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 1 -DECIDING TO START A STARTUP

SHOULD YOU START A STARTUP'?

1. Types of people best suited to be startup founders.

-What do I have to lose- Nothing (People that take risks)

-Resilient people are suited for startups

       2. How to prepare to be a startup founder in the future

-You will learn a lot by starting a company

-You need two things to start: 1) Idea and 2) Co-founder

Do a Project: Turn an idea into something ideal.

-Start To Code

Advice

01 Don't worry about starting. Curiosity is simply enough

02 Worst-case scenario analysis

03 And intelligent people to talk ideas with people

04 Turn ideas into side projects and launch them

Why you should leave your paying job.

• So that you can start your own company
• You need a plan and an exit plan

WHY NOT NOT START A STARTUP

1. Too young > 18
2. Too Inexperienced (Should be at least 23, preferably out of college)
3. No determined enough (No determined enough, determination is vital)
4. Not smart enough (You don't have to be super bright)
5. Know nothing about business (The initial focus should be a product)
6. No co-founder (Having a co-founder is a must)
7. No idea (You must have an idea)
8. No room for startups (This is simply not true)
9. Family to support (Start startups when you are young)
10. Independently wealthy (What makes a good startup founder is his willingness to endure infinite schleps.
11. Not ready to commit (Be committed for at least 3 to 4 years)
12. Need for structure (At the beginning, no one should be telling people what to do)
13. Fear of uncertainty (You either lose big or win big)
14. Don't realize what you're avoiding (Have in mind all the things that you can do at a startup)
15. A job is a default (The transfer of the old to the new)

BEFORE THE STARTUP

-Startups are very counterintuitive

COUNTERINTUITIVE

Startups are so weird that you'll make many mistakes if you trust your instincts.

You may pause before making them if you know nothing more than this.

-Trust your gut

-Work with people you genuinely like, and you've known long enough to be sure.

EXPERTISE

It's okay to know about startups.

-The way to succeed in a startup is to be an expert on startups rather than an expert on your users and the problem you're solving for them.

The essential -Making something people want.

GAME

The best way to convince investors is to make a startup that's actually doing well, meaning going fast, and then simply tell investors so.

The only trick is: Make something people want.

All- Consuming

-Startups are all-consuming.

The real worry never decreases; if anything, it increases.

-You need to learn about the needs of your own users, and you can only do that once you start the company.

• The usual way startups take off is for the founders to make them take off, and it's gratuitously stupid to do that at 20.

TRY

But if you need more clarification on whether you're up to it, the only way to find out is to try. Just not now.

IDEAS

These are only two things you need initially: an idea and co-founders.

The way to come up with good startup ideas is to take a step back; instead of making a conscious effort to think of startup ideas, turn your mind into the type that startup ideas form in without any conscious effort. In fact, they are so unconscious that you don't even realize at first that they're startup ideas.

How do you turn your mind into the type that startup ideas form unconsciously?

1. Learn a lot about things that matter
2. Work on problems that interest you
3. With people you like and respect

-Real problems are interesting

-The component of entrepreneurship that really matters is domain expertise.

-To become a search expert is to be driven by genuine curiosity, not some ulterior motive.

-Just learn

 2- GETTING AND EVALUATING STARTUP IDEAS

How to get and evaluate startup ideas:

1. Four most common mistakes founders make with startup ideas
2. How to know if your idea is good
3. How to come up with new startup ideas

Mistake #1- Not solving a real problem

-Solution in search for a problem (SISP)

-Fall in love with a problem

-Start with a high-quality problem

Mistake #2- Getting stuck on a "Tarpit Idea."

WHAT CAUSES TARPIT IDEAS

1. A widespread problem that the loss of potential founders encounters.
2. It could be easily solvable with a startup.

Google: Your Startup Idea

Mistake #3- Not evaluating an idea

Ideas that can form a startup

10 KEY QUESTIONS TO ASK ABOUT A STARTUP IDEA

Question 1°

Do you have a founder market fit?

-Are you the right team to be working on this idea (pick a good idea for your team)

Question 2°

How big is the market

1. One that is big now.
2. Ones that are small but rapidly growing markets. (Coinbase)

Question 3°

How acute is the problem?

• It must be big

Question 4°

Do you have competition?

• Most good startup ideas have competition.

Question 5°

Do you want this?

• Yes, I know people who want this.

Question 6°

Did this recently become possible or necessary?

• Necessary (Now Opportunity)

Question 7°

Are there good proxies for this business?

• A proxy is a large company that does something similar to your startup but is not a direct competitor.

Question 8°

Is this an idea you'd want to work on for years?

• Yes

Question 9°

Is this a scalable business?

• Yes

Question 10°

Is this a good idea space?

• It is a class of closely related ideas.
• Think about a good idea space that you expect will have a reasonable hit rate for new startup ideas and one that has a founder market fit.

