These are some notes I took when watching Sam Altman’s the second lecture of Sam Altman’s Startup Class. Sam covered the two of the four main components of starting a startup, idea and product, in the first lecture, on which I’ve posted notes previously. This lecture covers the other two – Team and Execution.
- Cofounder relationships are the most important in the entire company.
- The number one cause for early death for startups is cofounder blow-ups.
- Some people put less thought in picking cofounder than in hiring.
- Cofounder dating etc is crazy. Don’t choose someone you don’t have a past history with. It usually ends in disaster.
- Track record for founders that don’t already know each other is really bad.
- Best place to find a cofounder: College. If you’re not in college the best way is to work at an interesting company.
- 2-3 tends to be the best number of cofounders.
- Every cofounder must have vesting. Preneogitating what happens if one of you leaves The standard vesting agreement used is: equity vests over 4 years, one year cliff.
- Cofounders should be in the same place together and not working remotely.
Things to look for in Cofounders
- You really want to know your cofounders for a while, ideally years.
- Relentlessly resourceful (more important to be like James Bond than have some specific domain knowledge )
- Tough and Calm
- Technical if you aren’t
Approach to hiring
- Try not to hire. Used as a vanity metric in startups, but it sucks to have a lot of employees.
- Complexity, slow decision making, high burn rate are just some of the issues that come with having a lot of people
- Be proud of what you can get done with a small number of employees.
- At the beginning only hire when you have a desperate need to. Later, need to learn how to scale up. But early on, the cost of getting a hire wrong is so high that you should wait.
- Airbnb spent 5 months interviewing before hiring first employee. Brian Chesky used to ask would you take this job if you had one year to live.
- Need to make sure everyone believes in the mission.
- How much time should you spend hiring? 0 or 25%. Either not hiring, or you’re in hiring mode.
What to look for in early hires
When hiring, your number one priority should be to get the best people. Recruiting is incredibly hard and founders always underestimate this.
There are three main things you should look for:
- Are they smart?
- Do they get things done?
- Do I want to spend a lot of time around them?
Additionally, the following are also things to look for:
- Good communication skills: this tends to correlate well with hires that work out.
- Maniacally determined.
- Animal test: should be abe to describe every employee as an animal at what they do.
- Someone you would be comfortable reporting to
How to Hire
- The best way to see if someone has the qualities above is by knowing them, especially if you’ve worked with them on projects before.
- If you do have to interview someone, then you should do the following
- Ask about the projects they’ve worked on (Don’t focus on asking brainteasers)
- Call references (dig deep when you call their references. You need to ascertain whether the candidate is in the top 5% of the people the reference has ever worked with)
Sources for candidates:
- Biggest trick for hiring is to leverage personal referrals, especially for first 100 or so people.
- Look outside the Valley. It’s very competetive within the Valley but still a lot of great candidates outside the Valley.
Mark Zuckerberg once said that he tries to hire people that (1) he’d be comfortable hanging with socially and (2) he’d be comfortable reporting to if the roles were reversed.
How to Retain Employees
You need to make sure they (1) are happy and (2) feel valued. Be generous as you possibly can with equity to early employees.
Need to give your team credit for everything good, and take responsibility for everything bad.
Autonomy, Mastery and Purpose the three things that motivate people to do great work, according to Dan Pink1
Firing is probably the worst part of being a founder. You should fire fast when it’s not working. It’s better for the company and the employee.
You should fire people who are:
- Doing a bad job
- Creating office politics
- Always being negative
Execution is one of the most fun yet most critical parts of being a startup founder. There’s at least a hundred times more people with great ideas than people who are willing to put in the effort to execute them well.
Ideas by themselves are not worth anything, only executing well is what adds and creates value.
5 Jobs of the CEO
- Set vision
- Raise money
- Hire and manage
- Make sure the entire company executes
For some reason, many startup CEOs don’t spend time on number 5. Executing involves two main components: can you figure out what to do and can you get it done.
Getting it done involes two main parts, focus and intensity.
Focus is critical and is the first component of getting things done.
- The founder sets the focus of the company.
- One of my favorite questions to ask founders about what they’re spending their time and their money on. This reveals almost everything about what founders think is important.
- 100 things warranting your attnetion and need to pick 2-3. It is therefore very important to have goals so you can figure out what you can focus on.
Growth and Momentum
Growth and momentum are lifeblood of startups. Founders must always focus on them
- You want the company to be winning all the time. A winning team feels good and keeps winning.
- Always keep momentum. In software, the way to do that is to keep growing; In hardware it’s to ensure you don’t let ship dates slip.
If you lose momentum
- Speeches not the right way to try to get it back (save them for when you’re winning)
- Use small wins to get momentum back.
- Sales fixes everything.
- There often tends to be disagreement when you lose momentum. If that is the case, ask your users and do what they say.
- A good way to keep momentum is to create an operating rhythym – look at metrics every week, ship products and launch new features.
- Don’t worry about competitors and press
“The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.” – Henry Ford
Intensity is the second component of getting things done. Once you’ve found what to focus on, you need to do those things well.
- Startups are intense
- Good thing is that a small amount of work on the right thing can make a big difference. One way to think about it is the viral coefficient of a consumer web product. How many new users each new user brings in. If its > 1.01, you’ll be in happy place of exponential growth forever. If it’s 0.99, it’ll just flatline and die.
- Execution speed is one big advantage startups have.
- The best predicotr we have if a company will be successful is if they do new things everytime we’ve spoken to them.
What founders (and startups) should do
- Be decisive and have a bias towards action
- Move fast yet be obsessed with quality, which is very hard to do together.
- Need to pick right size projects and work on it incrementally.
Overally, speed is very imporant. The best founders make decisions quickly, show up a lot, and respond to emails quickly. They also get on planes in marginal situations.