×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Paul Graham Explains How to Start a Startup

CmdrTaco posted more than 9 years ago | from the spelling-it-out-for-ya dept.

Businesses 423

woginuk writes "Paul Graham has posted a new essay on his website on how to start a startup. According to him 'You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.' How difficult can that be? So go start them startups."

cancel ×
This is a preview of your comment

No Comment Title Entered

Anonymous Coward 1 minute ago

No Comment Entered

423 comments

I'd rather hear the same (4, Insightful)

winkydink (650484) | more than 9 years ago | (#11902466)

from a successful venture capitalist.

Re:I'd rather hear the same (3, Insightful)

nametaken (610866) | more than 9 years ago | (#11902587)

A successful venture capitalist would likely tell you to have an excellent written, formal business plan. A good business plan is usually the product of at least two of the three things he mentioned. ;)

Re:I'd rather hear the same (2, Funny)

Anonymous Coward | more than 9 years ago | (#11902601)

I didn't RTFA.

Was Step Two "????" by any chance?

Re:I'd rather hear the same (1)

same_old_story (833424) | more than 9 years ago | (#11902605)

well, he sold his company for yahoo for (i think) 50 million dollars, or some other pretty high amount. if that is not successfull , what then?

Re:I'd rather hear the same (1)

winkydink (650484) | more than 9 years ago | (#11902667)

He did it once and I'm not belittling that.

A successful VC has to do this over and over again, which pretty much eliminates the possibility of "succeeding in spite of yourself".

Re:I'd rather hear the same (3, Interesting)

same_old_story (833424) | more than 9 years ago | (#11902793)

well, that depends.

if your goal is to become a multi billion dollar business person. ok, point taken.

if all you want is a few millions to live your life as you please, then one 50 million sell is more than enough.

by his essays, I dont think his target audience is the former, actually more like the later.

cheers

Re:I'd rather hear the same (0)

Anonymous Coward | more than 9 years ago | (#11902846)

Rather few successful VCs make $50 million companies more than once in their lifetimes either. Still, a VC's perspective would be welcome.

Re:I'd rather hear the same (1)

winkydink (650484) | more than 9 years ago | (#11902935)

Every single partner at Sequoia, KP & USVP has done it multiple times, and those are just 3 firms I know for a fact.

Re:I'd rather hear the same (4, Interesting)

JohnGrahamCumming (684871) | more than 9 years ago | (#11902773)

Allen Morgan, a VC with the firm Mayfield, has a blog, where he's been dispensing wisdom on how to get funded. Read it here: http://allensblog.typepad.com/

John.

To: Spelling-it-at-you: +1, Educational (0)

Anonymous Coward | more than 9 years ago | (#11902890)

"Spelling-it-at-ya" should read "Spelling-it-to-you".

Furthermore, "them start-ups" should read "those start-ups".

Start learning.

You spell as well as the
world's most dangerous and inarticulate "leader" [whitehouse.org] .

Regards,
Kilgore Trout, CEO

But instead you heard it from (-1, Flamebait)

Anonymous Coward | more than 9 years ago | (#11902945)

The Dr. Phil of VCs

Missing item (2, Insightful)

steelem (694396) | more than 9 years ago | (#11902476)

Customers.

Re:Missing item (3, Insightful)

varmittang (849469) | more than 9 years ago | (#11902536)

Um, that I think is covered under "something customers want" part.

Re:Missing item (3, Insightful)

freshman_a (136603) | more than 9 years ago | (#11902920)

Just because you make something people want, doesn't mean you automatically have customers.

Making something customers want requires an understanding of what the customers want in the first place and good development to actually be able to make that product.

Getting customers requires good marketing to get word out about your product and good salesmen to tell people why your product is better than the rest.

Re:Missing item (0)

Anonymous Coward | more than 9 years ago | (#11902602)

If you have a product that people actually want, your customer base will grow by itself.

Re:Missing item (1)

BoomerSooner (308737) | more than 9 years ago | (#11902875)

Amen, the best product in the world needs customers. Not to mention good marketing and sales. My companies salespeople are instructed to have integrity first. They don't get paid sales commissions but they do get bonuses based on the total company performance (actually everyone does) so the sales people don't have to lie to get customers and they don't have the opportunity to give us a black eye (based on our policy's). When you don't have sales/marketing people that are constantly in fear of losing their jobs because of missing a sales quota for a month or so.

