“When you’re talking about real innovators—people who actually do really creative, breakthrough work—I think you’re talking about a couple things:”

1. Very high in trait openness. “Just flat-out open to new ideas… And the nature of trait openness means you’re not just open to new ideas in one category—you’re open to many different kinds of new ideas… But of course, just being open is not sufficient because if you’re just open, you could just be curious and explore and spend your entire life reading, talking to people, but never actually create something.”

2. High level of conscientiousness. “You need somebody who’s really willing to apply themselves—typically over a period of many years to accomplish something great… For most of these people, it’s years and years of applied effort. You need somebody with an extreme willingness to basically defer gratification… Of course, this is why there aren’t many of these people—there aren’t many people who are high in openness and high in conscientiousness because to a certain extent, they’re opposed traits.”

3. High in disagreeableness. “If they’re not ornery, they’ll be talked out of their ideas… Because the reaction most people have to new ideas is ‘Oh, that’s dumb.’ So, somebody who’s too agreeable will be easily dissuaded to not pull on the thread anymore.”

4. High IQ. “They just need to be really smart because it’s hard to innovate in any category if you can’t synthesize large amounts of information quickly.”

5. Relatively low neuroticism. “If they’re too neurotic, they probably can’t handle the stress.”

Full video: Andrew Huberman “Marc Andreessen: How Risk Taking, Innovation & Artificial Intelligence Transform Human Experience” (Sep 2023)

“The doers are the major thinkers. The people that really create the things that change this industry are both the thinker-doer in one person.”

This is applicable outside of tech too, and he uses Leonardo DaVinci as an example:

“Did Leonardo have a guy off to the side that was thinking five years into the future about what he would paint or the technology he would use to paint it? Of course not. Leonardo was the artist, but he also mixed his own paints. He also was a fairly good chemist. Knew about pigments. Knew about human anatomy. And combining all of those skills together—the art and the science, the thinking and the doing—is what resulted in the exceptional result… There is no difference in our industry. The people that have really made the contributions have been the thinkers and the doers.”

Jobs speculates that one of the reasons people might mix this up is because it’s easy to take credit for the thinking:

“It’s very easy for someone to say ‘I thought of this three years ago.’ But usually when you dig a little deeper you find that the people who really did it were also the people who worked through the hard intellectual problems.”

Tobi recounts pitching Shopify to VCs on Sand Hill Road a few years after founding Shopify.

Investors passed because they thought the addressable market was too small. At the time, there were about 40,000-50,000 online stores, and even if Shopify captured 50% of the market, that still wouldn’t be a venture-scale business.

When Tobi ran into the VC partner a few years ago, the partner asked Tobi what he missed (Shopify is valued at almost $100 billion today).

Tobi explained:

“You were actually correct, but what you didn’t realize was that Shopify was the solution to the very problem you identified. The reason there was only 40,000 online stores was because it was hard, expensive, and everyone who tried ran into all these brick walls of complexity, which Shopify, one after another, smoothed over and made simple to do.”

Tobi believes this is a common mistake:

“What a lot of free-market thinkers don’t understand is that between the demand and eventual supply lies friction. And I actually think that friction is probably the most potent force for shaping the planet that people just generally do not acknowledge… That was my theory when I turned my snowboard store into Shopify: there was a lot more people like me except there was too much friction which we needed to solve. And Shopify has proven out that every time we make the process simpler, there’s more consumption. At this point, we have a million merchants on Shopify, which is a mind-blowing number. So friction is a major component, and it’s something that software is uniquely good at reducing.”

Full video: Dan Martell “Tobi Lütke The Creator of Shopify“ (Dec 2019)

Y Combinator accepts or rejects a company after just a 10 minute interview.

Sam admits he didn’t think you’d be able to do much better than random with only 10 minutes, but he doesn’t think that’s true anymore.

“It turns out that in 10 minutes if the only question you’re trying to answer is: Does this person have the potential to be the next Mark Zuckerberg?… [You don’t get to] 100% accuracy, obviously, but it’s good enough that our business model works.”

Sam continues:

“The obvious thing is intelligence… You can tell that really quickly, much less than 10 minutes… The hardest trait that we’re looking for is determination, and when we’re really wrong one way or the other on a founder, it’s because we were miscalibrated on how determined that founder seemed.”

