The TLDR for the Startup Playbook

The Startup Playbook by Sam Altman is a wonderful starting point for potential founders looking into what to expect or what to be aware of when they start a startup. This post is to give a summary of the insightful writing with the most important points that I thought were worth noting.

0. Intro

  • A startup's initial goal is to make something users love. Acquiring more users is next.
  • Making a product that a small number of users love is harder than making a product that a large number of users like.
  • Doing a startup is hard, but that doesn't mean it will risk your career.

1. The Idea

  • What to check for:
    • Is the answer to the idea clear and concise? Can it be communicated well?
    • Who needs the product? Is it at least you?
    • Is the user base growing? If so, at what speed? If not, why?
    • Is the product generating revenue? If not, why?
  • To test an idea:
    • Try to launch it (usually for consumers).
    • Try to sell it (usually for enterprises).
    • Try to discuss it (usually for hard tech).
  • Feedbacks from users are important, both getting them and understanding them.
  • Focus on the market's present state and the pace at which the desirable future state will be reached.
  • New ideas are better than derivative ideas, but derivative ideas seem easier to approach.
  • The best ideas initially sound bad anyway so don't fear too much about sharing them.
  • If you're forcing yourself to come up with an idea, you're probably not ready to do a startup.

2. A Great Team

  • Great founders are:
    • People who you want to work with.
    • Rigid with their beliefs but flexible to changes.
    • Unusually responsive.
    • Great communicators.
  • You need a cofounder who can do what you can't and who can stick around through hardships.

3. A Great Product

  • A great product loved by users is the most important thing to becoming successful.
  • Growth hacks will work up to a certain point, but a great product will take you beyond that.
  • Setup a "product improvement" cycle in which you repeatedly hack your product and listen to users.
  • Recruit users one at a time (i.e. "do things that don't scale").
  • Iterate in small steps with a fast pace.
  • Be obsessed with product quality.

4.1. Great Execution - Growth

  • Measure momentum through clear and simple metrics that the company can optimize on.
  • Keep a list of problems that are blocking growth.
  • Don't be fooled by vanity metrics, such as focusing on user acquisition rather than retention.
  • Establish an internal cadence to keep momentum.
  • Set and review periodic goals.
  • Talk about strategy internally as much as possible.
  • Don't worry too much if fast growth is breaking things, as fixing optimization is easier than fixing growth.
  • Don't try to scale out beyond 10x your current scale.
  • Focus on percentage increases rather than absolute numbers when checking growth.
  • Create growth by making products loved by and shared by users. Have great customer support.
  • Utilize sales and marketing after creating a great product.
  • For B2B, track revenue growth per month and beware of longer sales cycles.

4.2. Great Execution - Focus and Intensity

  • Focus on growth and product goals one by one.
  • Stay focused and move fast by getting small stuff done quickly and decisively.
  • Manage intensity by finding ways to get 90% of the value with 10% of the effort.
  • Don’t get caught up in early success and spotlights. You're far away from finishing the game.

4.3. Great Execution - Jobs of the CEO

  • The only universal job description of the CEO is to make sure the company wins.
  • Be super responsive to your team and the outside world.
  • Do "whatever it takes" so that your team members can learn from the same mentality.
  • Have relationships with other CEOs to prevent from becoming lonely.
  • Make things happen instead of making excuses.
  • Distort reality for others but not for yourself.
  • Be persistent and optimistic.
  • Be responsible for defining missions and values for the company early on.
  • Build a cultural religion.
  • Use your creativity on your products instead of trying to reinvent the wheel.

4.4. Great Execution - Hiring and Managing

  • Don't hire until you need to, since each new employee will add orginizational complexity and communication overhead.
  • The people you want are usually people who have lots of options, so be generous to them with equity, trust, and responsibility.
  • Use 25% or more of your time during recruiting mode.
  • Never compromise the quality of people you'll be hiring.
  • Never hire negative people.
  • Put aptitude, intelligence, and track record over experience.
  • Try doing projects with people before hiring them.
  • Find mentors who can help you become a good manager.
  • Fire quickly to protect your culture.

4.5. Great Execution - Competitors

  • 99% of the startups die because of internal problems rather than competition.
  • Ignore competitors until they are beating you with real products.

4.6. Great Execution - Making Money

  • Making money is simply by making people pay more than the cost of your product.
  • Try selling the product yourself.
  • Juggle between direct sales or various user acquisition models depending on the customer lifetime value.
  • Try to repay your customer acquisition cost in 3 months.
  • First aim at making enough money to control your own destiny (i.e "ramen profitability").
  • Watch your cash flow.

4.7. Great Execution - Fundraising

  • Money should only be taken when you need it, when the terms are good, and when the company has the potentials.
  • Investors look for companies that will grow fast.
  • Anything other than a "yes" is a "no," and don't get upset if you hear so.
  • Utilize investor's FOMO by talking to them in parallel.
  • Terms or great board members are more important than intermediate valuations.
  • Check what values the investors can add.

5. Closing Thoughts

  • Execution is always worth more than the idea.
  • Turning an idea into success is by having a great combination of idea + team + product + execution.
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