Y-Combinator’s Startup Playbook: Principles for startups
We spend a lot of time advising startups. Though one-on-one advice will always be crucial, we thought it might help us scale Y Combinator if we could distill the most generalizable parts of this advice into a sort of playbook we could give YC and YC Fellowship companies.
What makes a great founder?
The most important characteristics are ones like unstoppability, determination, formidability, and resourcefulness. Intelligence and passion also rank very highly.
Good founders have a number of seemingly contradictory traits. One important example is rigidity and flexibility. You want to have strong beliefs about the core of the company and its mission, but still be very flexible and willing to learn new things when it comes to almost everything else.
Hire Slowly
The most successful companies at YC have waited a relatively long time to start hiring employees.
Employees are expensive.
Employees add organizational complexity and communication overhead.
How to test an Idea
The way to test an idea is to either launch it and see what happens or try to sell it (e.g. try to get a letter of intent before you write a line of code).
The former works better for consumer ideas (users may tell you they will use it, but in practice it won’t cut through the clutter) and the latter works better for enterprise ideas (if a company tells you they will buy something, then go build it.)
Be Optimistic
It’s important for the CEO to believe that the future will be better, and that the company will play an important role in making the future better.
The CEO should infect the rest of the company with this belief.
Be Persistent
Most founders give up too quickly or move on to the next product too quickly.
If things generally aren’t going well, figure out what the root cause of the problem is and make sure you address that.
Bring Focus + Intensity
While great founders don’t do many big projects, they do whatever they do very intensely.
They get things done very quickly.
They are decisive, which is hard when you’re running a startup.
The best founders are unusually responsive
This is an indicator of decisiveness, focus, intensity, and the ability to get things done.
Founders that are hard to talk to are almost always bad.
Tech startups need at least one founder who can build the company’s product or service, and at least one founder who is (or can become) good at sales and talking to users. This can be the same person.
Simple Ideas spread: Sam Altman
One of the first things we ask YC companies is what they’re building and why.
We look for clear, concise answers here. This is both to evaluate you as a founder and the idea itself. It’s important to be able to think and communicate clearly as a founder—you’ll need it for recruiting, raising money, selling, etc. Ideas in general need to be clear to spread, and complex ideas are almost always a sign of muddled thinking or a made up problem.
If the idea does not really excite at least some people the first time they hear it, that’s bad.
The CEO’s Only Job Is to Win
The only universal job description of a CEO is to make sure the company wins.
You can do this as the founder even if you have a lot of flaws that would normally disqualify you as a CEO.
Hire people that complement your own skills.
Avoid Common Growth Mistakes
Founders often believe that deals with other companies and “the big press launch” will deliver growth.
But in practice these almost never work and suck up a huge amount of time.
Understand that they effectively never work.
Build a “Product Improvement Engine”
Improvements compound.
Talk to your users and watch them use your product, figure out what parts are sub-par, and then make your product better.
If you improve your product 5% every week, it will really compound.
Avoid “Hero Mode”
Most first-time managers try to do everything themselves.
It usually ends in a meltdown.
Resist all temptation to switch into this mode, and be willing to be late on projects to have a well-functioning team.
Build a Great Product
This is the only thing all great companies have in common.
Eventually your company will get so big that all growth hacks stop working and you have to grow by people wanting to use your product.
If you do not build a product users love you will fail.
Define the Mission & Values Early
This can feel a little hokey, but it’s worth doing early on.
Whatever you set at the beginning will usually still be in force years later.
Each new person needs to first buy in and then sell others on the mission and values of the company.
Don’t Reinvent the Wrong Wheels
One mistake that CEOs often make is to innovate in well-trodden areas of business instead of innovating in new products and solutions.
It’s nearly always bad for founders to look for new ways to do HR, marketing, sales, financing, PR, etc.
It’s a Marathon, Not a Sprint
A successful startup takes a very long time—certainly much longer than most founders think at the outset.
You cannot treat it as an all-nighter.
You have to eat well, sleep well, and exercise.
Think Short Term
Thinking about problems too far in the future is a trap.
The answer is to figure it out when you get there.
Far more startups die while debating this question than die because they didn’t think about it enough.
Cheerfully Fix Problems
Everything will feel broken all the time—the diversity and magnitude of the disasters will surprise you.
Your job is to fix them with a smile on your face and reassure your team that it’ll all be ok.
Usually things aren’t as bad as they seem.
Fire quickly
Everyone knows this in principle and no one does it.
Also, fire people who are toxic to the culture no matter how good they are at what they do. Culture is defined by who you hire, fire, and promote.
Hire for Aptitude Over Experience
Look for raw intelligence and a track record of getting things done.
Look for people you like – you’ll be spending a lot of time together and often in tense situations.
Don’t Make Excuses
People who let themselves make a lot of excuses usually fail in general, and startup CEOs who do it almost always fail.
Grow the Right Way
Get growth the same way all great companies have:
- • by building a product users love
- • recruiting users manually first
- • then testing lots of growth strategies (ads, referral programs, sales and marketing, etc.) and doing more of what works.
Control Perceptions
It’s important that you distort reality for others but not yourself.
You have to convince other people that your company is primed to be the most important startup of the decade.
But you yourself should be paranoid about everything that could go wrong.
Build a Religion
Building a company is somewhat like building a religion.
If people don’t connect what they’re doing day-to-day with a higher purpose they care about, they will not do a great job.
Great Execution = Growth + Momentum
Growth and momentum are the keys to great execution.
Profitable growth solves all problems.
Lack of growth is not solvable by anything but growth.
Focus on Solving For Growth
Keep a list of what’s blocking growth.
Talk as a company about how you could grow faster.
If you know what the limiters are, you’ll naturally think about how to address them.
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