Three things that make startup ideas seem wrong but actually make them suitable.

01 Hard to get started

02 Boring Space

03 Existing Competitors

-Ideas that take a lot of work to get started. Like Stripe (Payment with Credit Cards).

-Ideas in a dull space (Gusto pay-role software (Have fun working on your company).

-Ideas that have existing competitors (A market where there are existing competitors)

HOW TO COME UP WITH STARTUP IDEAS

Have startup ideas organically

-Become an expert on something valuable.

-Working at a startup.

-Build things you find interesting.

7 RECIPES FOR GENERATING STARTUP IDEAS

Recipe 1°

Start with what your team is especially good at. Take advantage of your expertise.

Recipe 2°

Start with a problem you've encountered.

USING RECIPES ONE AND TWO

01 Think of every job you've had (+ internships + life experiences)

02 What problems or opportunities have you been uniquely positioned to see?

Recipe 3°

Think of things you personally wish existed.

-Think about why it hadn't existed yet.

Recipe 4°

Look for things in the world that have changed recently.

Recipe 5°

Look for new variants of successful companies

-Novo Cargo

Recipe 6°

Talk to people and ask what problems they have

01 Picked an ideal space

02 Drive to truck stops and talked to potential users

03 Asked other founders about the industry

04 Evaluated several ideas before picking fuel cards

Recipe 7°

Look for big industries that seem broken

Bonus Recipe

Find a co-founder with an idea

-Launch it and find out

PIVOTING OUT OF A TARPIT IDEA

A lot of ideas that people try and they fail.

Tarpit Ideas: Startups' ideas that look promising, but they actually aren't.

Consumer Ideas. Is a product that is marketed to people, not companies.

Why they're popular: Because we're all consumers

Why It's Difficult: The first challenge is that people often need help understanding the bar's height.

TIMING: The right timing

What's a tarpit idea?

-Is a consumer idea that many people try.

-A true tarpit is one in that you will be defensive when you are presented with evidence that the idea is challenging.

-Know the game you're playing

Supply and Demand

-Make a Good Product

Solve a problem that the world needs a solution to.

How to get startup ideas? Look for problems, preferably problems you have yourself.

Problems

• Makes something people want.

WELL

• When a startup launches, there have to be at least some users who really need what they're making.
• Not just people who could see themselves using it one day but who want it urgently.
• When you have an idea for a startup, ask yourself, who wants this right now.
• Build something in demand.
• Starting with a small market, there was a fast path out.

SELF

• If you're at the leading edge of a field changing fast, you're more likely to be right when you have a hunch that something is worth doing.

NOTICING

• The way to catch startup ideas is to look for things that need to be added.
• Look for something that appears to need to be added.
• Work on complex problems, driven mainly by curiosity.

SCHOOL

Entrepreneurship is something you learn best by doing it.

COMPETITION

Because a good idea should seem obvious when you have one, so you'll tend to feel late. Don't let that deter you. Worrying that you're late is one of the sighs of a good idea.

-So better a good idea with competitors than a bad one without.

FILTERS

-If you want to notice startup ideas turn off these filters: -The unsexy filter and -The schlep filter.

RECIPIES

-When searching for ideas, look in areas where you have some expertise.

The place to start looking for ideas is things you need. There must be things you need.

ORGANIC

Looking for waves is a way to stimulate the organic method.

Living in the future and building what seems interesting.

ALL ABOUT PIVOTING

Pivoting Overview

• What is a pivot?
• Why you should pivot.
• When you should pivot.
• Evaluating ideas to pivot to.

The term "Pivot."

• If you are very, very early stage, it's not even precisely "Pivoting" - It's just idea iteration -"Pivoting" usually implies changing a product that is fully live and has customers (For example, Slack)
• Pivoting is not a big bang moment- It's just a thing you do when you iterate on ideas. It's a lightweight thing.

WHY PIVOT?

• Opportunity Cost: "The loss of potential gain from other alternatives when one alternative is chosen."

If [( How well things are working) / (# of months of concerted full time effort)] < (Excitement to work on another idea)* [(Confidence that you can find an idea that works better)]

You-Should-Pivot

Good Reasons To Pivot

• Hate working on it
• It's not growing
• I'm not a good fit to be working on the idea
• I'm reading about an external factor outside of my control to make a startup take off
• I'm out of ideas on what to do differently to make it start working

GOOD REASONS NOT TO PIVOT

• You are trying to run away from doing hard work
• You repeatedly change ideas and give up on them before launching and doing sales.
• You read an article about some hot new trend popular with investors and want to chase it.

WHY DO PEOPLE TAKE TOO LONG TO PIVOT

• Loss aversion
• Have a little bit of traction
• People are polite and have a hard time telling you don't want what you are making in a direct way
• Fear of admitting weariness/ defeat
• Putting blame: Why things aren't working on customers/ investors
• Inspirational sources give you the belief that "if you just believe hard enough, things are going to change."

