One Order of Operations for Starting a Startup

More often than not, when I talk to a talented technical person who’s thinking about becoming a founder, their number one blocker is that they don’t have an idea. At some point during their formative years they learned that every great startup started with a great idea and if the idea isn’t amazing (usually as judged by peers, parents, or other people with little startup experience), the startup will fail.

My first startup’s idea (really Justin Kan’s idea) was to create a live reality TV show where people would walk around with cameras on their head livestreaming their lives 24/7. This company eventually became Twitch.tv and sold to Amazon for almost a billion dollars (thanks to some amazing work by Emmett Shear, Kevin Lin, and a great group of employees). Airbnb started with the idea that when you want to attend a conference, sometimes all the hotels in that city are sold out. Therefore, wouldn’t it be great to have a site where you can find an airbed to crash on. In 2017 over 200 million nights were booked on Airbnb, almost none of them fitting the original purpose of the site.

I’d like to offer an alternative to the conventional “great idea” theory of startups for first time founders to consider. This guide can help you walk the path from nothing to a launched minimal viable product (MVP). This is by no means the only path to an MVP and I don’t know if it’s the best path, but it is a path that I’ve seen work for a number of YC companies.

The Order of Operations

Here’s where I’d start: Is there any particular problem that you are passionate about? For younger founders, that problem can come from your experience growing up, from your family/friends, your personal interests, or from school. For older founders it could also come from experiences at work, being married, or being someone’s partner. For the Airbnb founders, their original problem was how to pay rent. For Justin.tv/Twitch the original problem Justin and Emmett had was what startup should we work on next. Some problems seem important and impactful at the beginning and others feel like trivial toys. I’ve seen both types grow into billion dollar companies.

Once you decide on a problem, find some friends and brainstorm potential solutions to the problem. Those friends can be other people who also have the same problem but they don’t have to be. They can be people you went to school with, people from work, or people you’ve met in your personal life. What’s probably most important is that you pick friends who are smart and fun to brainstorm with. When someone is fun to brainstorm with – instead of rejecting potential solutions as they are said aloud – they riff on the solutions and improve upon them. If you’re not technical I’d encourage you to brainstorm with friends/colleagues who are. If you pick the correct friends to talk to, sometimes the result of this brainstorm is a solution or idea that you can get really excited about. This is the spark that can make your startup come alive. Because the people you brainstormed with feel some ownership for the solution you came up with together, this is the perfect time to ask them to work with you to actually build that solution. A great brainstorm can often not only provide you with an idea, it can also provide you with co-founders (so pick your brainstorming partners carefully).¹

At this point the most important thing to make that spark turn into a fire is to work together to build and launch a minimal viable product (MVP). An MVP is the smallest possible product you can build that allows you to start offering your service to users. Often times you need very little software to start. Resist the temptation to build your complete solution because in reality you have no idea whether it will work. Better to build an extremely stripped down version of your solution and start seeing if users actually want to use it. Airbnb’s first version had almost no features (no map view, no profiles, no messaging, no payments, etc) and they referred to it as “Airbnb Lite” and built it in under a month. It’s totally okay if you need to do a bunch of manual work that doesn’t scale on the backend, is users actually want what you are making you’ll have time to fix everything and make it scale later. Once you have your first users of any kind, you have a startup. That being said, you still need someone with the technical skills to ship the MVP.

Once you’ve put your MVP together, there’s a ton of startup advice to follow. Here are a few resources I recommend:
– YC’s Essential Advice
– Paul Graham’s Essays
– Blog Pmarca

Two Failed Orders of Operations

There are a couple of paths I see first time founders walk that often lead them to failure.

1) Come up with an idea and then pitch investors.
Usually these founders think that investors, by investing, will validate their idea and that if they can’t raise money – they don’t have a good idea. Good investors are interested in teams who are actually in the process of executing their idea and tend to shy away from teams that are just pitching their idea.

2) I have an idea but can’t write code and none of my co-founders can either.
These founders want to pay someone else to build their product. Then they’ll launch it, try to raise money, and build out a tech team. The problem there is that good investors are actually investing in the team you’ve built. If you are building a tech startup and no one on your team can write code or do the technical work necessary, the bar to raise investment is much much higher. In my experience you have to have 10x the amount of traction to get a good investor to overlook a non-technical team. Also, in general the problem with outsourcing engineering is that the people you outsource aren’t as motivated as you are and are often fairly expensive.

Counterexamples

There are a lot of counterexamples to the “failure” scenarios I described above, both for first time and repeat founders. What I will tell you is that building a successful startup is extremely hard and when you choose to follow one of the failure paths – often your road is much harder and less likely to lead to success. Why make things more painful on yourself?

By no means do I think this is the only path but when founders ask me to recommend a path, this is the one I recommend. It’s the most effective one I’ve seen in getting founders past the first major hurdles of putting something out and finding initial funding.

Note
1. Now, what if you’re not technical and don’t have access to technical people? Often what I tell future founders is go work at a startup and make those friends. At the end of the day, having the right founding team is such a fast track to to building a successful startup that it’s worth investing a year or two building those relationships before you start.↩

Thanks to Carolynn Levy, Adora Cheung, Daniel Gackle, and Craig Cannon for reading drafts of this post.

One Order of Operations for Starting a Startup

The Order of Operations

Two Failed Orders of Operations

Counterexamples

Author

Michael Seibel