This applies not just to intelligence but to ability in general,
and that's why so many people said character was more important in
choosing cofounders.
6. Think Long-TermYou need persistence because everything takes longer than you expect.
A lot of people were surprised by that.

    I'm continually surprised by how long everything can take.
    Assuming your product doesn't experience the explosive growth
    that very few products do, everything from development to
    dealmaking (especially dealmaking) seems to take 2-3x longer
    than I always imagine.

One reason founders are surprised is that because they work fast,
they expect everyone else to.   There's a shocking amount of shear
stress at every point where a startup touches a more bureaucratic
organization, like a big company or a VC fund.  That's why fundraising
and the enterprise market kill and maim so many startups.  
[2]But 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 1 out of 100 successful startups has a trajectory like that,
and they all think "we're going to be that 1."Maybe they'll listen to one of the more successful founders:

    The top thing I didn't understand before going into it is that
    persistence is the name of the game. For the vast majority of
    startups that become successful, it's going to be a really
    long journey, at least 3 years and probably 5+.

There is a positive side to thinking longer-term.  It's not just
that you have to resign yourself to everything taking longer than
it should.  If you work patiently it's less stressful, and you can
do better work:

    Because we're relaxed, it's so much easier to have fun doing
    what we do. Gone is the awkward nervous energy fueled by the
    desperate need to not fail guiding our actions. We can concentrate
    on doing what's best for our company, product, employees and
    customers.

That's why things get so much better when you hit ramen profitability.
You can shift into a different mode of working.7. Lots of Little ThingsWe 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 startups.  You have to do lots of different things:

    It's much more of a grind than glamorous. A timeslice selected
    at random would more likely find me tracking down a weird DLL
    loading bug on Swedish Windows, or tracking down a bug in the
    financial model Excel spreadsheet the night before a board
    meeting, rather than having brilliant flashes of strategic
    insight.

Most hacker-founders would like to spend all their time programming.
You won't get to, unless you fail.  Which can be transformed into:
If you spend all your time programming, you will fail.The principle extends even into programming.  There is rarely a
single brilliant hack that ensures success:

    I learnt never to bet on any one feature or deal or anything
    to bring you success. It is never a single thing.  Everything
    is just incremental and you just have to keep doing lots of
    those things until you strike something.

Even in the rare cases where a clever hack makes your fortune, you
probably won't know till later:

    There is no such thing as a killer feature. Or at least you
    won't know what it is.

So the best strategy is to try lots of different things.  The reason
not to put all your eggs in one basket is not the usual one,
which applies even when you know which basket is best.  In a startup
you don't even know that.
8. Start with Something MinimalLots of founders mentioned how important it was to launch with the
simplest possible thing.  By this point everyone knows you should
release fast and iterate.  It's practically a mantra at YC.  But
even so a lot of people seem to have been burned by not doing it:

    Build the absolute smallest thing that can be considered a
    complete application and ship it.

Why do people take too long on the first version?  Pride, mostly.
They hate to release something that could be better.  They worry
what people will say about them.  But you have to overcome this:

    Doing something "simple" at first glance does not mean you
    aren't doing something meaningful, defensible, or valuable.

Don't worry what people will say.  If your first version is so
impressive that trolls don't make fun of it, you waited too long
to launch.  
[3]One founder said this should be your approach to all programming,
not just startups, and I tend to agree.

    Now, when coding, I try to think "How can I write this such
    that if people saw my code, they'd be amazed at how little there
    is and how little it does?"

Over-engineering is poison.  It's not like doing extra work for
extra credit.  It's more like telling a lie that you then have to
remember so you don't contradict it.
9. Engage UsersProduct development is a conversation with the user that doesn't
really start till you launch.  Before you launch, you're like a
police artist before he's shown the first version of his sketch to
the witness.It's so important to launch fast that it may be better to think of
your initial version not as a product, but as a trick for getting
users to start talking to you.

