Startup Archive

Peter Thiel on pivoting and PayPal’s early failure “When we started PayPal, the initial product was an infrared-beaming device on Palm Pilots for sending money. It was voted one of the 10 worst business ideas in 1999. And 1999 was a year when there were many bad ideas in technology… But the team was good… It’s not like you only get one chance. You get many chances so long as you keep trying. If you get hung up on failure, and if you think you don’t have another chance, that’s when you really don’t.” One lesser-known fact about the PayPal pivot is that the idea didn’t come from the cofounders, Peter Thiel and Max Levchin. It came from David Sacks who was fresh out of Stanford Law School and a one year stint at McKinsey. Sacks was the one who finally persuaded a reluctant Levchin that beaming money between Palm Pilots was a bad idea. Instead, he argued, they should focus on sending money via email. A talented team and getting multiple shots on goal turned out to be the difference between startup failure and a $1.5 billion exit to eBay. Video source: CBS News (2012)

Elon Musk on what it means to work “super hard” “Depending on how well you want to do—particularly if you’re starting a company—you need to work super hard. What does ‘super hard’ mean? Well, when my brother and I were starting our first company, instead of getting an apartment we just rented a small office and slept on the couch. We showered at the YMCA. And we had just one computer so the website was up during the day and I was coding at night—seven days a week, all the time.” Elon recalls briefly having a girlfriend at the time who also had to sleep at the office if she wanted to be with him. And he frames the math of it as follows if you’re starting a company: “If somebody else is working 50 hours a week and you’re working 100, you’ll get twice as much done in the course of the year as the other company.” Video source: University of Southern California (2014)

Patrick Collison on how both Stripe and Facebook doubted their ideas in the beginning As Patrick tells the founding story of Stripe, he reflects on the fact that he and his cofounder John weren’t quite sure how seriously to take it: “Even once we built this prototype we thought held some promise, it wasn’t obviously a great idea.” He points out that the same was true of Facebook, which was also working on a peer-to-peer file sharing product six months after it launched Facebook. “I find it very interesting that six months later it was not obvious that Facebook was the thing to be working on.” Patrick believes there may be a broader lesson here: “I think a lot of really good ideas don’t seem particularly great or big upfront. Certainly, speaking from personal experience, Stripe did not. But over the course of working on it that summer and thinking about it and so on, we shifted from thinking about it merely as this nice little tool for developers that makes their lives easier… [To realizing] that the whole edifice is broken… We came to appreciate that what we thought was this little pond was actually this much larger ocean.” It was only after coming to this realization that the Collison brothers decided to drop out of school and raise some initial funding from Sam Altman, Peter Thiel, Sequoia, Elon Musk, and a couple others. Video source: This Week in Startups (2017)

Naval Ravikant on the most valuable advice he’s received When asked about the best advice he’s ever received, Naval says he first ignored it. “It's the same one that everyone who's been in the business for a long time and has a lot of gray hairs tells you… whether it's Warren Buffett telling you about public investing or whether it's an experienced venture capitalist telling you about private investing… They'll all tell you, ‘It’s the people, stupid.’” Naval urges startup founders to look for three qualities in a partner: intelligence, energy and integrity. “You need all three. You can't compromise on any one of them. Otherwise you'll end up with either someone who's not smart (which does you no good) or someone who's not hardworking (which also does you no good) or the worst case is you end up with a smart, hardworking crook who ends up working against your interests.” Video source: GigaOm (2010)

Sam Altman on the biggest mistake startup CEOs make when scaling a company “When you’re a Seed or Series A company, you spend a huge amount of effort recruiting, but almost no effort retaining talent — and that is [the right strategy] at the beginning. But if you don’t shift to viewing retaining talent as much of your job as recruiting talent, you eventually have some level of a disaster on your hands.” Sam recalls Mark Zuckerberg speaking at Y Combinator and saying he only hires people he’d report to if the roles were reversed. Sam reflects on this: “If you’re hiring people that are that good — which you should be doing — they have as many opportunities as you do… And so if you don’t make the role good enough that you yourself would stay in it, then you have a hard time retaining your best people for a long period of time.” Sam gives three pieces of tactical advice for CEOs who want to retain their best people: 1. Spend one-on-one time with your best people “The thing that your best 5-10 people crave the most is time with you, the CEO. And that is something that as people get busier, they spend less and less time on. Some of the best CEOs in our portfolio, every month they will take out for a one-on-one dinner or drinks or something each of their best 10 people. This is a huge time commitment. If you think about it, you only get 30 dinner slots in a month. It’s a really big thing to do. But I think it actually works because that is the thing these people really crave… They want you to ask them what you think they should be doing and listen to them and have a personal connection. That’s super important.” 2. Continually give them more responsibility “I think if you stop giving people more responsibility, they will eventually leave. If they get to take on new tasks every year or additional tasks every year, they’re happier.” 3. Proactively re-up their compensation “I think most founders are very bad about proactively re-upping — to the level that they should — their top 5-10 lieutenants.” Video source: Khosla Ventures (2016)

Jony Ive: “Ideas are always fragile” “Ideas, by definition, are always fragile. If they were resolved, they wouldn’t be ideas. They would be products that were ready to ship.” The legendary designer reflects on what he learned at Apple: “I’ve come to learn that you have to make an extraordinary effort not to focus on the problems, which are implicated with any new idea. These problems are known. They’re quantifiable and understood. But you have to focus on the actual idea, which is partial, tentative, and unproven. If you don't actively suspend your disbelief — if you don't believe there is a solution to the problems — of course you will lose faith in your idea.” He continues: “That is why criticism and focusing on the problems can be so damaging, particularly in the absence of a constructive idea. Remember, opinions are not ideas. Opinions are not as important as ideas. Opinions are just opinions.” Video source: California College of the Arts (2021)