What about (2, Insightful)

deangelo (127317) | more than 9 years ago | (#11902485)

The summary seems to make light of the fact that a CRAP load of cash is still going to be needed?
codohundo

WRONG. (1, Informative)

Lumpy (12016) | more than 9 years ago | (#11902486)

The three things you need for a startup is not what he says...

it much simpler....

MONEY, Sales Ability, and competent management.

Money is the absolute most important thing needed. Without it there is no startup.

and THAT is the hardest thing to get.

Re:WRONG. (2, Insightful)

GGardner (97375) | more than 9 years ago | (#11902516)

Note that he says "successful" startup. Plenty of failed startups had lots of money.

Re:WRONG. (1, Insightful)

Lumpy (12016) | more than 9 years ago | (#11902596)

I would like to know HOW. how do these people have the ability to get money without a viable and researched product and business plan?

That is the easy part from my experience, getting someone to shell over $200,000.00 in startup capitol to fund the prototypes is next to impossible. finding Sales people that can competently sell as well as management that is actually skilled and desire to grow a business and not their wallets is even harder.

Venture Capital even in the 90's was not interested in creating a long term company providing a product/service, they were only interested in huge gains almost overnight. I know, I was a "startup" back in 1994-1995 with one of the first ISP's in the area I lived, no money was to be had from any source unless you made pie-in-the-sky promises and was a overzealot yes man that did not care about telling the truth to "investors".

if you were honest and showed them a 5 year plan they told you to go away..... show them a 24 month plan and they are all over you.

So how in the sorld are these people getting the money to start the startup without a real and viable plan?

Re:WRONG. (0)

Anonymous Coward | more than 9 years ago | (#11902730)

. finding Sales people that can competently sell as well as management that is actually skilled and desire to grow a business and not their wallets is even harder.

Did you miss the "start with good people" part?

yes, MONEY, and don't be shy (1)

r00t (33219) | more than 9 years ago | (#11902581)

If you ask for just a few million, forget it.
If you waste time saving small change, forget it.

The VC will want to know you're paying for the
best management you can get. The VC will want you
to demand the money you need to do things right,
without a chance of running short.

Re:WRONG. (1)

winkydink (650484) | more than 9 years ago | (#11902586)

You still need "something customers want". Yes, with great salesmen you can probably sell a few dogshit-flavored popsicles, but as customers probably, as a rule, won't want them, you will not succeed.

no, not really. (1)

smitty45 (657682) | more than 9 years ago | (#11902700)

if you've been around silicon valley, money is not all that hard to get, compared to getting/developing a product that actually *deserves* to be funded.

Re:WRONG. (1)

WolfDeusEx (310788) | more than 9 years ago | (#11902737)

Hum,

I don't agree. Taking them in reverse order.

Competent Management
Most startups don't have such divided roles. If you only have 3 to 4 employies and one of them is a full time manager and nothing else, then your already doing something wrong (Spending money you don't need too).

Sales Ability
Well I will agree with this one to a degree. Really it matches the one in the artical. Creating something people need, will make it much easier to sell it.

Money
Well yes you need money, but as the artical says spend as little money as possible. If you do that, then you can wait longer while you create a good product.

Re:WRONG. (5, Insightful)

XorNand (517466) | more than 9 years ago | (#11902754)

As a (somewhat) successful entrepreneur, I take exception to your statement. I've been running my own network services company for about a year now. I started it up with practically nothing. Granted, it's nothing as sexy as working on the next killer app with a staff of 3 dozen people, but it was a startup. And it was done without having to sell my soul to a VC vulture.

It's been my fulltime job since I started. My truck was fully paid for before I started, I live in a cheap one-bed apartment and I have three cases of ramen in my pantry as I write this. But, my bills are always paid on time and I have enough cash to grow my biz. In fact, I just leased a tiny bit office space last week. I had been working exclusively out of my home.

You don't need a lot of money to be successful. The #1 thing, by far, that you need is dogged persistence. It's rough and can be very nerve wracking. You have to have the ability to hang in there.