REMINDER ABOUT PRODUCT MARKET FIT

• Most people never get it.
• You know you have it when growth is not your biggest problem - Keeping up with demand is.
• If you don't have PMF and have given an idea your best, it can be easier to get PMF by changing thoughts than continuing to throw good time/ money after bad.
• "Shots on goal"

HOW TO FIND A BETTER IDEA

• Try to find something the founders are more excited about and make them feel more optimistic about working on it.
• Corollary: Being more ambitious is often counterintuitively easier.
• An honest assessment of founders' strengths/weaknesses and an attempt to find something with a better founder market fit.
• Best to find something easy to get started and validate market feedback.
• It's okay to not work on an idea that requires venture capital.
• Most companies in the world that people start don't require good VC.
• Trying to raise money for a company where VC needs to make sense is not a great use of time.
• If the way you evaluate the quality of an idea is from investors, you are going to get pushed down the VC rabbit hole.

VENTURE VS. NON-VENTURE SCALE IDEAS

There is no guidebook I'm aware of for what "venture scale means."

• Some suggestions I have:

-Can this business generate thousands of millions or billions in net revenue annually?

-Can I imagine the revenue growth to get to that scale taking less than ten years?

-Can I imagine this as a publicly traded company?

- Kevin's first lecture talks about this

WHEN IS THE BEST TIME TO PIVOT

-As soon as possible when these things happen:

• You have launched and have been trying to get users for weeks or months, and it feels hopeless.
• When the idea is impossible to get started on V/C, it takes years of building / too much capital, etc.
• You know in your heart it's not going to work.

MORE PIVOTING THOUGHTS

• Pivoting over and over and over again can cause whiplash

-Whiplash makes founders give up and Kills a company.

• Founders that are incapable of changing ideas struggle, and founders that change ideas too much struggle. Find the happy medium.
• Having employees while pivoting is extra hard and not recommended - Best to do it with just founders.

IDEA QUALITY SCORES

• Here are some criteria you can use to evaluate your idea.
• How big of an idea it seems to be: 1-10
• Founder/ Market Fit: 1-10
• How easy to get started on the concept: 1-10
• Early market feedback from customers: 1-10
• Overall score: 1-10

WHERE DO GREAT STARTUP IDEAS COME FROM?

1. TIMING

-Preexisting product

-Preexisting competitor

-10x Better Product

1. IDEA

-Most founders and investors thought these ideas were horrible

1. MARKET

-Each opportunity turned out to be bigger than what the founders expected

• Great startups already existed.

Topics

Airbnb    Build a network first

Competition

Payments

Free Listings

Problem

Used Product

Criticisms

-Unappealing

-Paid= Uncool

 3- BUILDING YOUR FOUNDING TEAM

ALL ABOUT CO-FOUNDERS (Keys To Successful Co-founder Relationships)

• Someone who has 10% equity
• Someone who has been there from the beginning

WHY DO YOU NEED A CO-FOUNDER?

• Productivity
• Higher Quality and Quantity of Work
• Accountability
• Moral Support

Where To Find A Co-founder?

-Look at your network

Evaluating Co-founder Compatibility

• Goals and values
• Stress
• Communication
• Finances
• Commitment

How To Split Equity Equally

• 50%/ 50%

HOW TO WORK TOGETHER?

Topics to discuss in advance

• How much to work on your startup?
• What do "Being available " AND "Response Time" Look Like?
• How long can you go without salary/benefits?
• What milestones need to be reached?

HOW TO BUILD TRUST

• Trust people by default
• If you say you'll do something, do it
• Create space for mistakes
• Spend time together in person

HOW TO GET UP FOR HARD DECISIONS

• Start with clear titles, or at least pick a CEO
• Specific areas of ownership: who is the final decision maker?
• What happens if someone disagrees slightly versus strongly?
• Set up a structure for accountability.

Co-founder mistakes that kill companies and how to avoid them

In the beginning, when everything is going well, you don't know how you will handle disagreements or harmful actions by the other person. It's tough to deal with a bad situation after the fact if you don't have anything written down.

Take arguments with your co-founder seriously. It's more likely to kill you than anything else.

HOW TO SPLIT EQUITY AMONG CO-FOUNDERS

-Split it equally. Be fare

-Make a decision on how they are going to maximize their motivation.

-Safety mechanism for equity investing and cuff.

HOW TO WORK TOGETHER

Founders need to optimize a relationship that can last for 10 years.

Issues when running a startup

-Fundraising/Runway

-Customers/Employees

-Performance

-Roadmap

-Competition

-Partnerships

What is your co-founder's attachment style?

-To evaluate work, using Ray Dalio's Framework

GOALS

• What are our short-term goals for the company?
• Are we using the right metrics?
• Are we hiring our goals?