As Sam explains in the clip, he also looks for clarity of vision, communication skills, and non-obvious brilliance of the idea.

Full video: Khosla Ventures “Startups | Sam Altman” (Sep 2021)

Jony recounts the time he asked Steve Jobs to be less harsh in his critique of a piece of work.

When Steve asked “why?”, Jony replied: “Well, because I care about the team.”

Steve then said, as Jony puts it, “this brutally, brilliantly, insightful thing”:

“No Jony, you’re just really vain. You just want people to like you. And I’m surprised at you because I thought you really held the work up as the most important—not how you believe you are perceived by other people.”

Jony reflects on the remark:

“I was terribly cross because I knew he was right.”

Full video: Vanity Fair “Apple's Jony Ive on the Lessons He Learned From Steve Jobs” (Oct 2014)

“The advice that I would give entrepreneurs is don't chase the hot new thing. It's so hard to catch something that everybody already knows is hot. Instead, position yourself and wait for the wave to come to you.”

The best way to position yourself, Jeff argues, is to pursue something that captures your curiosity. When Amazon startup, Jeff always asks himself if the founder is a “missionary” or a “mercenary.”

“I don't like mercenaries, and I don't like mercenary cultures. The missionary is building the product, building the service, because they love the customer, because they love the product, because they love the service. The mercenary is building the product or the service so that they can flip the company and make money.”

One of the great paradoxes of entrepreneurship is that the missionaries usually end up making more money than the mercenaries anyways.

After you’ve picked something you’re passionate about, Jeff’s second piece of advice is:

“Start with the customer and work backwards… Those two things will take you an awfully long way.”

Full video: Utah Technology Council “UTC 2012 Hall of Fame - Jeff Bezos Keynote“ (Nov 2012)

“I do think there’s a bit of a myth in Silicon Valley that you should keep grinding no matter what and it’s just about perseverance, and I think that’s really bad advice… In general, things that work tend to work pretty fast and usually that’s within the first year of launch.”

There are undoubtedly counterexamples, but Elad points out that when a startup finally works after five years of grinding, it’s usually because they changed direction.

“When people pivot, they tend to pivot locally. They don’t tend to pivot across markets. And that’s a huge mistake because you get stuck in some local maxima… I think usually if the thing isn’t working and you decide to pivot, it’s often wise to rethink everything from the ground up. And it’s hard if you’ve raised a lot of money and have a big team.”

To determine if their product is working, Elad urges founders to look for indicators that users care. It’s usually a sign that you’re onto something if you’re product is half broken and people are still using it (e.g. Twitter fail whale days) or if customers are constantly complaining but they keep sending you feature requests—at least they care enough to complain! Again, you’re looking for signs that people care.

Full video: South Park Commons “Elad Gil & the Early-Stage Startup Squiggle” (Oct 2023)

“You’ve got to find people who want what you’re making A LOT. And that's necessarily going to be a small number at first. But that's ok. That’s how these giant things get started… You don’t have to do any better than Apple and Facebook.”

Apple started by selling just 500 Apple I computers. Today it’s the largest company in the world.

"You have to know who those first users are and how you're going to get them. Then you're going to sit down and just have a party with those first few users and focus entirely on them and making them super super happy."

He gives another example of a startup in a Y Combinator batch with a beta group of just one user: Sam Altman.

This startup was building a new mobile email client and their goal was to just make Sam happy. Sam uses email a lot on the go and knows all of the other email client options, so he is sufficiently demanding.

If they can build a product that makes Sam happy, odds are it will make lots of other people happy too.

"One of the things we tell startups in these extreme cases where they can make just one user happy is to act like a consultant. Act like Sam has hired you to make an email app just for him. All you have to do is make Sam happy--it can say 'Sam Altman' at the top of the screen. That's ok! Just so long as Sam would feel bummed if you stopped working on it. That's the test."

Full video: This Week in Startups “Y Combinator's Paul Graham sits down with Jason at LAUNCH Festival 2014” (Mar 2014)

“What you want to do with every single employee every single day is expand the scope of their responsibilities until it breaks… and that’s the role they should stay in.”

Keith tells the story of giving an intern the task of getting smoothies to arrive at the office at 9pm to reward Square’s engineering team. And once the intern proved they could solve this task that had stumped multiple people at the company, he gave them something more important and consequential to do.

