Why It's Safe for Founders to Be Nice I recently got an email from a founder that helped me understand something important: why it's safe for startup founders to be nice people. I grew up with a cartoon idea of a very successful businessman (in the cartoon it was always a man): a rapacious, cigar-smoking, table-thumping guy in who wins by exercising power, and isn't too fussy about how. As I've written before, one of the things that has surprised me most about startups is how few of the most successful founders are like that. Maybe successful people in other industries are; I don't know; but not startup founders. [ 1 ] I knew this empirically, but I never saw the math of why till I got this founder's email. In it he said he worried that he was fundamentally soft-hearted and tended to give away too much for free. He thought perhaps he needed "a little dose of sociopath-ness." I told him not to worry about it, because so long as he built something good enough to spread by word of mouth, he'd have a superlinear growth curve. If he was bad at extracting money from people, at worst this curve would be some constant multiple less than 1 of what it might have been. But a constant multiple of any curve is exactly the same shape. The numbers on the Y axis are smaller, but the curve is just as steep, and when anything grows at the rate of a successful startup, the Y axis will take care of itself. Some examples will make this clear. Suppose your company is making $1000 a month now, and you've made something so great that it's growing at 5% a week. , you'll be making about $160k a month. Now suppose you're so un-rapacious that you only extract half as much from your users as you could. That means you'll be making $80k a month instead of $160k. How far behind are you? How long will it take to catch up with where you'd have been if you were extracting every penny? A mere . After , the un-rapacious founder is behind the rapacious one. [ 2 ] If you're going to optimize a number, the one to choose is your growth rate . Suppose as before that you only extract half as much from users as you could, but that you're able to grow 6% a week instead of 5%. Now how are you doing compared to the rapacious founder after ? You're already ahead-$214k a month versus $160k-and pulling away fast. In you'll be making $4.4 million a month to the rapacious founder's $2 million. Obviously one case where it would help to be rapacious is when growth depends on that. What makes startups different is that usually it doesn't. Startups usually win by making something so great that people recommend it to their friends. And being rapacious not only doesn't help you do that, but probably hurts. [ 3 ] The reason startup founders can safely be nice is that making great things is compounded, and rapacity isn't. So if you're a founder, here's a deal you can make with yourself that will both make you happy and make your company successful. Tell yourself you can be as nice as you want, so long as you work hard on your growth rate to compensate. Most successful startups make that tradeoff unconsciously. Maybe if you do it consciously you'll do it even better. Notes [ 1 ] Many think successful startup founders are driven by money. In fact the secret weapon of the most successful founders is that they aren't. If they were, they'd have taken one of the acquisition offers that every fast-growing startup gets on the way up. What drives the most successful founders is the same thing that drives most people who make things: the company is their project. [ 2 ] In fact since ^ 15, the un-rapacious founder is always behind the rapacious one. [ 3 ] The other reason it might help to be good at squeezing money out of customers is that startups usually lose money at first, and making more per customer makes it easier to get to profitability before your initial funding runs out. But while it is very common for startups to die from running through their initial funding and then being unable to raise more, the underlying cause is usually slow growth or excessive spending rather than insufficient effort to extract money from existing customers. Thanks to , Harj Taggar, , and for reading drafts of this, and to for being such a nice guy.


Change Your Name If you have a startup called X and you don't have , you should probably change your name. The reason is not just that people can't find you. For companies with mobile apps, especially, having the right domain name is not as critical as it used to be for getting users. The problem with not having the .com of your name is that it signals weakness. Unless you're so big that your reputation precedes you, a marginal domain suggests you're a marginal company. Whereas (as shows) having signals strength even if it has no relation to what you do. Even good founders can be in denial about this. Their denial derives from two very powerful forces: identity, and lack of imagination. X is what we are , founders think. There's no other name as good. Both of which are false. You can fix the first by stepping back from the problem. Imagine you'd called your company something else. If you had, surely you'd be just as attached to that name as you are to your current one. The idea of switching to your current name would seem repellent. [ 1 ] There's nothing intrinsically great about your current name. Nearly all your attachment to it comes from it being attached to you. [ 2 ] The way to neutralize the second source of denial, your inability to think of other potential names, is to acknowledge that you're bad at naming. Naming is a completely separate skill from those you need to be a good founder. You can be a great startup founder but hopeless at thinking of names for your company. Once you acknowledge that, you stop believing there is nothing else you could be called. There are lots of other potential names that are as good or better; you just can't think of them. How do you find them? One answer is the default way to solve problems you're bad at: find someone else who can think of names. But with company names there is another possible approach. It turns out almost any word or word pair that is not an obviously bad name is a sufficiently good one, and the number of such domains is so large that you can find plenty that are cheap or even untaken. So make a list and try to buy some. That's what did. (Their search also turned up , which their friends at Parse took.) The reason I know that naming companies is a distinct skill orthogonal to the others you need in a startup is that I happen to have it. Back when I was running YC and did more office with startups, I would often help them find new names. 80% of the time we could find at least one good name in a office hour slot. Now when I do office hours I have to focus on more important questions, like what the company is doing. I tell them when they need to change their name. But I know the power of the forces that have them in their grip, so I know most won't listen. [ 3 ] There are of course examples of startups that have succeeded without having the .com of their name. There are startups that have succeeded despite any number of different mistakes. But this mistake is less excusable than most. It's something that can be fixed in if you have sufficient discipline to acknowledge the problem. 100% of the top 20 YC companies by valuation have the .com of their name. 94% of the top 50 do. But only 66% of companies in the current batch have the .com of their name. Which suggests there are lessons ahead for most of the rest, one way or another. Notes [ 1 ] Incidentally, this thought experiment works for nationality and religion too. [ 2 ] The liking you have for a name that has become part of your identity manifests itself not directly, which would be easy to discount, but as a collection of specious beliefs about its intrinsic qualities. (This too is true of nationality and religion as well.) [ 3 ] Sometimes founders know it's a problem that they don't have the .com of their name, but delusion strikes a step later in the belief that they'll be able to buy it despite having no evidence it's for sale. Don't believe a domain is for sale unless the owner has already told you an asking price. Thanks to , , and for reading drafts of this.