ROLES

• Is it clear who is responsible for what?
• Do we agree that the current division makes the most sense?

PERFORMANCE

• Is our workload distributed optimally today?
• Do we feel a high level of dedication and motivation?
• What mechanisms are in place for providing feedback to each other?

HOW TO WORK TOGETHER

• Everyone fights, so make a plan.
• Figure out roles, goals, and a process before emotions get involved.
• Start having hard conversations now.
• Use nonviolent communication to share honest feedback.
• Pay down emotional debt regularly.

 4: Planning an MVP

How To Talk To Users

01 Why the best founders talk to their users throughout the company's lifetime.

02 How to find your users and how to talk to them

03 What questions to ask and not to ask

04 How to turn your conclusions into an MVP

The best founders learn from their users throughout their lifetime.

-Users will keep you honest

-Talk with people in your network

My Plan

01  Interview Potential Customers

02 Learn about the problems and motivations

03 Understand what an MVP will look like (Minimum Viable Product)

WHAT I'M LOOKING TO LEARN

• What does your company care about?
• Why do you watch or not care?
• Who in your company is relevant here?

HOW TO INTERVIEW

• Video, phone, or in person
• Build Rapport
• Don't introduce your product
• Listen, don't talk
• Ask open-ended questions
• Take notes

QUESTIONS TO ASK POTENTIAL COSTUMERS

01 Tell me how you do X Today

02 What is the hardest thing about doing X?

03 Why is it hard?

04 How often do you have to do X?

05 Why is it essential to your company to do x?

06 What do you do to solve this problem for yourself?

ASK FOLLOW-UP QUESTIONS

• What do you mean by that?
• Can you tell me more about that?
• Why is that important to you?

DON'T ASK THESE QUESTIONS

• Will you use our product?
• Which features would make our product better?
• Yes/ No Questions
• What would a better product look like to you?
• Two questions at the same time

WHAT I'M LOOKING TO LEARN

• What does your company care about?
• Why do you watch or not care?
• Who in your company is relevant here?

HOW TO INTERVIEW

• Video, phone, or in person
• Build rapport
• Don't introduce your product
• Listen, don't talk
• Ask open-ended questions
• Take notes

QUESTIONS TO ASK POTENTIAL COSTUMERS

01 Tell me how you do X Today

02 What is the hardest thing about doing x?

03 Why is it hard?

04 How often do you have to do x?

05 Why is it essential for your company to do x?

06 What do you do to solve this problem for yourself?

Ask follow-up questions

• What do you mean by that?
• Can you tell me more about that?
• Why is that important to you?

DON'T ASK THESE QUESTIONS

• Will you use our product?
• Which features would make our product better?
• Yes/ No Questions
• What would a better product look like to you?
• Two questions at the same time

FOCUS ON PROBLEMS, NOT FEATURES

Users have no incentive to say no to features.

NEXT STEPP

01 Synthesize your learnings

02 Create a problem/ Solution Hypothesis

03 Start sketching and MVP

Is solving this problem valuable?

01 Are people paying money for solutions in this space today?

02 Have you tried to solve this problem on your own?

03 Some customers will always be more accessible than others to do research on.

How to talk to users (Summary)

01 Why do the best founders talk to their users throughout the company's lifetime.

02 How to find your users and how to speak to them.

03 What questions to ask and not ask.

04 How to turn your conclusion into an MVP

HOW TO PLAN AN MVP

MVP (Minimum Viable Product)

Understanding the problem is helpful when building an MVP, so please talk to your users before writing code.

The goal of a pre-launch startup:

• Launch quickly (MVP)
• Get Initial Costumers
• Talk To Costumers And Get Feedback
• Iterate (Improve The Product)

Lean MVP (In Most Cases)

• Very fast to build (Weeks, not Months)
• Very Limited Functionality
• Appeal to a small set of users
• Base to iterate from

HEAVY MVP (IN VERY FEW CASES)

• Significant regulation (Insurance Banking)
• Hard tech
• Biotech

-Launch simply means to start getting customers.

-Learning from customers is easier with an MVP than without.

Hacks for building and MVP quickly

-Time box your spec

-Write your spec

-Cut your spec

-Don't fall in love with your MVP!

PRODUCT DEVELOPMENT CYCLE FUNDAMENTALS

Define your development cycle length

• Your development cycle should be directed by your product
• If you are doing a web app, your process can be shorter
• The key is to structure the process so that teammates stay excited and feel like they can brainstorm new ideas.

DETERMINE YOUR GOALS AND IDENTIFY THE PRODUCT LEAD

PRODUCT MEETING GOALS

1. Increasing Content Creation
2. Increasing New Users
3. Increasing Retention

Organized and Inclusive Brainstorm

Following Categories:

• New Features/Feature Iterations
• Maintenance
• A/B Tests

BUILDING A CONSENSUS

Once your ideas were written out, we began to pick what we would work on through consensus.

