iRayan7/startupschool19

Startup School 2019

Notes from Y Combinator's Online Startup School 2019

WEEK 1

Startup School 2019 Orientation

How to Evaluate Startup Ideas Pt. 1

Startup = Growth
A great investor will not try to poke holes in your idea, instead will try to find a way for that to become a billion dollars idea. ( A great investor will pitch your idea back to you, and try to convince you on ways to grow your company fast )
Your startup idea is a hypothesis. Your job is to figure out how to construct this hypothesis (the pitch) to the investors so they understand how it can grow quickly. ( A common mistake is to accurately describe or over-describe different parts)
Startup Idea:
- Problem: What are the initial conditions (settings) for this company that allow it to grow quickly.
  - Good characteristics of a problem ( ways to describe your problem ):
    - Popular [1M+ users]
    - Growing -markets- [20%/ year]
    - Urgent [people have to solve it Right Now]
    - Expensive -to solve- [cost $B]
    - Mandatory [Laws changed]
    - frequent (very important) [Hourly]
- Solution: What is the experiment that you are running for this company to grow quickly.
  - Don’t start here!
    - Avoid -> SISP "Solutions In Search of a Problem” ( usually engineers get excited about a technology and tend to build something with it and then try to find a problem to solve with this solution )
- Insight: Why your experiment is going to be successful.
  - Unfair advantage.
    - Why this solution is going to work?
    - Why you are going to win vs everyone else?
    - Why should the investor choose you over anyone else?
    - Related to growth.
      - Your unfair advantage should be related to growth, otherwise, investors are not gonna find it valuable.
    - You need one!
    - Types (you should have one at least):
      - Founders [1 of 10 -in the world-]
      - Market [20% / year] (weak one)
      - Product [10x -better that competitors-]
      - Acquisition [$0 -cost to acquire new users-] (can’t count paid channels here!) (WOM is the best)
      - Monopoly [growth = harder for others to defeat you] ( growth of network = growth of company value, marketplaces where one company can win it)
    - (Good examples of unfair advantages in slides!)
👨‍💻 Amazing talk overall. I think everyone should watch it. Even if you don't currently have a startup idea.

How to Talk to Users

Good founders maintain a direct connection to their users. ( To extract info from your users throughout the different stages of a company )
To start a company -according to YC- you need to:
- Write code. (build your product)
- Talk to users.
The Mom Test:
1. Talk about their life, not your idea. (extract data to help improve your product. not the time to sell your product to them)
2. Talk specifics, not hypotheticals.
3. Listen, don’t talk.
Great questions you can ask in every user interview:
1. What’s the hardest part about [doing this the thing]?
2. Tell me about the last time you encountered that problem… (context)
3. Why was that hard? (To know how to explain the value to new customers) (Users buy the Why not the What)
4. What, if anything, have you done to try to solve the problem? (is the problem burning enough for others to consider your solution. what your solution will be compared to)
5. What don’t you love about the solution you’ve tried? (basis of your feature set)
Talking to users is useful at all stages:
- Got idea? -> find users with problem
  - Idea Stage
    - Finding first users with problem:
      - Friends, coworkers, intros
      - Drop by in person!
      - Industry events
    - Tips:
      - Take detailed notes. (you never know which is useful until later)
      - Keep it casual.
      - Careful with their time. (10-15 min max)
- Built prototype -> best first customers
  - Prototype Stage
    - Identify best first customers
    - Find numerical answers to:
      - How much does this problem cost them?
      - How frequent is the problem?
      - How large is their budget?
- Launched -> find product market fit
  - Launched Stage
    - Iterate towards Product Market Fit
    - Tips:
      - Ask for phone # during sign up.
      - Don’t design by committee.
      - Discard bad data. (complements)
👨‍💻 Really liked how practical this talk was.