What Microsoft Is this the Altair Basic of? One of the most valuable exercises you can try if you want to understand startups is to look at the most successful companies and explain why they were not as lame as they seemed when they first launched. Because they practically all seemed lame at first. Not just small, lame. Not just the first step up a big mountain. More like the first step into a swamp. A Basic interpreter for the ? How could that ever grow into a giant company? People sleeping on airbeds in strangers' apartments? A web site for college students to stalk one another? A wimpy little single-board computer for hobbyists that used a TV as a monitor? A new search engine, when there were already about 10, and they were all trying to de-emphasize search? These ideas didn't just seem small. They seemed wrong. They were the kind of ideas you could not merely ignore, but ridicule. Often the founders themselves didn't know why their ideas were promising. They were attracted to these ideas by instinct, because they were living in the future and they sensed that something was missing. But they could not have put into words exactly how their ugly ducklings were going to grow into big, beautiful swans. Most people's first impulse when they hear about a lame-sounding new startup idea is to make fun of it. Even a lot of people who should know better. When I encounter a startup with a lame-sounding idea, I ask "What Microsoft is this the Altair Basic of?" Now it's a puzzle, and the burden is on me to solve it. Sometimes I can't think of an answer, especially when the idea is a made-up one. But it's remarkable how often there does turn out to be an answer. Often it's one the founders themselves hadn't seen yet. Intriguingly, there are sometimes multiple answers. I talked to a startup that could grow into 3 distinct Microsofts. They'd probably vary in size by orders of magnitude. But you can never predict how big a Microsoft is going to be, so in cases like that I encourage founders to follow whichever path is most immediately exciting to them. Their instincts got them this far. Why stop now?


The Ronco Principle No one, VC or angel, has invested in more of the top startups than . He knows what happened in every deal in the , half the time because he arranged it. And yet he's a super nice guy. In fact, nice is not the word. Ronco is good. I know of zero instances in which he has behaved badly. It's hard even to imagine. When I first came to I thought "How lucky that someone so powerful is so benevolent." But gradually I realized it wasn't luck. It was by being benevolent that Ronco became so powerful. All the deals he gets to invest in come to him through referrals. Google did. Facebook did. Twitter was a referral from himself. And the reason so many people refer deals to him is that he's proven himself to be a good guy. Good does not mean being a pushover. I would not want to face an angry Ronco. But if 's angry at you, it's because you did something wrong. is so old school he's Old Testament. He will smite you in his just wrath, but there's no malice in it. In almost every domain there are advantages to seeming good. It makes people trust you. But actually being good is an expensive way to seem good. To an amoral person it might seem to be overkill. In some fields it might be, but apparently not in the startup world. Though plenty of investors are jerks, there is a clear trend among them: the most successful investors are also the most upstanding. [ 1 ] It was not always this way. I would not feel confident saying that about investors . What changed? The startup world became more transparent and more unpredictable. Both make it harder to seem good without actually being good. It's obvious why transparency has that effect. When an investor a founder now, it gets out. Maybe not all the way to the press, but other founders hear about it, and that investor starts to lose deals. [ 2 ] The effect of unpredictability is more subtle. It increases the work of being inconsistent. If you're going to be two-faced, you have to know who you should be nice to and who you can get away with being nasty to. In the startup world, things change so rapidly that you can't tell. The random college kid you talk to might in be the CEO of the hottest startup in the . If you can't tell who to be nice to, you have to be nice to everyone. And probably the only people who can manage that are the people who are genuinely good. In a sufficiently connected and unpredictable world, you can't seem good without being good. As often happens, discovered how to be the investor of the future by accident. He didn't foresee the future of startup investing, realize it would pay to be upstanding, and force himself to behave that way. It would feel unnatural to him to behave any other way. He was already living in the future . Fortunately that future is not limited to the startup world. The startup world is more transparent and unpredictable than most, but almost everywhere the trend is in that direction. Notes [ 1 ] I'm not saying that if you sort investors by benevolence you've also sorted them by returns, but rather that if you do a scatterplot with benevolence on the x axis and returns on the y, you'd see a clear upward trend. [ 2 ] Y Combinator in particular, because it aggregates data from so many startups, has a pretty comprehensive view of investor behavior. Thanks to and for reading drafts of this. Translation


What Doesn't Seem Like Work? My father is a mathematician. For most of my childhood he worked for Westinghouse, modelling nuclear reactors. He was one of those lucky people who know early on what they want to do. When you talk to him about his childhood, there's a clear watershed at , when he "got interested in maths." He grew up in the small seacoast town of . As we retraced his walk to school on , he said that it had been nice growing up in the country. "Didn't it get boring when you got to be about 15?" I asked. "No," he said, "by then I was interested in maths." In another conversation he told me that what he really liked was solving problems. To me the exercises at the end of each chapter in a math textbook represent work, or at best a way to reinforce what you learned in that chapter. To him the problems were the reward. The text of each chapter was just some advice about solving them. He said that as soon as he got a new textbook he'd immediately work out all the problems - to the slight annoyance of his teacher, since the class was supposed to work through the book gradually. Few people know so early or so certainly what they want to work on. But talking to my father reminded me of a heuristic the rest of us can use. If something that seems like work to other people doesn't seem like work to you, that's something you're well suited for. For example, a lot of programmers I know, including me, actually like debugging. It's not something people tend to volunteer; one likes it the way one likes popping zits. But you may have to like debugging to like programming, considering the degree to which programming consists of it. The stranger your tastes seem to other people, the stronger evidence they probably are of what you should do. When I was in college I used to write papers for my friends. It was quite interesting to write a paper for a class I wasn't taking. Plus they were always so relieved. It seemed curious that the same task could be painful to one person and pleasant to another, but I didn't realize at the time what this imbalance implied, because I wasn't looking for it. I didn't realize how hard it can be to decide what you should work on, and that you sometimes have to figure it out from subtle clues, like a detective solving a case in a mystery novel. So I bet it would help a lot of people to ask themselves about this explicitly. What seems like work to other people that doesn't seem like work to you? Thanks to , , , , and my father for reading drafts of this. : All About Programming French Translation