Exact spec and over measurements of success.

Working during the developing cycle.

Test Your Progress

The Results: Scaling

 5: LAUNCHING

How To Launch (Again and Again)

01 When To Launch and Why

02 1-Line Descriptions

03 Types of Launch

01 When To Launch

ASAP

-Launch and Iterate, launch and iterate

02 Use a Clear Idea Is The Best Foundation For Growth

-Lead with what and not with why

Description Airbnb

The first online marketplace lets travelers book rooms with locals instead of hotels.

• We built the first online marketplace that lets users book/hire a maid in their specific area for time convenience.

WHY LAUNCH CONTIN0UOSLY? 

• A/B test your short pitch
• See how users respond to your product
• Launching to different audiences

TYPES OF LAUNCHES

• Silent Launch: THINGS YOU NEED: Domain Name, Company Name, Short Description, Contact Information, and Call To Action
• Friends and Family Launch
• Stranger/ Launch: Talk To Strangers
• Online Community Launch: Best Way To Launch
• Social Media/ Blogger LAUNCH
• Request Access Launch
• Pre-Order Launch: Kickstarter
• Press Launch
• New Feature/ Product Launch

Note: Start a Community using a Newsletter

HOW TO GET YOUR FIRST COSTUMERS

What we'll cover

01 Doing things that don't scale

02 How to make sales

03 Sales funnel

04 Charge for your product

05 Work backward from your goal

STARTUPS TAKE OFF BECAUSE FOUNDERS MAKE THEM TAKE OFF

How To Make Sales

Founders Should Learn How To Make Sales

• You need to know your costumers
• It gives you control over your destiny
• Don't hire a sales team until you know how to do sales yourself
• Don't worry if you don't know how to sell- You Can Learn
• Understanding the problem, your product, and the market makes you an expert
• A love for solving customer problems is infectious

HOW TO WRITE A GREAT SALES EMAIL

• It should be short. 6 to 8 sentences
• Clear language
• Address the problem
• No HTML
• Say you're the founder and describe your success
• Include Your Website
• Ask For A Call

The Sales Funnel

Stages in founder speak

List of Potential Costumers

Email/ Message Them

Schedule/Meetings

Disclose Price/ Close Them

Revenue

STAGES IN SALES SPEAK

PROSPECTING

QUALIFICATION

SALES CALLS

PROPOSAL MADE

SALE

Example: Target Your First Costumers

1. Your first customer should be your easiest

• You should have a significant pipeline of potential customers. Prioritize correctly
• Sell To Your Network
• Sell To Startups
• 955 people aren't early adopters. Avoid them

WHY DO YOU HAVE TO CHARGE YOUR FIRST COSTUMER

• If you don't charge, you're not a company
• It's a sign that you're providing value
• If they don't want to pay, you should move on
• No Free Trials - Offer a money-back guarantee or opt-out from the annual contract
• Increase your price until costumers are complaining but still paying.
• Working backward from your goal, from your sales funnel
• You need to know your conversion rate. That's why you need a CRM to keep track
• Outbound sales are ultimately a numbers game
• You cannot close 5 customers from 10 leads
• Most founders don't work their way backward. As a result, they need to get more sales done.

MOST COMMON SALES MISTAKES

• Founders don't send enough outreach
• Believing that something else but sales will solve your sales problems
• Outsourcing Sales
• Not Qualifying your costumers enough in the first call

TOOLS

Apollo.io

Close.com

Predrive.com

Hunter.io

Books

1. Founding Sales By Peter Kazandty
2. Launchnewsletter.com

Do Things That Don't Scale

Recruit

The most common unscalable thing founders must do at the start is manually recruit users.

But for a startup to succeed, at least one founder (usually the CEO) must spend a lot of time on sales and marketing.

-We encourage every startup to measure their progress by weekly growth rate.

FRAGILE

The question to ask about an early-stage startup is not, "is this company taking over the world?" But "How big could this company get if the founders did the right things?"

• Build something to solve your problems.

DELIGHT

• Take extraordinary measures not just to acquire users but also to make them happy.
• Your first users should feel that signing up with you was one of their best choices.
• And you, in turn, should be racking your brains to think of new ways to delight them.

PROVIDE A LEVEL OF SERVICE

EXPERIENCE

• Your attention to users should be extreme.
• Not the product that should be insanely great, but the experience of being your user.
• For most successful startups it's a necessary part of the feedback loop that makes the product suitable.
• In software, it usually works best to get something in front of users as soon as it has a quantum utility. And see what they do with it.
• The feedback you get from engaging directly with your earliest users will be the best you ever get.

FIRE

Sometimes the right unscalable trick is to focus on a deliberately narrow market.

Any startup described as a marketplace usually has to start in a subset of the market but this can also work for other startups. It's always worth asking if there's a subset of the market where you can quickly get a critical mass of users.

