Introduction

The instructor answers questions from the previous lecture before starting today's lecture on how to hire and execute.

• The instructor welcomes students and asks if there are any questions from the previous lecture.

• A student asks about identifying fast-growing markets.

• The instructor advises students to trust their instincts and observe what they and their peers are using to identify fast-growing markets.

• Another student asks about dealing with burnout as a founder, and the instructor advises that it is important to address challenges and rely on a support network.

Co-founder Relationships

The importance of co-founder relationships is discussed, along with common mistakes made when choosing a co-founder.

• Co-founder relationships are among the most important in a company, but many treat choosing a co-founder with less importance than hiring.

• Students often choose random or unfamiliar people as co-founders, which can lead to disaster when things go wrong.

• Choosing someone you have a long history with or are friends with can help bind you together during tough times.

• The track record for founders who don't already know each other is poor.

Co-Founders and Solo Founders

This section discusses the importance of having co-founders and the risks associated with being a solo founder.

Importance of Co-Founders

• For the top 20 most valuable YC companies, all of them have at least two founders.

• YC funds at a rate of something like one out of ten solo teams.

Characteristics to Look for in Co-Founders

• Relentlessly resourceful is a very good description for what you're looking for with co-founders.

• You need someone that behaves like James Bond more than you need someone that is an expert in some particular domain.

• In addition to relentlessly resourceful, you want a tough and calm co-founder. Smart is obvious but most people don't prioritize tough and calm well enough.

Risks Associated with Being a Solo Founder

• It's better to have no co-founder than have a bad co-founder, but it's still bad to be a solo founder. Random founder you meet is really bad. Students tend to do this for some reason.

• Ideally, you should know your co-founders for years before starting a company together. This is true for early hires as well but more people get this right for early hires than they do for co-founders. Take advantage of school to find potential co-founders or early hires.

Hiring Employees

This section discusses the importance of keeping employee count low in the beginning stages of starting up.

Importance of Keeping Employee Count Low

• Having lots of employees leads to a high burn rate, complexity, tension, and slow decision making. The goal should be not to hire too much in the beginning stages of starting up.

• Many of the best YC companies have had phenomenally small numbers of employees for the first year, sometimes none besides the founders. They really try to stay small as long as they possibly can.

Risks Associated with Hiring Early

• At the beginning, you should only hire when you have a desperate need to. The cost of getting an early hire wrong is really high. Later on, you need to learn how to hire fast to scale up the company.

Airbnb's Cultural Values

This section discusses the cultural values that Airbnb wanted its employees to have.

Cultural Values

• Before hiring anyone, Airbnb wrote down a list of cultural values they wanted their employees to have.

• One of those values was that you had to "bleed Airbnb." If you didn't agree with this value, they wouldn't hire you.

• Brian Chesky, the CEO, used to ask potential hires if they would take the job if they only had one year left to live. He later relaxed this question to ten years but still asks it.

• The company has a culture of extremely dedicated people who come together during crises.

Hiring for Startups

This section discusses how startups should approach hiring and recruiting top talent.

Recruiting Top Talent

• When in hiring mode, your number one priority should be getting the best people.

• Founders often underestimate how hard it is to recruit top talent. It can easily take a year or more to convince someone to join your startup.

• Good people know that they should join a "rocket ship" - a company that's already working and on a breakout trajectory.

• The best way to attract top talent is by having a great product and mission.

Time Spent Hiring

• When in hiring mode, founders should spend either 0% or 25% of their time on hiring. In practice, spending 50% of your time on hiring is recommended but rare for most managers.

Importance of Hiring Well

• A single mediocre hire in the first five can often kill a startup.

• Every person in a startup sets the tone for the company's culture. If you compromise on quality early on, it can poison the culture and hurt the company's chances of success.

• Founders should think about whether they would bet the future of their company on each hire they make.

Hiring Tips for Startups

In this section, the speaker provides tips on hiring for startups. The best source of candidates is people that you already know or people that other employees in the company already know. Experience matters for some roles and not others. Good communication skills tend to correlate really well with hires that work out.

Sources of Candidates

• The best source by far for hiring is people that you already know or people that other employees in the company already know.

• Personal referrals are the trick to hiring.

• Look outside the valley as it is brutally competitive to hire engineers here.

Experience Matters?

• Experience matters for some roles and not others.

• For most of the early hires you make in a startup, experience doesn't matter very much.

• Three things to look for when hiring: Are they smart? Do they get things done? Do I want to spend a lot of time around them?

Evaluating Candidates

• Working together on a project rather than just doing an interview is way better to evaluate someone's aptitude and belief in what you're doing.

• Ask specifically about projects that someone has done in the past rather than brain teasers.

• Call references and dig into projects people have worked on.