Don't Talk to Corp Dev Corporate Development, aka corp dev, is the group within companies that buys other companies. If you're talking to someone from corp dev, that's why, whether you realize it yet or not. It's usually a mistake to talk to corp dev unless (a) you want to sell your company right now and (b) you're sufficiently likely to get an offer at an acceptable price. In practice that means startups should only talk to corp dev when they're either doing really well or really badly. If you're doing really badly, meaning the company is about to die, you may as well talk to them, because you have nothing to lose. And if you're doing really well, you can safely talk to them, because you both know the price will have to be high, and if they show the slightest sign of wasting your time, you'll be confident enough to tell them to get lost. The danger is to companies in the middle. Particularly to young companies that are growing fast, but haven't been doing it for long enough to have grown big yet. It's usually a mistake for a promising company even to talk to corp dev. But it's a mistake founders constantly make. When someone from corp dev wants to meet, the founders tell themselves they should at least find out what they want. Besides, they don't want to offend Big Company by refusing to meet. Well, I'll tell you what they want. They want to talk about buying you. That's what the title "corp dev" means. So before agreeing to meet with someone from corp dev, ask yourselves, "Do we want to sell the company right now?" And if the answer is no, tell them "Sorry, but we're focusing on growing the company." They won't be offended. And certainly the founders of Big Company won't be offended. If anything they'll think more highly of you. You'll remind them of themselves. They didn't sell either; that's why they're in a position now to buy other companies. [ 1 ] Most founders who get contacted by corp dev already know what it means. And yet even when they know what corp dev does and know they don't want to sell, they take the meeting. Why do they do it? The same mix of denial and wishful thinking that underlies most mistakes founders make. It's flattering to talk to someone who wants to buy you. And who knows, maybe their offer will be surprisingly high. You should at least see what it is, right? No. If they were going to send you an offer immediately by email, sure, you might as well open it. But that is not how conversations with corp dev work. If you get an offer at all, it will be at the end of a long and unbelievably distracting process. And if the offer is surprising, it will be surprisingly low. Distractions are the thing you can least afford in a startup. And conversations with corp dev are the worst sort of distraction, because as well as consuming your attention they undermine your morale. One of the tricks to surviving a grueling process is not to stop and think how tired you are. Instead you get into a sort of flow. [ 2 ] Imagine what it would do to you if at mile 20 of a marathon, someone ran up beside you and said "You must feel really tired. Would you like to stop and take a rest?" Conversations with corp dev are like that but worse, because the suggestion of stopping gets combined in your mind with the imaginary high price you think they'll offer. And then you're really in trouble. If they can, corp dev people like to turn the tables on you. They like to get you to the point where you're trying to convince them to buy instead of them trying to convince you to sell. And surprisingly often they succeed. This is a very slippery slope, greased with some of the most powerful forces that can work on founders' minds, and attended by an experienced professional whose full time job is to push you down it. Their tactics in pushing you down that slope are usually fairly brutal. Corp dev people's whole job is to buy companies, and they don't even get to choose which. The only way their performance is measured is by how cheaply they can buy you, and the more ambitious ones will stop at nothing to achieve that. For example, they'll almost always start with a lowball offer, just to see if you'll take it. Even if you don't, a low initial offer will demoralize you and make you easier to manipulate. And that is the most innocent of their tactics. Just wait till you've agreed on a price and think you have a done deal, and then they come back and say their boss has vetoed the deal and won't do it for more than half the agreed upon price. Happens all the time. If you think investors can behave badly, it's nothing compared to what corp dev people can do. Even corp dev people at companies that are otherwise benevolent. I remember once complaining to a friend at Google about some nasty trick their corp dev people had pulled on a YC startup. "What happened to Don't be Evil?" I asked. "I don't think corp dev got the memo," he replied. The tactics you encounter in M&A conversations can be like nothing you've experienced in the otherwise comparatively upstanding world of . It's as if a chunk of genetic material from the old-fashioned robber baron business world got incorporated into the startup world. [ 3 ] The simplest way to protect yourself is to use the trick that , whose grandfather was an alcoholic, used to protect himself from becoming one. He once told a school class Boys, do you know why I never became a drunkard? Because I never took the first drink. Do you want to sell your company right now? Not eventually, right now. If not, just don't take the first meeting. They won't be offended. And you in turn will be guaranteed to be spared one of the worst experiences that can happen to a startup. If you do want to sell, there's another set of techniques for doing that. But the biggest mistake founders make in dealing with corp dev is not doing a bad job of talking to them when they're ready to, but talking to them before they are. So if you remember only the title of this essay, you already know most of what you need to know about M&A in . Notes [ 1 ] I'm not saying you should never sell. I'm saying you should be clear in your own mind about whether you want to sell or not, and not be led by manipulation or wishful thinking into trying to sell earlier than you otherwise would have. [ 2 ] In a startup, as in most competitive sports, the task at hand almost does this for you; you're too busy to feel tired. But when you lose that protection, e.g. at the final whistle, the fatigue hits you like a wave. To talk to corp dev is to let yourself feel it mid-game. [ 3 ] To be fair, the apparent misdeeds of corp dev people are magnified by the fact that they function as the face of a large organization that often doesn't know its own mind. Acquirers can be surprisingly indecisive about acquisitions, and their flakiness is indistinguishable from dishonesty by the time it filters down to you. Thanks to , , , and for reading drafts of this.