    I learned to think about the initial stages of a startup as a
    giant experiment. All products should be considered experiments,
    and those that have a market show promising results extremely
    quickly.

Once you start talking to users, I guarantee you'll be surprised
by what they tell you.

    When you let customers tell you what they're after, they will
    often reveal amazing details about what they find valuable as
    well what they're willing to pay for.

The surprise is generally positive as well as negative. They won't
like what you've built, but there will be other things they would
like that would be trivially easy to implement.  It's not till you
start the conversation by launching the wrong thing that they can
express (or perhaps even realize) what they're looking for.
10. Change Your IdeaTo benefit from engaging with users you have to be willing to change
your idea.  We've always encouraged founders to see a startup idea
as a hypothesis rather than a blueprint.  And yet they're still
surprised how well it works to change the idea.

    Normally if you complain about something being hard, the general
    advice is to work harder.  With a startup, I think you should
    find a problem that's easy for you to solve.  Optimizing in
    solution-space is familiar and straightforward, but you can
    make enormous gains playing around in problem-space.

Whereas mere determination, without flexibility, is a greedy algorithm
that may get you nothing more than a mediocre local maximum:

    When someone is determined, there's still a danger that they'll
    follow a long, hard path that ultimately leads nowhere.

You want to push forward, but at the same time twist and turn to
find the most promising path.  One founder put it very succinctly:

    Fast iteration is the key to success.

One reason this advice is so hard to follow is that people don't
realize how hard it is to judge startup ideas, particularly their
own.  Experienced founders learn to keep an open mind:

    Now I don't laugh at ideas anymore, because I realized how
    terrible I was at knowing if they were good or not.

You can never tell what will work.  You just have to do whatever
seems best at each point.  We do this with YC itself.  We still
don't know if it will work, but it seems like a decent hypothesis.
11. Don't Worry about CompetitorsWhen 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."These alarms are almost always false:

    Companies that seemed like competitors and threats at first
    glance usually never were when you really looked at it. Even
    if they were operating in the same area, they had a different
    goal.

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:

    All the scares induced by seeing a new competitor pop up are
    forgotten weeks later. It always comes down to your own product
    and approach to the market.

This is generally true even if competitors get lots of attention.

    Competitors riding on lots of good blogger perception aren't
    really the winners and can disappear from the map quickly.  You
    need consumers after all.

Hype doesn't make satisfied users, at least not for something as
complicated as technology.12. It's Hard to Get UsersA lot of founders complained about how hard it was to get users,
though.

    I had no idea how much time and effort needed to go into attaining
    users.

This is a complicated topic.  When you can't get users, it's hard
to say whether the problem is lack of exposure, or whether the
product's simply bad.  Even good products can be blocked by switching
or integration costs:

    Getting people to use a new service is incredibly difficult.
    This is especially true for a service that other companies can
    use, because it requires their developers to do work. If you're
    small, they don't think it is urgent. 
[4]

The sharpest criticism of YC came from a founder who said we didn't
focus enough on customer acquisition:

    YC preaches "make something people want" as an engineering task,
    a never ending stream of feature after feature until enough
    people are happy and the application takes off.  There's very
    little focus on the cost of customer acquisition.

This may be true; this may be something we need to fix, especially
for applications like games.  If you make something where the
challenges are mostly technical, you can rely on word of mouth,
like Google did.  One founder was surprised by how well that worked
for him:

    There is an irrational fear that no one will buy your product.
    But if you work hard and incrementally make it better, there
    is no need to worry.

But with other types of startups you may win less by features and
more by deals and marketing.
13. Expect the Worst with DealsDeals fall through.  That's a constant of the startup world.  Startups
are powerless, and good startup ideas generally seem wrong.  So
everyone is nervous about closing deals with you, and you have no
way to make them.This is particularly true with investors:

    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 would have focused us on finding
    revenue streams early.

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.

    If someone offers you money, take it. You say it a lot, but I
    think it needs even more emphasizing.  We had the opportunity
    to raise a lot more money than we did last year and I wish we
    had.

