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Paul Graham from YIncubator is a legend when it comes to startups. So when he speaks, we should all listen. He spoke recently to a class of Stanford students, the transcript of which can be found on his website here. Business Insider Alyson Shontell at Business insider did a great job summarizing it, however, so below is her piece repurposed. Enjoy!
His main point: Startups are counterintuitive. If you want to start one, there are six unusual things you should realize about running a company.
"Startups are so weird that if you trust your instincts, you'll make a lot of mistakes," Graham writes.
Here are the main points he makes:
- While you shouldn't always trust your instincts about how to run a startup, you should trust your instincts when it comes to hiring people. "One of the most common mistakes young founders make is not to do that enough," Graham says. If you feel someone is a jerk or your gut says something with someone is off, listen.
- Don't be an expert on startups, be an expert on users. Graham thinks learning too much about how startups are typically run can be dangerous, because it can make it tempting to "play house" and go through the motions of running a company (raising money, getting a big office, hiring lots of people) before you actually have a viable business. Graham points out that Mark Zuckerberg was not a startup expert when he started Facebook, he just knew the user base really well.
- You can't gamify a startup. While you may be able to get ahead in school or at a corporation by "gaming" the system or sucking up to a teacher or boss, there are no corners you can cut with a startup. "There is no boss to trick, only users," says Graham. He warns that sometimes, investors can be tricked or gamed and they'll give questionable startups cash. But this only wastes the founder's time because if a business idea isn't strong, it will fail anyway.
- Startups take over your life more than you can possibly imagine. "Startups are all-consuming," Graham writes. Startups are even difficult to run once they become big companies, like Google and Facebook. Graham notes that Page has been running Google since he was 25 and probably still feels like he hasn't had a chance to rest.
- More on that same thought: "Starting a successful startup is similar to having kids in that it's like a button you push that changes your life irrevocably," Graham says.
- It's almost impossible to tell if you're the type of person who's up for a startup before you try. "Starting a startup will change you a lot," says Graham. "What you're trying to estimate is not just what type of person you are, but what you could grow into, and who can do that?"
- Don't try to think up a startup idea. "It's how Apple, Yahoo, Google, and Facebook all got started," Graham says. "None of these companies were even meant to be companies at first. They were all just side projects. The best startups almost have to start as side projects, because great ideas tend to be such outliers that your conscious mind would reject them as ideas for companies."
- His ultimate startup advice: learn everything you possibly can. "At its best, starting a startup is merely an ulterior motive for curiosity," says Graham. "So here is the ultimate advice for young would-be startup founders, boiled down to two words: just learn."
Crowd funding, by definition, is a means of bringing a large number of people together, typically through the internet, to collectively fund the activities of people, organizations and companies. As traditional sources of capital increasingly, and frustratingly, become more difficult to attain, entrepreneurs and inventors are finding crowd funding to be a perfect solution to their growth needs.
Jumpoff, a crowd funding site dedicated to kid-related products and kid entrepreneurs and inventors. Through our work with Wild Creations, a toy and game developer, we understood firsthand and intimately the difficulties of raising money for a new project or idea, especially in the toy and game industry.
After endeavoring to start Jumpoff, however, we began to realize that that there were numerous other benefits to using crowd funding beyond just Raising Capital. For instance ...
- Establish Priority: While it is clearly a good idea to patent or copyright an idea, posting a project on a crowd funding site provides a permanent record of your idea in the public domain. This is far better than just having your idea on a bar napkin in file in a desk drawer. Of course, it is essential that you have your records in order and, for highly sensitive ideas, start the process of protecting them legally.
- Raise Awareness: Since most of the money in a startup goes toward developing an idea, creating a prototype, etc, there is typically very little left for marketing. Crowd funding provides a great and inexpensive platform for introducing your idea to the public. The project does need to be thoroughly thought out and creative, however, otherwise it gets lost in the noise.
- Build A Community: These days, with social media playing an increasingly significant role in brand awareness, having supporters and fans, as well as reviewers and commentators, is crucial for developing a grass roots effort to promote your idea. While using Facebook, Twitter, and other social media sites will surely play into a strategy, the crowd funding community is a great place to start.
- Develop Proof of Concept: Proof of concept is the realization of an idea to demonstrate its feasibility. Most crowd funding sites, Jumpoff included, do not fund a project unless it meets certain project guidelines and, most important, meets its funding goal. If the funding request is not met, NO money is exchanged and the project just goes away. If it IS funded, however, the project not only has the money it requested, it has a proven track record and most likely sales. This is tremendous leverage when taking the product to the next stage of growth.
- Create Partnerships: As the crowd investing guidelines of President Obama's J.O.B.S. Act starts to take form and go into affect in 2013 (knock on wood), the natural place to begin looking for projects in which to invest will naturally come from crowd funding sites. Entrepreneurs and inventors can get a head start now by creating an online crowd funding profile and submitting projects in order to begin networking with the most active community members. This is where the true partnership are going to take place.
As for my dreams of becoming a film maker ... well, let's just say that with inspiring and creative projects like "Por las Plumas" on the horizon, I'll just stick to my day job!
Por las Plumas / All About the Feathers from Neto Villalobos on Vimeo.