Let the Other 95% of Great Programmers In technology companies want the government to make immigration easier because they say they can't find enough programmers in the . Anti-immigration people say that instead of letting foreigners take these jobs, we should train more to be programmers. Who's right? The technology companies are right. What the anti-immigration people don't understand is that there is a huge variation in ability between competent programmers and exceptional ones, and while you can train people to be competent, you can't train them to be exceptional. Exceptional programmers have an aptitude for and interest in programming that is not merely the product of training. [ 1 ] The has less than 5% of the world's population. Which means if the qualities that make someone a great programmer are evenly distributed, 95% of great programmers are born outside the . The anti-immigration people have to invent some explanation to account for all the effort technology companies have expended trying to make immigration easier. So they claim it's because they want to drive down salaries. But if you talk to startups, you find practically every one over a certain size has gone through legal contortions to get programmers into the , where they then paid them the same as they'd have paid an . Why would they go to extra trouble to get programmers for the same price? The only explanation is that they're telling the truth: there are just not enough great programmers to go around. [ 2 ] I asked the CEO of a startup with about 70 programmers how many more he'd hire if he could get all the great programmers he wanted. He said "We'd hire ." And this is one of the hot startups that always win recruiting battles. It's the same all over . Startups are that constrained for talent. It would be great if more were trained as programmers, but no amount of training can flip a ratio as overwhelming as 95 to 5. Especially since programmers are being trained in other countries too. Barring some cataclysm, it will always be true that most great programmers are born outside the . It will always be true that most people who are great at anything are born outside the . [ 3 ] Exceptional performance implies immigration. A country with only a few percent of the world's population will be exceptional in some field only if there are a lot of immigrants working in it. But this whole discussion has taken something for granted: that if we let more great programmers into the , they'll want to come. That's true now, and we don't realize how lucky we are that it is. If we want to keep this option open, the best way to do it is to take advantage of it: the more of the world's great programmers are here, the more the rest will want to come here. And if we don't, the could be seriously fucked. I realize that's strong language, but the people dithering about this don't seem to realize the power of the forces at work here. Technology gives the best programmers huge leverage. The world market in programmers seems to be becoming dramatically more liquid. And since good people like good colleagues, that means the best programmers could collect in just a few hubs. Maybe mostly in one hub. What if most of the great programmers collected in one hub, and it wasn't here? That scenario may seem unlikely now, but it won't be if things change as much in as they did in . We have the potential to ensure that the remains a technology superpower just by letting in a few thousand great programmers . What a colossal mistake it would be to let that opportunity slip. It could easily be the defining mistake this generation of politicians later become famous for. And unlike other potential mistakes on that scale, it costs nothing to fix. So please, get on with it. Notes [ 1 ] How much better is a great programmer than an ordinary one? So much better that you can't even measure the difference directly. A great programmer doesn't merely do the same work faster. A great programmer will invent things an ordinary programmer would never even think of. This doesn't mean a great programmer is infinitely more valuable, because any invention has a finite market value. But it's easy to imagine cases where a great programmer might invent things worth 100x or even 1000x an average programmer's salary. [ 2 ] There are a handful of consulting firms that rent out big pools of foreign programmers they bring in on -B visas. By all means crack down on these. It should be easy to write legislation that distinguishes them, because they are so different from technology companies. But it is dishonest of the anti-immigration people to claim that companies like Google and Facebook are driven by the same motives. An influx of inexpensive but mediocre programmers is the last thing they'd want; it would destroy them. [ 3 ] Though this essay talks about programmers, the group of people we need to import is broader, ranging from designers to programmers to electrical engineers. The best one could do as a general term might be "digital talent." It seemed better to make the argument a little too narrow than to confuse everyone with a neologism. Thanks to , , , , , , and for reading drafts of this. Spanish Translation


How to Be an Expert in a Changing World If the world were static, we could have monotonically increasing confidence in our beliefs. The more (and more varied) experience a belief survived, the less likely it would be false. Most people implicitly believe something like this about their opinions. And they're justified in doing so with opinions about things that don't change much, like human nature. But you can't trust your opinions in the same way about things that change, which could include practically everything else. When experts are wrong, it's often because they're experts on an earlier version of the world. Is it possible to avoid that? Can you protect yourself against obsolete beliefs? To some extent, yes. I spent almost a decade investing in early stage startups, and curiously enough protecting yourself against obsolete beliefs is exactly what you have to do to succeed as a startup investor. Most really good startup ideas look like bad ideas at first, and many of those look bad specifically because some change in the world just switched them from bad to good. I spent a lot of time learning to recognize such ideas, and the techniques I used may be applicable to ideas in general. The first step is to have an explicit belief in change. People who fall victim to a monotonically increasing confidence in their opinions are implicitly concluding the world is static. If you consciously remind yourself it isn't, you start to look for change. Where should one look for it? Beyond the moderately useful generalization that human nature doesn't change much, the unfortunate fact is that change is hard to predict. This is largely a tautology but worth remembering all the same: change that matters usually comes from . So I don't even try to predict it. When I get asked in interviews to predict the future, I always have to struggle to come up with something plausible-sounding on the fly, like a student who hasn't prepared for an exam. [ 1 ] But it's not out of laziness that I haven't prepared. It seems to me that beliefs about the future are so rarely correct that they usually aren't worth the extra rigidity they impose, and that the best strategy is simply to be aggressively open-minded. Instead of trying to point yourself in the right direction, admit you have no idea what the right direction is, and try instead to be super sensitive to the winds of change. It's ok to have working hypotheses, even though they may constrain you a bit, because they also motivate you. It's exciting to chase things and exciting to try to guess answers. But you have to be disciplined about not letting your hypotheses harden into anything more. [ 2 ] I believe this passive m.o. works not just for evaluating new ideas but also for having them. The way to come up with new ideas is not to try explicitly to, but to try to solve problems and simply not discount weird hunches you have in the process. The winds of change originate in the unconscious minds of domain experts. If you're sufficiently expert in a field, any weird idea or apparently irrelevant question that occurs to you is ipso facto worth exploring. [ 3 ] Within Y Combinator, when an idea is described as crazy, it's a compliment-in fact, on average probably a higher compliment than when an idea is described as good. Startup investors have extraordinary incentives for correcting obsolete beliefs. If they can realize before other investors that some apparently unpromising startup isn't, they can make a huge amount of money. But the incentives are more than just financial. Investors' opinions are explicitly tested: startups come to them and they have to say yes or no, and then, fairly quickly, they learn whether they guessed right. The investors who say no to a Google (and there were several) will remember it for the rest of their lives. Anyone who must in some sense bet on ideas rather than merely commenting on them has similar incentives. Which means anyone who wants such incentives can have them, by turning their comments into bets: if you write about a topic in some fairly durable and public form, you'll find you worry much more about getting things right than most people would in a casual conversation. [ 4 ] Another trick I've found to protect myself against obsolete beliefs is to focus initially on people