Y Combinator Partners on DoorDash, Instacart, and doing things that don’t scale Apoorva Mehta’s idea for Instacart was to let users order their groceries with the tap of a button. Some founders might’ve spent months trying to negotiate corporate partnerships with grocery stores like Trade Joe’s or Whole Foods before starting this business. But the first thing Apoorva did was test whether this was something people even wanted. His team took their YC money, went to Trader Joe’s and bought one of every item. They then rented a photography studio, took pictures of every item, wrote down the prices, and posted it all to their website. When an order came in, they bought the item from Trader Joe’s and delivered it. This allowed them to prove that Instacart was something customers wanted, and only once they hit scale did they negotiate partnerships with large grocery chains. YC Partner Tom Blomfield sums up the core advantage this approach that Paul Graham advocates for in his essay Do Things That Don’t Scale: “In the cases where you do things that don’t scale and it turns out no one wants it, that’s actually a good thing because you’ve saved yourself months or years of building something no one wants… And by doing this stuff that doesn’t scale, you can give the appearance of that service or product already existing by basically faking it manually, pulling the strings in the background, and doing tons of hard work yourself to deliver that incredible white glove experience to customers.” YC CEO Garry Tan adds: “Doing things that don’t scale lets you experiment, fail fast, and try new things. It lets you test your assumptions before you spend months building a product.” YC Partners Diana Hu and Michael Seibel discuss another great example of this: DoorDash. Even though the team was a technical group of Stanford engineering students and MBAs, they built the MVP with a tech stack of Google Drive to upload menus, a simple HTML/CSS website, a Google Form to take orders, and Find My Friends as their dispatch system to track drivers. Diana comments: “They could have done the fancy thing and build out a dynamic site with real-time tracking, but the founders were very pragmatic. That was not the hardest thing to prove.” Usually the hardest thing to prove is that your product is something people want. Video source: Y Combinator (2024)

Peter Thiel on the type of company more startup founders should build Thiel first emphasizes his belief that when starting a company, you should always ask: “Can this company become a monopoly?” He then lists three of the most common types of monopolies: 1. Super fast distribution on a very thin product (e.g. Twitter) 2. A technological advantage that is continually built upon with iterative improvement and compounds over time (e.g. SaaS software) 3. A truly brilliant breakthrough (e.g. Bitcoin) But he argues that there’s a different monopoly category that’s continually overlooked: “A different modality for innovation that we do very little of and we don’t even recognize as an important category is what I would describe as ‘Complex Coordination,’ where you take a lot of different pieces and the challenge is to coordinate them into something new.” Thiel continues: “This is the thing that’s maybe 180 degrees antithetical to the Lean Startup ethos. It’s complicated. You have to put all the pieces together in just the right way. I think this is on some level what really drove Apple as an innovative company in the last decade… What was new about the iPhone? There was no single component that was new. It was just that you put all of these things together in just the right way… and once you built it, it was actually super hard for people to replicate. You had an advantage for many years.” He points to Tesla and SpaceX as more recent examples. “There’s no component to the Tesla that’s actually that new. It’s just that you put all of the pieces together. You re-engineered the whole distributor network. It was this complex coordination that made it work. There’s like this lost art of accounting where you figure out how much things cost and add them all together. And Elon has discovered this lost art of accounting which no other people practice.” Video source: General Assembly (2015)

Marc Andreessen on handling a crisis: “There are no silver bullets, only lead bullets” Marc reflects on his partner Ben Horowitz’s essay “Lead Bullets”: “There’s this temptation - especially when you get into crisis - to think there must be a magic answer or some stroke of genius [similar to Sherlock Holmes]…. There’s this really strong tendency to think that that’s out there. And we see a lot of entrepreneurs cycle through different silver bullets that don’t work. Ben’s point is the answer is probably in firing a whole bunch of lead bullets.” Marc explains: “The answer is probably the engineers working later at night for six months and getting the next version of the product out. And the answer is probably for the sales reps to go call on twice as many customers and try to close more deals… I’ve certainly come around to that point of view a lot.” In other words, there rarely a silver bullet that solves all your problems. So don’t waste a lot of time looking for one. Instead, identify the few key drivers of success for your business and do them extremely well. Here’s a brief excerpt from Ben’s essay: “There may be nothing scarier in business than facing an existential threat. So scary that many in the organization will do anything to avoid it. They will look for any alternative, any way out, any excuse not to live or die in a single battle… There comes a time in every company’s life where it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself: ‘If our company isn’t good enough to win, then do we need to exist at all?’” Video source: Stanford University Graduate School of Business (2014)

Mark Zuckerberg on why the Growth Team was one of the biggest factors in Facebook’s success “Making it so that we could grow faster was the most important product feature we ended up building for Facebook. The traditional approach to growing and marketing is you have a communications group or marketing team and you buy ads. Sometimes there’s a place for that.. But if you’re actually trying to grow a product, the best levers for doing that are often within the product itself.” He continues: “There’s no magic in the group we’ve built here that other people can’t replicate. It’s just being very rigorous with data and investing in data infrastructure so that you can process different experiments and learn from what customer behavior is telling you.” Mark cites Facebook’s “People You May Know” feature as an example of a critical product growth lever. And his key point is that the best levers for growth are often within your product itself. Facebook’s growth team had a simple framework for growth focused on acquisition, activation, engagement, and virality. They then used this framework to prioritize design experiments and build products. Quickly iterating through these experiments and rigorously measuring what was working (and trying to understand why it was working), helped put the platform on the path to billions of users. Video source: Y Combinator (2016)