Starting a Technical Startup: Key Principles and Insights

Successful technical startups require a strong engineering team, problem-solving focus, and efficient spending.

### Essential Steps to Launch a Successful Technical Startup
* 🚀 Starting a technical startup requires **two to four co-founders**, with at least **50% having engineering backgrounds**, and all should have a year’s worth of living expenses saved, ideally in a **frugal manner**.
* 💡 It's crucial to brainstorm ideas as a team, as often **one member has the seed of an idea** that can grow into the company, and everyone should feel **ownership of the concept**.
* 📈 Focus on solving **daily or weekly problems** rather than monthly or yearly ones, as this increases the chances of success; for example, services like Uber address **daily transportation needs**.
* 🔍 Conduct thorough market research to ensure there are **billions of dollars in your target market**, and use competitors' products to inform your strategy.
* 💼 Incorporating in the US is a straightforward process, costing around **$250**, which allows you to **raise funds from American investors**.
* 🚀 Launching your MVP (Minimum Viable Product) should ideally take **no longer than two months**, as getting something in front of users quickly is key to **early feedback and growth**.
* 📊 Growth is the most critical metric for investors; therefore, focus on creating a product that **naturally encourages sharing and word-of-mouth** from day one.
* 💰 To fundraise effectively, create **urgency** by scheduling investor meetings **closely together** and build **momentum** by discussing your **growth and press coverage** to attract attention.

but this is it. Like, literally, this is all the smart stuff I know, period, and it's all in like maybe 14 slides, so it's really fast. All right, let's go. How to start a technical startup. First one, two to four co-founders, at least 50% engineering. They all have to have somewhat around a year's worth of money in the bank, but that doesn't mean a year's worth of money living in a one-bedroom apartment like in a high-rise. That means a year's worth of money eating ramen noodles and being very poor. And everyone has to have quit their job. This is what you need to start a startup. Notice no idea is required; you just need this. That's it. Second idea: I always think that it's better to start brainstorming with your teammates. Typically, one member of the team has the kernel of an idea that'll become the company, but it's always best before that gets too solidified to discuss it with your teammates so that everyone buys in and gets ownership. We tend to like

companies who are trying to solve personal problems. Every investor says that the real thing is we like companies where the founders know what the hell the companies are doing and know what the problem is. So if it's not solving your problem, it should be solving a problem that you're very, very aware of. And then the other thing I tell Founders is try to focus on daily and weekly problems as opposed to monthly or yearly problems. It's a lot easier to do something like Uber. The typical person in America has to figure out how to get somewhere three times a day. It's a lot harder to do a car sales website. The typical person in America only buys a car once every seven years. Try to focus on daily and weekly problems. It tends to be a lot more successful. Market, this is an area that like people talk so much about. Do an hour of research, figure out whether there are billions of dollars being made in your market, and use your competitor's product. After that, I don't care legal if you guys are interested in raising money in the US.

You're going to have to incorporate in the US. That is a very, very, very simple process for $250 and clerk.com. You can have an American company, and you can raise money from American investors. Yeah, it's that easy. Let's demystify that MVP, most viable product. This is where most companies will screw up. Actually, sorry, where most companies will screw up is on the team. This is the second place most companies will screw up. How can you get something into people's hands? I can't tell you. I've done this many times myself. The number one piece of advice we give to YC companies before they launch is launch. I can't tell you how many people will just sit there and iterate and iterate before users ever see anything. So when I ask a company how long it's going to take to launch, I always just ask them, Why does it take longer than two months? Like, I don't care what it is. I don't care if they haven't started yet. You should be able to build something in two months and get it in

front of users. This is just saying it one more time. You're nothing into your launch. So, how do you achieve growth? I would say that for the typical Silicon Valley investor, this is the number one metric for determining whether you're going to raise money. It's not team, it's not past experience, it's not fancy investors, it's growth. So, um, typically you're going to go one of three places. One, you're going to experiment with ads. I tend to like that strategy the least. The second, if you're B2B, you really want to focus on reference customers, the customers who you can provide amazing service to, who's going to talk to other people in their industry and spread the word about you. The last one, if you're doing anything related to Consumer, whether it's consumer services, social media, etc., usage should equal sharing. I can't tell you how many Founders I've talked to said, Oh, I'm going to make my thing go viral. Well, if you want to make your thing go viral, it doesn't mean just adding a share.

button. The very fact that people are using your product has to create some type of sharing that has to be built in from day one. And so, don't think of sharing as an extra activity or a side activity; think of it as 100% part of using your product. All right, press. A lot of people think that they need to hire someone to do their PR. At Justin TV, my co-founder had a little competition on how much money we've wasted, and we'd write it up on a whiteboard. And every time we wasted money, we'd write it up there and add it up. I've wasted over $150,000 on PR firms, so I'm giving this advice because I don't want you to do the same thing. 99% of PR in the early stage you can do yourself. The best piece of advice I've been given about PR, the thing that completely changed my whole perception, is that PR is exactly like business development. When you're trying to do a BD deal, you get a warm introduction. You

follow up. You build a relationship, and you provide something of value when you're dealing with press. It's the exact same thing. You need to get an introduction from someone, hopefully who that reporter has always written about. You need to be able to structure your pitch so that it's real news: something launching, money being raised, a significant hire, a significant new BD deal. You can't just expect the profile piece, and what you need to do is make sure you treat that as a relationship. Once you have a reporter who's written about you, you've got to follow up with them. That becomes a very, very important relationship that can continue to provide value if you continue to follow up. PR is very simple and don't spend money fundraising. Typically, companies will come to YC and ask, How do we start fundraising? and the number one thing we say to them is that if you don't need money, people love to give it to you. So how do you put yourself in the position of not needing money? One, let's not start the company with a $1 million marketing.