Week 1 Lectures Q&A

WEEK 2

How to Plan an MVP

MVP (Minimum Viable Product): The first thing you can give to the first set of users to see if you can deliver any value to them.
Talk to users before building any MVP -or writing any code-.
Goal of any pre-launch startup:
- Lunch quickly (MVP) [single most important info in this presentation is to launch something bad quickly].
- Get initial customers.
- Talk to customers and get feedback. [Hold your problem tightly, hold your customer tightly, hold the solution loosely]
- Iterate (improve your product).
Lean MVP (in most cases):
- Very fast to build (Weeks not months)
- Very limited functionality.
- Appeal to a small set of users.
- Base to iterated from.
Heavy MVP (in very few cases):
- Significant regulations (insurance, banking)
- Hardtech
- Biotech
- Moonshot
Launch simply means to start getting customers.
Learning from customers is easier with an MVP than without. (putting something in front of users to see if that solves their problem)
Hacks for building an MVP quickly:
- Timebox your spec
- Write your spec [To control change]
- Cut your spec
- Don’t fall in love with your MVP! [it’s just a first step in a journey]
Q/A
- Don’t ask users about features they want in your product, it’s your job to come up with features. Ask them about the problem itself, How frequent, intense? are they going to pay to solve it? do they know any other people who suffer from the same problem?
- I’m stuck in the cycle where I keep changing the MVP and never launch? Stop doing what you are doing. Stop seeing your MVP as special, it doesn’t have to be perfect.
- Key-value of MVP? To see whether your solution is solving the problem.
- Don’t solve the problem for all users.
- There are a lot of times where a founder has to keep two things in mind at the same time: Vision big and MVP small. Grow and Retain. Investor pitch and Customer pitch. Founders always wanna smoosh these things together or kill one because it’s much easier to think of it as a single problem.
👨‍💻 Great solutions for common mistakes.

How to Set KPIs and Goals

KPI (Key Performance Indicator): A set of quantitative metrics that indicate how healthy your business is doing.
- Primary metric: The one metric that if you had to you would bet the whole company on.
  - Why only one metric? To focus and keep it simple.
  - The job of this metric? To quickly determine how well your startup is doing.
  - Characteristics of a good primary metric:
    - Represent delivery of real value
    - Capture recurring value
    - Lagging indicator (users gave out money of time to use your product)
    - Usable as a feedback mechanism.
  - Revenue: Nothing can tell more about delivering value than revenue. suits 99% of startups. usually MRR (Monthly Recurring Revenue)
  - Active Users: When your startup is network based (Advertising business model like facebook). Huge network effect (e.g. Marketplace: where you need users for it to get going)
- Secondary metrics: (3-5 north stars metrics, where you choose along with a primary one to get 360° overview of the health of your company)
Goals: set weekly % growth rate (weekly because you need frequent feedback from users and to divide the progress you need into doable chunks)
- Do things that don’t scale to achieve your weekly goal. Don’t worry too much about the final goal.
- Guidelines on defining a goal:
  - Fast initial growth (usually growth gets slow after some time)
  - Time to sale (how long does it take to acquire a user and make a sale)
  - Organic vs paid (Focus on organic [WOM, search engines]. using paid users in the beginning is cheating growth)
  - Exponential vs linear
How to leverage your primary metric and goal?
- Week to wee stack rank all the ideas you have of how to grow. and choose what would have the biggest impact on meeting your next week's goal)
Q/A
- LTV (Customer lifetime value) should not be paired with CAC (Customer acquisition cost). When you are focused on paid growth look at payback period (0 days?).

Analytics for Startups

Why analytics and data?
1. Test product market fit.
2. Focus the team.
3. Operate/grow the company.
Funnels: Sequential series of steps your users go through to actually get value and then pay you.
- Typical funnel for B2B and B2C companies: you acquire a user, engage him over a period of time (this loop is called retention) and then monetize him.
- Metrics both primary and secondary are performance indicators on top of each stage in the funnel.
  1. On top of Acquisition: How many signups this week vs last?
    - Signups per week
  2. On top of Engagement: How many users are re-engaged week over week?
    - Retention cohorts
      - Which metric do you pick? a metrics that represent value (Airbnb -> Bookings, Uber -> rides)
  3. On top of Monetize: How much revenue are we making week over week?
    - Revenue
Stack over time: *
- Open as much communication channels with your customers as you can.
- [10:07 -> 13:18 must watch if interested)
Best in class tools:
- Improving product usability:
  - fullstory: to watch how users interact with your product.
  - Small usability issues might drive metrics down!
- 43-min founder email:
  - customer.io: you can specify a certain amount of time to send an email from founders after user signup.
  - A way to start the connection between you and the users.
- Democratize data access:
  - Google big query and Mode: to find answers to questions normal data analytics tools can’t answer.
  - Good after PMF stage.
- Tools change -every 2 years-, don’t overthink which tool to choose. Just pick one and set your self up for change.
A nice gift for early-stage startups! checkout slide 36.
👨‍💻 Very practical talk. Recommend it to after MVP stage startups.

WEEK 3

Nine Business Models and the Metrics Investors Want

Nine “verticals” based on business models, not industry:
- Enterprise:
  - Sells services or software to a large enterprise.
  - Examples: Docker, Cloudera.
  - Metrics:
    - Bookings
    - Total customers
    - Revenue
- SAAS:
  - software-as-a-service company sells subscription based license for a cloud-hosted software solution.
  - Examples: Segment
  - Metrics:
    - MRR (Monthly recurring revenue)
    - ARR (Annual recurring revenue)
    - Gross MRR Churn
    - Paid CAC (cost per customer acquired through paid marketing channel)
- Usage-based
- Subscription:
  - Sells a product or a service on a recurring bases.
  - Exampled: Dollar shave club, Blue Apron.
  - Metrics:
    - MRR
    - MRR CMGR (Compound monthly growth rate): (latest month MRR / first month MRR) ^ (1/ # of months) -1.
    - Gross user churn: total lost customers (canceled subscriptions) in a given period / prior period total customers.
    - Paid CAC
- Transactional:
  - Enables a financial transaction on behalf of a customer and collects a fee.
  - Examples: Stripe, Paypal, Coinbase, RevenueCat?
  - Metrics:
    - Gross transaction volume
    - Net revenue
    - User retention
    - Paid CAC
- Marketplace:
  - Acts as an intermediary in the sale of a good or a service.
  - Examples: Airbnb, Uber, Ebay.
  - Metrics:
    - GMV (Gross Merchandise Value): total sale in a given period.
    - Net revenue
    - Net revenue CMGR
    - User retention
    - Paid CAC
- E-commerce:
  - Sells goods online.
  - Examples: Warby Parker.
  - Metrics:
    - Monthly revenue
    - Revenue CMGR
    - Gross margin
    - Paid CAC
- Advertising:
  - Offers a free service and drives revenue from advertisers.
  - Examples: Twitter, Snapchat.
  - Metrics:
    - Daily active users
    - Monthly active users
    - Percent logged-in
- Hardware:
  - Sells physical devices.
  - Examples: Fitbit, GoPro.
  - Metrics:
    - Monthly revenue
    - Revenue CMGR
    - Gross margin
    - Paid CAC
- Presenting metrics -> Common mistake / solutions
  - Cumulative charts / monthly data
  - Not labeling Y-axis / label with the right detail
  - Changing Y-axis scale / X and Y intersect at zero
  - Showing only % gains / Show absolute number and %

How Investors Measure Startups Q&A

How investors measure startups at early stages?
- Team (Most important) (Why you are working on this idea? your clarity of thought? How good are you with convincing others? If an investor gives you capital you know what to do with it?)
- Product market fit
- Market opportunity
When to fundraise?
1. You need the money to grow
2. You are willing to give up equity to grow
3. You clearly know the milestone this money will get your company

WEEK 4

How to Launch (Repeatedly)

Why launch constantly?
- A/B test your short pitch
- See how users respond to your product
- Launching to different audiences: Are you talking to the right users?
Types of launches:
- Silent Launch (you can use ship or carrd)
  - Domain name
  - Company name
  - Short description
  - Contact
  - Call to action (subscribe to our newsletter, get email when we launch)
- Friends and Family
- Strangers (Go out to your users and introduce your product to them!)
- Online Communities
  - Reddit
  - Hackernews
  - Product Hunt
  - (Don’t use marketing language, no jargon. Talk as if you are explaining it to a human)
  - How?
    - Introduce your self
    - What are you building?
    - Who are you building it for?
    - Why?
    - Interesting insights?
- Request for access
  - Request for early access
  - Add some viral elements to it (share to skip waiting line)
- Social Media
  - Relevant blogs (Look for blogs with good SEO when searching for common words regarding your product)
- Pre-order
  - For physical products.
- New product/feature
  - Pressing every launch button with new products/features
- Build your own community
  - Email list (add people interested in your product to a mailing list and send updates every once in a while. When launching your product ask them to help spreading the word about it)
Launching is not a one moment in time.
👨‍💻Good talk. Lots of interesting stories and good ideas.

Growth for Startups

Most startups don’t have PMF. Founders convince them selfs they do, but they don’t 😞
If you build it, they won’t come! (people are used to working on big companies where this isn’t a problem!)
As a founder you must keep in mind these two skills:
- At the beginning of your company, you will do so many things that don’t feel right. Physical and real stuff that don’t feel relevant later on.
- When your company grows bigger, you are gonna do things that relate directly to software, that scale your company.
One way to grow when you are small: Doing things that don’t scale.
PMF:
- How to know if you’ve reached PMF?
  1. Identify the metric that represent the value my users get from my product.
  2. Measure the repeat usage of that metric
- Other (worse) ways to measure PMF:
  1. Net promoter score - not great
  2. Surveys - often biased
  3. "How would you feel if you can no longer use this product"
- Other not good metrics for PMF:
  1. Registered users
  2. Visitors
  3. “Conversion rate"
  4. “Customers that aren’t paying"
Growth channels & tactics (Don’t do this before PMF. There’s no need for this with users that churn so fast):
1. Product growth / conversion rate optimization (engineers, designers, data scientists, product managers)
  1. Your product is a funnel/growth loop
  2. Every step in the funnel have drop-off
    - Content/Copy
    - Internationalization
    - Authentication (critical flow/ users are vulnerable)
    - On-boarding
    - Purchase conversion
2. Growth channels
  - rare behavior/ people use google to find a solution? -> Google SEO & SEM
    - SEO:
      - On-page optimization:
        
        Every optimization starts with keyword research.
        