MERAKI

Hardware startups face an obstacle that software startups need to overcome.

The Minimum Order for a factory production run is usually several hundred thousand dollars.

Like paying excessive attention to early customers, procrastinating things yourself is valuable for hardware startups.

CONSULT

-B2B startups take over engagement to an extreme, pick a single user, and act as if they were consultants building something just for that user.

Consulting is the canonical example of work that doesn't scale.

MANUAL

There's a more extreme variant where you don't just use your software but are your software.

When manual components look at the user life software, this technique starts to have aspects of a practical joke.

-If you can find someone with a problem that needs solving and you can solve it manually, go ahead and do that for as long as you can and then gradually automate the bottlenecks.

BIG

All you need from a launch is some initial core users.

Partnerships, too, usually only work sometimes.

VECTOR

And the main benefit of treating startups as vectors will be to remind founders they must work hard in two dimes.

-Recruit users manually and give them an overwhelmingly good experience.

 6: GROWING AND MONETIZING 

How to set KPIs and prioritize your time

Get to product market fit as quickly as possible.

KPI: "Key performance indicator," AKA a measurable metro your track.

PRIORITIZATION

What do you work on each day?

• Prioritize tasks that move you toward your KPIs faster.

Only do necessary stuff/ save time on things that matter.

• Optimizing paperwork task
• Unnecessary perfectionism
• Premature Optimization
• Not building what your users want

1. Speed Matters
2. Align with your co-founder

STEP 1:

Identify top KPIAS

-Set KPI Goals

Early growth compounds

Step 2:

Identify Biggest Bottleneck

Simple System to Move Your KPI(s)

01 Write down ideas that may help

• Rank and choose a few

02 If your KPI doesn't move, be honest about why

03 Do honest retros: Learn and adjust course

• If it wasn't working, do something different
• If it was working, double down

04 Move Fast

• Don't waste time on indecision

Things That Should Be On Your Lust

• Talking to users/ responding to customer support messages
• Building features you know your customers will pay for
• Getting users to pay for what you've built

THINGS THAT SHOULD PROBABLY NOT BE ON YOUR LIST

• Investor "Coffee"
• Conferences
• Arbitrary Technical Milestones

COMMON MENTAL TRAPS

• Checking things off a list feels good
• It is easy to continue yourself; something is working when it isn't
• Perfectionism and indecision are your enemies: Fast decisions are good decisions
• Mitigate downside (rather than chasing the upside) can feel falsely urgent
• Working on secondary problems instead of the primary one

PRIORITIZATION RECAP

• You'll never get to everything on your task list.
• Use KPIs to prioritize your work
• Be honest with yourself; fail fast

Primary Metric

• This is the metric that unequivocally tells you if your business is working
• Most commonly, revenue growth

SECONDARY METRICS

• Things that need to be tracked to make sure you're not cheating/ gaming your primary metric

EXAMPLES

• Retention/ Churn
• Unit economics
• Acquisition cost and payback period

VANITY METRICS

• Amount raised
• Team size
• Office Space
• Press Hits
• Celebrity Endorsements
• Instagram Likes

SETTING TARGETS

From Paul Graham

• 5-7% Wow= good
• 10% Wow= exceptional

Early Growth Matters

• Growth Rate Compounds

Factors To Consider

• Latent demand may boost early growth
• Length of Sales Cycle
• Organic VS. Paid
• Retention/Engagement

TOP DOWN

01 Pick a milestone/date in the future that you want/ need to hit.

02. Work up from this to determine a realistic future milestone.

CAC/LTV

• Focus on the payback period

Free Signups /Davs

• Only if your product requires a network effect 

STARTUPS BUSINESS MODELS AND PRICING

01 The 9 Business models of nearly every $B Company

02 Business Lessons from the YC Top 100 Companies

03 Startup Pricing Insights

Saas

• Cloud-Based Subscription Software

Marketplace

• Facilitate Transactions with Buyers and Sellers

Usage-Based

• Pay-as-you-go based on consumption

Advertising

• Sell ads to monetize free users

BIO

• Science-based tech companies

Transactional

• Facilitate Transactions and take a cut

Hard Tech

• Lots of technical and long time horizons

Enterprise

• Sell large contracts to huge companies

E-commerce

• Sell products online

BUSINESS MODEL GUIDE

• The metrics that matter most
• Key takeaways for each model
• Other similar companies you can learn from

WHAT CAN WE LEARN FROM THE TOP 100 YC COMPANIES?

• Use a single model
• Marketplaces are the most likely to build winner take all companies.
• Marketplace Takeaways: They are thought to get off the ground and have a chicken and egg problem
• However, they get massive network effects when they work (Like Airbnb and Opensea).
• Transactional businesses outperform because they're in the flow of funds.

