- The lecturer answers questions from the previous lecture, including how to identify fast-growing markets and how to deal with burnout as a founder.
- The importance of choosing the right co-founder is emphasized, and the speaker advises against randomly choosing a co-founder or someone with whom you have no history.
- The qualities of a good co-founder are described as being relentlessly resourceful, tough, calm, and able to act quickly and creatively.
- It is recommended to know your co-founder for a while before starting a business together, ideally for years.
- It is important to have a technical co-founder if you yourself are not technical.
- The lecturer advises against hiring too many employees and emphasizes the importance of staying small and hiring only when there is a desperate need to do so.
- The cost of getting an early hire wrong is high, and it is important to hire people who believe in the company and are dedicated to its success.

- Hiring the right people is crucial for the success of a startup
- It is difficult to recruit the best people, and founders often underestimate this challenge
- The best candidates have many options and may wait to see the startup's potential before joining
- Founders should spend a significant amount of time on hiring, ideally around 25% of their time
- Hiring mediocre people can be detrimental to the company's culture and success
- Personal referrals are the best source for hiring, and founders should reach out to people they know
- Experience matters for some roles, but for early hires in a startup, aptitude and belief in the mission are more important
- Smart, productive, and enjoyable to work with are key qualities to look for in candidates
- Working together on a project is a better way to evaluate someone than just conducting an interview
- Good communication skills and a risk-taking attitude are important traits for early employees
- Employee equity should be generous and given to those who will contribute the most to the company's success
- Retaining employees is also important after hiring them.

- Founders often forget the importance of retaining employees after hiring them.
- It is crucial to ensure that employees are happy and feel valued.
- Big equity grants can help in this regard.
- Learning management skills and avoiding micromanagement can prevent team churn.
- Praising the team and giving clear feedback is important.
- Firing people who create office politics or are persistently negative is necessary.
- Co-founders should decide on the equity split early on.
- Inexperience is okay as long as the person can learn and adapt.
- Co-founders should have vesting on equity to prevent issues if a co-founder leaves.
- It is better to lose some customers than hire suboptimal employees in the early stages of a startup.
- Remote teams are generally not recommended for startups.
- Execution is critical for the success of a startup and cannot be outsourced.
- The founders' actions shape the company culture.

- The CEO of a startup must be a dedicated execution machine.
- Ideas alone have no value; execution is what creates value.
- The CEO's role includes setting the vision, raising money, evangelizing the company, hiring and managing the team, and setting the execution bar.
- Focus and intensity are key to successful execution.
- Founders must prioritize the most important tasks and ignore or delegate the rest.
- Clear communication and maintaining growth and momentum are crucial for focus.
- Startups require extreme dedication and outworking competitors.
- Quality and speed are both important; startups must have high standards and move quickly.
- Indecisiveness is detrimental to a startup's success; founders must have a bias towards action.
- Incremental progress is more effective than waiting for a big breakthrough.
- Speed is highly valued in successful founders, as they respond quickly and make decisions swiftly.

- The speaker emphasizes the importance of having a "do whatever it takes" attitude and showing up consistently in business.
- They share a personal story about how they saved a deal by getting on a plane and meeting with the potential client in person.
- Momentum and growth are crucial for startups, and losing momentum can lead to demotivation and failure.
- The speaker advises founders to focus on maintaining momentum and growth, either through continuous growth for software startups or meeting ship dates for hardware startups.
- When momentum is lost, the speaker suggests regaining it through small wins rather than giving long speeches or vision talks.
- In times of disagreement, the speaker suggests asking users for input and doing whatever the users suggest to get back on track.
- The speaker gives the example of Facebook's growth group, which helped turn the company around when growth slowed down.
- Establishing an operating rhythm and regularly reviewing metrics with the entire company can help maintain momentum.
- Competitors should only be a concern if they are actually beating the company with a real shipped product, and founders should not let competitor noise in the press affect the company's morale.
- The speaker mentions that they will cover finance, deal making, and distribution in a later lecture.

- The lecturer answers questions about identifying fast-growing markets and dealing with burnout as a founder.
- Choosing the right co-founder is emphasized, with qualities such as resourcefulness, toughness, and quick thinking being important.
- It is recommended to know your co-founder for a while before starting a business together.
- Hiring the right people is crucial for startup success, and founders often underestimate the challenge of recruiting top talent.
- Employee equity should be generous and given to those who will contribute the most to the company's success.
- Retaining employees is important, and founders should ensure they are happy and feel valued.
- Execution is critical for startup success, and founders must prioritize tasks and maintain focus.
- Speed and a "do whatever it takes" attitude are highly valued in successful founders.
- Maintaining momentum and growth is crucial for startups, and small wins can help regain momentum when it is lost.
- Competitors should only be a concern if they have a real shipped product that is beating the company.