        Which page am I trying to rank for that keyword?
        
        SEO experimentation
      - Off-page optimization:
        
        Who is linking to you? (More link from press and blogs will get you higher)
  - do current users already share your product via word-of-mouth? (Uber, Airbnb) -> Virality & Referrals
    - Referrals:
      - WOM is Airbnb’s largest growth driver
      - Referrals are engineered WOM.
  - Does having more users improve the experience? (Marketplaces, LinkedIn, facebook) -> Virality
  - Do I already know who each of my future users is? -> Sales
  - Do my users have high LTV? -> Paid acquisition (Google, facebook)
    - Pain Growth:
      - Don’t do paid growth if you don’t have revenue (common mistake)
      - CAC = Customer acquisition cost
      - CAC / Payback time (the most important metric in online marketing)
      - Channels: Google, facebook, Appstore and play store for apps.
  - Most companies grow huge using 1 or 2 of these channels!
Making decisions using A/B testing:
- Most startups at early stages don’t need A/B testing, it won’t matter at all. It’s a great decision making tool later on.
- A/B test calculator (Search on google)
Summary:
1. Start by doing things that don’t scale
2. Measure your retention / PMF
3. Build a culture of experimentation (use data to make decisions and not follow the loudest sound in the room)

WEEK 5

Startup Finance Pitfalls and How to Avoid Them

It’s surprisingly easy to run out of cash.
Not knowing what numbers to look at (to ensure the health of your company finically)
- Know this:
  - Bank balance
  - Money coming in
  - Money going out
- Calculate this:
  - Burn -> Money in - Money out
  - Runway (# of months till you run out of money) -> Bank balance / Average burn
  - Growth rate -> Money in (Month 2) - Money in (Month 1) / Money in (Month 1)
  - Default alive? -> if (expenses = constant) && if (revenue growth = continues): [Do you have enough cash to reach profitability?] startup growth calculator Default alive or default dead?
Not looking too often (you should look at it every week)
Under-representing expenses:
- Expenses don’t remain constant:
  - undervaluing your own time
  - Hiring people doesn’t just cost their salary (equipments, health insurance, office space)
  - Assuming paid acquisition remains constant (in the early days you might find users who are excited to use your product, and over time it gets harder to find and convert users. Assume and predict the worst case scenario so you can manage it well)
  - Don’t ignore to make runway look good! (numbers don’t lie and money will finish eventually)
Out-sourcing responsibility:
- It’s recommended to outsource bookkeeping and focus on what really matters. But at the same time you as a founder/CEO are the one responsible for the numbers.
Scaling too quickly:
- It’s easy to fall in this pitfall.
- The best startups do more with less.
- You should avoid hiring before PMF.
- More employees do not help you reach PMF.
Letting runway get too low before fundraising:
- Always assume you’ll never raise money again.
- Seed stage money will help you reach PMF.
- Series A and beyond expect sustained growth.
- Your runway gives you leverage.
- Advice for Companies With Less Than 1 Year of Runway
How to not run out of money?
- Know your cash balance and runway at all times.
- Understand how your expenses are going to increase over time.
- Understand that a high ration of revenue: employees is a better metric than # of employees.
- Assume you’ll never raise again, so have a plan for reaching profitability.