Communication Skills & Risk Taking Attitude

• Good communication skills tend to correlate really well with hires that work out.

• Early employees should have somewhat of a risk-taking attitude.

Hiring and Retaining Employees

This section covers the importance of hiring the right employees, giving them equity, and retaining them by making sure they feel valued.

Hiring the Right Employees

• Describe any employee as an animal at what they do.

• Aim to hire unstoppable people who will get things done.

• Hire people you would spend time with socially and be comfortable reporting to if roles were reversed.

Employee Equity

• Give 10% of the company to the first ten employees as a rough guideline.

• Be generous with equity to early employees and fight with investors to reduce their equity.

Retaining Employees

• Make sure your employees are happy and feel valued.

• Learn management skills to prevent team churn.

• Motivate people by providing autonomy, mastery, and purpose.

Firing People

In this section, the speaker talks about firing people and how it is one of the worst parts of running a company. He emphasizes that firing fast when it's not working out is better for both the company and the employee. The speaker also mentions that creating office politics and being persistently negative are reasons to fire someone.

Firing People When It's Not Working Out

• Firing people is one of the worst parts of running a company.

• Every first-time founder waits too long to fire someone.

• Firing fast when it's not working out is better for both the company and the employee.

• Creating office politics and being persistently negative are reasons to fire someone.

Balancing Firing Fast with Employee Security

In this section, a question is asked about balancing firing fast with making early employees feel secure even if they make mistakes sometimes.

Balancing Firing Fast with Employee Security

• When an employee is not working, it's not like they screw up once or twice. Anyone will screw up once or twice, or more times than that. If someone is getting every decision wrong, that's when you need to act. And at that point, it'll be painfully aware to everyone. It's not a case of the few screw-ups; it's a case where every time someone does something you would've done the opposite yourself.

• You should be very loving and work together as a team when firing someone who isn't working out instead of taking it out on them.

Equity Split Among Cofounders

In this section, the speaker talks about when cofounders should decide on the equity split.

Deciding on Equity Split Among Cofounders

• A lot of founders like to leave the discussion of equity split for a very long time. This is not a discussion that gets easier with time. You want to set this ideally very soon after you start working together, and it should be near equal. If you're not willing to give someone your cofounder an equal share of the equity, that should make you think hard about whether or not you want them as a cofounder.

• The ink should dry on this before the company gets too far along, certainly in the first number of weeks.

Dealing with Inexperience

In this section, a question is asked about how to deal with inexperience.

Dealing with Inexperience

• People who are really smart and can learn new things can almost always find a role in the company as time goes on. You may move them into something else other than where they started if they can't scale up to a role as things go on and later become crippling. Really good people can almost always find some great place in the company.

Handling Relationship Breakdown Between Founders

In this section, a question is asked about what happens when relationships between founders break down over time.

Handling Relationship Breakdown Between Founders

• The speaker does not answer this question as he moves onto another topic before answering it fully.

Cofounder Vesting and Preventing Fallout

In this section, the speaker discusses the importance of cofounder vesting and preventing fallout between cofounders.

Cofounder Vesting

• Cofounder vesting is pre-negotiating what happens if one of you leaves.

• The normal stance in Silicon Valley is that it takes four years to earn all equity split 50/50.

• The clock doesn't start until one year in.

• If you leave after one year, you keep 25% of the equity. If you leave after two years, 50%, and so on.

• Not having vesting on equity can lead to a huge fallout if a founder leaves early with half the company.

• This creates dead weight on your equity table and makes it hard to get investors to fund your company.

Preventing Fallout

• Talk about problems early instead of letting them fester.

• It's better to have vested equity because it prevents fallout between cofounders.

Choosing Between Hiring Suboptimal Employees or Losing Customers

In this section, the speaker discusses whether to hire suboptimal employees or lose customers.

Hiring Suboptimal Employees vs Losing Customers

• If you have to choose between hiring a suboptimal employee and losing customers to your competitor, what do you do?

• If they are one of the first five employees of the company, lose those customers.

• It's better to lose some customers than kill the company.

Working with Cofounders in Different Locations

In this section, the speaker talks about working with cofounders who are not in the same location.

Working with Cofounders in Different Locations

• The speaker is skeptical of remote teams in general.

• In the early days of a startup, communication and speed outweigh everything else.

• Video conferencing or calls just don't work that well.

• It's really tough to point to a single example where cofounders were in different locations.

Execution is Critical for Founders

In this section, the speaker discusses how execution is critical for founders.

Execution for Founders

• Execution is often the most critical part of starting a company.

• Most people think they are signing up to have a brilliant idea and be on magazine covers and go to parties.

• Being a founder means signing up for a year-long grind on execution.

• You can't outsource execution.

• Everything in startup gets modeled after the founders.

