How To Start

A Startup

By Stanford University

Part 1 : Ideas & Products

 

  • Most great companies start with ideas , not pivots

  • Idea : Size & growth of market , growth strategy , defensibility strategy etc.

  • You need to build a business that is difficult to replicate

  • Best companies are always mission oriented. People need an important mission to stay motivated including you. People outside will be more inclined to help you 

  • (Check the market size of second-hand clothes)

  • You need to get an idea about the wave that’s growing in the market that you are targeting and how will you be riding it

  •  Why is this the perfect time to start this particular idea? Why now?

  • Good startups are very easy to explain and very easy to understand. More than 1 sentence = very complicated

  • Until you build a great product , nothing else happens

  • Talk to users as much as possible and create something that they really love!

  • Try to create something that a very small group of people really love instead of a large group of people like

  • If you make something that people love , people will tell their friends about it

  • Very few startups die of competition , most die because they can’t create something that users love

  •  The initial users , you should go pick them by hand as they will be the ones to give you frequent feedback - Understand them extremely well , get close to them ,  ask them what they like & don’t like and watch them use it , ask them what they would recommend to their friends

  • Need to have a system in the company that transforms feedback from users into product decisions.

  • Early founders will need to do sales & customer support on their own

  • Metrics : Focus on growth 

  • #1 goal of a CEO is managing your own psychology

 

Part 2 : Team & Execution

 

Team

  • Random founder = bad decision

  • Technical co-founder is very important

  • Less Employees > More Employees while starting out (Year 1)

  • Cost of getting an early hire wrong is very high

  • When hiring , you NEED to get the best people

  • Spend 0 time hiring or 25% time 

  • Mediocre engineers do not build great companies

  • Best source for hiring is people who you know or whom your employees know ( Personal referrals )

  • 3 Core Things to look for : Smart ? Get things done ? Want to spend alot of time with them?

    • 5 Extra things to look for : Communication , Determination , The Animal Test , Feel comfortable reporting to them if roles were reversed

  • Work on a quick project with someone before hiring them

  • Interview question : Ask what projects have people worked on?

  • Employee Equity : 10% of the company -> 1st 10 employees . Be generous with employee equity

  • Fight with investors to reduce the equity that they get

  • You NEED to make sure your employees are happy and feel valued

  • Let your team take all the credit for the good and you take the hit for the bad 

  • Don’t micromanage , give people responsibilities

  • Fire Fast when it’s not working out - Creating office politics or negative = fire 

Execution

  • For a culture where people work hard , pay attention to details & customers , YOU need to set the bar

  • CEO Job roles 

    • Set the vision

    • Raise money

    • Evangelize the company

    • Hiring MGT team

    • Make sure the entire company executes

      • Can you figure out what to do?

      • Can you get it done?

        • Focus - Critical : What are you spending your time and money on? FIGURE OUT THE 2-3 MOST IMPORTANT THINGS EVERY DAY AND GET THOSE DONE ( 100’s of things will be fighting for your attention)

        • Intensity : 

  • What ever the founder thinks are key roles - the whole company focuses on

  • Have the right metrics and GROW THOSE METRICS 

  • Ways to keep momentum : 

    • Reviewing metrics and milestones weekly

    • Launching new features

 

Part 3 : Before the startup

 

  • Cannot trust your intuition at all times in terms of the startup business aspect

  • You can trust your intuition in terms of people though

  • Work with people you genuinely like and respect 

  • Need to understand users very well

 

Part 4 : How to be a great founder 

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  • Great founders seek the networks that are vital to their problem & task 

  • Go talk to every smart person you talk to and ask them what they think

  • You should take Risks however think smartly in a way to minimize risks 

  • When raising your current round of funding , you should already have thought of your next round

  • Recognizing whether or not you are on track with your investment thesis is a core quality for great founders

  • Collective problem solving & learning = secret sauce for a great team

 

Part 5 : Competition is for losers 

  • ALWAYS aim for monopoly 

  • How to build a monopoly ?

    • Go after a small market and monopolize 

    • For Wardo , if I start with a market for simply Wardrobe services and become the best at it : It will be a better stepping stone than to add selling right from the start. (Adding the AI Aspect , Styling Aspect , Disabilities Aspect)  

  • Key selling point for Wardo : Proprietary Technology -> Adding clothes to the app ( It’s an order of magnitude better )

  • Why will your company have the last big breakthrough for a long time & How will you keep innovating and keep people from catching up

 

 

Part 6 : Building product , Talking to users & growing

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  • Pre-Requisites of startups - Have a lot of time on hand

  • Noob approach for startups : 

    • Build product in secret

    • Exclusive press launch

    • Wait for users

    • Buy users

    • Give up

  • Where to start ?

    • Learn alot , become an expert in your field 

      • Research all your competitors 

      • Read as much about your industry 

    • Identify customer segments

      • Starting with 1 customer segment 

      • Have a VERY VERY clear value proposition for your users 

      • First few users? - Social circle , online communities , local communities , niche influencers , cold

    • Storyboard the user experience

  • Customer Feedback 

    • Interviews are much better than surveys - It seems like a slog but this is where the best feedback is going to come from 

      • Make it more of a conversation , you should have a personal connection with them so they open up and give you honest feedback

      • If someone is asking you to build a feature , figure out what’s the underlying need 

  • What to do when trying to get alot of users 

    • Take one channel , execute on it for a week and if it works , keep working on it until it caps out INSTEAD of trying 5 different channels at once 

  • Types of growth

    • Sticky - Trying to get existing users to come back and use you more

    • Viral - People talking about you 

      • Need to have a good referral program. 

        • Where are people learning that they can refer to other people? - Should ideally be put when the user is highly engaged 

        • Program mechanics : You invite a friend , you get $10 , they get $10

    • Paid - Works out if you have money to spend for getting users

  • Alot of businesses crash because they start spending beyond their potential 

 

 

Part 7 : Doing things that don’t scale 

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  • Do whatever it takes to bring in your first customers 

    • Sending 100 emails a day

    • Going through a network

    • Making phone calls everyday

  • Don’t focus on ROI , focus on growth 

  • How to make users advocate your product?

    • Delight them with an experience they will remember 

  • Ways to talk to customers?

    • Run customer service as long as possible

    • Proactively reach out to current & churned customers 

  • Optimize for SPEED over SCALABILITY/CLEAN CODE initially 

  • What is your goal for press ? Who are you targeting ?

    • You should have a target audience ; investors , customers , industry 

  • Types of stories for press (Before launching these , think about these objectively : will anyone actually want to read this?)

    • Launches

    • Fund raising

    • Milestones/Metrics - Revenue etc.

    • Business overviews 

    • Stunts

  • When pitching your story to press , have a bunch of bullet points sequentially ready and ensure that you mention all of these points

 

Part 8 : Culture

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  • Everyday (A) & (B) of each member of the team in pursuit of our company (C) 

    • A = Assumptions , beliefs , values 

    • B =   , Actions

    • C = Mission / Bhag (Big hairy audacious goals)

  • Best practices for culture : 

    • Incorporate your mission to your values 

    • Performance = think harder , deeper & longer about your values 

    • Interview for culture fit 

    • Evaluate performance on culture as well 

    • Make it a daily habit 

  • Build a team that is so talented that you are uncomfortable working with them 

  • Phase 1 : Building product -> Phase 2 : Building company that builds a product

  • You don’t want a diversity of values g