- The author discusses the misconception that a great startup requires a great idea.
- They provide a framework for finding ideas, which includes identifying a problem one is passionate about, brainstorming solutions with others, and building and launching a minimal viable product (MVP).
- The author emphasizes the importance of focusing on solving a personal problem that is frequent and intense.
- They highlight the value of having co-founders and iterating on ideas together.
- The author advises against getting caught up in legal or fundraising aspects before trying out the product.
- They suggest that having a few customers can increase excitement, team cohesion, and investor interest.

- Investors are more interested in talking to entrepreneurs with actual customers rather than just an idea.
- Some people make excuses instead of working on the actual problem.
- Two failed orders of operations: coming up with an idea and then pitching to investors, and having an idea but no coding skills or technical co-founders.
- A good deck or idea is no longer enough to impress investors, as there are many startups competing for attention.
- Outsourcing can be more expensive and lead to constant iterations, running out of money, and ultimately needing more funding from investors.
- Getting a technical co-founder tends to be cheaper and more beneficial in the long run.
- Some people outsource with the intention of finding a co-founder later, but end up in a worse position with a bad product, no users, and less money.
- Going from contractor to big company is a harder path and more likely to result in losing one's own money.

Michael Seibel is a partner and the CEO of YC. He cofounded Justin.tv, which was in the winter 2007 batch and Socialcam, which was in the winter 2012 batch. https://twitter.com/mwseibel

In this video Michael comments on his essay One Order of Operations for Starting a Startup https://blog.ycombinator.com/one-order-of-operations-for-starting-a-startup/

The YC podcast is hosted by Craig Cannon - https://twitter.com/craigcannon

***

Topics

00:00 - One Order of Operations for Starting a Startup

1:00 - People aren’t taught how to find ideas

2:40 - Find a particular problem that you’re passionate about

6:15 - Find some friends and brainstorm a solution

8:40 - Build an MVP

11:15 - Two failed orders of operations for starting a startup

1 order of operations for starting a startup.

More often than not, when I talk to a talented technical person who's thinking about becoming a founder, they're number 1 blockers that they don't have an idea.

At some point during their formative years, they learn that every great startup started with a great idea, and if the idea isn't amazing, usually as judged by peers, parents, or other people with little startup experience, the startup will fail." All right, why'd you write

I wrote this because this is the number 1 excuse I hear from people who want to start a startup.

I think that there are all of these old entrepreneurial rules and business best practices that I think that people just want to apply hand in glove to a new industry.

And I think tech startups might be a little different.

And so interestingly enough, I don't even think people are really taught how to find ideas.

So I feel as though people are sitting there saying, I don't have an idea, and they don't even really understand a process by which to get 1.

They think they think that it's supposed to happen organically.

It's almost like out of the cartoons where a light bulb goes off the top of your head.

And so what I wanted to do with this essay was give people a framework that they could try to use to come up with an idea.

So instead of this being a passive process, it can be an active process.

I think 1 of the things that might be hard for people to see is, now being in this world for so long, I have a lot of friends who wanted to do a startup and didn't know what they wanted to do, and then came up with an idea and were very successful.

And so I've seen this happen with a lot of people and so that's kind of where I've come up with this thought.

So you break it out into 1234, several steps.

So I'm going to outline it and then we can explain.

Is there any particular problem that you're passionate about?

Once you decide on a problem, find some friends and brainstorm potential solutions to the problem.

At this point, the most important thing to make that spark turn into a fire is to work together and build and launch an MVP.

Particular passion, what problem are you passionate about?

I'll give you the conversation that I had with a founder.

I was at a conference over the weekend called AfroTech and there were a bunch of young people who wanted to start companies there.

And this woman walked up to me and she said, I have an idea.

I'm doing a startup that helps other startups.

And this is startups that I kind of don't like because in some ways I think it's like a cop out.