How to Work Together

Founders need to optimize a relationship that can last for 10 years.
The four horsemen (To avoid when fighting):
- Criticism (not addressing the one issue in hand, instead, bringing other issues to the conversation)
- Contempt (intention to insult)
- Defensiveness (someone not owning responsibility to the problem)
- Stonewalling (not engaging, not talking)
Make a plan before you fight:
- Divide and conquer (who’s responsible/decision maker for what ex: finance, product, hiring)
- Once you decide ownership -> determine success and failure. (what can trigger conversation and serious talk when things go south)
- Know your self:
  - What’s your attachment style (How people approach relationships):
    - Secure (don’t mind been vulnerable, relying on each other)
    - Anxious (want to feel loved all the time)
    - Avoidant (it’s scary, and i’m afraid I will ruin it up)
  - What’s your cofounder's attachment style?
    - Anxious(need constant validation to make decisions/solve conflicts ) and Avoidant (need space to make decisions/resolve conflicts) are the most common in the world!
  - What Is Your Attachment Style?
- Document a process
  - When you are emotionally sober, make a process to deal with disagreements.
  - Decision Disagreement Framework - How we encourage disagreements at Matter
  - There are a lot of ways. You just all have to agree ahead of time.
- Use non violent communication
  - Nonviolent communication (Book). “When [observation], I feel [emotion] because I’m needing some [universal needs]. Would you be able to [request]?"
  - Observation vs Evaluation (disagreement/criticism should about an observation(You haven’t finished this task for a week) , not an evaluation/opinion (you are lazy!)
  - Emotion vs Thoughts (don’t say thoughts talk about feelings) (I feel frustrated / I think you are not taking this seriously) (to know if this is a feeling or a thought, is to substitute the phrase I think with I feel and it still works)
  - Universal needs
    - (I need to be CCde in every email you send! - instead use a universal need - I need transparency! )
    - Everybody can agree on universal needs.
    - Avoid (I need support from you) since this makes it non universal.
  - Requests vs Needs
    - Requests an invitation for the other poison to meet our universal needs.
    - Make it very specific.
    - Say what you want (not what you don’t want).
    - Stay curious.
  - How to Deliver Constructive Feedback in Difficult Situations
- Pay down your emotional debt
  - Pay this down every day.
  - In successful relationships: you don’t resolve big conflicts, you resolve the conflict when it’s small and you don’t let it grow ever.
- Practice having level 3 conversations:
  - Level 1: Informal conversation/ data exchange
  - Level 2: have some emotions/talk about something personal
  - Level 3: They are relational/ they are engaged with something that is happening right now, something that matters. (In a startup there are a lot of things that matter and should be talked about)
Questions to start with:
- Goals:
  - What are our short term goals for the company?
  - Are we using the right metrics?
  - Are we hitting our goals?
- Roles:
  - Is it clear who is responsible for what?
  - Do we agree that the current division makes the most sense?
- Performance:
  - Is our workload distributed in an optimal manner today?
  - Do we all feel a high level of dedication and motivation?
  - What mechanisms are there in place to for providing feedback to each other?
Summary:
- Everyone fights, make a plan.
- Figure out roles, goals and a process before commons get involved.
- Start having hard conversations now.
- Use non violent communications to share honest feedback without criticism.
- Pay down emotions debt regularly.

WEEK 6

Building Culture

Culture is behavior. Implicit set of behaviors inside your company. They should inform the employees how to behave if it hasn’t been explicitly laid out for them.
Right behaviors -> Good business
Stages of companies: Idea stage -> PMF -> Scaling
The (~20) employees before scaling are the DNA of your companies culture.
6 thing you can do now:
1. Be proud of the problem you are solving.
2. Create a long time vision that others will follow.
  - Tesla: To accelerate the world’s transition to sustainable energy.
  - Microsoft: A computer on every desk and in every home.
  - Google: Organize the world’s information and make it universally accruable and useful.
3. List your values then model the behavior.
  - Spotify:
    - Innovative
    - Collaborative
    - Sincere
    - Passionate
    - Playful
    - Innovative
  - Atlassian:
    - Open company, no bullshit.
    - Build with heart and balance.
    - Don't #@!% the customer.
    - Play, as a team.
    - Be the change you seek.
4. Align your culture with your customer.
  - Examples of internally-focused culture:
    - Facebook’s "Move fast and break things”.
    - Googls’s “Don’t be evil”.
5. Talk about the importance of diversity to your company.
  - Diversity of opinions. (Very important)
6. Put a hiring process into practice, plan to evolve it.
It’s not too early to start today!