What's not in the top 100

• Services/ Consulting Businesses (Non-recurring revenue, scale with people, low margins )
• Affiliate Business (Too far away from the Transaction)
• Hardware Business (Require Lots of capital, Have Low Margins
• Businesses built in other platforms

Too much platform risk

RECURRING REVENUE CONSISTENTLY CREATES WINNERS

• Highly predictable
• High LTVs
• Lower Cacs

The biggest Winners are Built With Meats

• Network Effects
• Lock-In/ High Switching Costs
• Technical Innovation
• Higher Margins Better Unit Economics
• Organic Distribution

RECAP

The Best Businesses...

• Generate Recurring Revenue
• Have High Retention
• Build Defensible MOATS
• Are Close To The Transaction
• Scale With Software, Not People
• Are Proven, And Familiar To Customers

Let's Talk About Pricing

Pricing- Is a Tool To Help You Learn Faster

Pricing Can Teach You:

• Who wants your product
• How much do they want it
• How much value your product provides
• Which channels can you use to acquire customers

You Should Charge

Three Key Components

FOUNDERS OFTEN START WITH COST + PRICING: This is not recommended

HOW TO FIND YOUR VALUE

01 TALK TO YOUR USERS

"What is the problem that you are hoping that our product could solve?"

• Make More Money
• Reduce Costs
• Move Faster
• Avoid Risk

Are your users willing to pay?

Which users are most willing to pay?

How much are they willing to pay?

Where to begin to charge?

• Don't overthink it.
• Pricing isn't set in stone. It can change
• Price on value, not cost

02 KEEP RAISING PRICES UNTIL YOU GET PUSHBACK

Ideal Price:

Which Costumers Complaint But Still Pay?

03 MOST STARTUPS ARE UNDERCHARGING

PRICING IMPLIES VALUE

1. You need to add more value to your product
2. You need to solve a more significant problem
3. Lower your price

Give a lower price in exchange for...

• Your First User
• A valuable Logo
• If you lock-in
• Renew at a higher price

04 PRICING ISN'T PERMANENT

How to Raise Your Prices:

• Exclude Existing Customers
• Give Advance Notice

05 KEEP IT SIMPLE

• Don't create friction

RECAP

PRICING INSIGHTS

01 You should charge!

02 Price on value, not cost

03 Most are undercharging

04 Pricing isn't permanent

05 Keep it simple

GROWTH FOR STARTUPS

"If you build it, they won't come."

LESSON: STARTUPS TAKE OFF BECAUSE FOUNDERS MAKE THEM TAKE OFF

One way to grow when you are small is: Doing things that don't scale

PRODUCT MARKET FIT

How to use data to understand if you've made something people want.

1. Identify the metric that represents the value my users get from my product
2. Measure the repeat usage of that metrics

MEASURING PRODUCT MARKET FIT

COMPANY               METRICS THAT REPRESENT VALUE                IDEAL FREQUENCY 

Airbnb                                     Active users                                        Annual

Instagram                               Hiring Retention                                   Daily

x                                              Hiring/Retention                                   Daily

Now measure your retention

• Retention is the best way to determine product market fit.

Other (worse) ways to measure PMF

1. Net promoter score not great
2. Surveys- Often Biased
3. "How would you feel if you could no longer use this product."

These are not good metrics for PMF

1. Registered users
2. Visitors
3. "Conversion Rate"
4. "Costumers that aren't paying"

Growth Channels And Tactics (Two ways to grow at scale)

1. Product Growth/ Conversion Rate Optimization
2. Growth Channels

PRODUCT GROWTH: Conversion Rate Optimization

• Your product is a funnel/ Growth Loop
• Every step in the funnel has drop-off

CONVERSION RATE OPTIMIZATION AREAS

• Internationalization
• Authentication
• Onboarding
• Purchase Conversion

GROWTH CHANNELS TO EXPLORE

COMPANY                                                       CHANNEL

Is this a rare behavior that people              Google SEO and SEM

Google to find a solution?

Do existing users already share                   Virality and Referrals

your product via word-of-mouth?

Does having more users improve                 Virality

the experience?

Do I already know who each of                    Sales

my future users are?

Do my users have high LTV?                         Paid Acquisition (Facebook, Google, ETC)

Most companies grow huge using only 1 or 2 of these channels.

Referrals

Referrals: Word-of-mouth is Airbnb's most significant growth driver for referrals.

Referrals are insincere word-of-mouth.

PAID GROWTH

• Don't do paid growth if you don't have revenue
• CAC= Costumer Acquisition Cost 
• CAC/ PAYBACK TIME (Most important metric in online marketing)
• Attribution
• Channels: Facebook, Instagram, Google, Youtube

Search Engine Optimization

• SEO is a zero Sum Game

SEO- Two main levers

On-Page optimization

• Every optimization starts with keyword research.
• Which page am I trying to rank for what keyword?
• SEO Experimentation

Off-Page Optimization

"Who is linking to you?