rather than ideas. Though the nature of future discoveries is hard to predict, I've found I can predict quite well what sort of people will make them. Good new ideas come from earnest, energetic, independent-minded people. Betting on people over ideas saved me countless times as an investor. We thought Airbnb was a bad idea, for example. But we could tell the founders were earnest, energetic, and independent-minded. (Indeed, almost pathologically so.) So we suspended disbelief and funded them. This too seems a technique that should be generally applicable. Surround yourself with the sort of people new ideas come from. If you want to notice quickly when your beliefs become obsolete, you can't do better than to be friends with the people whose discoveries will make them so. It's hard enough already not to become the prisoner of your own expertise, but it will only get harder, because change is accelerating. That's not a recent trend; change has been accelerating since the paleolithic era. Ideas beget ideas. I don't expect that to change. But I could be wrong. Notes [ 1 ] My usual trick is to talk about aspects of the present that most people haven't noticed yet. [ 2 ] Especially if they become well enough known that people start to identify them with you. You have to be extra skeptical about things you want to believe, and once a hypothesis starts to be identified with you, it will almost certainly start to be in that category. [ 3 ] In practice "sufficiently expert" doesn't require one to be recognized as an expert-which is a trailing indicator in any case. In many fields a year of focused work plus caring a lot would be enough. [ 4 ] Though they are public and persist indefinitely, comments on e.g. forums and places like Twitter seem empirically to work like casual conversation. The threshold may be whether what you write has a title. Thanks to , , and for reading drafts of this. Spanish Translation Arabic Translation


How You Know I've read 's chronicle of at least two times, maybe three. And yet if I had to write down everything I remember from it, I doubt it would amount to much more than a page. Multiply this times several hundred, and I get an uneasy feeling when I look at my bookshelves. What use is it to read all these books if I remember so little from them? , as I was reading excellent biography of , I figured out if not the answer to this question, at least something that made me feel better about it. She writes: had no patience with mathematical lectures which filled the students with facts but did not teach them how to frame a problem and solve it. He often used to tell them that "a perfect formulation of a problem is already half its solution." That has always seemed to me an important point, and I was even more convinced of it after hearing it confirmed by . But how had I come to believe in this idea in the first place? A combination of my own experience and other things I'd read. None of which I could at that moment remember! And eventually I'd forget that had confirmed it too. But my increased belief in the importance of this idea would remain something I'd learned from this book, even after I'd forgotten I'd learned it. Reading and experience train your model of the world. And even if you forget the experience or what you read, its effect on your model of the world persists. Your mind is like a compiled program you've lost the source of. It works, but you don't know why. The place to look for what I learned from 's chronicle is not what I remember from it, but my mental models of the crusades, , medieval culture, siege warfare, and so on. Which doesn't mean I couldn't have read more attentively, but at least the harvest of reading is not so miserably small as it might seem. This is one of those things that seem obvious in retrospect. But it was a surprise to me and presumably would be to anyone else who felt uneasy about (apparently) forgetting so much they'd read. Realizing it does more than make you feel a little better about forgetting, though. There are specific implications. For example, reading and experience are usually "compiled" at the time they happen, using the state of your brain at that time. The same book would get compiled differently at different points in your life. Which means it is very much worth reading important books multiple times. I always used to feel some misgivings about rereading books. I unconsciously lumped reading together with work like carpentry, where having to do something again is a sign you did it wrong the first time. Whereas now the phrase "already read" seems almost ill-formed. Intriguingly, this implication isn't limited to books. Technology will increasingly make it possible to relive our experiences. When people do that it's usually to enjoy them again (e.g. when looking at pictures of a trip) or to find the origin of some bug in their compiled code (e.g. when succeeded in remembering the childhood trauma that prevented him from singing). But as technologies for recording and playing back your life improve, it may become common for people to relive experiences without any goal in mind, simply to learn from them again as one might when rereading a book. Eventually we may be able not just to play back experiences but also to index and even edit them. So although not knowing how you know things may seem part of being human, it may not be. Thanks to , , and for reading drafts of this. Translation


Investor Herd Dynamics Want to start a startup? Get funded by Y Combinator . The biggest component in most investors' opinion of you is the opinion of other investors. Which is of course a recipe for exponential growth. When one investor wants to invest in you, that makes other investors want to, which makes others want to, and so on. Sometimes inexperienced founders mistakenly conclude that manipulating these forces is the essence of fundraising. They hear stories about stampedes to invest in successful startups, and think it's therefore the mark of a successful startup to have this happen. But actually the two are not that highly correlated. Lots of startups that cause stampedes end up flaming out (in extreme cases, partly as a result of the stampede), and lots of very successful startups were only moderately popular with investors the first time they raised money. So the point of this essay is not to explain how to create a stampede, but merely to explain the forces that generate them. These forces are always at work to some degree in fundraising, and they can cause surprising situations. If you understand them, you can at least avoid being surprised. One reason investors like you more when other investors like you is that you actually become a better investment. Raising money decreases the risk of failure. Indeed, although investors hate it, you are for this reason justified in raising your valuation for later investors. The investors who invested when you had no money were taking more risk, and are entitled to higher returns. Plus a company that has raised money is literally more valuable. After you raise the first million dollars, the company is at least a million dollars more valuable, because it's the same company as before, plus it has a million dollars in the bank. [ 1 ] Beware, though, because later investors so hate to have the price raised on them that they resist even this self-evident reasoning. Only raise the price on an investor you're comfortable with losing, because some will angrily refuse. [ 2 ] The second reason investors like you more when you've had some success at fundraising is that it makes you more confident, and an investors' opinion of you is the foundation of their opinion of your company. Founders are often surprised how quickly investors seem to know when they start to succeed at raising money. And while there are in fact lots of ways for such information to spread among investors, the main vector is probably the founders themselves. Though they're often clueless about technology, most investors are pretty good at reading people. When fundraising is going well, investors are quick to sense it in your increased confidence. (This is one case where the average founder's inability to remain poker-faced works to your advantage.) But frankly the most important reason investors like you more when you've started to raise money is that they're bad at judging startups. Judging startups is hard even for the best investors. The mediocre ones might as well be flipping coins. So when mediocre investors see that lots of other people want to invest in you, they assume there must be a reason. This leads to the phenomenon known in the as the "hot deal," where you have more interest from investors than you can handle. The best investors aren't influenced much by the opinion of other investors. It would only dilute their own judgment to average it together with other people's. But they are indirectly influenced in the practical sense that interest from other investors imposes a deadline. This is the fourth way in which offers beget offers. If you start to get far along the track toward an offer with one firm, it will sometimes provoke other firms, even good ones, to make up their minds, lest they lose the deal. Unless you're a wizard at negotiation (and if you're not sure, you're not) be very careful about exaggerating this to push a good investor to decide. Founders try this sort of thing all the time, and investors are very sensitive to it. If anything oversensitive. But you're safe so long as