Paul Graham posted a great essay yesterday on what startups are really like. The essay polarizes the life of an entrepreneur against the life of… well… anyone with a job. It also describes what surprises founders the most when they enter startup life and it discusses founders’ views of external investors (using a sample of Y Combinator founders).
(For those uninitiated, Paul is from Y Combinator, an early-stage startup investment firm.)
Here are the points from Paul’s essay that grabbed my attention the most:
- Founders said their number one surprise was how careful they needed to be about co-founders
- Founders were surprised how much more important persistence is than skill and intelligence
- Founders were surprised how long things take, especially when bureaucracy takes hold
- Founders were surprised launching early, learning from customers and iterating really works
- Founders were surprised of the power of engaging customers and changing ideas accordingly
- Founders were surprised that they overvalued competitors’ ideas and overstated the threat
- And of course, founders were surprised that investors are clueless
This last point grabbed my attention because, a) I’m an investor, and b) I like to think I’m not entirely clueless. This then begs the questions, a) am I in fact clueless, and b) does this even matter?
Well, of course I’m clueless about many things, and, I’m usually clueless about the products and services of our investees, before we invest. But, once I seriously consider an investment, I become an expert, or as expert as one can become in a matter of weeks. I’ll never have the entrenched understanding that comes from 20 years of research, but I can build an appreciation that helps to understand a potential investment, it’s market, it’s customers, etc.
So, is this enough? Considering I’m not the one building the product, it likely is more than enough. My skill lies elsewhere in areas that complement the skills of the founder (or at least that’s my pitch). I know finance, I know deals, I know fund raising, and as a layperson (with regard to an investee’s technology), I also know what the average person wants. And with that, I can just as easily argue that founders are clueless too. Just as investors may be stumped trying to turn a device on, founders interminably build square pegs for round holes.