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Y Combinator’s Success Principles for a Startup That Changes the World

by | May 1, 2023 | Startups

The startup world is full of so much sludge.

One place I’ve never got nonsense advice from is Y Combinator. They’re an accelerator that has given birth to some of the most successful startups in history such as Stripe, Airbnb, and DoorDash.

Even better are the people around Y Combinator. Deep thinkers such as Paul Graham, Gary Tan, and Sam Altman.

YC has a set of principles they run by. They can help you form your own startup or even succeed as a one-person business. Here they are.

Launch now

As the founder of multiple startups myself, one thing that pisses me off is entrepreneurs who overplan and overthink.

The corporate world teaches you to try and predict the market. That’s fine if you’re a big company with loads of cash to burn. But if you’re a startup there’s no time for guessing. You need to launch and test your ideas.

Whatever you think your startup will become will end up being wrong.

No one can predict it. Because as you acquire users they warp your thoughts and change your roadmap.

Build something people actually want

Many startups build bullsh*t products people don’t want.

The #1 job of a startup is to solve a problem people care enough about to pay for. If you can do that then the rest is easier than beating a man in a wrestling match after he’s had 21 tequila shots.

Too many entrepreneurs think they know what people want.

They try to spoon-feed the market their idea because they think they’re a genius. The truth is it’s just ego. Data should always tell you what the market wants. Ignore the data, and end up in bankruptcy.

Valuation is *NOT* equal to success or even the probability of success

This one should be blasted through megaphones all throughout Silicon Valley.

  • Number of employees doesn’t matter.
  • Who’s on your board doesn’t matter.
  • The fact your CTO worked on a life science project that sold for a billion dollars doesn’t matter.
  • A friendship with Uber founder Travis Kalanick doesn’t mean anything either.

BS vanity metrics has overtaken the startup world. Over the last year startups have been brought back to planet earth after their decade-long stay on Mars.

Does your startup make a profit? Yes or no.

Valuations are nonsense. They are theory. They mean nothing when a recession hits and grabs you by the pubic hairs on your ass crack.

We’ve got to bring it back to basics. And making a profit is the most basic sign of whether a startup is succeeding or not.

Avoid long negotiated deals with big customers if you can

Startups love to toss around big-name corporates.

“Ohhh we pitched Bank of America and they’re going to have 5000 users on our platform by 2024.”

This rarely happens. When I worked for big banks I found they were expert time-wasters. Startups run by naive young founders would pitch us. Just because they had a meeting, often, that’s all it took to get them horny.

They’d waste months of their startup life trying to get us to say yes.

No one ever had the power to sign the checks so we’d keep passing them from department to department to give more PowerPoint talks.

All the time wasted would have been better spent pitching either consumers or much smaller businesses that actually had a chance of buying their product.

Don’t get played by corporates.

Chase them when you have product-market fit.

Don’t scale your team/product until you’ve built something people want

In my current startup it’s tempting to hire loads of employees.

One of our competitors the other day announced on Youtube that they’ll have 100 employees by the end of the year.

They said this as if it were an achievement. But I don’t want hundreds of employees. No, call me crazy, but I want my startup to make a profit.

If you add too many employees too early, you risk getting distracted by shiny new features — instead of doubling down on product-market fit.

Any monkey can hire loads of employees and give them job titles. It takes a skilled founder to make a profit though.

Startups can only solve one problem well at any given time

We saw this during the bat virus of 2020–2021.

Companies like Coinbase and Shopify let their employees get distracted by social justice causes that had nothing to do with selling more crypto or being the #1 eCommerce platform in America.

Founders of both companies finally came to their senses and gave employees the option to quit if they wanted to focus on anything outside of the single mission each of their businesses had.

It got rid of a lot of the trash and marketing theatrics. Both startups got back to business.

It’s too hard to have multiple focuses. It’s already hard enough for a startup to survive beyond 5 years.

Focus is what makes a company successful. Pick one and don’t let anyone or anything distract you.

Most companies don’t die because they run out of money

In this debt-driven world backed by trillions of dollars, and full of investors who love to bet on anything, access to money is rarely a problem.

The actual value of money is warped so much, thanks to inflation and currency devaluation, no one knows what anything is worth anymore.

What we do know is if a bank (like Silicon Valley bank) or economy gets into trouble, the government and central bank will bail them out.

So running out of money isn’t the curse it used to be 20 years ago. What’s more likely to happen is the founding team quit or the entrepreneur(s) in charge run out of energy. That’s what secretly murders most startups.

Be nice! Or at least don’t be a jerk.

Let’s finish on this final success principle from Y Combinator (full list here).

The startup world has been full of arrogance for far too long. It’s become more of a status game than solving real problems that progress humanity and make life better for all of us.

For startups and founders to truly be successful we need to buck the trend. We need to learn to be nice to each other and have more humility.

Just because you work for a startup or are an entrepreneur, doesn’t make you better than everyone else.

If you can’t be nice, at least don’t act like an a-hole.

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