you're telling the truth. If you're getting far along with investor B, but you'd rather raise money from investor A, you can tell investor A that this is happening. There's no manipulation in that. You're genuinely in a bind, because you really would rather raise money from A, but you can't safely reject an offer from B when it's still uncertain what A will decide. Do not, however, tell A who B is. VCs will sometimes ask which other VCs you're talking to, but you should never tell them. Angels you can sometimes tell about other angels, because angels cooperate more with one another. But if VCs ask, just point out that they wouldn't want you telling other firms about your conversations, and you feel obliged to do the same for any firm you talk to. If they push you, point out that you're inexperienced at fundraising - which is always a safe card to play - and you feel you have to be extra cautious. [ 3 ] While few startups will experience a stampede of interest, almost all will at least initially experience the other side of this phenomenon, where the herd remains clumped together at a distance. The fact that investors are so much influenced by other investors' opinions means you always start out in something of a hole. So don't be demoralized by how hard it is to get the first commitment, because much of the difficulty comes from this external force. The second will be easier. Notes [ 1 ] An accountant might say that a company that has raised a million dollars is no richer if it's convertible debt, but in practice money raised as convertible debt is little different from money raised in an equity round. [ 2 ] Founders are often surprised by this, but investors can get very emotional. Or rather indignant; that's the main emotion I've observed; but it is very common, to the point where it sometimes causes investors to act against their own interests. I know of one investor who invested in a startup at a $15 million valuation cap. Earlier he'd had an opportunity to invest at a $5 million cap, but he refused because a friend who invested earlier had been able to invest at a $3 million cap. [ 3 ] If an investor pushes you hard to tell them about your conversations with other investors, is this someone you want as an investor? Thanks to , , , and for reading drafts of this. Russian Translation


Do Things that Don't Scale Want to start a startup? Get funded by Y Combinator . One of the most common types of advice we give at Y Combinator is to do things that don't scale. A lot of would-be founders believe that startups either take off or don't. You build something, make it available, and if you've made a better mousetrap, people beat a path to your door as promised. Or they don't, in which case the market must not exist. [ 1 ] Actually startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going. A good metaphor would be the cranks that car engines had before they got electric starters. Once the engine was going, it would keep going, but there was a separate and laborious process to get it going. Recruit The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can't wait for users to come to you. You have to go out and get them. Stripe is one of the most successful startups we've funded, and the problem they solved was an urgent one. If anyone could have sat back and waited for users, it was . But in fact they're famous within YC for aggressive early user acquisition. Startups building things for other startups have a big pool of potential users in the other companies we've funded, and none took better advantage of it than Stripe. At YC we use the term " installation" for the technique they invented. More diffident founders ask "Will you try our beta?" and if the answer is yes, they say "Great, we'll send you a link." But the brothers weren't going to wait. When anyone agreed to try they'd say "Right then, give me your laptop" and set them up on the spot. There are two reasons founders resist going out and recruiting users individually. One is a combination of shyness and laziness. They'd rather sit at home writing code than go out and talk to a bunch of strangers and probably be rejected by most of them. But for a startup to succeed, at least one founder (usually the CEO) will have to spend a lot of time on sales and marketing. [ 2 ] The other reason founders ignore this path is that the absolute numbers seem so small at first. This can't be how the big, famous startups got started, they think. The mistake they make is to underestimate the power of compound growth. We encourage every startup to measure their progress by growth rate . If you have 100 users, you need to get 10 more to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you'll be surprised how big the numbers get. After you'll have 14000 users, and after you'll have 2 million. You'll be doing different things when you're acquiring users a thousand at a time, and growth has to slow down eventually. But if the market exists you can usually start by recruiting users manually and then gradually switch to less manual methods. [ 3 ] Airbnb is a classic example of this technique. Marketplaces are so hard to get rolling that you should expect to take heroic measures at first. In Airbnb's case, these consisted of going door to door in , recruiting new users and helping existing ones improve their listings. When I remember the during YC, I picture them with rolly bags, because when they showed up for dinners they'd always just flown back from somewhere. Fragile Airbnb now seems like an unstoppable juggernaut, but early on it was so fragile that of going out and engaging in person with users made the difference between success and failure. That initial fragility was not a unique feature of Airbnb. Almost all startups are fragile initially. And that's one of the biggest things inexperienced founders and investors (and reporters and know-it-alls on forums) get wrong about them. They unconsciously judge larval startups by the standards of established ones. They're like someone looking at a newborn baby and concluding "there's no way this tiny creature could ever accomplish anything." It's harmless if reporters and know-it-alls dismiss your startup. They always get things wrong. It's even ok if investors dismiss your startup; they'll change their minds when they see growth. The big danger is that you'll dismiss your startup yourself. I've seen it happen. I often have to encourage founders who don't see the full potential of what they're building. Even made that mistake. He returned to Harvard for after starting Microsoft. He didn't stay long, but he wouldn't have returned at all if he'd realized Microsoft was going to be even a fraction of the size it turned out to be. [ 4 ] The question to ask about an early stage startup is not "is this company taking over the world?" but "how big could this company get if the founders did the right things?" And the right things often seem both laborious and inconsequential at the time. Microsoft can't have seemed very impressive when it was just a couple guys in writing Basic interpreters for a market of a few thousand hobbyists (as they were then called), but in retrospect that was the optimal path to dominating microcomputer software. And I know and didn't feel like they were en route to the big time as they were taking "professional" photos of their first hosts' apartments. They were just trying to survive. But in retrospect that too was the optimal path to dominating a big market. How do you find users to recruit manually? If you build something to solve your own problems , then you only have to find your peers, which is usually straightforward. Otherwise you'll have to make a more deliberate effort to locate the most promising vein of users. The usual way to do that is to get some initial set of users by doing a comparatively untargeted launch, and then to observe which kind seem most enthusiastic, and seek out more like them. For example, noticed that a lot of the earliest Pinterest users were interested in design, so he went to a conference of design bloggers to recruit users, and that worked well. [ 5 ] Delight You should take extraordinary measures not just to acquire users, but also to make them happy. For as long as they could (which turned out to be surprisingly long), Wufoo sent each new user a hand-written thank you note. Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them. Why do we have to teach startups this? Why is it counterintuitive for founders? Three reasons, I think. One is that a lot of startup founders are trained as engineers, and customer service is not part of the training of engineers. You're supposed to build things that are robust and elegant, not be slavishly attentive to individual users like some kind of salesperson. Ironically, part of the reason engineering is traditionally averse to handholding is that its traditions date from a time when engineers were less powerful - when they were only in charge of their narrow domain of building things, rather than running the whole show. You can be ornery when you're , but not when you're . Another reason founders don't focus enough on individual customers is that they worry it won't scale. But when founders of larval startups worry about this, I point out that in their current state they have nothing to lose. Maybe if they go out of their way to make existing users super happy, they'll have too many to do so much for. That would be a great problem to have. See if you can make it happen. And incidentally, when it does, you'll find that delighting customers scales better than you expected. Partly because you can usually find ways to make anything scale more than you would have predicted, and partly because delighting customers will by then have permeated your culture. I have never once seen a startup lured down a blind alley by trying too hard to make their initial users happy. But perhaps the biggest thing preventing founders from realizing how attentive they could be to their users is that they've never experienced such attention themselves. Their standards for customer service have been set by the companies they've been customers of, which are mostly big ones. doesn't send you a hand-written note after you buy a laptop. He can't. But you can. That's one advantage of being small: you can provide a level of service no big company can. [ 6 ] Once you realize that existing conventions are not the upper bound on user experience, it's interesting in a very pleasant way to think about how far you could go to delight your users. Experience I was trying to think of a phrase to convey how extreme your attention to users should be, and I realized had already done it: insanely great. wasn't just using "insanely" as a synonym for "very." He meant it more literally - that one should focus on quality of execution to a degree that in everyday life would be considered pathological. All the most successful startups we've funded have, and that probably doesn't surprise would-be founders. What novice founders don't get is what insanely great translates to in a larval startup. When started using that phrase, Apple was already an established company. He meant the (and its documentation and even packaging - such is the nature of obsession) should be insanely well designed and manufactured. That's not hard for engineers to grasp. It's just a more extreme version of designing a robust and elegant product. What founders have a hard time grasping (and himself might have had a hard time grasping) is what insanely great morphs into as you roll the time slider back to of a startup's life. It's not the product that should be insanely great, but the experience of being your user. The product is just one component of that. For a big company it's necessarily the dominant one. But you can and should give users an insanely great experience with an early, incomplete, buggy product, if you make up the difference with attentiveness. Can, perhaps, but should? Yes. Over-engaging with early users is not just a permissible technique for getting growth rolling. For most successful startups it's a necessary part of the feedback loop that makes the product good. Making a better mousetrap is not an atomic operation. Even if you start the way most successful startups have, by building something you yourself need, the first thing you build is never quite right. And except in domains with big penalties for making mistakes, it's often better not to aim for perfection initially. In software, especially, it usually works best to get something in front of users as soon as it has a quantum of utility, and then see what they do with it. Perfectionism is often an excuse for procrastination, and in any case your initial model of users is always inaccurate, even if you're one of them. [ 7 ] The feedback you get from engaging directly with your earliest users will be the best you ever get. When you're so big you have to resort to focus groups, you'll wish you could go over to your users' homes and offices and watch them use your stuff like you did when there were only a handful of them. Fire Sometimes the right unscalable trick is to focus on a deliberately narrow market. It's like keeping a fire contained at first to get it really hot before adding more logs. That's what Facebook did. At first it was just for Harvard students. In that form it only had a potential market of a few thousand people, but because they felt it was really for them, a critical mass of them signed up. After Facebook stopped being for Harvard students, it remained for students at specific colleges for quite a while. When I interviewed at Startup School, he said that while it was a lot of work creating course lists for each school, doing that made students feel the site was their natural home. Any startup that could be described as a marketplace usually has to start in a subset of the market, but this can work for other startups as well. It's always worth asking if there's a subset of the market in which you can get a critical mass of users quickly. [ 8 ] Most startups that use the contained fire strategy do it unconsciously. They build something for themselves and their friends, who happen to be the early adopters, and only realize later that they could offer it to a broader market. The strategy works just as well if you do it unconsciously. The biggest danger of not being consciously aware of this pattern is for those who naively discard part of it. E.g. if you don't build something for yourself and your friends, or even if you do, but you come from the corporate world and your friends are not early adopters, you'll no longer have a perfect initial market handed to you on a platter. Among companies, the best early adopters are usually other startups. They're more open to new things both by nature and because, having just been started, they haven't made all their choices yet. Plus when they succeed they grow fast, and you with them. It was one of many unforeseen advantages of the YC model (and specifically of making YC big) that B2B startups now have an instant market of hundreds of other startups ready at hand. Meraki For hardware startups there's a variant of doing things that don't scale that we call "pulling a Meraki." Although we didn't fund Meraki, the founders were grad students, so we know their history. They got started by doing something that really doesn't scale: assembling their routers themselves. Hardware startups face an obstacle that software startups don't. The minimum order for a factory production run is usually several hundred thousand dollars. Which can put you in a catch-22: without a product you can't generate the growth you need to raise the money to manufacture your product. Back when hardware startups had to rely on investors for money, you had to be pretty convincing to overcome this. The arrival of crowdfunding (or more precisely, preorders) has helped a lot. But even so I'd advise startups to pull a Meraki initially if they can. That's what did. The assembled the first several hundred watches themselves. If they hadn't gone through that phase, they probably wouldn't have sold $10 million worth of watches when they did go on . Like paying excessive attention to early customers, fabricating things yourself turns out to be valuable for hardware startups. You can tweak the design faster when you're the factory, and you learn things you'd never have known otherwise. of Pebble said one of the things he learned was "how valuable it was to source good screws." Who knew? Consult Sometimes we advise founders of B2B startups to take over-engagement to an extreme, and to pick a single user and act as if they were consultants building something just for that one user. The initial user serves as the form for your mold; keep tweaking till you fit their needs perfectly, and you'll usually find you've made something other users want too. Even if there aren't many of them, there are probably adjacent territories that have more. As long as you can find just one user who really needs something and can act on that need, you've got a toehold in making something people want, and that's as much as any startup needs initially. [ 9 ] Consulting is the canonical example of work that doesn't scale. But (like other ways of bestowing one's favors liberally) it's safe to do it so long as you're not being paid to. That's where companies cross the line. So long as you're a product company that's merely being extra attentive to a customer, they're very grateful even if you don't solve all their problems. But when they start paying you specifically for that attentiveness - when they start paying you by the hour - they expect you to do everything. Another consulting-like technique for recruiting initially lukewarm users is to use your software yourselves on their behalf. We did that at . When we approached merchants asking if they wanted to use our software to make online stores, some said no, but they'd let us make one for them. Since we would do anything to get users, we did. We felt pretty lame at the time. Instead of organizing big strategic e-commerce partnerships, we were trying to sell luggage and pens and men's shirts. But in retrospect it was exactly the right thing to do, because it taught us how it would feel to merchants to use our software. Sometimes the feedback loop was near instantaneous: in the middle of building some merchant's site I'd find I needed a feature we didn't have, so I'd spend implementing it and then resume building the site. Manual There's a more extreme variant where you don't just use your software, but are your software. When you only have a small number of users, you can sometimes get away with doing by hand things that you plan to automate later. This lets you launch faster, and when you do finally automate yourself out of the loop, you'll know exactly what to build because you'll have muscle memory from doing it yourself. When manual components look to the user like software, this technique starts to have