And.... since it's on-topic, I'm going to plug the messageboard in my sig. I started it a couple of weeks ago to help others in my situation. It pays to learn from other's mistakes and it's great to have the moral support. If you run your own biz or are thinking about starting one, please come check us out: SmallBizGeeks.com [smallbizgeeks.com]

Re:WRONG. (1)

uptownguy (215934) | more than 9 years ago | (#11902927)

I wish I could mod you to the moon but, having no points, I'll instead tell you that I've bookmarked your messageboard and stuck it near the top of my list in Firefox... Dogged persistence and the willingness to laugh about the ramen and know that you're going to make it no matter what; it seems like this is a key ingredient that's missing from a lot of the cynics on here.

Your message was inspiring. Thanks!

Re:WRONG. (2, Insightful)

torpor (458) | more than 9 years ago | (#11902779)


this is like saying, to start a fire, you need a big huge can of gasoline.

you do not need money to get a startup going. you need motivation, good people to work with, paying customers, and cunning thriftiness.

give some moron who thinks the only way to start fires, a big can of gasoline, and you'll have a disaster on your hands, probably a crispy moron.

paying customers is the hard part, but then, software is a wonderful tool .. you can 'squidgy' it in many different cracks, it'll fix pretty much any borked 'system', whatever form...

Re:WRONG. (1)

bengoerz (581218) | more than 9 years ago | (#11902798)

Isn't Sales Ability simply a prerequisite to Money, in an abstract sense? He who sells his idea gets his money. And what about a product? That seems pretty integral, unless you plan to sell vaporwear, packages of happy thoughts and sweet dreams, or some other non-product. (Did you hear that HotOrNot.com now sells "virtual flowers" for "non-virtual money"? Genious!)

Re:WRONG. (1)

SlashDread (38969) | more than 9 years ago | (#11902824)

I think the point may be that if you want THAT, you need his three things.. If you aint been born rich.

Re:WRONG. (1)

RobotWisdom (25776) | more than 9 years ago | (#11902828)

He's way wrong about Google's history: "Google's plan, for example, was simply to create a search site that didn't suck. They had three new ideas: index more of the Web, use links to rank search results, and have clean, simple web pages with unintrusive keyword-based ads."

AltaVista didn't suck, it had the largest index, and it had a clean interface. And a forgotten site called RankDex used links to ranks results. And supposedly the compromise of adding ads came much later.

Google added a more sophisticated ranking algorithm, was really all.

nope, you're wrong (1)

Freedom Bug (86180) | more than 9 years ago | (#11902917)

Sorry, I'm employee #1 in a successful startup. We didn't have money. We did have the last two, but the reason we succeeded was because we also had the three things that Paul talks about.

But Paul says it much better than I can.

Pricing? (0, Redundant)

_Sharp'r_ (649297) | more than 9 years ago | (#11902489)

You have to make something that customers want, AND be able to supply it for a profit for what they are willing to pay for it.

That's another little detail.

Make sure you live frugally! (5, Informative)

BWJones (18351) | more than 9 years ago | (#11902491)

This was the thing that absolutely amazed me with the startup fever in the 1990's. I had a couple of friends I visited in the bay area who were with startups that had essentially no existing product, infrastructure or long term plan. Yet, they had an idea which inspired VCs to pour money down their throats. It made for a surreal situation where twenty-somethings were driving Ferrari's and Porsche's all purchased on the value of their existing stock. The parties were amazing and the whole atmosphere was one of incredulity. Of course we all know what happened.

I know one guy who bought a house, Lamborghini, Ferrari, matching Range Rovers for he and his girlfriend and loaded the house with furniture and electronics. The scary thing was that all of these purchases were made from loans based on the value of his stock holdings (because presumably he did not want to sell his stock). When the stock dropped through the floor along with everybody else, he had to come due. It was an absolute firesale and the only thing he kept was the big empty house, for which he had to struggle to make the payments. Moral? Live frugally and don't buy much on credit, especially leveraged against your holdings in your company.

Re:Make sure you live frugally! (5, Interesting)

BWJones (18351) | more than 9 years ago | (#11902625)

I should also have mentioned. There is a wonderful documentary called Startup.com [imdb.com] that documents a small companies beginnings from obtaining VC funding to their rise and ultimate fall. It was an amazing example of a not atypical experience where a company was organized and obtained VC funding based solely upon an idea. They had no infrastructure, no network, no customers, no product. Yet they were able to secure a significant amount of VC funding. It's an absolute hoot to watch.