Making Decisions Using A/B Testing

Experiment Review

Product Decisions Are Hard

Growth For Startups- Summary

1. Start by doing things that don't scale
2. Measure your retention/ PMP
3. Build a culture of experimentation

SETTING UP KPIS & GOALS

• Prioritize your time.
• Get to product market fit as quickly as possible.

KPI

"Key Performance Indicator" aka a measurable metric you track.

-These are the metrics that you track and report on both internally and externally.

Prioritization

What do you work on each day?

In what order you need  to tackle your work on each day.

• How you spend your time each day.
• How you direct your team to spend their time each day.
• Tells you what things you don't get to do today.

Prioritize tasks that move you toward your KPIs faster.

Things that waste your time:

• Optimizing paperwork tasks.
• Unnecessary perfectionism.
• Premature optimization.
• Not building what your users want.

-Speed matters.

-Align with your co-founders.

STEP 1: IDENTIFY TOP KPIs

• If you?e launched your primary Kpi should be Revenue growth.
• If your in pre-lunch your Kpis in the short term might be weeks until launch or  number of conversations with users but once you do launch shift your primary Kpis to revenue growth.
• Second you need to identify what your Kpi  goal for this week.
• Early growth compounds.

Step 2: IDENTIFY BIGGEST BOTTLENECK OR PROBLEM  

Simple system to move your KPIs

01 Write down ideas that may help

• Rank & choose a few

02 If your KPIs doesn't move, be honest on why

03 Do honest retros; learn and adjust course

• If it wasn't working, do something different.
• If it was working, double down.

04 Move fast

Things that should be on your list:

• Talking to users/responding to customer support messages.
• Building features you know your costumers will pay for.
• Getting users to pay for what you've built.

Things that should probably not be on your list

• Investor "coffees"
• Conferences
• Arbitrary technical milestones

Common metal traps

• Checking things off a list feels good
• It's easy to convince yourself something is working when it isn't.
• Perfectionism and indecision are your enemy: fast decisions are good decisions.
• Mitigating downside (rather than chasing upside) can feel falsely urgent.
• Working on secondary problems instead of the existential one.

Primary Metric

• This is the metric that unequivocally tell you if your business is working.
• Most commonly revenue growth.

Secondary Metric(s)

• Things that need to be tracked to make sure you're not cheating7gaming your primary metric.
• Examples:

-Retention/churn

-Unit economics

-Acquisition cost and payback period

Vanity Metrics

• Amount raised
• Team size
• Office space
• Press hits
• Celebrity endorsements
• Instagram likes

Setting Targets

From Paul Graham

• 5-7% WoW= good
• 10% WoW = exceptional

Early growth matters

• Growth rate compounds.

Factors to consider

• Latent demand may boost early growth.
• Length of sales cycle.
• Organic vs. Paid.
• Retention/Engagement.

Top Down

01 Pick a milestone/date in the future that you want/need to hit.

02 Work backwards from this for bi-weekly goals.

Bottoms up

01 What is realistic for you to get done next week?

02 Work up from this to determine a realistic future milestone.

CAC/LTV

• Focus on payback period

Free signups/DAUs

• Only if your product requires a network effect.

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7: FUNDRAISING AND COMPANY BUILDING 

How startup fundraising works in 2022

HOW FUNDRAISING WORKS

• Raising money is the second most challenging part of starting a startup.

Paul Graham Essays

• Fundraising Survival Guide
• How To Fund A Startup
• How To Convince Investors
• Investor Herd Dynamics

TACTICAL GUIDES

• How to build a seed deck
• How to pitch your startup
• How to get meetings with investors and raise money
• Raising money online for startups
• Different types of investors and their incentives

7 FUNDRAISING MYTHS

Myth #1: Raising Money Is Glamorous

Myth #2: I need to raise money before I start working on my startup

The Best Founders: Build V1 (First Version) and get users first

It's easier than ever to find potential users.

Myth #3: My startup needs to be impressive to raise money

Talk about the business you are building

• How are you going to get people to want your product

Myth #4: Raising money is complicated, slow, and expensive

TYPICAL SERIES AB ROUND

What do you think it is?

SIZE:

$10 TO 50 M

Time To Close: Months

Legal Fees: Hundreds of Thousands

Actual Typical Seed Round:

Size:

$500K-2m

Time To Close:

Weeks

Legal Fees:

$0

Use Safe Document (Y Combinator Safe)

Myth #5:

I'm going to lose control of my company

When You Raise With SAFEs

• No board Seats
• No shareholders
• No info rights

Why Bootstrapping Forever sucks

• Scary- always about to shut down
• Miserable - Can't Pay Yourselves
• Distracting - Have To Go Into Consulting
• Poor Odds- Few 100% Giant Boost-rapped Co's

Myth #6: I need a fancy network to raise capital

Myth #7: If investors reject my startup, that means it's bad

Final Myth: This isn't for me

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