All About Pivoting

What is a pivot?
- Changing your product.
A company that is not quickly ideating and rapidly learning and changing in the beginning is probably not moving fast enough.
Opportunity lost: “the loss of the potential gain from other alternatives when one alternative is chosen."
Good reasons to pivot:
- I hate working on it.
- It’s not growing.
- I’m not a good fit to be working on this idea.
- I’m relying on an external factor outside of my control to make my startup take off.
- I’m out of ideas on what to do differently to make it start working.
Good reasons not to pivot:
- You are trying to run away from doing hard work.
- You are repeatedly changing ideas and giving up on them before launching and doing sales.
- You read an article about some hot new trend that is popular with investors and want to chase it.
Why people take too long to pivot?
- Loss aversion (when feel you have invested a lot in something and have a hard time letting go.
- Have a little bit of attraction.
- People are very polite and have a hard time telling you they don’t like the thing you are working on.
- Fear of admitting weakness/defeat.
- Putting blame re:why things aren’t working on customers/investors.
- Belief given to you by inspirational sources that “if you believe hard enough things are going to change”
Reminder about product market fit
- Most people never get it
- You know you have it when growth is not your biggest problem — keeping up with demand is.
- If you don’t have PMF and you have given an idea your best then it can be easier to get PMF by changing ideas than continuing to throw good time/money after bad.
- “shots on goal"
How to find a better idea:
- Try to find something the founders are more excited about and makes them feel more optimistic to work on it.
- Corollary: being more ambitious is often counter-intuitively easier.
- Honest assessment of founders strengths/weaknesses and attempt to find something with better founder make-fit.
- Best to find something easy to get started and validate market feedback.
- It OK to work on an idea that doesn’t require VC:
  - Most companies in the world that people start don’t require VC. That’s good.
  - Trying to raise money for a company where VC doesn’t make sense is not a great use of anyone's time.
  - If the way you evaluate the quality of an idea is from investors you are going to get pushed down the VC rabbit hole.
When is the best time to pivot?
- ASAP when these things happen:
  - You have launched and have been trying to get users for weeks or months and it feels hopeless.
  - When the idea is impossible to get started on b/c it takes years of building/too much capital etc.
  - You know in your heart its not going to work.
More pivoting thoughts:
- Pivoting over and over and over again can cause whiplash.
  - Whiplash makes founders give up -> kills the company.
- Founders that are incapable of changing ideas struggle, founders that change ideas too much struggle. Find the happy medium.
- Having employees while pivoting is extra hard and not recommended — best to do it with just founders.
Idea quality scores:
- How big of an idea it seems to be: 1-10
- Founder/market fit: 1-10
- How easy is it to get started on the idea: 1-10
- Early market feedback from the customers: 1-10
- Overall score: 0-10
Summary:
- Changing your idea is part of doing a startup, and the earlier you lock into the right ideas the better.
- When you are considering a pivot it should not feel like some huge monumental decision.
- You should follow pivoting best practices.

WEEK 7

How to Improve Conversion Rates

Working on churn is easier than working on conversion.
To solve design (UI) problems:
- You either have to do one of each -> decrease knowledge || increase knowledge.
- For landing pages do the one button exercise: if I have only one button in a page and I want users to click it. What information should I put in there to make them click it? and what information I need to remove that makes them not click it?
7 questions to ask your self to improve conversion rates:
- What’s the call to action? (a button to click that should be right beside the Magic Moment “the moment your user understands and feels the most excited about your product”)
- What is it? (the magic moment it might be a sentence that could be put in an email and sent to your mom and she will understand the product )
- Is it right for me? (am I in the right place? Is there any reflection in this of me?)
- Is it legit? (normal template would solve this. don’t overthink it)
- Who else is using it? (it’s a short cut for the previous two questions. If so and so are using it, I might give it a chance)
- How much is it? What’s the catch? (have some empathy and show how much it costs)
- Where can I get help? (FAQ are not enough. People wanna talk to someone or at least know that they can talk to someone)

Startup Pricing 101

1% of effort in optimizing monetization might give you up to 12.7% in growth. Compared to the 1% in Acquisition will give you 3.32% and in retention the 1% will give you 6.71%.
Companies that don’t price the product with neither "value based pricing” nor “cost plus” models will face one or more of these mistakes:
- Prices are too low.
- Underestimate your cost. (your margins are not enough to cover acquisition)
- Don’t understand your value. (you don’t understand your value, or you don’t know how to convince users of the value your product provide)
- Focus on the wrong customers
Demand doesn’t accelerate until the first 2% to 5% of potential buyers adopt the product.
Why is pricing innovation hard?
- Innovations requires users to change patterns.
- Average user lacks knowledge and trust to make that change.
- Early adopters place highest value on potential benefits.
10 - 5 - 20 Rule:
- Value = 10x Price
- Raise price 5%
- Until 20% push back
Summary:
- Pricing gives the most bang for effort
- Understand the variables (const, price, value)
- Go after early adopters. Benefit > Price
- Get organized when optimizing pricing.
- Price determines acquisition strategy
- Use the 10 / 5 / 20 Rule