ABC's of BS (1, Redundant)

micromoog (206608) | more than 9 years ago | (#11902495)

Most. Worthless. Analysis. Ever.

Re:ABC's of BS (1)

winkydink (650484) | more than 9 years ago | (#11902623)

I disagree. Unless you've done it before or are far enough up the management food chain to undertsand the mechanics involved, I think very few people knew everything that was written here.

The beauty of this article was gathering all of this information into one place, especially if you have no idea how to go about creating a successful startup (and, as history shows, most people don't).

Missing something (1, Funny)

justforaday (560408) | more than 9 years ago | (#11902503)

Ummm, shouldn't there be a good idea somewhere in there too?

Re:Missing something (1)

jayloden (806185) | more than 9 years ago | (#11902867)

I think it's implied that if you have good people, and customers actually want your product, you already have a good idea...

-Jay

Three steps (0, Redundant)

Crash24 (808326) | more than 9 years ago | (#11902504)

1. Tell a random Venture Capitalist about your new Intarweb Cyberspace killer app startup.
2. ???
3. Profit!

Wait, this isn't 1999...

Where are my Millions? (5, Funny)

Anonymous Coward | more than 9 years ago | (#11902520)

First, I have excellent fucking people skills, I understand that people just want to be left alone and I didn't spend ANY money on that! Where is my friggin' BMW at?

Re:Where are my Millions? (1)

YukiKotetsu (765119) | more than 9 years ago | (#11902646)

I have excellent fucking people skills

Are you a pr0n star or something? What movies have you starred in? Anything I might know, like "Ass Angels 2" perhaps? Man, was that ever a good flick.

Re:Where are my Millions? (4, Funny)

taustin (171655) | more than 9 years ago | (#11902747)

First, I have excellent fucking people skills

There's your problem. If you want to succeed in business, and make your millions, you need excellent people fucking skills, not fucking people skills.

I hear Bill Gates gives classes. Pants not required. Or allowed.

More? (1)

bengoerz (581218) | more than 9 years ago | (#11902523)

Perhaps within the bounds of the law?

Perhaps ethically sound?

And since a startup that succeeds ordinarily makes its founders rich, that implies getting rich is doable too.

Perhaps at a profit?

Re:More? (1)

AgentPhunk (571249) | more than 9 years ago | (#11902805)

Perhaps within the bounds of the law?

* Makes lots of money
* Enjoy what you do
* Keep it legal

Pick two.

-- Ivan Boesky (IIRC)

Also requisite... (4, Informative)

Faust7 (314817) | more than 9 years ago | (#11902540)

to start with good people, to make something customers actually want, and to spend as little money as possible.

"Check with the Patent Office beforehand" should definitely be in there.

Re:Also requisite... (3, Funny)

TheGavster (774657) | more than 9 years ago | (#11902781)

Which brings us to the alternate requirements:

-A patent
-A lawyer
-Xerox paper and envelopes

Re:Also requisite... (1)

fubar1971 (641721) | more than 9 years ago | (#11902838)

Only if you are inventing a product. If you are providing services, where would a patenet be involved. Not all startups invent things.

A SLASHDOT READER... (1, Insightful)

MLopat (848735) | more than 9 years ago | (#11902541)

Seems this guy has read one too many sarcastic slashdot articles where we all leave out that magical step before we get to PROFIT!!

Step 1. Read slashdot
Step 2. Take sarcasm at face value
Step 3. Give this suggestion to people as to how to make a startup
Step 4. ??
Step 5. Profit!!

Maybe he should include research into market share, how to get capital, how VC funding works, where to get these great people, etc. etc. The most important lesson in business came from Thomas Edison when he said "Get the money first!"

Re:A SLASHDOT READER... (0)

Anonymous Coward | more than 9 years ago | (#11902598)

Those posts were sarcastic?!

/me wonders what he's going to do now with a warehouse in Ukraine full of Natalie Portman-themed instant grits

Your "???" steps may vary. (2, Insightful)

Tackhead (54550) | more than 9 years ago | (#11902552)

> to start with good people, to make something customers actually want, and to spend as little money as possible.

I suppose that's one way to fill in the "???" that comes between "Obtain venture capital" and "Profit".