It's like, hey, I want to help give other startups advice and guidance, but I haven't really done a startup myself.

I was like, okay, so what's a problem that you have?

The woman was a mother, and she said, 1 of the problems I have is that there are a lot of places, when I go somewhere new, there are a lot of places where I don't know if I can use my stroller with my baby.

Because it's hard to get around, or if I'm walking on the street, does it have the proper sidewalks, and so on and so forth.

So I'd love some type of product that would tell me what path I should take that's stroller-friendly.

And I said to her, okay, we're getting somewhere.

Now we're actually solving a problem directly, great.

But I asked her, hey, can you judge this by 2 things first?

And she said, well, actually, when I'm in an area that I know, then I know where to walk, I know how to do it.

It's like, well, you know, if I have to go over a curb or something, it's pain, but it's not intense.

So then I was like, okay, what if you could start a problem that was addressing 1 of the top 3 problems in your life, what would it be?

Even if you have solved that problem, you're going to be wildly successful.

There are gajillions of people who have that problem.

And it was interesting because in such a weird way, I feel like she had somehow condensed all of the startup advice that she'd been given and everything she read to go to this wrong place when I just asked her, what's the problem in your life?

And she almost immediately got to a place that could create real value.

But damn, it's a personal problem she has and she sure as hell knows that if she makes a product, is it helping her.

And at least if it's helping her, she knows it's halfway decent.

So that, I got to a really exciting place by just digging into what sucks for you.

And I think that exercise can be informed by your work life or your personal life.

So many startups I see are created because they were doing something at work and they were like, this sucks, why do I have to keep on doing this?

I'm going to make this thing and then sell it to my job so that no 1 has to do this ever again.

Right, and this is a very easy way to get people to pay you.

Whereas doing things like strapping a webcam to your head, not as obvious of a problem.

So once you find a problem, find some friends and brainstorm potential solutions to the problem.

You don't need to skip to a solution too early.

And your thought process should be, whatever solution I come up with is probably gonna be wrong.

So what my solution really is, is a first hypothesis.

And basically it's like, imagine I'm trying to, I don't know, like redo some famous science experiment.

Like I'm trying to figure out the speed of gravity or something, right?

I first have to start with a hypothesis, then test, and then repeat, repeat, repeat, and plug it to my answer.

So I don't need to know the answer up front.

If you have a big enough problem, trust that if you come up with anything resembling an answer in a reasonable period of time, years, you have a big business.

So instead of thinking, okay, let me come up with an idea how to solve it, I think the more important thing is to start talking to other people about it.

Because I think that the number 1 thing you have to do to create a company, or 1 of the top 3, is to have some co-founders.

And it's really helpful to figure out who are the types of people who you can talk to about something and you riff well.

There's some type of people you brainstorm with and they say, I say, Craig, wouldn't it be cool if the sky was red?

It's like, well, we might not have a best founder relationship.

As opposed to like, wouldn't it be cool if the sky was red?

And Craig says, you know, we can't make the sky red, but what happens if we tint all the windows in the house red so you can make it look like the sky's red?

So you want to start having those conversations with people that you like.

People, if you're not technical, people who are technical.

People who you just respect their intelligence.

And ideally together you start coming up with an idea.

And what's cool about that is that if you co-op that idea together, everyone you've been talking to feels some ownership of the idea.

Yeah, It's dangerous to be married to a solution.

All right, so at this point, the most important thing is to turn that spark into a fire and work together to build an MVP.

So biggest mistake that people make at this point is to think that the things they need to do, now I feel like some weird phantom MBA starts whispering in their ear, and it's like, you need to incorporate, you need to raise money, you need to da da da da.

That person, that's not what you need to do.

Can you just build a simple V1 of the product?

Can you build the simplest V1, even if it's just an Excel spreadsheet, something powered by an Excel spreadsheet?

The way to get that team even more excited is to try something.

And oftentimes I see people get lost in that legal or that fundraising world and never even got to give their thing a try.

