This week has been an explosion of ideas, learning and possibilities personally for me. How to Start a Startup class by Sam Altman lectures have been such a pleasure to watch and learn from. In addition to those lectures, I got Peter Thiel‘s Zero to One book through Audible. I have been listening to the book and watching the lectures, it has been so much fun and such a treat. The more and more once goes deeper into this rabbit hole of building startups or startup communities or entrepreneurship, the problems start getting harder and harder. I guess it is just like any learning, the more you learn about something the more you realize that you know so little about that thing.
We tried to couple the Founders Institute Second Meetup with screening the first lecture of Sam Altman, we had a rather poor showing we had about 10 people. It was huge drop from last week. I blame it on myself as I did not publicize the event everyday from the last event. I was on the road and I did not want to be a spammer, bad call, the end result… not much attendance. We will pick up our efforts at getting to those people who are really looking to start companies and become a founder. If there is one thing I have learnt in this journey is that it is never over until you say its over. I am convinced that we can build great founders out of this island and I am convinced that we will launch the first semester of Reykjavik Chapter of Founders Institute this year.
I thought instead of writing about the lectures, I will refer to a couple of people who have already written, summarized and also added some expert annotations to the lectures through Genius.com and Medium.com platforms. For those of you who are unfamiliar with Genius.com it is the reincarnation of RapGenius.com for all other things. The first lecture by Sam Altman has been Annotated in Genius.com, check it out here. Here is one summary and synopsis of the first lecture as well. I like the way the title of the synopsis has been written
Startups = Ideas X Product X Team X Execution X Luck
If one assigns a probability to each of these things and you do a conditional probability, you will understand why startups fail…i.e Lets say you have a 50% chance of landing on a good idea, 50% chance of building a product that your market loves, 50% chance that you are able to recruit and retain a kick ass team, 50% chance you get execution right and there is a 50% chance of you getting lucky the probability that your startup will succeed is 0.5 X 0.5 X 0.5 X 0.5 X 0.5 = 0.03125 which is actually not bad odds.
Coming back to the title of the post, here is a graph that explains it. Startup ideas need to be to the left of impossible and to the right of being hard. The rectangular box is the total area that startups can be build but higher the complexity the larger is the resource usage, the sweet spot is the intersection of the two ellipses.
This is counter intuitive because ideas that sound almost impossible to execute by default falls under the category of “Ideas that sound bad”. I have personally had experience of talking to investors who thought that CLARA was a bad idea, after we had proved that there was a market and we were generating revenue.
An important thing that Sam mentioned was everyone forgets to look at the rate of growth of the market when looking at an idea or the product. The rate of market growth is more indicative than the rate of growth of the startup and when does a market top out.
You also really want to take the time to think about how the market is going to evolve. You need a market that’s going to be big in 10 years. Most investors are obsessed with the market size today, and they don’t think at all about how the market is going to evolve.
In fact, I think this is one of the biggest systemic mistakes that investors make. They think about the growth of the start-up itself, they don’t think about the growth of the market. I care much more about the growth rate of the market than its current size, and I also care if there’s any reason it’s going to top out. You should think about this. I prefer to invest in a company that’s going after a small, but rapidly growing market, than a big, but slow-growing market.
The assignment for the students for the first lecture, was to just notice and log everything that was missing or problematic. The trick is not to think about how you will solve it but just document those things.
Here is the first lecture:
and here is the second lecture: