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Paul Graham Explains How to Start a Startup
woginuk writes "Paul Graham has posted a new essay on his website on how to start a startup. According to him 'You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.'
How difficult can that be? So go start them startups."
This was the thing that absolutely amazed me with the startup fever in the 1990's. I had a couple of friends I visited in the bay area who were with startups that had essentially no existing product, infrastructure or long term plan. Yet, they had an idea which inspired VCs to pour money down their throats. It made for a surreal situation where twenty-somethings were driving Ferrari's and Porsche's all purchased on the value of their existing stock. The parties were amazing and the whole atmosphere was one of incredulity. Of course we all know what happened.
I know one guy who bought a house, Lamborghini, Ferrari, matching Range Rovers for he and his girlfriend and loaded the house with furniture and electronics. The scary thing was that all of these purchases were made from loans based on the value of his stock holdings (because presumably he did not want to sell his stock). When the stock dropped through the floor along with everybody else, he had to come due. It was an absolute firesale and the only thing he kept was the big empty house, for which he had to struggle to make the payments. Moral? Live frugally and don't buy much on credit, especially leveraged against your holdings in your company.
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to start with good people, to make something customers actually want, and to spend as little money as possible.
"Check with the Patent Office beforehand" should definitely be in there.
The coolest voice ever.
If you want to read a good book on starting up a Silicon Valley company, you should read Startup: A Silicon Valley Adventure. Of course, Jerry Kaplan ultimately failed in his startup; but most sucessful business people usually have four or five failures before getting it right.
And what it took me was. commitment, good people, never sleeping, and a truck load of beer.
But really, starting a company is the scarest thing i have ever done, I was lucky, im past the 10 year mark and past the daily effects of cash flow. which brings me to the secret of starting a business....
CASH FLOW - CASH FLOW - CASH FLOWYou need cash to start, you need to sell the product, you need people to actuall pay you for it so you can build or sell more product, so people will at some point actually pay for it....... and on and on..
It doesn't matter how good you or your people or your product or whatever. It matters how good you collect the debts owed to you so you can either reinvest it or pay off the bank interest rates.
CASH FLOW - CASH FLOW - CASH FLOW
Damn which reminds me, SEND CASH!
From Guy's website:
The Art of the StartWhen you get pregnant, you read What to Expect When You're Expecting. When you get laid off, you read What Color is Your Parachute?. When you get entrepreneurial, you read The Art of the Start.
This book is a weapon of mass construction. My goal was to provide the definitive guide for anyone starting anything. It builds upon my experience as an evangelist, entrepreneur, and most recently, as a venture capitalist who found, fixed, and funded startups.
The book is as relevant for two guys in a garage starting the next Google as social activists trying to save the world. GIST: cuts through the theoretical crap, theories and gets down to the real-world tactics of pitching, positioning, branding, recruiting, bootstrapping, and rainmaking.
A US Supreme Court decision in 1972 (I believe) said that you couldn't make hiring decisions based on general intelligence, but only on the specific skills needed for the job. So Google can give applicants programming tests, but not IQ tests.
plus they started out with Bill Gates' daddy's millions. And they didn't just buy DOS and re-sell it, their was a lot of work to be done to that Quick and Dirty OS before they sold it to IBM... I am not saying they didn't steal it, just that they didn't just re-sell it.