Speaking for several entrepreneurs, I'm sure that Paul Graham is one of the most influential people in shaping today's technology industry. Through his writings and his Startup Accelerator YCombinator, he has helped shape the modern technology ecosystem — especially among startups — about as much as Steve Jobs and Apple helped shape hardware. Or Microsoft shaping software. Not only has YCombinator funded and mentored thousands of companies in navigating through their growth, they also give priceless written knowledge to the broader community of entrepreneurs and startups. Companies they have funded include Reddit, Airbnb, Dropbox, Coinbase, DoorDash, Twitch, and many more.
Their content is also top notch. In an age of forgetfulness and information overload, Paul Graham's essays have stood the test of time and they continue to be some of the most comprehensive ways around the wild west of technology, especially software. The way Paul Graham writes has a unique style — he gets down into the gritty details without getting you lost. Then he brings you back up to see the big picture, helping you connect the dots the whole way. In this series I will highlight the best of several of his articles, starting at the very beginning, perhaps his most classic essay: How to Start a Startup.
1 — How to Start a Startup
Right off the bat, the first paragraph hits hard in its simplicity and succinctness (emphasis my own).
You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.
That's it? In a world of startups and small businesses where the majority shut down within their first year, and only 10% end up making any significant return, this seems like a very bold statement in beating the averages, but as he goes on, he deliberately proves each of the above points in his thesis, and you realize he is right. He breaks up the rest of the essay into about 6 major sections: "idea", "people", "what customers want", "raising money", "not spending it", and "should you?". Among all of these, the idea section is noticeably the shortest. The introductory sentence reveals why.
In particular, you don't need a brilliant
idea to start a startup around.Huh? But most people think the idea is everything!! He acknowledges this in another essay: startups are counterintuitive. He then provides more detail on how little an idea is worth in the market and finishes with the solution to this dilemma of what really matters.
What matters is not ideas, but the people who have them. Good people can fix bad ideas, but good ideas can't save bad people.
Ok, so it's the people that really matter. The people who have the ideas. But what kind of people should they be? This includes the founders, the early team members and employees. He goes on to describe the team at his startup.
Almost everyone who worked for us was an animal at what they did. The woman in charge of sales was so tenacious that I used to feel sorry for potential customers on the phone with her. You could sense them squirming on the hook, but you knew there would be no rest for them till they'd signed up.
Tenacity. A required characteristic among the top performers. The rest of the section includes tips on how to recognize top performers of other professions, namely programmers. It also includes tips on how to find these people, work with them, and finally a general makeup of the initial group's roles. In discussing the interactions of the early team and the general makeup of their roles, Paul Graham arrives at the most important role of any business person working at the startup: understanding users, the main topic of the next section.
This section on "What Customers Want" is clearly the most important of the essay considering how lengthy it is. I would even go so far as to say that this is the central thesis of the essay and everything else after that is only there to satisfy the curious entrepreneur about the process of raising money and managing it. In this section, PG is also his realest / harshest self. He doesn't mince words about why most startups fail.
In nearly every failed startup, the real problem was that customers didn't want the product. For most, the cause of death is listed as "ran out of funding," but that's only the immediate cause. Why couldn't they get more funding? Probably because the product was a dog, or never seemed likely to be done, or both.
So the product is really important. To drive the point home, PG uses the restaurant analogy that no restaurant with great food went out of business. He also really hits home that in order to make something people want, founders and "hackers" (software developers) should try very hard to be empathetic and focus on ease of use.
It's worth trying very, very hard to make technology easy to use. Hackers are so used to computers that they have no idea how horrifying software seems to normal people
I write software and yet most software still seems horrifying to me. This comment rings especially true for people working on User Interfaces and consumer products. There's even more of a danger in trying to go after products that need large numbers of consumers to be successful. The chances of those succeeding is even lower because lots of people try to make the next Facebook and also because consumers today have no shortage of entertainment options. The best advice that PG offers to this dilemma is to focus on niches.
Since startups make money by offering people something better than they had before, the best opportunities are where things suck most.
Well said. Despite over half the world being connected to the Internet today, most internet software still sucks. This is especially true for software related to productivity or work. There are also several niches that continue to get worse, like the recent example of decreasing interest in Tumblr, which has left several artists without a creative means of expression. This has led to better designed platforms like Medium thriving because of their excellence in a particular niche like writing.
The rest of the section has great advice on things that you can do to understand your users better. PG also discusses marketing and segmentation. Then he justifies why it's better to start in a niche, even if your end goal is taking over the whole market. This is a well-documented business strategy called the Blue Ocean Strategy, popularized by a book of the same name.
