The Breakdown

4 Steps to Startup Success

Startups are hard.

I know that, you know that.

Sam Altman also knows that (although he makes it look easy…)

From 2014-2019, he was president of Y Combinator, the famous startup accelerator in Silicon Valley.

In 2014, Sam gave a lecture that broke down the 4 core ingredients of a successful early-stage startup.

It covers exactly what you need and leaves out the distractions. And the best part, you need each of the four to be successful.

Let’s get into it.

Step #1: Pick a great idea

Startups have one purpose, to fix a problem. All the greatest startups do that.

Airbnb helps tourists experience the world from the eyes of a local. Google helps us find answers to the questions most important in our lives.

If you look at the top 3 reasons why startups fail, you’ll see:

Sam says the company “should feel like it is on an important mission”. Your chosen problem should drive every decision.

So how do you find a problem in dire need of fixing? First, look at your life and think “What challenges am I facing?”

Most startups succeed because founders have a personal problem and validate that others have that problem too.

Everyone should have a note on their phone with a list of problems they see in their life.

No matter how stupid, any problem you see goes on the list.

Every week, check through it, remind yourself of what you saw, and think who else has the problem too.

Next thing you know, you have a problem statement and are ready to start building a solution.

Step #2: Start small

Once you’ve picked your problem, how quickly can you test your idea?

In this article, Tom Eisenmann, a professor of the Entrepreneurial Manager MBA Class at Harvard, discusses how one of his students quickly tested a hypothesis they had for a women’s apparel brand.

In lean startup mode, they gathered a sample of apparel and exhibited it at trunk shows where 25% of the 200 women who tried the clothing, bought it.

Basically, they sold clothes from the trunk of their car…

It’s scrappy, it’s not perfect - however, it was quick and got them the proof they needed.

Now in this specific example, the business didn’t work out for other reasons but you can check out the full case study here to learn more.

And the concept is no different for any other startup, software or otherwise.

Start small, don’t waste any time on complexities - just get something into the hands of users.

Step #3: Build a great team

Choosing the right team is super important.

Investors like to say they are “betting on the jockey as much as the horse”.

When choosing a team, you need to hire for 3 areas:

By intelligence, I mean - do they have the skills for the job?

This article, titled “The Dream Team: Hipster, Hacker, and Hustler”, outlines the ideal co-founding team:

Culture fit is important because you need to spend so much time with your team, if you don’t mix, it will be a difficult journey.

Altman suggests “seeking individuals who genuinely enjoy working with each other, as this fosters a positive and collaborative environment”.

Finally, having a sense of ambition and personal responsibility is a must. Team members should be driven and take ownership of their work, demonstrating a commitment to the company's success.

Step #4: Execute your mission

Sam says that a CEO has five jobs

In my eyes, I see a CEO as a “resource collector”.

Think about it.

A CEO shouldn’t be doing everything, operationally.

But they should be collecting all the necessary resources to execute on their vision.

What resources should a CEO collect?

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