You don't need bank accounts to give something a try.

You don't need an incorporation to give something a try for the most part.

There's some ideas you do, but for the most part you don't.

And a way that you can really get that team solidified is just to get some kind of MVP and get 1 customer, 2 customers.

This is 1, the final test on like, hey, can we work together well?

And 2, man, it amps up the excitement a lot.

And so that when you have to go through some of the bullshit of incorporation and stuff, or fundraising, the excitement level's high.

If you actually have something with a couple customers, then investors are far more interested to talk to you than if you just have an idea.

Especially people who are on the fence about working with you.

All of these things that you're saying, these are all excuses you create because It's easier than working on the actual problem.

But I also think it's, for some people, it's what they think is the right path.

I actually think that some people are being, I don't want to say lazy, but some people are being, I don't know, some people are kind of being disingenuous in this process.

But I think other people actually think, oh no, the right thing to do is actually to come up with an idea, fundraise, outsource an MVP, and then hire a team.

I think that some people think that's the right thing to do.

All right, so then You wrap this essay up with a couple of things.

So 1, come up with an idea and then pitch to investors.

2, I have an idea but can't write code, and none of my co-founders can either.

So we're in a time where there are a lot of startups.

And there's unfortunately, people that you're pitching, if they're good, they're getting pitched by a lot of people.

So you need to bring some real fire to that meeting.

And a good deck is no longer good enough.

I would argue that back in the day, like in the 90s, it was so expensive to get software made and hosted and online and get users that a good deck, or actually back then it was like a 100 page business plan, that's all you could get.

And so you're not bringing the fire if you just bring in an idea.

Now some people can raise on just an idea, right?

And if you're 1 of those lucky people, it's great.

But I don't know, I'd rather be good than lucky.

In terms of no technical co-founders, This is a constant issue.

I talked to a friend the other day who is thinking about starting something and doesn't have a technical co-founder yet.

And even she was a little concerned about getting 1, even though she has kind of been in the tech startup world.

And I had to encourage her, I had to tell her, no, you can, you can do this.

Not only is this not going to be that hard, it's probably going to be easier than outsourcing it.

The 1 thing that I see a lot is that I see people who can raise a little bit of money, go down the outsourcing route, and believe that they are progressing.

They believe that the thing is moving forward.

And what they don't realize is that for the most part, they're going to need to iterate anything that's created by those outsourcers over and over and over and over again.

And it gets pretty expensive pretty fast.

And so the thing that I see so constantly is outsourcing.

Iterating with that outsourcer, you run out of money.

And so you have to go to an investor and say, well, I don't have anything, I need more money.

And what's so sad about that death is that you've been kind of walking that path the whole time, but often you don't realize it to the very end, and after you spent money.

And sometimes it's people's own money, They do their savings, they hand their savings to these people.

And I don't think the outsourcing folks are bad or morally wrong.

I just think that people should take the hustle that they have and apply it to the number 1 problem, which is like, it just turns out that getting a technical co-founder tends to be cheaper than paying an outsourcer.

I mean, I guess, you know, to push back, if you had someone outsource something and then that got you a couple customers, then you found a co-founder, that's a great outcome.

Well, it's interesting, because I think that a lot of people go into the outsourcing route with that intention.

But the thing that they don't realize is that they didn't feel comfortable going and finding a technical co-founder now, and they don't have any traction, and they don't have a product, right?

Most likely the outcome is the outsourcer will give them a shitty product, a shitty V1.

They won't have any users then, and now they'll go after a technical co-founder with a shitty product and no users and less money.

And they want to give the co-founder 10%.

Yeah, they're not actually in a better position.

So it's like, yes, I think that there, 1, and I mentioned the essay, There are counter examples.

There are people who do go from contractor to big company.

But it's just, I would argue it's a harder path.

And it's a path that's much more likely to lose you a lot of money.


