Paul Graham

When a startup launches, there have to be at least some users who really need what they’re making — not just people who could see themselves using it one day, but who want it urgently. Usually this initial group of users is small, for the simple reason that if there were something that large numbers of people urgently needed and that could be built with … [ Read more ]

Paul Graham

If you try to do some big thing, you don’t just need it to be big; you need it to be good. And it’s really hard to do big and good simultaneously. So, what that means is you can either do something small and good and then gradually make it bigger, or do something big and bad and gradually make it better. And you know … [ Read more ]

Paul Graham

The very best startup ideas tend to have three things in common: they’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing.

Paul Graham’s Startup Advice for the Lazy

Paul Graham is a renowned programmer and wildly successful venture capitalist. He also happens to be a talented writer. You should ideally just go read his actual essays, but if you’re short on time, Stelios Constantinides has cropped the most important pieces from his favorite essays.

Paul Graham on Building Companies for Fast Growth

Graham’s tech accelerator, Y Combinator, has minted many big hits, including Dropbox, Reddit, and Airbnb. Here’s a conversation with the start-up guru.

Paul Graham

Be nice when investors reject you. The best investors are not wedded to their initial opinion of you. If they reject you in phase 2 and you end up doing well, they’ll often invest in phase 3. In fact investors who reject you are some of your warmest leads for future fundraising. Any investor who spent significant time deciding probably came close to saying yes. … [ Read more ]

Paul Graham

Avoid investors till you decide to raise money, and then when you do, talk to them all in parallel, prioritized by expected value, and accept offers greedily. That’s fundraising in one sentence. Don’t introduce complicated optimizations, and don’t let investors introduce complications either.

How to Raise Money

Most startups that raise money do it more than once. A typical trajectory might be (1) to get started with a few tens of thousands from something like Y Combinator or individual angels, then (2) raise a few hundred thousand to a few million to build the company, and then (3) once the company is clearly succeeding, raise one or more later rounds to accelerate … [ Read more ]

Paul Graham

To founders, the behavior of investors is often opaque—partly because their motivations are obscure, but partly because they deliberately mislead you. And the misleading ways of investors combine horribly with the wishful thinking of inexperienced founders.

Paul Graham

The most important thing to understand about valuation is that it’s not that important.

Founders who raise money at high valuations tend to be unduly proud of it. Founders are often competitive people, and since valuation is usually the only visible number attached to a startup, they end up competing to raise money at the highest valuation. This is stupid, because fundraising is not the test … [ Read more ]

Heidi M. Neck, Paul Graham

Paul Graham, essayist, programmer, investor, and co-founder of YCombinator, the Silicon Valley tech accelerator program, describes a contrast between “maker schedules” versus “manager schedules.” Manager schedules break the day into hourlong chunks conducive for meetings and communication, but not for work that requires deep thinking, creative problem-solving, writing, or making. The work of [entrepreneurship] necessitates uninterrupted blocks of time.

How to Convince Investors

Paul Graham offers some very useful advice to entrepreneurs about trying to raise money. As he points out, most inexperienced founders try to convince with their pitch when they would be better off if they let their startup do the work—if they started by understanding why their startup is worth investing in, then simply explained this well to investors.

Paul Graham

Investors are looking for startups that will be very successful. But that test is not as simple as it sounds. In startups, as in a lot of other domains, the distribution of outcomes follows a power law, but in startups the curve is startlingly steep. The big successes are so big they dwarf the rest. And since there are only a handful each year (the … [ Read more ]

Paul Graham

The time to raise money is not when you need it, or when you reach some artificial deadline like a Demo Day. It’s when you can convince investors, and not before.

Paul Graham

No company, however successful, ever looks more than a pretty good bet a few months in.

Paul Graham

Raising money is not like applying to college, where you can assume that if you can get into MIT, you can also get into Foobar State. Because the best investors are much smarter than the rest, and the best startup ideas look initially like bad ideas, it’s not uncommon for a startup to be rejected by all the VCs except the best ones.

Paul Graham

[Investors] think they’re trying to convince investors of something very uncertain—that their startup will be huge—and convincing anyone of something like that must obviously entail some wild feat of salesmanship. But in fact when you raise money you’re trying to convince investors of something so much less speculative—whether the company has all the elements of a good bet—that you can approach the problem in a … [ Read more ]

The Start-up Guru

Paul Graham’s business school and investment fund, Y Combinator, has launched 145 companies — for a lot less money than you would think.

Startups in 13 Sentences

Paul Graham offers startups 13 pieces of advice.

Paul Graham

Some people seem to have unlimited self-generated morale. These almost always succeed. At the other extreme, there are people who seem to have no ability to do this; they need a boss to motivate them. In the middle there is a large band of people who have some, but not unlimited, ability to motivate themselves. These can succeed through careful morale management (and some luck). … [ Read more ]