All that stuff sounds like way more work than making your money the old-fashioned way, namely the Big Three of "ensure continuous availability of blowjobs to investment analysts responsible for pumping of stock after the IPO", "sell everything the day the IPO lockup expires", and "avoid going into debtor's prison for underpayment of AMT".

I'll never understand this newfangled paradigm-shifting business models, but I'll give the article author this much: his newfangled method may be a lot more work than the traditional dot-com model, but it also sounds like a lot more fun.

Re:Your "???" steps may vary. (0)

Anonymous Coward | more than 9 years ago | (#11902666)

Actually, step one is not "Obtain ventury capital." It's "Steal underpants."

Although now that I come to think of it, the process is pretty much the same.

1 key... (2, Insightful)

Reignking (832642) | more than 9 years ago | (#11902557)

How about a competitive advantage? You know, people choosing your product or service because you do something better or cheaper or quicker or sleeker...

Man last time I read something this positive (5, Interesting)

Fox_1 (128616) | more than 9 years ago | (#11902567)

was back during the bubble, I worked for a start-up. Note the past tense.

and on the subject of NOTEs take a look at number 2 from his list of notes at the bottom of the article (I included only the first 2)

Notes

[1] Google's revenues are about two billion a year, but half comes from ads on other sites.

[2] One advantage startups have over established companies is that there are no discrimination laws about starting businesses. For example, I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. But you're not allowed to ask prospective employees if they plan to have kids soon. Believe it or not, under current US law, you're not even allowed to discriminate on the basis of intelligence. Whereas when you're starting a company, you can discriminate on any basis you want about who you start it with.


Re:Man last time I read something this positive (4, Funny)

Gannoc (210256) | more than 9 years ago | (#11902729)

For example, I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. when you're starting a company, you can discriminate on any basis you want about who you start it with.

"Hello, i'm Susan Johnson."
"I'm going to call you Suzy."
"Ummm, OK."
"Actually, lets call you Suzy McTitsfull."
"What??"
"Are you a breeder McTitsfull? Because we're trying to start a business and we can't have your water breaking all over our nice Aerons."
"That is none of your goddamn business."
"Well, then we have something in common, because THIS isn't YOUR business, McTitsfull. I knew I shouldn't have interviewed some random gash. GOOD-BYE."

Forgot number four, very important... (1, Interesting)

Anonymous Coward | more than 9 years ago | (#11902571)

Make sure a big customer doesn't FUCK YOU.

File UCC papers on any order that you can't afford to lose over the civil matter of customer refusing to pay you. It only costs a few bucks and changes the rules so that you are still the owner of unpaid goods as opposed to the much less secure position of 'creditor'.

BTBF (been there been fucked)

A good book... (3, Informative)

creimer (824291) | more than 9 years ago | (#11902591)

If you want to read a good book on starting up a Silicon Valley company, you should read Startup: A Silicon Valley Adventure [amazon.com] . Of course, Jerry Kaplan ultimately failed in his startup; but most sucessful business people usually have four or five failures before getting it right.

Inspiring Article! (2, Funny)

Anonymous Coward | more than 9 years ago | (#11902608)

I am going to resurrect Gopherspace and sell it as the internet 2.

the secret (2, Funny)

justforaday (560408) | more than 9 years ago | (#11902609)

to start with good people, to make something customers actually want, and to spend as little money as possible

Ahhh, so that was the secret to Microsoft's success...

New Start up (1)

varmittang (849469) | more than 9 years ago | (#11902618)

1) Don't need good people, you need either great marketers or great workers (marketers are better)

2) Need customers that can't tell the difference between whats good and whats bad.

3) Sue people so you don't have to make anything, thus saving money

4)??????

5) Profit!

NDA-s and VC firms (1)

jomagam (512625) | more than 9 years ago | (#11902626)

The reason VC-s don't sign NDA-s is not because the ideas are worthless. They probably read business plans of a dozen companies with overlapping ideas and don't want to get burned.

Re:NDA-s and VC firms (0)

Anonymous Coward | more than 9 years ago | (#11902707)

The reason VC-s don't sign NDA-s is not because the ideas are worthless

You are absolutely correct. A very successful business starter / finisher once told me: Ideas are a buck a piece. It's all about getting products to customers.

I have done it and survived (5, Informative)

dalewj (187278) | more than 9 years ago | (#11902656)

And what it took me was. commitment, good people, never sleeping, and a truck load of beer.