In technology, the low end always eats the high end. It's easier to make an inexpensive product more powerful than to make a powerful product cheaper. So the products that start as cheap, simple options tend to gradually grow more powerful till, like water rising in a room, they squash the "high-end" products against the ceiling. Sun did this to mainframes, and Intel is doing it to Sun. Microsoft Word did it to desktop publishing software like Interleaf and Framemaker. Mass-market digital cameras are doing it to the expensive models made for professionals. Avid did it to the manufacturers of specialized video editing systems, and now Apple is doing it to Avid. Henry Ford did it to the car makers that preceded him. If you build the simple, inexpensive option, you'll not only find it easier to sell at first, but you'll also be in the best position to conquer the rest of the market.
Not only does this paragraph offer solid business advice, its tone is also one of my favorite parts about Paul Graham's philosophy on startups. It is the exact opposite of what many people's perception of the technology industry is — large companies that control the market and take all the profits. In fact, Paul Graham advises entrepreneurs to make simple, inexpensive products that can help users who are currently having a terrible experience. This philosophy is at the center of a happy intersection of doing something you like, getting paid well for it, and having it improve a currently broken aspect of the world.
In a very real sense, Paul Graham's writings have provided us the satirical comedy of the show Silicon Valley. He is the reason why so many entrepreneurs claim to be focused on "making the world a better place", and genuinely believe it. The case also very strong for a well-run startup company making the products described above actually making the world a better place with affordable, easy to use products that are solving a problem. But there's a catch — making a startup like that is an excruciatingly difficult and slow process. Despite there being an overabundance of knowledge and tips, entrepreneurs still need all the help they can get.
"My mom has always been the driving force of my family. No matter what she was always there for us. She has taught me to be a better person. A lot of people would confuse my behavior as being 'too effeminate' or something but I think it's more along the lines of I know how to treat people with respect, and I think that that's one of the more important things to learn from your parents is how to respect people. My mom is the most kind hearted person I know and that's how I aspire to be." 
"I'm living in Los Angeles for the first time. I'm from Germany and I love it here. Everything is different, especially the school system. Here we're doing more practical things like interviewing, taking pictures and videos. In Germany we mostly just sit in class and listen to the teacher. I like the weekly assignments they give you here which makes you study during the week. In Germany you just have an exam at the end of the semester but no one forces you to do anything. Here I have to do everything during the week. You have to be a lot more disciplined in Germany if you want to do well." 
"I don't really have a well-structured study life. I'm on the CSUN ice hockey team and we have practice two days a week, and then travel to wherever our games are so I usually will study on the plane or on the bus, or right before my classes like I'm doing now. I've been playing ice hockey since I was nine, but I'm keeping it a hobby. Most players start when they're five or six if they're wanting to do it professionally. I have a couple of jobs in mind. I was looking at being a coast guard, or a physical therapist, or I could be a beach lifeguard. I feel like there are a lot of opportunities I can choose from." 
"I've always had a passion for acting. I love entertaining people and making people laugh and smile. I just love watching shows and thinking 'I can do that.' When I saw the show 'A Different World' it made me realize how different African-Americans are from other races, what they go through. The show made people open their eyes and realize, 'Oh this is going on in our world,' it taught that we have to take a stand for what we want, and that made me want to be an actress more because it makes me feel like I can change the world." 
"When I was nine years old both of my brothers died the same year. My younger brother died first from leukemia. He was three years old at the time, and then six months later my older brother got into an accident. He got hit by a fast car. I was the middle child. I stopped going to school for almost a year. My parents, especially my mom, helped me cope with it by talking to me a lot. It has shaped me in a lot of different ways. I'm more compassionate toward other people. It doesn't make me feel emotional when I think about it now but, before, it was terrible. It's a long process, I've kind of moved on, but it's still there." 
"My father came here from Mexico pretty much with nothing. He started from the bottom and I've seen him prosper a lot in his work. I look up to him a lot, he makes me want to be more like him. My ambition grows every time I see him grow and it mak es me just want to finish school and make him proud and be able to say, 'Thanks to you I made it this far.' I'd like to give back to him eventually. Sometimes a part of me tells me he probably wishes I was a guy. He puts me down sometimes, and I try not to let him see that. It just makes me want to go out there and do something with my life and prove him wrong. He always tells me life in his times life was so hard at my age and I'm like 'Okay well we're not in your times, and I'm a girl, so things are different.'" 
JVI | praying over town | 09.17.18iv. Jesus compares impenitent cities to Old Testament cities 