aspects of a practical joke. For example, the way delivered "instant" merchant accounts to its first users was that the founders manually signed them up for traditional merchant accounts behind the scenes. Some startups could be entirely manual at first. If you can find someone with a problem that needs solving and you can solve it manually, go ahead and do that for as long as you can, and then gradually automate the bottlenecks. It would be a little frightening to be solving users' problems in a way that wasn't yet automatic, but less frightening than the far more common case of having something automatic that doesn't yet solve anyone's problems. Big I should mention one sort of initial tactic that usually doesn't work: the Big Launch. I occasionally meet founders who seem to believe startups are projectiles rather than powered aircraft, and that they'll make it big if and only if they're launched with sufficient initial velocity. They want to launch simultaneously in 8 different publications, with embargoes. And on a , of course, since they read somewhere that's the optimum day to launch something. It's easy to see how little launches matter. Think of some successful startups. How many of their launches do you remember? All you need from a launch is some initial core of users. How well you're doing will depend more on how happy you made those users than how many there were of them. [ 10 ] So why do founders think launches matter? A combination of solipsism and laziness. They think what they're building is so great that everyone who hears about it will immediately sign up. Plus it would be so much less work if you could get users merely by broadcasting your existence, rather than recruiting them one at a time. But even if what you're building really is great, getting users will always be a gradual process - partly because great things are usually also novel, but mainly because users have other things to think about. Partnerships too usually don't work. They don't work for startups in general, but they especially don't work as a way to get growth started. It's a common mistake among inexperienced founders to believe that a partnership with a big company will be their big break. they're all saying the same thing: that was way more work than we expected, and we ended up getting practically nothing out of it. [ 11 ] It's not enough just to do something extraordinary initially. You have to make an extraordinary effort initially. Any strategy that omits the effort - whether it's expecting a big launch to get you users, or a big partner - is ipso facto suspect. Vector The need to do something unscalably laborious to get started is so nearly universal that it might be a good idea to stop thinking of startup ideas as scalars. Instead we should try thinking of them as pairs of what you're going to build, plus the unscalable thing(s) you're going to do initially to get the company going. It could be interesting to start viewing startup ideas this way, because now that there are two components you can try to be imaginative about the second as well as the first. But in most cases the second component will be what it usually is - recruit users manually and give them an overwhelmingly good experience - and the main benefit of treating startups as vectors will be to remind founders they need to work hard in two dimensions. [ 12 ] In the best case, both components of the vector contribute to your company's DNA: the unscalable things you have to do to get started are not merely a necessary evil, but change the company permanently for the better. If you have to be aggressive about user acquisition when you're small, you'll probably still be aggressive when you're big. If you have to manufacture your own hardware, or use your software on users's behalf, you'll learn things you couldn't have learned otherwise. And most importantly, if you have to work hard to delight users when you only have a handful of them, you'll keep doing it when you have a lot. Notes [ 1 ] Actually Emerson never mentioned mousetraps specifically. He wrote "If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods." [ 2 ] Thanks to for suggesting I make this explicit. And no, you can't avoid doing sales by hiring someone to do it for you. You have to do sales yourself initially. Later you can hire a real salesperson to replace you. [ 3 ] The reason this works is that as you get bigger, your size helps you grow. wrote "At some point, there was a very noticeable change in how felt. It tipped from being this boulder we had to push to being a train car that in fact had its own momentum." [ 4 ] One of the more subtle ways in which YC can help founders is by calibrating their ambitions, because we know exactly how a lot of successful startups looked when they were just getting started. [ 5 ] If you're building something for which you can't easily get a small set of users to observe - e.g. enterprise software - and in a domain where you have no connections, you'll have to rely on cold calls and introductions. But should you even be working on such an idea? [ 6 ] pointed out an interesting trap founders fall into in the beginning. They want so much to seem big that they imitate even the flaws of big companies, like indifference to individual users. This seems to them more "professional." Actually it's better to embrace the fact that you're small and use whatever advantages that brings. [ 7 ] Your user model almost couldn't be perfectly accurate, because users' needs often change in response to what you build for them. Build them a microcomputer, and suddenly they need to run spreadsheets on it, because the arrival of your new microcomputer causes someone to invent the spreadsheet. [ 8 ] If you have to choose between the subset that will sign up quickest and those that will pay the most, it's usually best to pick the former, because those are probably the early adopters. They'll have a better influence on your product, and they won't make you expend as much effort on sales. And though they have less money, you don't need that much to maintain your target growth rate early on. [ 9 ] Yes, I can imagine cases where you could end up making something that was really only useful for one user. But those are usually obvious, even to inexperienced founders. So if it's not obvious you'd be making something for a market of one, don't worry about that danger. [ 10 ] There may even be an inverse correlation between launch magnitude and success. The only launches I remember are famous flops like the Segway and Google Wave. Wave is a particularly alarming example, because I think it was actually a great idea that was killed partly by its overdone launch. [ 11 ] Google grew big on the back of Yahoo, but that wasn't a partnership. Yahoo was their customer. [ 12 ] It will also remind founders that an idea where the second component is empty - an idea where there is nothing you can do to get going, e.g. because you have no way to find users to recruit manually - is probably a bad idea, at least for those founders. Thanks to , , , , , , , and for reading drafts of this. 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The Hardware Renaissance Want to start a startup? Get funded by Y Combinator . One advantage of Y Combinator's early, broad focus is that we see trends before most other people. And one of the most conspicuous trends in the last batch was the large number of hardware startups. Out of 84 companies, 7 were making hardware. On the whole they've done better than the companies that weren't. They've faced resistance from investors of course. Investors have a deep-seated bias against hardware. But investors' opinions are a trailing indicator. The best founders are better at seeing the future than the best investors, because the best founders are making it. There is no one single force driving this trend. Hardware does well on crowdfunding sites. The spread of tablets makes it possible to build new things controlled by and even incorporating them. Electric motors have improved. Wireless connectivity of various types can now be taken for granted. It's getting more straightforward to get things manufactured. Arduinos, 3D printing, laser cutters, and more accessible CNC milling are making hardware easier to prototype. Retailers are less of a bottleneck as customers increasingly buy online. One question I can answer is why hardware is suddenly cool. It always was cool. Physical things are great. They just haven't been as great a way to start a rapidly growing business as software. But that rule may not be permanent. It's not even that old; it only dates from . Maybe the advantage of software will turn out to have been temporary. Hackers love to build hardware, and customers love to buy it. So if the ease of shipping hardware even approached the ease of shipping software, we'd see a lot more hardware startups. It wouldn't be the first time something was a bad idea till it wasn't. And it wouldn't be the first time investors learned that lesson from founders. So if you want to work on hardware, don't be deterred from doing it because you worry investors will discriminate against you. And in particular, don't be deterred from applying to Y Combinator with a hardware idea, because we're especially interested in hardware startups. We know there's room for the next . But there's almost certainly also room for the first . Thanks to , , , , , , Harj Taggar, and for reading drafts of this. A Hardware Renaissance while Software Eats the World?