But really, starting a company is the scarest thing i have ever done, I was lucky, im past the 10 year mark and past the daily effects of cash flow. which brings me to the secret of starting a business....

CASH FLOW - CASH FLOW - CASH FLOWYou need cash to start, you need to sell the product, you need people to actuall pay you for it so you can build or sell more product, so people will at some point actually pay for it....... and on and on..

It doesn't matter how good you or your people or your product or whatever. It matters how good you collect the debts owed to you so you can either reinvest it or pay off the bank interest rates.

CASH FLOW - CASH FLOW - CASH FLOW
Damn which reminds me, SEND CASH!

There is only one thing they need... (5, Funny)

gosand (234100) | more than 9 years ago | (#11902662)

There is one and only one thing that a startup needs. And that is the infamous: "???"

further reading (4, Informative)

pHatidic (163975) | more than 9 years ago | (#11902663)

I highly recommend the book The Art of the Start by Guy Kawasaki, the guy who was responsible for the branding of Apple and making it into a cult company.

From Guy's website:

The Art of the StartWhen you get pregnant, you read What to Expect When You're Expecting. When you get laid off, you read What Color is Your Parachute?. When you get entrepreneurial, you read The Art of the Start.

This book is a weapon of mass construction. My goal was to provide the definitive guide for anyone starting anything. It builds upon my experience as an evangelist, entrepreneur, and most recently, as a venture capitalist who found, fixed, and funded startups.

The book is as relevant for two guys in a garage starting the next Google as social activists trying to save the world. GIST: cuts through the theoretical crap, theories and gets down to the real-world tactics of pitching, positioning, branding, recruiting, bootstrapping, and rainmaking.

It's even easier than that (2, Interesting)

Minwee (522556) | more than 9 years ago | (#11902670)

All a startup company needs to do is remember one thing: Make lots more money than you spend.

A startup that always does that will probably succeed. How difficult can that be?

Don't bother... (2, Funny)

Overzeetop (214511) | more than 9 years ago | (#11902859)

If you can pull that one off, you may as well just play the stock market. One rule: buy low, sell high. How can you lose?

Smart people ... (5, Insightful)

richg74 (650636) | more than 9 years ago | (#11902683)

From the article:

When nerds are unbearable it's usually because they're trying too hard to seem smart. But the smarter they are, the less pressure they feel to act smart. So as a rule you can recognize genuinely smart people by their ability to say things like "I don't know," "Maybe you're right," and "I don't understand x well enough."

This paragraph is one that some PHBs could study to their benefit. I once was associated (fortunately only in a consulting capacity) with a start-up boss who hired, as his marketing person, one of the most obnoxious people I have ever met. He (marketing guy) was constantly mentioning that he was a member of Mensa. For some odd reason, this did not go over too well with potential customers.

When someone makes a point of telling me how honest he is, I make sure to count my fingers after we shake hands. My reaction to people who tell me how smart they are is similar.

Re:Smart people ... (2, Funny)

taustin (171655) | more than 9 years ago | (#11902699)

When someone makes a point of telling me how honest he is, I make sure to count my fingers after we shake hands. My reaction to people who tell me how smart they are is similar.



Yeah, when someone tells me how smart they are, I count my fingers afterwords, too, out of fear their stupidity might be contageous.

Wildly understates the importance of luck (2, Insightful)

Anonymous Coward | more than 9 years ago | (#11902684)

This is what happens when the engineers fallacy [I can use logic, therefore I can understand any other subject by just applying logic] meets up with survivorship bias. A wiser geek than me expressed it as follows:

People whose sense of self-worth has gone nonlinear, because when they look at their brokerage statement, they forget that, while skill was certainly a component of why they got to where they did, luck was also a huge component. Most of these people have never worked for a company that built a good product and failed anyway. They don't have any understanding of the fact that skill is often necessary, but always insufficient. They believe their hype.

-- ac

Hmm... (4, Interesting)

Misch (158807) | more than 9 years ago | (#11902708)

Except thanks to the new bankruptcy reform bill passed yesterday [washingtonpost.com] , it's raising the opportunity costs on small business owners.

Often, even with a decent business plan, banks will require people to take out personal loans to get a small business started. With yesterdays new bill that benefits banks and credit card companies, people will have fewer opportunities to get out from the debt they created while trying to get a business off the ground.

