What comes before a successful startup? From interviewing many great entrepreneurs, watching hundreds at Stanford and YC and my own experience running a startup for almost two years, the best entrepreneurs have a unique combination of speed, focus, courage and an understanding of exits. Here's some first principles of growth that precedes breakout success:
Building an opportunity for a startup is a two-step dance of searching for a market, then investing to grow expertise and ideas [1]. While choosing a market is a harder problem mathematically (see Market), investment in growth - actually spending months studying and practicing - is more psychologically challenging. Growth typically looks boring and there's lots of noise in the world, so many people give up or get distracted.
However, with focus and the right tactics, you can optimize your chances, so that it doesn't feel like a struggle:When you've found a market you're interested in [2], you’ll have identified communities like companies, labs, or Reddit groups that are experts. As soon as possible, stop reading things and starting working with them! Building products with others tests many traits you’ll later need to start a startup - namely, having a track record with potential (to convince others to work with you or hire you) and an aggressive vision (to motivate yourself). [3] Sometimes students only rely on reading; in the real world, a surprising amount of knowledge isn't written down.
It's likely that you won't have the perfect product in mind when you start - you’ll have to be attentive and creative to find this. However, it does make it likely that you’ll be exposed to the right product opportunities in natural settings, and you’ll be able to take advantage of them through your product experience and teammates, which competitors won't have.
It takes six months to actually generate good ideas in a market, and longer before you have the expertise to take advantage of them. Be strategically patient but tactically impatient and keep your expectations reasonable. The goal of investment isn't to start a company, but to ship small projects - papers, essays, code or events - that build your expertise. [4] Since it’s 2017, it’s most effective to distribute these online.
Most successful founders I know weren't necessarily at the top of their classes, but they are among the fastest to build things. Every time you talk to them, they have something new to demo.
Shipped projects are one of the most powerful forces in the universe, even if small. Like cash, they are universally desirable - not only do they give you courage to invest further, but they also give you valuable feedback and attract allies. So, ship quickly! Pursuing small rewards in important markets is the most likely way to find big ones later on, and, since humans are wired to enjoy frequent rewards, this also feels satisfying. [5]
Sometimes, you may find that one of your friends picked what seems to be a better market than you. [6] It’s important to resist the temptation to give up on your market until you ship - at minimum, shipping will preserve your career momentum for another investment in a different market, and if you’re lucky, things may change with time. Snapchat initially got so little traction that the founders put it into maintenance mode and went back to Stanford until high schoolers suddenly started picking it up months later. If they hadn’t shipped and left their servers running, a $15 billion company wouldn't exist.
In school, it’s actually hard to give up - your professors, peers and physical environment will push you towards finishing your assignments. In the real world, however, it’s tempting to shelve a challenging project since none of those forces will be there unless you engineer them.
This is one of the reasons that successful side projects tend to be projects of personal interest. This is also the reason it’s best to pick simple products in large markets - simple projects reduce the duration of the investment challenge, while large markets give you orienting dreams which intentionally blind you to difficulties.
Courage also flows from others in your corner who give you energy. The press and your peers will compare your results against the entire world, and it can be surprising for students accustomed to being the best in their class to now be curved to failing (even if they are doing well objectively!). Seek out other builders who understand the BFS vs. DFS differentiation themselves and can coach you through times of struggle. Some of the most impactful words that I’ve heard myself came not from investors but from my friend Congxing Cai over a bowl of pho. Keep close friends who will do the same for you.
When you ship to real users, courage comes naturally - you're past the most dangerous part of the struggle. Although you may not be globally famous, others close to you will think of you as “the girl (or guy) that does X” and people will start to ask you to help them or talk about your experience. When this happens, you probably have enough expertise to generate good ideas, so you can start thinking about startups seriously.
Stay alert to user needs in your area of expertise and keep investing to help others.
Although the default choice should be to exploit your expertise (it's more efficient), it’s also possible that no amount of growth can overcome current market conditions. In this case, put that market on hold and invest in a stronger one. [7] [8]
If this happens, you’re in good company, despite the fact it may feel like you're going backwards. In general, most people tend to stay in markets too long, whereas breakout careers are often composed of one or two connected jumps. Olivia Wang didn’t start as a VP at Zhenfund, she was an entrepreneur first, became known for her interest in bitcoin and now spearheads global business development for one of the largest Chinese VCs (full disclosure: they are also an investor in Mindori). China just banned all bitcoin activity, but it's one of the hottest places for VC investment, so this was probably a good choice.
Changing markets is hard - you're intentionally idling expertise in exchange for unclear future rewards. One thing that makes it easier is to have already shipped things that last. Humans in general are bad at estimating long-term value, but optimizing for distribution and mission will get you there, even if it's challenging to see clearly.
At the beginning, aim towards shipping a final product that's trivially easy to walk away from but can be viewed forever by anyone, like a series of papers posted online or a large dollar value for an acquisition. Since you expect your career to be long, prioritize future value over current value - it becomes increasingly strong to have built things that grow on their own after you leave. Coursera is not run day-to-day by Andrew or Daphne as of this essay, but their legacies will keep growing with future products.
In the long run, if you keep investing in increasingly good markets throughout your career and ship quickly, you may grow an opportunity. A startup takes a lot more care to mature from that seedling, but you're actually past the hardest part. Go build a company and see if you can defer your next exit indefinitely.
[1]
Expertise + idea = opportunity.
[2]
If you're trying to find a market, read this first.
[3]
Vision is sometimes where scientific experts can have trouble, since their field discourages grandiose statements. However, in a startup, aggressive vision is desired. Your vision should be aggressive enough that it seems lofty, but you should have enough personal credibility so that others believe you have a shot of making it there. Implicitly tell people a high-contrast story about their own future.
[4]
It's also ok to get paid for it.
[5]
There's probably an evolutionary connection between these two facts.
[6]
This occurs most often when you have smart friends, so it's not that bad, on average.
[7]
Holding an imperfect investment too long is less bad than never building it in the first place, but it prevents you from finding a better market. You can come back to it if things change.
[8]
It may be worth imagining what you would need to ship for an exit even if your market is strong. Visualizing the next step will make you impatient to get there from the current one.
Thanks to Ben Lengerich and Tim Shi for reading early drafts of this, and to Koh Pang Wei, Jiquan Ngiam, Bipin Suresh, Joe Gershenson, Olivia Wang, Congxing Cai, Brody Huval, Awni Hannun and many others for their insightful thoughts.