Why do founders ignore me?  Mostly because they're optimistic by
nature.  The mistake is to be optimistic about things you can't
control. By all means be optimistic about your ability to make
something great.  But you're asking for trouble if you're optimistic
about big companies or investors.
14. Investors Are CluelessA lot of founders mentioned how surprised they were by the cluelessness
of investors:

    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.

Angels are a bit better than VCs, because they usually have startup
experience themselves:

    VC investors don't know half the time what they are talking
    about and are years behind in their thinking.  A few were great,
    but 95% of the investors we dealt with were unprofessional,
    didn't seem to be very good at business or have any kind of
    creative vision. Angels were generally much better to talk to.

Why are founders surprised that VCs are clueless?  I think it's
because they seem so formidable.The reason VCs seem formidable is that it's their profession to.
You get to be a VC by convincing asset managers to trust you with
hundreds of millions of dollars.  How do you do that?  You have to
seem confident, and you have to seem like you understand technology.
[5]
15. You May Have to Play GamesBecause investors are so bad at judging you, you have to work harder
than you should at selling yourself. One founder said the thing
that surprised him most was

    The degree to which feigning certitude impressed investors.

This is the thing that has surprised me most about YC founders'
experiences.  This summer we invited some of the alumni to talk to
the new startups about fundraising, and pretty much 100% of their
advice was about investor psychology.  I thought I was cynical about
VCs, but the founders were much more cynical.

    A lot of what startup founders do is just posturing.  It works.

VCs themselves have no idea of the extent to which the startups
they like are the ones that are best at selling themselves to VCs.
[6]
It's exactly the same phenomenon we saw a step earlier.  VCs get
money by seeming confident to LPs, and founders get money by seeming
confident to VCs.
16. Luck Is a Big FactorWith two such random linkages in the path between startups and
money, it shouldn't be surprising that luck is a big factor in
deals.  And yet a lot of founders are surprised by it.

    I didn't realize how much of a role luck plays and how much is
    outside of our control.

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?Why are founders fooled by this?  Business guys probably aren't,
but hackers are used to a world where skill is paramount, and you
get what you deserve.

    When we started our startup, I had bought the hype of the startup
    founder dream: that this is a game of skill. It is, in some
    ways.  Having skill is valuable. So is being determined as all
    hell. But being lucky is the critical ingredient.

Actually the best model would be to say that the outcome is the
product of skill, determination, and luck.  No matter how much
skill and determination you have, if you roll a zero for luck, the
outcome is zero.These quotes about luck are not from founders whose startups failed.
Founders who fail quickly tend to blame themselves.  Founders who
succeed quickly don't usually realize how lucky they were.  It's
the ones in the middle who see how important luck is.
17. The Value of CommunityA surprising number of founders said what surprised them most about
starting a startup was the value of community.  Some meant the
micro-community of YC founders:

    The immense value of the peer group of YC companies, and facing
    similar obstacles at similar times.

which shouldn't be that surprising, because that's why it's structured
that way.  Others were surprised at the value of the startup community
in the larger sense:

    How advantageous it is to live in Silicon Valley, where you
    can't help but hear all the cutting-edge tech and startup news,
    and run into useful people constantly.

The specific thing that surprised them most was the general spirit
of benevolence:

    One of the most surprising things I saw was the willingness of
    people to help us. Even people who had nothing to gain went out
    of their way to help our startup succeed.

and particularly how it extended all the way to the top:

    The surprise for me was how accessible important and interesting
    people are. It's amazing how easily you can reach out to people
    and get immediate feedback.

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.
18. You Get No RespectThere was one surprise founders mentioned that I'd forgotten about:
that outside the startup world, startup founders get no respect.

    In social settings, I found that I got a lot more respect when
    I said, "I worked on Microsoft Office" instead of "I work at a
    small startup you've never heard of called x."