WEEK 8

How to Prioritize Your Time

Real vs. Fake Progress
- Primary KPI: Revenue or Active users
- Set weekly goal for primary KPI
- What usually moves the progress: Talking to users and building product
Task prioritization
- Journal every hour of last week’s time used to work on your company. Be honest and write down what did this hour contribute to your company’s progress.
- Keep a list of ideas that would move your primary KPIs.
- Talking to users:
  - Helps you to convert them into customers and revenue.
  - Helps you understand if you are in the right track or not.
  - Helps you figure out your product’s road map.
- Building product:
  - Delivers a solution to the user to see if it converts into more customers and revenue.
- Go over the list every week and rate every task on priority: High, medium, Low.
- Go over the list every week and rate every task on complexity: High (Might take more than a week), medium(1-2 days), Low(Do in less than a day).
How well am I prioritizing?
- Hitting your weekly goals consistently.
- Weekly updates and being really honest and consistent about it
  - Primary KPI (Actual vs Goal)
  - Biggest obstacle to grow
  - Tasks accomplished + impact
  - Big learnings
- Every once in while review your updates and check for:
  - Learning fast?
  - Low value work creep in?
  - Consistent blockers to grow?
  - Complementing tasks in timely manner?
- Finding your self always not completing tasks?
  - Your tasks are too complex. Break it down into smaller tasks.
  - Maker's Schedule, Manager's Schedule - Paul Graham
The art of moving fast = Decisiveness
- In the beginning of your startup your primary objective is to move fast and prove that you are building something people want.
- The faster you figure this out the faster you pivot into something or have the confidence that you have PMF to start scaling and make a huge business.
- Making decisions thoughtfully and quickly is super important. Time is often waisted indecisiveness.
- The key is to be OK with making a wrong choice and learning fast.
- The person that chooses the wrong task to work on today but moves quickly, learns why it’s wrong and moves to the right one.
Summary:
- Always be working on thing that directly that impacts your primary KPI.
- Do the thing that has the highest impact to meeting your weekly goals. That usually always means: Talking to users and building your product!

How to Evaluate Startup Ideas Pt. 2

How do I package up my idea and present them to an investor?
Good investors are looking for these things when hearing a pitch:
- Do I understand idea?
- Am I excited by idea?
- Do I like the team?
A clear idea is the foundation for growth
- Every great company grows organically. By WOM.
You should have a clear way to describe your startup for people who know nothing about your business to understand it.
You will talk about your startup more than anything else! have a clear way to describe it with.
Avoid: Ambiguity(the apposite of clear), Complexity, Mystery (Unknown nouns), Ignorable (some language people will just ignore)
Great pitch characteristics:
- Conversational. We talk like normal people not like CEOs all the time. Good for WOM.
- No Jargon. Words that are only used by your industry.
- No Preamble.
- Reproducible. I should understand these from your pitch: What are you making? What is the problem? Who is the customer?
- Good examples:
  - Airbnb is the first online marketplace that lets travelers book rooms with locals, instead of hotels.
  - Dropbox synchronizes files across your/your team’s computers.
  - Vahan is building LinkedIn to the next billion internet users.
    - Should I use x for y?
      - X is a household name
      - Does Y want X?
      - Y should be a huge market
Lead with what. Not why or how.

WEEK 9

Safe Financing Documents

The basics:
- Form a corporation
- Need money to grow?
- Sell a part of the company to raise money
- Valuation = The value of your enterprise
- Dilution = Stock. How much of your company you have sold.
Old way of raising early money:
- Series A preferred stock financing
  - Valuation / outstanding shares = price per share
  - Sell to investors - angel groups
  - Negotiate terms of preferred stock
  - Lots of documents!
Modernization of the convertible:
- Simple Agreement for Future Equity
  - Because it doesn’t make sense to use debt to sell equity
  - Investors don’t want to be lenders, startups don’t want to be borrowers.
  - YC’s Safe Financing Documents
Summary:
- Modern early stage rounds of financing are usually done using convertible securities, like the safe.
- Selling preferred stock in priced rounds of financing is still modern, but not for first fundraising.
- Point of fast, flexible, cheap fundraising resources = founders focus on building
- What is standard in Silicon Valley is still novel in other areas.

Advice for Hardtech and Biotech Startups

That is a hard-tech company?
1. It will take a lot of time and money to build the first product
2. It may or may not be possible to build it
Market risk: Do people want it?
Technical risk: Can we make it?
Why start a hard-tech company?
- “In many ways, it’s easier to start a hard company than an easy company” — Sam Altman
How do you make progress when you have a “heavy MVP”?
- Boom (fast airplanes)
  - Do things that don’t cost money
    - Assemble a team of top advisors (to give them credibility)
    - Build computer simulations (to show that they have a design that could work)
    - Build a plastic model (to show it around)
    - Show customer demand (get people excited)
- Solugen (some chemical stuff)
  - Start small
- AirX (medical device)
  - Launch a simplified version
  - Original plan:
    - Medical device
    - 3 years to get FDA approval
  - New plan:
    - Use existing medical device
    - Write software
    - Zero FDA approval
- Notable Labs (new drug for cancer)
  - Bootstrap with a service
  - Long-term vision: develop new drugs for cancer
  - Hack to get started: provide tumor screening services
- Astanis (satellites)
  - Start with a proof of concept
- Ginkgo Bioworks
  - Sell it before you make it
How do you prove people will want your product if you haven’t built it yet?
- Pre-sales: you sell your product before you build it.
- LOI: letter of intent. “Non-binding contract to buy your product when it’s ready”.
  - How many units they will buy
  - The price they will pay
  - When they will buy
  - What specs your product needs to achieve
The way to accomplish incredibly ambitious things is to break them into very small steps.