and advertising plan, right? That's you need money for that. Um, think about how you can structure your company so all you have to do is pay for the living expenses of your co-founders. That's it. Hopefully, your MVP requires so little money to get up and running that you can produce some growth without needing it. The second thing is that people don't quite understand that speed when it comes to fundraising is extremely important. Um, when you have meetings with investors, you want them to be scheduled as tightly as possible, like one week, every single introduction meeting you have with an investor. Um, the purpose of this is that one, it creates Buzz around your fundraise, two, it lines all the investors up. So, if one investor wants to take a step forward, you can contact everyone else you just met in the previous week and said, Hey, look, we've got someone on hook here. Do you want to come along or not? The biggest mistake we see people make is doing investing these investment meetings serially. I'll take one this week, I'll take one next

week. I'll take one the week after that. Investors move because they have a fear of missing out (FOMO). You're not creating a fear of missing out if you're only talking to them one at a time. The last thing is having growth. Having growth is like the solution to every single problem. The more you're growing, the more investors are going to invest time finding you as opposed to the other way around. So, you're having problems fundraising. How many people right now are looking to fundraise in this audience? Okay, all right, beautiful. Four things to think about. One, are you growing? I should have asked, have you launched? If you have a launch plan that requires fundraising, change it. Two, are you talking to the press? It's investors' jobs when they wake up every morning to find a company to invest in. That's their job. They try to trick you into thinking that their job is to sit at their desk and wait for you to walk in the front door, but that's not their job. So, you need to be getting the word

out about your company so that they hear about your company from someone else, not just you. Three, build momentum. Make sure you're talking to as many investors at the same time as possible. Sometimes this means cheating, like oftentimes this means doing stuff like telling the investor you're really busy and you can only meet a month from now so you can spend a whole month lining up other investors for that week. That's totally fine. That's totally fine. The last thing is that try to focus on people, especially for your first money, people who understand your problem because they've had it or they have it right now. Oftentimes, customers and potential customers can be great initial investors early stage. So, operations super, super fast. The number one problem that companies have is they spend too much money. That's the number one problem they have. So, spend less money, pay yourself less, get a crappier office, just suck it up and use less money. This is the number one way you can extend your runway, and it's 100% dependent on you. No

one else. The second thing, and I can't tell you how many people do this, look at how much you spend every month. It's very simple. Just go to your bank account, download your, you know, the spreadsheet that says exactly every line item what you spent, and read it every month. If you're the CEO and you don't know what your expenses are, you're not doing your job. Then figure out how to spend less money. That seems pretty simple. All right, hiring. One of the goals I like to kind of instill in people in hiring is figure out how you can increase the average talent with each hire. Oftentimes, founders think that they are like the smartest people in the universe. Founders tend to be pretty smart, but very, very, very willing to take on risk. And so your first couple of employees should be a lot smarter and just a little bit more risk-averse than you are. If when you're hiring someone you don't think you're increasing the average intelligence of the company, you made a mistake because those people are

basically your hiring advertisement. If those people are smart, other smart people going to want to come to your company. If those people are not smart, everyone knows it. So don't. I mean, one of the things I always think about is like, if you can't hire someone who's smarter than you, just do it yourself. You know, it doesn't. Hiring a lot of people is not required. Be fair and transparent when you give someone an offer. You need to tell them how much stock they're getting. They should get stock. Need to tell them how much stock is outstanding. Need to tell them whether their salary is, you know, typical for what you give. And if not, be honest. A lot of the times, your first employees are your most viable. And if you show them loyalty, they'll show you loyalty back. And then the last thing is hire slow. My second company, Social Cam, had three founders. When we sold, we had three founders, no employees. We didn't necessarily want it to be that way, but we were able to grow a product to over 20 million downloads.

with three people, so don't tell me that you can't do a lot with just your founding team. You can do a whole lot. I think Instagram sold for a billion, and they were under 20, so high or slow, you can do it.

Everything We Teach at YCombinator in 10 Minutes

Startup Istanbul

A successful technical startup requires 2-4 co-founders with at least 50% engineering background and a year's worth of low-cost living expenses.

Brainstorming with teammates is crucial for idea ownership, and focusing on solving daily or weekly problems increases the chances of success.

Conducting market research, incorporating in the US, and launching the product within two months are essential steps to get the startup off the ground.

Strategies for Achieving Growth in Startups

Growth is the key metric for Silicon Valley investors when determining funding.

To achieve growth, startups can experiment with ads, focus on reference customers for B2B, and integrate usage with sharing for consumer-related services.

PR should be handled personally in the early stages, building relationships with reporters and providing real news to gain coverage, while also positioning the company in a way that minimizes the need for fundraising.

Key Strategies for Successful Fundraising

Structuring the company to cover co-founders' living expenses can help minimize initial funding needs.

Scheduling investor meetings tightly creates buzz and a sense of urgency, increasing the likelihood of securing funding.

Growing the business and actively engaging with the press can attract investors and create a stronger fundraising position.

Building a strong network is crucial, so aim to have multiple investors lined up at the same time.

Managing expenses effectively is vital; spend less, pay yourself less, and regularly review your monthly spending.

When hiring, focus on bringing in talent that is smarter and more risk-averse than you, to increase the overall intelligence of the company.

Hiring smart people is crucial, as their presence will attract other talented individuals to the company.

It's important to be fair and transparent in job offers, including details about stock and salary.

Hiring slowly and relying on a strong founding team can lead to significant growth and success.