With less of an incentive to create new opportunities, I feel that this will hurt the ability of America to be a leader in "innovation".

Re:Hmm... (1)

Overzeetop (214511) | more than 9 years ago | (#11902899)

Huh? You mean the banks want their money back if you fail miserably? That's just ridculous!

Maybe this will make America a leader in personal responsibility. All we need is to revamp the rest of the code.

(FWIW, I have a business loan I personally signed for in order to upfit my first office. You'd better believe I'm working my ass off to make sure I can pay for it)

Might I suggest (1)

synx (29979) | more than 9 years ago | (#11902709)

A book called 'The Art of the Start'. Written by Guy Kawasaki, who is (in)famous for being apple's chief platform evangelist back in the 80s.

The book is much more detailed based on his experiences at Apple and as his job as CEO of Garage.com - a venture type firm which helps inventors do start ups.

The book is much more detailed than the 'basics' that Paul outlines. It is essentially the old stock market "wisdom" - "buy low sell high". But this is not an operating plan, or a philosophy of starting a business, etc.

Of course I haven't read the essay yet, but if I read the essay I wouldn't be able to post early enough so my comment would be read by a reasonable number of users. Ah, the slashdot paradox.

Re:Might I suggest (1)

synx (29979) | more than 9 years ago | (#11902956)

And now I have read some of the essay. Having read the above mentioned book it was too boring to continue on Paul's essay. I'm not sure what Paul knows about starting companies, but I do know that Guy knows a few things.

At one point of the book, Guy points out, with a supporting reference (I don't have the book in front of me now, I lent it to someone doing a new business) that most startups fail not because they don't spend money frugally, but because they fail to execute. He said that if all it took to be successful is to not spend money, then everyone would be working on doors and sawhorse desks.

I completely believe that. To that end, Paul's advice would in fact be wrong. Not spending money (especially where it counts) is not a way to success. Building a product customers want is obviously important, but consider a product like the iPod or original Mac, there was no existing customer base, and customers literally did not know what they wanted. I think Paul's advice while it seems good, is oversimplified to the point that it is essentially useless as a general start-up guide.

Competence vs. Brilliance (4, Insightful)

G4from128k (686170) | more than 9 years ago | (#11902718)

In particular, you don't need a brilliant idea to start a startup around.

I'd like to second this idea and expand on it. Customers, especially business customers, prize consistent performance above uber-brilliance and cutting-edge innovation. They (and I) would rather buy a reliable product/service and give up on a few cutting-edge features (compare Google's plain text to Yahoo's overloaded graphics).

Our company does well because we always deliver what we promise and try to under-promise/over-deliver if possible. The result is that we don't have to spend any money on marketing because referrals and word-of-mouth do the trick. The money not spent on marketing goes into doing a better job for our clients and so the cycle continues.

Competence beats brilliance when the product or service is too important to risk on the unknown. I'm not recommending mediocrity, only suggesting the quality of execution is more important than brilliance of ideas. Of course, if you have both a brilliant idea that is useful and that is flawlessly executed, then you can't help but win.

I can't fail now (1)

Haxx (314221) | more than 9 years ago | (#11902719)

to start with good people, to make something customers actually want, and to spend as little money as possible

Now I know what my problem was! Stupid me! I spent as much money as possible!

Next time, i'll skip advertising and promoting and I will not pay any overhead bills at all.

My cousin had a failing business for 10 years. His wife is a lawyer and paid the bills and covered his losses the whole time. Now in year 11 he has enough customers to scrape up a living. You have to hear this guy give other self-employed people advice. Sounds just like this fool.

Luck: The most important element (3, Insightful)

imaginaryelf (862886) | more than 9 years ago | (#11902753)

You need luck.

Being at the right place at the right time to have the right things happen.

Why is it that people attribte their successes to skill but their failures to bad luck?

Sounds like stock advice... (1)

Macrobat (318224) | more than 9 years ago | (#11902775)

Sounds like the old, iron-clad "buy low, sell high" stock advice to me. While incontrovertably true, it still doesn't tell you how you're supposed to to that.

Cluck like a chicken (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#11902802)

Buck, buck, buck, buck, buck, buck....BROKE!

