- 🧠 Sam Altman's Startup Secrets
🧠 Sam Altman's Startup Secrets
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Sam Altman’s Startup Secrets
4 steps to Startup Success
Why startups fail
Over to John… 👇
4 Steps to Startup Success
Startups are hard.
I know that, you know that.
Sam Altman also knows that.
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.
Well, I suppose that is debatable considering my most recent Google search was “Who would win in a fight between Batman and Superman?”.
Silly question, because we all know Batman would kick his butt in real life!
Ok back to the point…
If you look at the top 3 reasons why startups fail, you’ll see:
No market need (42%)
Ran out of cash (29%)
Not the right team (23%)
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.
Every week, you should write a list of 10 problems you have.
No matter how stupid.
Test out if others have that problem and then decide if there is a viable business. Next thing you know, you have a problem statement and are ready to start building your product.
Step #2: Start small
Once you have 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 in SaaS.
Start small, don’t waste any time on complex software - just get going.
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:
A ‘hipster’ is a creative genius or a designer.
A ‘hacker’ is the coding master.
A ‘hustler’ is a business mind who strikes deals or fundraises.
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
Set the vision
Hire and manage
Make sure the entire company executes
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?
Customer Insight: Talk to your customers and collect feedback to validate that your idea has demand.
Capital: Build your network, talk to investors and raise money.
People: Find a co-founding team, hire employees or bring on an advisor.
That’s all from me this week folks. Say hello, ask a question and we’ll be back next week for more startup content 🚀