Speaker 0: 1 order of operations for starting a startup. More often than not, when I talk to a talented technical person who's thinking about becoming a founder, they're number 1 blockers that they don't have an idea. At some point during their formative years, they learn that every great startup started with a great idea, and if the idea isn't amazing, usually as judged by peers, parents, or other people with little startup experience, the startup will fail." All right, why'd you write

Speaker 1: this 1? I think I wrote that.

Speaker 0: I think I read that before.

Speaker 1: I wrote this because this is the number 1 excuse I hear from people who want to start a startup. And it's so interesting to me. I think that there are all of these old entrepreneurial rules and business best practices that I think that people just want to apply hand in glove to a new industry. And I think tech startups might be a little different. And so interestingly enough, I don't even think people are really taught how to find ideas.

So I feel as though people are sitting there saying, I don't have an idea, and they don't even really understand a process by which to get 1. They think they think that it's supposed to happen organically. It's almost like out of the cartoons where a light bulb goes off the top of your head. That's not really how it works. And so what I wanted to do with this essay was give people a framework that they could try to use to come up with an idea.

So instead of this being a passive process, it can be an active process. I think 1 of the things that might be hard for people to see is, now being in this world for so long, I have a lot of friends who wanted to do a startup and didn't know what they wanted to do, and then came up with an idea and were very successful. And so I've seen this happen with a lot of people and so that's kind of where I've come up with this thought.

Speaker 0: So you break it out into 1234, several steps. So I'm going to outline it and then we can explain. So the order of operations. Here's where I'd start. Is there any particular problem that you're passionate about?

The next step. Once you decide on a problem, find some friends and brainstorm potential solutions to the problem.

Speaker 1: The

Speaker 0: next step. At this point, the most important thing to make that spark turn into a fire is to work together and build and launch an MVP. And that's basically it.

Speaker 1: Yeah. It's not that complex. It's hard, but it's not that complex.

Speaker 0: No, it's not. So let's start at the beginning. Particular passion, what problem are you passionate about?

Speaker 1: I'll give you the conversation that I had with a founder. I was at a conference over the weekend called AfroTech and there were a bunch of young people who wanted to start companies there. And this woman walked up to me and she said, I have an idea. I'm doing a startup that helps other startups. And I call this a meta startup.

And this is startups that I kind of don't like because in some ways I think it's like a cop out. It's like, hey, I want to help give other startups advice and guidance, but I haven't really done a startup myself. And I don't know, it's just not great. And so I dug in. I was like, okay, so what's a problem that you have?

And it was interesting. The woman was a mother, and she said, 1 of the problems I have is that there are a lot of places, when I go somewhere new, there are a lot of places where I don't know if I can use my stroller with my baby. Because it's hard to get around, or if I'm walking on the street, does it have the proper sidewalks, and so on and so forth. So I'd love some type of product that would tell me what path I should take that's stroller-friendly. And I said to her, okay, we're getting somewhere.

Now we're not in this meta idea. Now we're actually solving a problem directly, great. But I asked her, hey, can you judge this by 2 things first? 1, how frequent is this problem? And she said, well, actually, when I'm in an area that I know, then I know where to walk, I know how to do it.

It's not that frequent. And how intense is this problem? It's like, well, you know, if I have to go over a curb or something, it's pain, but it's not intense. So then I was like, okay, what if you could start a problem that was addressing 1 of the top 3 problems in your life, what would it be? You know what she said?

She said affordable childcare. I was like, you know what? A lot of people have that problem. That's a big problem. And I felt my douchebag investor go up.

It's like, Yes, you should do that. That is a problem. Even if you have solved that problem, you're going to be wildly successful. There are gajillions of people who have that problem. It's ridiculously intense.