How to Start a Startup is a series of video lectures, initially given at Stanford in Fall 2014.

Lecture Transcript: http://www.tech.genius.com/Sam-altman-lecture-2-ideas-products-teams-and-execution-part-ii-annotated

Sam Altman finishes up "Ideas, Products, Teams and Execution" by covering Team and Execution, in Lecture 2 of How to Start a Startup.

See the slides and readings at http://www.startupclass.samaltman.com/courses/lec02

Discuss this lecture: http://www.startupclass.co/courses/how-to-start-a-startup/lectures/64031

Before I jump into today's lecture, I wanted to answer a few questions.

People emailed me saying they had questions about the last lecture.

So if you have a question about what we covered last time, I'm welcome to answer it now, starting with you.

So 1 question that was submitted online was how do I identify if a market has a fast growth rate now and also for the next 10 years?

All right, so the question is how you identify markets that are growing quickly.

The good news about this is this is 1 of the big advantages students have.

You should just trust your instincts on this.

Older people have to basically guess about the technologies that are sort of, that young people are using, right?

Cuz young people get older and they become the dominant market.

But you can just watch what you're doing and what your friends are doing.

And you will almost certainly have better instincts on fast growing markets than anybody older than you.

And so the answer to this is just trust your instincts.

Think about what you're using, what you're seeing people your age begin to start using.

That will almost certainly be the future.

Maybe I can do 1 more question in the last lecture before we start.

This isn't related to the last lecture, but another question online is how do you deal with burnout while still being effective and being effective?

So the question is how you deal with burnout as a founder.

This, the answer to this is just that it sucks and you keep going.

Unlike a student, where you can sort of like throw up your hands and say, you know what, I'm really burned out.

I'm just gonna like get bad grades this quarter.

1 of the hard parts about running a startup is that it's real life and you just have to get through it.

The canonical advice is like go on vacation or whatever.

It's like really important, and founder depression is this serious thing.

But the way through burnout is just to address the challenges, address the things that are going wrong.

All right, so last week we, or last lecture we covered the idea and the product.

And I want to just emphasize again that if you don't get those right, none of the rest of this is going to save you.

Today, we're going to talk about how to hire and how to execute.

Hopefully you don't execute the people you hire.

So, first I wanna talk about co-founders.

Co-founder relationships are among the most important in the entire company.

And everyone says that you need to watch out for tension brewing among co-founders and address it immediately, and that's all true.

And certainly in YC's case, the number 1 cause of early death for startups is co-founder blow ups.

But for some reason, a lot of people treat choosing their co-founder with even less importance than they put on hiring.

This is 1 of the most important decisions you make in the life of your start-up, and you need to treat it as such.

And for some reason, students are really bad at this.

They just pick someone, they're like, I want to start a business, you want to start a business, let's start a startup together.

There are these like, co-founder dating things, where you're like, hey, I'm looking for a co-founder, we don't really know each other, let's start a company.

You would never hire someone like this, and yet people are willing to choose their business partners this way.

And choosing a random co-founder or choosing someone you don't have a long history with, Choosing someone that you're not friends with, so that when things are really going wrong, you have this sort of past history to bind you together.

We had 1 YC batch where 9 of about 75 companies added on a random co-founder between when we interviewed the companies and when they started.

And all 9 of those teams fell apart in the next year.

The track record for founders that don't already know each other is really bad.

A good way to meet a co-founder is in college.

If you're not in college and you don't know a co-founder, the next best thing I think is to go work in an interesting company.

If you work at Facebook or Google or something like that, it's probably almost as co-founder rich as Stanford.

It's better to have no co-founder than to have a bad co-founder, but it's still bad to be a solo founder.

I was just looking at the stats here before we started.

For the top, and I may have missed 1 because I was counting quickly, but I think that for the top 20 most valuable YC companies, all of them have at least 2 founders.

And we, we probably funded a rate of something like 1 out of 10 solo teams.

So, best of all, founder you know, co-founder you know.

Better than that, or not as good as that, but still okay, solo founder.

So as you're thinking about co-founders and people that could be good, there's a question of what you're looking for, right?

And at YC we have this public phrase, and it's relentlessly resourceful, and everyone's heard of that.