• If you want a culture where people work hard, pay attention to detail, focus on the customer, and are frugal, you have to do it yourself.

• There is no other way.

Jobs of Startup CEO

In this section, the speaker talks about the jobs of a startup CEO.

Jobs of Startup CEO

• Set the vision

• Raise money

• Evangelize the company to people you're trying to

The Importance of Focus and Execution

In this section, the speaker discusses the importance of focus and execution in achieving success as a founder. He emphasizes that founders must identify the two or three most important things to work on each day and ignore or delegate everything else.

Focus is Critical

• Focus is critical for startup success.

• Founders must identify the two or three most important things to work on each day.

• Most startups are not focused enough, which can lead to failure.

• Without setting priorities every day, founders will struggle to get things done.

Setting Goals

• Good founders have a small number of overarching goals for their company at any given time.

• Everybody in the company should know what these key goals are so they can execute based off of them.

• Founders should repeat these goals over and over again to keep the company focused.

Maintaining Growth and Momentum

• Growth and momentum are what a startup lives on, so it's crucial to maintain them.

• Companies should always know how they're doing against their metrics and be suspicious if they're not growing well.

• Companies often get distracted by their own PR, which is a common mistake.

Remote Co-Founding Teams

In this section, the speaker discusses the challenges of remote co-founding teams and emphasizes the importance of being in the same space.

Challenges of Remote Co-Founding Teams

• Remote co-founding teams are hard to manage and slow down cycle time more than expected.

• Startups require extreme focus and dedication, which means work-life balance is not always achievable.

Importance of Being in the Same Space

• Startups are all-consuming and require a relentless operating rhythm.

• A small amount of extra work on the right thing can make a huge difference.

Intensity, Quality, and Decisiveness

In this section, the speaker discusses how intensity, quality, and decisiveness are crucial for startup success.

Importance of Intensity

• Startups only work at a fairly intense level.

• You need to be willing to outwork your competitors.

Importance of Quality

• Startups need to have a culture where people have very high-quality standards for everything the company does but still move quickly.

• Apple, Facebook, and Google have all managed to move fast while maintaining quality standards everywhere.

Importance of Decisiveness

• Indecisiveness is a startup killer; mediocre founders spend too much time talking about grand plans without making decisions.

• The best founders work on things that seem small but move quickly; every time you talk to them they've gotten new things done.

Speed and Incremental Progress

In this section, the speaker discusses how speed and incremental progress are crucial for startup success.

Importance of Speed

• The best founders usually respond to email the most quickly and make decisions the most quickly.

• Startups need to have a bias towards action; you can do huge things by breaking them down into smaller projects.

Importance of Incremental Progress

• You need to pick the right-sized projects and keep knocking down small chunks one at a time.

• Doing a small amount of extra work on the right thing can make a huge difference in startup success.

The Importance of Momentum and Growth

In this section, the speaker emphasizes the importance of momentum and growth in startups. He shares a personal story to illustrate how getting on planes in marginal situations can help save a deal.

Getting on Planes in Marginal Situations

• Investors show up a lot and it's important to meet them in person.

• When faced with losing a critical deal, the speaker got on a plane to meet with the potential customer.

• Showing up in person helped them close the deal that they would have lost otherwise.

The Prime Directive for Managing a Startup

• Momentum and growth are essential for startups.

• A winning team keeps winning while a team that hasn't won gets demotivated and keeps losing.

• For software startups, keeping momentum means keep growing. For hardware startups, it means not letting your ship date slip.

How to Get Back on Track When You Lose Momentum

• Most founders try to get momentum back by giving long speeches about vision for the company but this doesn't work when employees are demotivated.

• To get momentum back, focus on small wins such as increasing sales.

• When there is disagreement among the team about what to do, ask users what they want and do whatever they tell you.

Facebook Example

• When Facebook's growth slowed down, Mark instituted a growth group that worked on small things to make Facebook real faster.

Establishing Momentum and Dealing with Competitors

In this section, the speaker discusses how to establish momentum in a company by establishing an operating rhythm and reviewing metrics regularly. The speaker also talks about how competitors can disrupt momentum and provides advice on how to deal with them.

Establishing an Operating Rhythm

• To keep momentum, establish an operating rhythm in the company early.

• Ship product and launch new features on a regular basis.

• Review metrics every week with the entire company.

• This is one of the best things your board can do for you.

Dealing with Competitors

• Don't worry about a competitor until they're actually leaving you with a real, shipped product.

• Press releases are easier to write than code, which is still easier than making a great product.

• Remind your company of this and don't let them get down because of competitors and press.

• The competitor to be feared is one who never bothers about you at all but goes on making their own business better all the time.

Conclusion

In this section, the speaker concludes the lecture by announcing that Paul Graham will speak on Tuesday.