And it was interesting because in such a weird way, I feel like she had somehow condensed all of the startup advice that she'd been given and everything she read to go to this wrong place when I just asked her, what's the problem in your life? And she almost immediately got to a place that could create real value. Now, how should she solve that problem? Okay, yes, that's another question. But damn, it's a personal problem she has and she sure as hell knows that if she makes a product, is it helping her.

And at least if it's helping her, she knows it's halfway decent. So that, I got to a really exciting place by just digging into what sucks for you. I think everyone can do that exercise. And I think that exercise can be informed by your work life or your personal life. So many startups I see are created because they were doing something at work and they were like, this sucks, why do I have to keep on doing this?

I'm going to make this thing and then sell it to my job so that no 1 has to do this ever again. So it can apply either way. Peter.

Speaker 0: Right, and this is a very easy way to get people to pay you. Whereas doing things like strapping a webcam to your head, not as obvious of a problem.

Speaker 1: Pretty non-obvious. So you go there.

Speaker 0: So once you find a problem, find some friends and brainstorm potential solutions to the problem.

Speaker 1: So here's the trick. You don't need to skip to a solution too early. And your thought process should be, whatever solution I come up with is probably gonna be wrong. So what my solution really is, is a first hypothesis. And basically it's like, imagine I'm trying to, I don't know, like redo some famous science experiment.

Like I'm trying to figure out the speed of gravity or something, right? I first have to start with a hypothesis, then test, and then repeat, repeat, repeat, and plug it to my answer. So I don't need to know the answer up front. That's not the goal. If you have a big enough problem, trust that if you come up with anything resembling an answer in a reasonable period of time, years, you have a big business.

So instead of thinking, okay, let me come up with an idea how to solve it, I think the more important thing is to start talking to other people about it. Because I think that the number 1 thing you have to do to create a company, or 1 of the top 3, is to have some co-founders. And it's really helpful to figure out who are the types of people who you can talk to about something and you riff well. You iterate each other's ideas. There's some type of people you brainstorm with and they say, I say, Craig, wouldn't it be cool if the sky was red?

And Craig says no. And that's the end of the brainstorm. It's like, well, we might not have a best founder relationship. As opposed to like, wouldn't it be cool if the sky was red? And Craig says, you know, we can't make the sky red, but what happens if we tint all the windows in the house red so you can make it look like the sky's red?

It's like, oh, yeah, right? We're moving, right? So you want to start having those conversations with people that you like. People, if you're not technical, people who are technical. People who you just respect their intelligence.

And ideally together you start coming up with an idea. And what's cool about that is that if you co-op that idea together, everyone you've been talking to feels some ownership of the idea. And that helps kind of light that flame. Peter.

Speaker 0: Yeah, It's dangerous to be married to a solution. That is a real problem. All right, so at this point, the most important thing is to turn that spark into a fire and work together to build an MVP. Paul Matzkoff

Speaker 1: Boom. So biggest mistake that people make at this point is to think that the things they need to do, now I feel like some weird phantom MBA starts whispering in their ear, and it's like, you need to incorporate, you need to raise money, you need to da da da da. It's like, kick that person out. That person, that's not what you need to do. Can you just build a simple V1 of the product?

Can you build the simplest V1, even if it's just an Excel spreadsheet, something powered by an Excel spreadsheet? Give it a try. The way to get that team even more excited is to try something. And oftentimes I see people get lost in that legal or that fundraising world and never even got to give their thing a try. You don't need bank accounts to give something a try.

You don't need an incorporation to give something a try for the most part. There's some ideas you do, but for the most part you don't. And a way that you can really get that team solidified is just to get some kind of MVP and get 1 customer, 2 customers. This is 1, the final test on like, hey, can we work together well? And 2, man, it amps up the excitement a lot.

And so that when you have to go through some of the bullshit of incorporation and stuff, or fundraising, the excitement level's high. Also, third, it gives you leverage. If you actually have something with a couple customers, then investors are far more interested to talk to you than if you just have an idea.