Partly this is because the rest of the world just doesn't get
startups, and partly it's yet another consequence of the fact that
most good startup ideas seem bad:

    If you pitch your idea to a random person, 95% of the time
    you'll find the person instinctively thinks the idea will be a
    flop and you're wasting your time (although they probably won't
    say this directly).

Unfortunately this extends even to dating:

    It surprised me that being a startup founder does not get you
    more admiration from women.

I did know about that, but I'd forgotten.
19. Things Change as You GrowThe last big surprise founders mentioned is how much things changed
as they grew.  The biggest change was that you got to program even
less:

    Your job description as technical founder/CEO is completely
    rewritten every 6-12 months. Less coding, more
    managing/planning/company building, hiring, cleaning up messes,
    and generally getting things in place for what needs to happen
    a few months from now.

In particular, you now have to deal with employees, who often have
different motivations:

    I knew the founder equation and had been focused on it since I
    knew I wanted to start a startup as a 19 year old.  The employee
    equation is quite different so it took me a while to get it
    down.

Fortunately, it can become a lot less stressful once you reach
cruising altitude:

    I'd say 75% of the stress is gone now from when we first started.
    Running a business is so much more enjoyable now.  We're more
    confident. We're more patient. We fight less. We sleep more.

I wish I could say it was this way for every startup that succeeded,
but 75% is probably on the high side.
The Super-PatternThere were a few other patterns, but these were the biggest.  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, and so did a YC founder I read the list to.
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 I
tell people.  If I wrote a new essay with the same outline as this
that wasn't summarizing the founders' responses, everyone would say
I'd run out of ideas and was just repeating myself.What is going on here?When I look at the responses, the common theme is that
starting a startup was like I said, but way more so.  People just
don't seem to get how different it is till they do it.  Why?  The
key to that mystery is to ask, how different from what?  Once you
phrase it that way, the answer is obvious: from a job.  Everyone's
model of work is a job.  It's completely pervasive.  Even if you've
never had a job, your parents probably did, along with practically
every other adult you've met.Unconsciously, everyone expects a startup to be like a job, and
that explains most of the surprises.  It explains why people are
surprised how carefully you have to choose cofounders and how hard
you have to work to maintain your relationship.  You don't have to
do that with coworkers.  It explains why the ups and downs are
surprisingly extreme.  In a job there is much more damping.  But
it also explains why the good times are surprisingly good: most
people can't imagine such freedom.  As you go down the list, almost
all the surprises are surprising in how much a startup differs from
a job.You probably can't overcome anything so pervasive as the model of
work you grew up with.  So the best solution is to be consciously
aware of that.  As you go into a startup, you'll be thinking "everyone
says it's really extreme."  Your next thought will probably be "but
I can't believe it will be that bad."  If you want to avoid being
surprised, the next thought after that should be: "and the reason
I can't believe it will be that bad is that my model of work is a
job."
Notes[1]
Graduate students might understand it.  In grad school you
always feel you should be working on your thesis.  It doesn't end
every semester like classes do.[2]
The best way for a startup to engage with slow-moving
organizations is to fork off separate processes to deal with them.
It's when they're on the critical path that they kill you—when
you depend on closing a deal to move forward.  It's worth taking
extreme measures to avoid that.[3]
This is a variant of <NAME>man's principle that if you
aren't embarrassed by what you launch with, you waited too long to
launch.[4]
The question to ask about what you've built is not whether it's
good, but whether it's good enough to supply the activation energy
required.[5]
Some VCs seem to understand technology because they actually
do, but that's overkill; the defining test is whether you can talk
about it well enough to convince limited partners.[6]
This is the same phenomenon you see with defense contractors
or fashion brands.  The dumber the customers, the more effort you
expend on the process of selling things to them rather than making
the things you sell.Thanks: to <NAME> for reading drafts of this,
and to all the founders who responded to my email.Related:Startups in 13 SentencesThe Hardest Lessons for Startups to LearnHow Not to DieThe 18 Mistakes That Kill StartupsA Fundraising Survival GuideRussian TranslationKorean TranslationHebrew Translation