Everybody has some level of complexity that they can handle, and you want to keep expanding their responsibility until you see where it breaks—as Keith points out, some people will surprise you:

“There will be some people who you don’t expect—with different backgrounds, without a lot of experience—who can just handle enormously complicated tasks. So keep testing that and pushing the envelope.”

Keith also argues that you should monitor who is going up to other people's desks. If you see people frequently going up to a person's desk, it's a sign that that person can help them. Promote these people and give them more responsibility as fast as you can.

Full video: Y Combinator “Lecture 14 - How to Operate (Keith Rabois)” (Nov 2014)

Andy Rachleff believes paid user acquisition can be a distraction for startups:

“The way that you know you have product/market fit is if you have exponential organic growth. That’s not an easy thing to do, and advertising can make you think you’re doing well because you’re buying customers when in fact you’re not. The only way you drive exponential organic growth is through word of mouth.”

He recalls a Japanese saying in manufacturing: “You can’t see the rocks until you drain the water.”

“By getting rid of the advertising, we could actually see if we were driving exponential organic growth… The great companies were all built through word of mouth and through great products.”

Instead of marketing, Andy has chosen to invest most in building a product that delights customers because, as he puts it, “delight is the greatest form of virality.”

Full video: Fintech Nexus “Andy Rachleff of Wealthfront on Finding Product Market Fit in Fintech: The Wealthfront Story“ (May 2018)

“My problem with most strategy conversations is that they’re always inward out [and start with the company’s products first].”

Eric prefers a totally different approach:

“Work very, very hard to figure out what the world’s going to look like in five years. What will people be doing? What will your customers want? Where will costs be? In our case, what will networks look like? How important will phones be? What will the apps look like? And spend an awful lot of time on that. Then take a look at your offerings.”

He cites media businesses as an example of what can happen if you don’t do this:

“There are media businesses that are growing very well and others that are in great trouble. This was completely predicted five years ago… The ones that are in trouble should have done a five year plan and said, ‘Holy cow, what are we going to do?’… Almost nobody does a 5-year plan. Most businesses do a 1-2 year plan.”

Full video: UCLAAnderson “Google’s Chairman Advocates an Iterative Process” (Feb 2016)

When Facebook first launched, a user’s profile included things like the dorm they lived in and the courses they were taking.

Paul Graham asks Mark if he thinks Facebook would’ve worked without these features, to which Mark replies:

“I remember this early debate that Dustin [Moskovitz] and I had where we had to do some manual work for every school that we released Facebook at. To do that, we went through and parsed the course catalogs at the schools to make sure that the data was clean.”

Dustin argued that it would be easier to launch new schools if they didn’t parse these catalogs, while Mark thought this would be an unacceptable drop in quality.

“We just had this really long debate about what quality meant for us and the community that we wanted to establish and the culture. In retrospect, maybe it wouldn’t have made a huge difference in how things played out. But it definitely set this tone where there’s a lot of clean data on Facebook, you can rely on it, it feels like a college-specific thing—which was valuable early on for setting the culture.”

Mark then offers the following advice to the YC Startup School audience:

“In the projects you work on, you will have a lot of similar questions. There’s the famous 80/20 rule where you get 80% of the benefit by doing 20% of the work, but you can’t just 80/20 everything. There have to be certain things that you are just the best at and that you go way further than anyone else on to establish this quality bar and have your product be the best thing that’s out there.”

Full video: Y Combinator “Mark Zuckerberg at Startup School 2012” (Oct 2012)

“There are certain fields in which you really get to see somebody’s core personality. You get to see their core attributes, their core virtues, their core vices, and their core weaknesses. And it’s really only under situations of extreme stress where you really get to see that.”

Startups is one of those fields, and Marc points to Mark Zuckerberg as someone who handles extremely stressful situations well:

“A great superpower that Mark Zuckerberg has that is probably not well-understood enough is he does not get emotionally upset in stressful situations. He is able to maintain an analytical frame of mind even when other people would be bursting into tears and hiding under the table. And I’ve seen that many, many times… I’ve been involved for almost 20 years and we’ve been through almost everything good and bad, and I have literally not once seen him raise his voice.”