Speaker 0: Peter. Especially people who are on the fence about working with you. All of these things that you're saying, these are all excuses you create because It's easier than working on the actual problem. Peter

Speaker 1: Collins Well, yes, for some people. But I also think it's, for some people, it's what they think is the right path. I actually think that some people are being, I don't want to say lazy, but some people are being, I don't know, some people are kind of being disingenuous in this process. But I think other people actually think, oh no, the right thing to do is actually to come up with an idea, fundraise, outsource an MVP, and then hire a team. I think that some people think that's the right thing to do.

And it's like, yeah, the harder. That's a harder path. You don't have to do that. Peter.

Speaker 0: Well, my failure mode is different then. All right, so then You wrap this essay up with a couple of things. The 2 failed orders of operations. Well, these are 2 of many, I suppose. Yes.

So 1, come up with an idea and then pitch to investors. 2, I have an idea but can't write code, and none of my co-founders can either. Yeah,

Speaker 1: So we're in a time where there are a lot of startups. And there's unfortunately, people that you're pitching, if they're good, they're getting pitched by a lot of people. So you need to bring some real fire to that meeting. And a good deck is no longer good enough. I would argue that back in the day, like in the 90s, it was so expensive to get software made and hosted and online and get users that a good deck, or actually back then it was like a 100 page business plan, that's all you could get.

That's all you could do without money. We're not there now. And so you're not bringing the fire if you just bring in an idea. Now some people can raise on just an idea, right? And if you're 1 of those lucky people, it's great.

But I don't know, I'd rather be good than lucky. In terms of no technical co-founders, This is a constant issue. And I'm surprised by this. I talked to a friend the other day who is thinking about starting something and doesn't have a technical co-founder yet. And even she was a little concerned about getting 1, even though she has kind of been in the tech startup world.

And I had to encourage her, I had to tell her, no, you can, you can do this. Not only is this not going to be that hard, it's probably going to be easier than outsourcing it. The 1 thing that I see a lot is that I see people who can raise a little bit of money, go down the outsourcing route, and believe that they are progressing. They believe that the thing is moving forward. And what they don't realize is that for the most part, they're going to need to iterate anything that's created by those outsourcers over and over and over and over again.

And it gets pretty expensive pretty fast. And so the thing that I see so constantly is outsourcing. Iterating with that outsourcer, you run out of money. You haven't figured things out yet. And so you have to go to an investor and say, well, I don't have anything, I need more money.

And that's death. And what's so sad about that death is that you've been kind of walking that path the whole time, but often you don't realize it to the very end, and after you spent money. And sometimes it's people's own money, They do their savings, they hand their savings to these people. And I don't think the outsourcing folks are bad or morally wrong. I just think that people should take the hustle that they have and apply it to the number 1 problem, which is like, it just turns out that getting a technical co-founder tends to be cheaper than paying an outsourcer.

Peter Collins

Speaker 0: Yeah, yeah. I mean, I guess, you know, to push back, if you had someone outsource something and then that got you a couple customers, then you found a co-founder, that's a great outcome. Peter.

Speaker 1: Well, it's interesting, because I think that a lot of people go into the outsourcing route with that intention. But the thing that they don't realize is that they didn't feel comfortable going and finding a technical co-founder now, and they don't have any traction, and they don't have a product, right? Most likely the outcome is the outsourcer will give them a shitty product, a shitty V1. They won't have any users then, and now they'll go after a technical co-founder with a shitty product and no users and less money. Peter.

Speaker 0: And they want to give the co-founder 10%.

Speaker 1: Yeah, they're not actually in a better position. So it's like, yes, I think that there, 1, and I mentioned the essay, There are counter examples. There are people who do go from contractor to big company. But it's just, I would argue it's a harder path. And it's a path that's much more likely to lose you a lot of money.

Speaker 0: Your own money.

Speaker 1: Your own money. Take care. You

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One Order of Operations for Starting a Startup by Michael Seibel