YC
Later Stage Advice with Sam Altman (How to Start a Startup 2014: Lecture 20)
@ Y Combinator
05/02/17
Takeaways
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Sam Altman
05/02/17
@ Y Combinator
You don't need to worry about management structure until your startup has around 20 to 25 employees, as a flat structure works best in the early stages.
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Sam Altman
05/02/17
@ Y Combinator
As your company grows, your main job shifts from building a great product to building a great company, which is a significant transition for founders.
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Sam Altman
05/02/17
@ Y Combinator
Founders often make the mistake of being afraid to hire senior people early on; instead, they should focus on hiring individuals who can get things done and work hard.
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Sam Altman
05/02/17
@ Y Combinator
It's crucial to avoid 'hero mode' where founders try to do everything themselves; instead, they should hire more team members to manage workload effectively.
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Sam Altman
05/02/17
@ Y Combinator
Effective delegation involves trusting your employees to make decisions rather than micromanaging them, which fosters a better work environment.
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Sam Altman
05/02/17
@ Y Combinator
Founders should establish a personal organization system early on to keep track of tasks and follow-ups as the company scales.
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Sam Altman
05/02/17
@ Y Combinator
Writing down how and why things are done in the company is essential for maintaining clarity and consistency as the team grows.
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Sam Altman
05/02/17
@ Y Combinator
Ignoring HR in the early stages can lead to problems later; establishing a clear structure and performance feedback is vital as the company grows.
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Sam Altman
05/02/17
@ Y Combinator
Compensation should be standardized with clear bands to ensure fairness and prevent future conflicts as the company scales.
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Sam Altman
05/02/17
@ Y Combinator
Founders should continue to offer equity to employees throughout their tenure, as this incentivizes long-term commitment and aligns interests.
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Sam Altman
05/02/17
@ Y Combinator
Diversity in hiring should be prioritized from the start to prevent a homogeneous culture that can hinder growth and innovation. As the company grows, early employees may want to take on roles like VP of Engineering, but you need to proactively discuss their career paths to retain them and maintain company culture.
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Sam Altman
05/02/17
@ Y Combinator
In the early days, small teams are naturally productive, but as the company grows, productivity can decline due to increased communication overhead. It's crucial to implement systems to maintain productivity as the team expands.
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Sam Altman
05/02/17
@ Y Combinator
Alignment is key to maintaining productivity in a growing company. If everyone is not on the same page regarding priorities, productivity suffers. A clear roadmap and goals for the next few months or year are essential for keeping the team aligned.
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Sam Altman
05/02/17
@ Y Combinator
It's important to regularly communicate the company's goals and roadmap to ensure everyone understands them. Founders often underestimate how frequently they need to reiterate these messages to keep the team focused.
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Sam Altman
05/02/17
@ Y Combinator
Establishing company values early helps guide decision-making. If everyone knows the framework for decisions, they are more likely to make consistent choices that align with the company's goals.
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Sam Altman
05/02/17
@ Y Combinator
While processes are necessary, they should not overshadow the focus on creating great products. Companies should prioritize product excellence over bureaucratic processes.
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Sam Altman
05/02/17
@ Y Combinator
Regular management meetings and all-hands meetings are critical for keeping the team informed about results and the roadmap. These meetings should occur at least once a month to maintain transparency and alignment.
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Sam Altman
05/02/17
@ Y Combinator
Offsites can be beneficial for strategic planning. Taking key team members away from the daily grind allows for deeper discussions about the company's direction and priorities.
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Sam Altman
05/02/17
@ Y Combinator
The goal of productivity planning is to build a company that creates long-term value. Founders should focus on sustainable growth rather than short-term gains.
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Sam Altman
05/02/17
@ Y Combinator
Founders should consider setting up financial and legal structures early, including accounting systems and collecting legal documents, to avoid complications later on.
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Sam Altman
05/02/17
@ Y Combinator
FF stock allows founders to sell shares in later rounds without affecting common stock valuation. It's advisable to set this up after initial success rather than too early.
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Sam Altman
05/02/17
@ Y Combinator
Filing provisional patents within 12 months of announcing a product is crucial to protect intellectual property. This step is often overlooked but can save significant legal trouble later.
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Sam Altman
05/02/17
@ Y Combinator
Founders should focus on their own psychology as the company grows, as the emotional highs and lows can become more pronounced. Managing this is essential for long-term success.
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Sam Altman
05/02/17
@ Y Combinator
As companies grow, founders may face increased scrutiny and criticism. It's important to prepare for this shift in perception and manage the emotional impact it can have.
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Sam Altman
05/02/17
@ Y Combinator
Founders should think long-term about their commitment to the company. Those who plan for the long haul have a significant advantage over those who only consider short-term goals.
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Sam Altman
05/02/17
@ Y Combinator
Taking regular vacations is essential for preventing burnout. Founders should prioritize their well-being to maintain focus and productivity over the long term.
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Sam Altman
05/02/17
@ Y Combinator
Maintaining focus is critical for success. Founders should resist distractions and avoid getting sidetracked by external opportunities that do not align with their core mission.
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Sam Altman
05/02/17
@ Y Combinator
Engaging in acquisition conversations can be distracting and demoralizing. Founders should only entertain such discussions if they are genuinely willing to sell the company.
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Sam Altman
05/02/17
@ Y Combinator
The primary reason startups fail is that founders give up. It's crucial to manage your psychology to avoid quitting prematurely, even when faced with challenges.
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Sam Altman
05/02/17
@ Y Combinator
In the early stages, founders should not prioritize marketing and PR, but as the product gains traction, they need to take charge of messaging and communication to ensure consistency and clarity. Developing personal relationships with journalists is crucial; they prefer talking to founders rather than PR representatives.
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Sam Altman
05/02/17
@ Y Combinator
The most effective PR strategy is to avoid hiring a PR firm and instead build close relationships with a few journalists who understand your company.
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Sam Altman
05/02/17
@ Y Combinator
In the early stages of a startup, focus on building a great product; nothing else matters until that is achieved.
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Sam Altman
05/02/17
@ Y Combinator
Establishing personal connections is vital when negotiating deals; many founders fail to do this, which can hinder their success.
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Sam Altman
05/02/17
@ Y Combinator
Creating a competitive environment is essential for securing favorable deal terms; if you don't have options, you may not get the best outcome.
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Sam Altman
05/02/17
@ Y Combinator
Persistence is key in negotiations; founders often need to push beyond their comfort zones to achieve their goals.
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Sam Altman
05/02/17
@ Y Combinator
You must clearly ask for what you want in negotiations; many founders hesitate to do this, but it's necessary to get what you need.
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Sam Altman
05/02/17
@ Y Combinator
Diversity in backgrounds is important, but it's crucial to maintain a shared vision among team members to avoid conflicts.
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Sam Altman
05/02/17
@ Y Combinator
When a startup is failing, it's important to communicate openly with investors and ensure that employees are not left in the dark.
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Sam Altman
05/02/17
@ Y Combinator
Most successful tech companies are run by their founders for a long time; if you don't want to be a long-term CEO, reconsider starting a company.
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Sam Altman
05/02/17
@ Y Combinator
If you're excited about a market but lack knowledge, you can either jump in and learn as you go or work in the industry for a while to gain experience.
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Sam Altman
05/02/17
@ Y Combinator
If you're considering raising funds, it's best to wait until you have a solid idea and initial signs of promise to avoid pressure on the company.
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Sam Altman
05/02/17
@ Y Combinator
Raising money too early can force you into a rush to pivot, which may lead to poor decisions; it's better to wait until your idea is working.