Marc explains why he believes this ability to keep your cool and maintain control of your emotions is such an important quality:

“Generally the thing that happens before a company goes down is the team cracks internally. The founders turn on each other. The management team dissolves. And so a big part of it with these things is just like: Can you keep the team together? If you can keep the team together then most these companies can battle through most things. I’ve seen just as many incredible last minute saves, rescues, and turnarounds as I have screaming disasters. And so, there is reason for optimism going into even the dark times.”

Full video: Chris Williamson “Elon Musk, The Changing World Order & America’s Future - Marc Andreessen“ (Dec 2024)

“Wait to have a good idea before you start a startup. If you start a startup without a good idea… you’ll be under pressure to make something up and it won’t work that well. The very best startups are all started because someone believes so passionately in an idea and they believe that a startup is the best way to make that happen.”

As Sam explains in the clip below, the hard thing about good ideas is they require original thought. Most people just copy other people’s thoughts, but it’s usually disastrous if you try to copy someone else’s idea. For example, thousands of social media and photo sharing apps were started after Facebook and Instagram, but very few went anywhere. You want to do something that’s new and different.

A good way to come up with startup ideas is noticing problems in your own life:

“It’s not true that all successful startups are started to solve a problem that the founders have themselves, but it’s a very high percentage. If you go back and think about the transformational companies, most of them start with someone solving their own problem.”

Another thing you notice if you go back and look at all the really successful companies is that many of them were early to a massive technology wave.

Sam believes these “Great Waves” are why great companies tend to cluster in time (e.g. Amazon and Google with the Internet wave; Uber, Airbnb, Snapchat, Instagram, WhatsApp with the mobile wave; etc.).

“A really good question ask is: What is the wave that’s starting right now?”

Sam also wrote an essay on this: Idea Generation.

Full video: Waterloo Engineering “Sam Altman Startup School Video | Waterloo Engineering“ (Jul 2017)

“One of the things that happens in business is that you develop certain things that you’re managing to—a typical case would be a metric. And that metric isn’t the real underlying thing.”

To illustrate his point, he suggests a hypothetical example of company that designates “customer returns per units sold” to be an important metric:

“The person who invented that metric and decided it was worth watching had a reason. And then when you fast forward five years, that metric is the proxy. In this case, it’s a proxy for customer happiness. But that metric is not actually customer happiness.”

He continues:

“Five years later, a kind of inertia can set in and you forget the truth behind why you were watching that metric in the first place. And the world shifts a little. And now that proxy isn’t as valuable as it used to be—or it’s missing something. You have to be on alert for that.”

You have to keep in mind that you don’t really care about the metric. What you care about is customer happiness, and the metric is only worth putting energy into and scrutinizing to the extent that it actually improves customer happiness.

“It’s very common and it’s a nuanced problem—especially in large companies—that they are managing to metrics that they don’t really understand. They don’t really know why [these metrics] exist. And the world may have shifted out from under them a little, and the metrics are no longer as relevant as they were when somebody ten years earlier invented them.”

You need metrics and can’t ignore them, but you have to make sure you really understand them and why they were invented in the first place.

“This is a way to slip into day 2 thinking — managing your business to metrics that you don’t really understand.”

Full video: Lex Fridman “Jeff Bezos: Amazon and Blue Origin | Lex Fridman Podcast #405” (Dec 2013)

“How do you make something for a million people? I don’t know where to start. But if you pick one person, study them, and take their journey, you can actually build something really personal. You can design something and keep iterating until they love it. Don’t stop improving it until that person loves it, and you’re not allowed to move to the second person until the first person loves it. Then you get the second person and keep iterating until they love it. And so on.”

As Brian argues, designing the perfect experience for one person is a much easier place to start than trying to design something for a million people. You can figure out how to scale it later.

“If you can design something really amazing using the hand-crafted part of your brain, then you can reverse-engineer how to industrialize this millions of times over. And what happens is people love your product and they tell everyone else about your product.”

When people truly love your service, they become your marketing department. But counterintuitively, the biggest and best products seem to mostly get started by solving a very specific problem for a very specific user.