WEEK 10

How to Lead

Managers come in all shapes and sizes. Anyone can be a manager.
Be your self. Don’t imitate other people’s style of management. People can detect inauthenticity.
Great people share these 3 attributes:
- Think and communicate clearly.
  - If you want other people to follow you. you have to paint a clear and compelling vision of the future for them to follow.
  - As your company grows your communications have to get better and better with time. Because you’ve got more diverse people who are hearing it.
  - Great communication needs to be simple. Simplicity in communications is very hard. It takes a lot of time and preparation to communicate simply.
  - Clarity of thought precedes clarity of language. You have to think clearly to communicate clearly.
  - Plan and practice your communication. Practice in front of a smaller audience. Get some coaching and feedback. It’s a fundamental skill.
- Good judgment about people.
  - Making constant bad decisions in empowering people will lead to diminishing the trust other people have in you.
  - When you are trying to recruit for any position in your company: you should meet a lot of people. Even people who you have no hope of hiring because it’s important to get a sense of what a great leader/engineering leader/sales leader is like. Talk to them about their jobs and backgrounds and how they came to be where they are. How they lead people and what they think goes well and what doesn’t.
  - Don’t cut corners. Spend time meeting people. Honing your instinct.
  - You will have to hire and recruit a lot of people. Some of them won’t work out. Make sure you view the hiring process as something you can learn from every single time.
  - Be very diligent in terms of learning who you hired. Why you hired that person. What went right and what went wrong. In terms of their original hiring, onboarding and their career in the company.
  - Be self reflective about the development of people in your organization and your choices as in who you are empowering with authority.
- Strong personal integrity and commitment.
  - Standing for something meaningful beyond them selfs. Being motivated by things outside their narrow personal interests.
  - Avoiding behavior that diminishes trust and credibility in a leader. Like favoritism, conflict of interests, inappropriate language, inappropriate work relationships.
  - Commitment means making your work into a life mission in ways that inspires others. Giving it your all. People see this and respect it and follow it.
  - You test this with the transparency test: Ask your self if all your private communications and behavior towards others. would be transparent to others in the company, would you be embarrassed about it? If everyone saw everything you say and did, would you be embarrassed by any of it? we all make mistakes. But patterns of mistakes are bad.
The best way to measure great leaders is in terms of the amount of trust they are able to engender in the people who work for/with/around them.
- Trust is the success metric for leadership.
- The job of every leader is to build trust. Trust in employees, investors, customers, users and so on.
- Building trust is both an art and a science.
  - The science: you have to be right about the empirical questions in your business.
    - We should build this product. We should try to sell to this customer. We should market the product in this way.
    - These things/choices over time get proven to be right or wrong. Hopefully you are right much more than you are wrong. Because if you are consistently wrong you diminish the amount of the trust people have in you.
    - People often get the science part right.
  - The art: Showing empathy. Good timing when you confront issues. Striving for something bigger than your self. Not being selfish or self centered.
    - It’s a delicate topic. Practice makes you better.
With every step you take forward. Try to optimize for trust. You are gonna have lots of hard decisions to make. You have to fire people. Admit mistakes to customers. Saying no to people because you disagree with them and their ideas.
Try to view every challenge as an opportunity to increase the trust that people have in you as a leader. Ask your self which path/action would generate more trust in you as a leader and always choose that path/action.

Parting Advice

Focus on what matters.
- What you’ve learned at SUS.
- Staying connected: updates, community.
- Making something people want.
- Metrics that measure your value.
- Surround your self with great people.
- Make a healthy and happy company and always moving forward.
Startups are hard!
Solve problems. Any problem that comes in your way.
Default to action
- Write code. Talk to users.
- Don’t get sad. Go. Do.
- Make forward progress.
- Be ambitious. Take chances.
- Stay default alive.
"Don’t just not be evil. Be good.” —Paul Graham
Being good
- Be good to yourself (eat healthy. exercise)
- Be good to your cofounders
- Be good to your employees (choose a culture and values that are positive. Make your company a happy, exciting place to work)
- Be good to your customers
- Be good to your investors
- Be good for the world
Summary
- Find your path.
- Focus on what matters.
- Things will go wrong: be determined and resourceful in the face of adversity.
- Default to action.
- Be good. (create the kind of company you want to work at)