And I think that really is a very good description for what you're looking for with co-founders.

You definitely need relentlessly resourceful co-founders.

But there's a more colorful example that we share at the YC kickoff.

Paul Graham started using this and I've kept it going.

So, you're looking for co-founders that need to be unflappable, tough, they know what to do in every situation.

They act quickly, they're decisive, they're creative, they're ready for anything.

And it turns out that there's a model for this in, in pop culture.

And we've told every class of YC this for a long time.

And again, this sounds crazy, but it, It will at least stick in your memory.

And, and you need someone that behaves like James Bond more than you need someone that is, you know, an expert in some particular domain.

As I mentioned earlier, you really want to know your co-founders for a while.

But incidentally, more people get this right for early hires than they do for co-founders.

In addition to relentlessly resourceful, you want a tough and a calm co-founder.

There are all the obvious things like smart, but everyone knows that you want a smart co-founder.

Most people don't prioritize tough and calm well enough.

Especially if you feel like you yourself aren't.

If you're not technical, And hopefully most people in this room are.

There's this weird thing going on in startups right now, where it's become popular to say, like, you know what?

That doesn't work too well in our experience.

You know, software people really should be starting software companies.

Media people should be starting media companies.

So in, in a YC experience, 2 or 3 co-founders seems to be about perfect.

4 works sometimes, but 2 or 3 I think is what to target.

Okay, the second part of how to hire, try not to.

So 1 of the weird things that you'll notice if you start a company, is that everyone asks you how many employees you have.

And this is the metric people use to sort of judge how real your startup is and how cool you are.

And if you say you have a high number of employees, they're really impressed.

And if you say you have a low number of employees, then, then you sound like sort of this little joke.

But actually it sucks to have a lot of employees.

And you should be proud of how few employees you can have.

Lots of employees ends up with things like a high burn rate, means you're losing a lot of money every month.

Complexity, tension, slow decision making.

So you wanna, you wanna be proud of how much you can get done with a small number of employees.

Many of the best YC companies have had phenomenally small number of employees for the first year.

They really try to stay small as long as they possibly can.

At the beginning, you should only hire when you have a desperate need to.

Later, you need to learn how to hire fast and scale up the company.

But in the early days, the goal should be not to hire, not to hire.

And 1 of the reasons this is so bad is that the cost of getting an early hire wrong is really high.

In fact, a lot of the companies that I've been very involved with that have had a very bad first hire, and the first 3 or so employees never recover from it.

Airbnb spent 5 months interviewing their first employee before they hired someone.

And in their first year, they only hired 2 people.

Before they hired a single person, they, they wrote down a list of the cultural values that they wanted any Airbnb employee to have.

1 of those was that you had to bleed Airbnb.

And if you didn't sort of agree to that, they just wouldn't hire you.

As an example of how intense Brian Chesky is, he's the Airbnb CEO.

He used to ask people, before he hired them at Airbnb, if they would take the job if they got a medical diagnosis that they had 1 year left to live.

Later he decided that was like a little bit too crazy.

But last I heard, he still asks that question.

But like, you know, these hires really matter.

These people are what go on to define your company.

And so you need people that believe in it almost as much as you do.

But he's gotten this culture of extremely dedicated people that come together when the company faces a crisis.

And when the company faced a big crisis early on, everyone in the company lived in the office.

And they shipped product every day until the crisis was over.

1 of the remarkable observations about Airbnb is if you talk to any of the first, say, I don't know, 40 or 50 employees, they all feel like they are part of the founding of the company.

And this is really hard to get right, and this is really rare.

But by having an extremely high bar, and hiring slowly, and making sure everyone believes in the mission, you can get that.

Okay, so let's say, you know, you've listened to the warning about not hiring and now you absolutely have to.

When you're in this hiring mode, your job is, it should be your number 1 priority to get the best people.

Just like when you're in product mode, that's your number 1 priority, and when you're in fundraising mode, fundraising's your number 1 priority.

1 thing that founders always underestimate is how hard it is to recruit.

You know, you think you have this great idea.

To get the very best people, they have a lot of great options, right?

And so it can easily take a year to recruit someone.

It's this long process and you have to convince them that your mission is the most important of anything that they're looking at.

This is another case of why it's really important to get the product right before anything else.

The best people know that they should join a rocket ship.

By the way, that's my number 1 piece of advice.

If you're going to join a startup, pick a rocket ship.

Pick a company that's already working and that the, you know, not everyone yet realizes that.