Full video: Stanford Graduate School of Business “Brian Chesky, Co-Founder and CEO of Airbnb: Designing a 10-star Experience” (Feb 2023)

Zillow co-founder Spencer Rascoff explains how the $10B+ company got its initial traffic:

“Very deliberately—and this is the advice I would give to any founder—we did no advertising. The philosophy for the first three years of the company was: any money that we might spend on SEM, Google, Facebook, whatever… Let’s invest that in product and try to build something viral.”

He continues:

“Most of the great companies and services that we use today—from Uber to Snapchat to Facebook to Instagram—followed the same philosophy.”

After three or four years, you do start seeing ads for these companies. But in the early days of those services, it’s all about product and not about advertising.

“The reason you do that is to build innovation and product development bonafides. When I do angel investing for example, I will never invest in anything B2C with paid marketing.”

Zillow launched with just consumer PR and a product that people liked.

Mark Zuckerberg echoed Spencer’s view in a previous Startup Archive answer:

“The traditional approach to growing and marketing is you have a communications group or marketing team and you buy ads. Sometimes there’s a place for that.. But if you’re actually trying to grow a product, the best levers for doing that are often within the product itself.”

Full video: docstocTV “Fireside Chat with Zillow CEO, Spencer Rascoff - Startups Uncensored #55” (Sep 2017)

Patrick argues that it’s a bad idea to continue working on a company if you’re truly unhappy working on it:

“In startupdom, we really extol and uphold the virtues of determination at all costs, and that’s clearly not the right answer.”

He explains:

“If something is making you unhappy or if it just doesn’t seem like an especially promising avenue, or it’s not really working, you’re time has relatively high opportunity costs. You don’t get to start that many startups in your life, right?… Sometimes you should quit.”

Naval Ravikant gives similar advice:

“One thing I’ve learned myself the hard way, is that it is easier to tear down a company and restart it in Silicon Valley, than it is to constantly try to pivot or keep something alive. There’s very little stigma associated with capital loss or shutting down and restarting. And investors want to back entrepreneurs of experience. They know how difficult it is.”

Every successful startup has times where no rational person would’ve persisted, so it’s important to not give up just because you find yourself in a situation that seems impossible.

But if you hit a point where you’re genuinely unhappy, out of ideas, or don’t believe in what you’re building, it’s ok to quit and start over.

Full video: Y Combinator “Running Your Company by Patrick Collison“ (Oct 2018)

In the clip below, Jeff tells a story from the early days of Amazon when their metrics said customers waited less than 60 seconds after calling customer service. Yet this conflicted with customer complaints, and as Jeff explains:

“I have a saying, which is when the data and the anecdotes disagree, the anecdotes are usually right… If you have a bunch of customers complaining about something, and your metrics look like they shouldn’t be complaining, you should doubt the metrics.”

Then one day in a meeting, the head of customer service was defending the metric, and Jeff said, “Ok, let’s call.”

Jeff picked up the phone and dialed Amazon’s 1-800 customer service number.

Everyone in the meeting proceeded to wait more than 10 minutes before customer service answered.

“It dramatically made the point that something was wrong with the data collection, and that set off a whole chain of events where we started measuring it right… That’s an uncomfortable thing to do, but you have to seek truth even when it’s uncomfortable and you have to get people’s attention and they have to buy into it and they have to get energized around really fixing things.”

Full video: Lex Fridman “Jeff Bezos: Amazon and Blue Origin” (Dec 2023)

“Startups get really hard when the product gets into market… When you’re building the product, it’s all good. How’s your startup? It’s doing fantastic - we’re building a product, it’s going to be great, it’s so genius, everybody I tell about it kisses me on the lips and says it’s wonderful. But then you get in the market and nobody wants it. Then it gets real hard, real fast.”

So the first job for any startup founder is build a great product.

“If you can’t build a great product, it doesn’t matter if you can build a great company.”

But once you’ve built a great product, your goal becomes building a great company. And to build a great company, you have to become a great manager, which Ben argues is a learned skill:

“Nobody was born a great manager… It’s a very unnatural job… But as CEO, as a manager, that’s what you have to do - you have to evaluate people’s performance. You have to correct them. You have to make sure they’re on task. And those kinds of motions, you have to learn how to do them, and you have to learn how to do them in a way that everybody doesn’t hate you all the time.”

Full video: Stanford eCorner “Ben Horowitz: Nailing the Hard Things [Entire Talk]“ (Nov 2014)