This is a load of crap. (5, Insightful)

radiumhahn (631215) | more than 9 years ago | (#11902829)

I have made a successful start up and let me tell you this article is one scenerio out of a possible million.

1. Work with honest people. Honest people won't be lazy slackers.

2. Single founder is great if you can do it. If you are going to have multiple founders or board members the rule is "odd numbers" no tie votes. But honestly...if you can do it yourself you will be better off.

3. Investors are a bad idea. They will be in your business in a bad way. If things don't work out and 9 out of 10 start ups fail ... the guilt will eat you alive especially if you go the friends and families route that VC push hard on beginners.

4. VCs are morons. Look at their portfolios and they will expect to tell you how to run your business. They will have lots of highly educated people who have never built a successful business. VC dollars are the most expensive dollars you will ever find. You are better off not taking them... VCs set the objectives so high you'll pass up good ideas and plans for bad ones of bigger scope. VCs need to pay for their portfolios... honestly...look at those portfolios closely.

5. 9 out of 10 Start ups fail... that means you are certain to have 9 times where you probably should close your doors... If you manage to stay open through them your business will likely have adapted to the market and demand and will be the one in 10 that lives...

6. There are no rules...Its fear and greed and desire and comfort and popularity.... these are social forces no one can control or predict. Be diligent on open to adaptation. Thats the best you can do.

Let me guess (0)

Anonymous Coward | more than 9 years ago | (#11902833)

Program everything in LISP!?!?!?

Easy - start up an adult site and post a link here (0)

Anonymous Coward | more than 9 years ago | (#11902837)

http://martinigirls.com [martinigirls.com] People always love pictures of beautiful nude women. Can't go wrong there.

missing step (5, Insightful)

digitalride (767159) | more than 9 years ago | (#11902844)

I started a startup about a year ago, and I have as TF Article says:
1. started with good people
2. made something customers actually want
3. spent as little money as possible

But the missing step before profit is marketing and sales, which is not easy for engineers. I'd like to see a good guide on marketing and sales for a startup since we can't afford to spend a fortune on advertising.

Another know-it-all blowhard like Philip Greenspun (0)

Anonymous Coward | more than 9 years ago | (#11902857)

These guys all have the same attitude:

"I did 'X'. I was successful. Therefore, in order to be successful you must do 'X'. Be like unto me!"

Google and Advertising (1)

filmmaker (850359) | more than 9 years ago | (#11902895)

Graham writes that one of Google's three ideas was to provide "clean, simple web pages with unintrusive keyword-based ads."

I remember in 2001/2002, when Google truly became a household name, there was little in the way of ad programs, and far fewer ads in their pages. And there certainly wasn't any of this going on [slashdot.org] .

Starting Up (1)

MightyMartian (840721) | more than 9 years ago | (#11902900)

So, in other words, the key to a good startup is to start with good people, start with good ideas, start with a smart starting startup business plan, start but don't start too fast, start but don't start to slow, don't forget that starting a startup is the starting of a new startup life where you can start a startup and start it with starter-like people, possibly starting a jungle gorilla startup camp for major league starting pitchers on startup but turn the key otherwise the car won't startup and then you'll be left without good starting up people who can't startup your Mos Eisley bar and then start banning droids and start a future Jedi on his path to starting the end of that startup company known as the Evil Galactic Empire which has started picking on wookies who start shitty spacecraft with pilots who start by not knowing how to startup the hunk of junk and can't even begin to start comprehending what a parsec is but not to worry, there's a great startup company that's starting a great starter course in astronavigation, but then again then you'll have no startup facility for starting gorillas on their course to start new nation-wide political parties that will start the process of getting starter sapient politicians...

And that's just for starters!

...and borrow as little as possible. (1)

mcguyver (589810) | more than 9 years ago | (#11902952)

Having to go to a VC is not always a good thing. Picture getting a home loan only your bank owns a percentage of whatever you make (or lose) and your loan officer sleeps in the bedroom while you sleep on the couch.

Coming soon! (2, Funny)

Black Parrot (19622) | more than 9 years ago | (#11902955)


In future episodes we will teach you how to pick a pickup, fix a fixup, hang a hangup, and screw a screwup.

Load More Comments
Slashdot Account

Need an Account?

Forgot your password?

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>
Sign up for Slashdot Newsletters
Create a Slashdot Account

Loading...