But it's, you know, you know, because you're paying attention, that it's going to be huge.

And, and again, you can usually identify these.

And so good people will wait, and they want to see that you're on this breakout trajectory before they join.

1 question that people asked online this morning is how much time you should be spending hiring?

You're either not hiring at all, or it's probably your single biggest block of time.

In practice, like all these books on management or whatever, say that you should spend 50% of your time hiring.

But the people that give that advice, it's rare for them to even spend 10% themselves.

But that's really how much you should be doing once you're in hiring mode.

Okay, so if you compromise and hire someone mediocre, you will always regret it.

No 1 really feels it until they make the mistake the first time.

Mediocre people at a big company cause some problems.

A single mediocre hire in the first 5 will often in fact kill a startup.

A friend of mine has a sign up in the conference room that he uses for interviews.

And he like positions the sign so the candidate is looking at it while they're interviewing.

And it says that mediocre engineers do not build great companies.

You can get away with it in a big company, right?

Cuz people just sort of like fall through the cracks.

But, but every person in a startup sets the tone.

So if you compromise in the first, you know, say 05:10 hires, it might kill the company.

And you should think about that for everyone you hire.

Like, will I bet the future of this company on the single hire?

At some point in the life of the company when you're bigger, You will compromise on a hire.

There will be some pressing deadline or something like that.

But this is the difference between theory and practice.

And we're gonna have later speakers talk about what this hap, what to do when this happens.

But in the early days, you just can't screw it up.

This is another thing that students get wrong a lot.

The best source by far for hiring is people that you already know.

And people that other employees in the company already know.

Most great companies in tech have been built by personal referrals for the first at least 100 employees, and often many more.

Most founders feel awkward about calling everyone good that they've ever met, and asking their employees to do the same.

But you'll notice that if you go work at Facebook or Google, 1 of the things they do in your first few weeks is an HR person sits you down and like beats out of you every smart person you've ever met.

No matter how likely you think you are to be able to recruit them.

And these personal referrals really are the trick to hiring.

So you have to like go way beyond your comfort zone here.

Another tip is to look outside the valley.

It is brutally competitive to hire engineers here.

But you probably know very good people living elsewhere in the world.

Another question that founders ask us a lot about is experience and how much that matters.

The short version here is that experience matters for some roles and not others.

When you're hiring sort of like, you know, someone that is going to run a large organization of your company, experience probably matters a lot.

For most of the early hires you make in a startup, experience doesn't matter very much.

And you should go for aptitude and believe in what you're doing.

Most of the best hires that I've ever made in my entire life.

So it's really worth thinking, like, is this a role where I care about experience or not?

There are 3 things that I look for when I hire people.

And do I want to spend a lot of time around them?

And if I get an answer, if I get, ended up with a yes for all 3 of these, I almost never regretted the hire.

You can learn a lot about all 3 of these things from an interview.

But the very best way is by working together.

So ideally, it's someone you've worked with in the past, and in which case, you probably don't even need an interview.

If you haven't, then I think it's way better to work with someone on a quick project for a day or 2 before hiring them.

And most first time founders are very bad interviewers, but very good at evaluating someone after they've worked together.

So 1 of the pieces that we give advice, 1 of the pieces of advice that we give at YC is try to work together on a project rather than just doing an interview.

If you are going to interview, which you'll probably do as well, you should ask specifically about projects that someone has done in the past.

You'll learn a lot more than you will with brain teasers.

For some reason, young technical founders love to ask brain teaser questions rather than just ask what someone's done.

Really dig into projects people have worked on.

That is another thing that first time founders like to skip.

You want to call some people that these people have worked with in the past.

And when you do, you don't just want to ask like, oh, how was so and so?

Like, is this person in the top 5% of people you've ever worked with?

Like, why, Why, why aren't you trying to hire them again?

You really have to press on, on these reference calls.

Another thing that I've noticed from talking to a lot of YC companies is that good communication skills tend to correlate really well with hires that work out.

We're gonna talk more about why communication is so important in early startup.

If someone is difficult to talk to, if someone cannot communicate clearly, it's a real problem in terms of their likelihood to work out.

Also, for early employees, you want people that have somewhat of a risk taking attitude.

You, you generally get this or they wouldn't be interested in a startup.

But now that startups are sort of more in fashion you, you want people that actually sort of like a little bit of risk.

See all Y Combinator transcripts on Youtube

Team and Execution with Sam Altman (How to Start a Startup 2014: Lecture 2)