The Request for Startups The Request for Startups Paul Graham 16 August 2009 Every funding cycle we try to do something new. For the upcoming winter 2010 cycle we're introducing the RFS (Request for Startups). There are a lot of startup ideas we've been waiting for people to apply with, sometimes for years. Recently we tried hinting at some of them, and that has yielded results. RFSes won't describe exactly what we're looking for, partly because we want to see if applicants can figure out the other half themselves (ideally better than we had), and partly because describing the idea precisely might create competition for the YC-funded startup we hope will be working on it. We don't expect responses to RFSes will ever be more than a fraction of the applications we accept. We expect RFSes to be relevant in two cases. Responding to an RFS will never be the deciding factor in who we fund. We might ask for a little more equity from startups responding to an RFS, because we'd expect to contribute more to them.
SaaS Metrics - A Guide to Measuring and Improving What Matters This blog post looks at the high level goals of a SaaS business and drills down layer by layer to expose the key metrics that will help drive success. Metrics for metric’s sake are not very useful. Instead the goal is to provide a detailed look at what management must focus on to drive a successful SaaS business. For each metric, we will also look at what is actionable. There is an updated (re-written) version of this post available here: SaaS Metrics 2.0. Before going any further, I would like to thank the management team at HubSpot, and Gail Goodman of Constant Contact, who sits on the HubSpot board. Let’s start by looking at the high level goals, and then drill down from there: Key SaaS Goals Profitability: needs no further explanation. Two Key Guidelines for SaaS startups The above guidelines are not hard and fast rules. In the next sections, we will drill down on the high level SaaS Goals to get to the components that drive each of these. Three ways to look at Profitability Other Metrics
Series AA Equity Financing Documents Safe Financing Documents The safe (simple agreement for future equity) is intended to replace convertible notes in most cases, and we think it addresses many of the problems with convertible notes while preserving their flexibility. In addition to being simpler and clearer, we intend the safe to remain fair to both investors and founders.During its development the safe was positively reviewed by many of the top startup investors. We believe it’s a positive evolution of the convertible note and hope the startup community finds it an easier way to accomplish the same goals. Features of a safe: Unlike a convertible note, a safe is not a debt instrument. There are four versions of safe, corresponding to the four types of convertible note: While a safe may not be suitable for all situations, the terms are intended to be fairly neutral. Sales Agreement When Y Combinator startups make their first sales, we provide them with a sales template to make the legal part easy.
How to get good ideas for startups The majority of people in the US would like to be self-employed, according to Dartmouth economist, David Blanchflower. This makes sense because people who work for themselves are happier than people who work at someone else’s company, according to research from Estaban Calvo at the Harvard School of Public Health. However the majority are not self-employed, and one of the most important reasons for this is that people do not know how to come up with an idea for a business. 1. Read all the time, among broad sources and materials. In a study spanning sixty years of economically underprivileged Harvard graduates, psychiatrist George Valliant concluded (in a great article in the Atlantic) that the only consistent indicator of who will be happy later in life is who did chores as a child. This information should make almost everyone happy, since obviously just graduating from Harvard isn’t enough to guarantee happiness. 2. 3. 4. Another idea I had is to buy a herd of Waygu cattle. 5. “Oh. 6.
Paul Graham – From social shyness to patronizing I’ve been quite upset lately by a few essays from every blogger’s darling : Paul Graham. Don’t get me wrong, I don’t have any problem with Paul Graham writings about start-up (there or there or there) or Lisp : his background speaks for itself, and one will hardly find any blogger offering more insight regarding these topics. How art can be good (ouch !) The problem appears when he leaves his area of expertise. At that point his peremptory voice, fed by his success in IT business, starts to sound a bit annoying. I was just as uncomfortable reading lies and kids : it reads as if he doesn’t have any, or they just are abstract incarnations of the child concept. Paul just jumped the shark with the last one on Cities. As of this writing, Cambridge seems to be the intellectual capital of the world. Thinking about a intellectual capital of the world is useless. Hackers are not Painters (thanks God!) To which I’d add, what hackers and painters don’t have in common is everything else. Like this:
5 crucial stages in designing your viral loop | Andrew Chen (@andrewchen) Designing a viral loop has multiple stagesViral loops have been featured in mainstream media and there’s even a book coming out on it – but the step-by-step design of creating a new loop remains obscure, and for good reason. I’ve come to believe that creating viral loops is akin to building a software project – at best, it still comes down to a great team, a strong understanding of the tools available, and relentless iteration. There’s no recipe at the heart of it which guarantees a viral process every time, the same way that you can’t guarantee that any software project will result in market success. There are no silver bullets in viral marketingIn fact, the core of virality ensures that there will never be a dominant “recipe.” If everyone knows how to build a viral loop around social network invites, then everyone will do it, resulting in consumers will become desensitized, which finally leads to lower response rates. How does this viral loop fit into your core product?
How To Build A Web App in Four Days For $10,000 (Say Hello To Matt) In this post, guest author Ryan Carson goes through some of the lessons learned from building a Web app in four days. Carson is the co-founder of Carsonified, a web shop in Bath, UK. They’ve built four web apps, created ThinkVitamin.com and run events like Future of Web Apps. If you’re bored you can follow Ryan on Twitter. The time it takes to design, build and deploy web applications has been steadily shrinking, especially with frameworks like Django, Rails and Symfony. The app we built is a simple tool that allows you to post to multiple Twitter accounts. How we did it We have a team of nine people which were divided as follows: Two developersOne designer / front-end developerTwo bloggersOne copywriterThree PR folks I would say you only need three people if you want to strip it back to the bare minimum, which would look like this: One developerOne designer / front-end developerOne blogger / PR person Our app was built in Python using Django and is hosted at WebFaction. Team building
Y Combinator Founder: 3 Tips for Coming Up With Start-up Ideas You're burning to do a start-up and think you have what it takes to succeed. Only problem: First, you need a great idea. As a co-founder of wildly successful incubator Y Combinator, Paul Graham has had a hand in shaping some of the best start-up ideas of the past few years. Now, helpfully, he has shed his insights on where they usually come from. If you are the person described in the first paragraph, seriously, read it in full. Those are the first couple of sentences of Graham's post, so there's no confusion about his essential advice. Go for Depth, Not Breadth To avoid bad but vaguely plausible start-up ideas--what the Y Combinator team calls sitcom ideas, i.e., the kind of ideas TV writers would make up if a character on a show had a start-up--choose something that some people want a lot rather than something lots of people might sort of want a little. Live in the Future Being at the leading edge of a field makes you more able to recognize good ideas. Turn Off the Filters
StyleFeeder: a retrospective | Philip Jacob / Whirlycott I haven’t said much publicly about the acquisition of StyleFeeder by Time Inc. for various reasons, but perhaps it’s worth spending a few moments on this topic. First, vital statistics: $4M invested from Schooner Capital and Highland Capital Partners along with a small army of supportive angelsAcquisition price: undisclosedTeam size: 5 tech, 1 bizdev, 1 marketing, half-time office managerCash flow positive for around a year with money still left in the bank at the time the deal closedStarted: January 2005 Publicly launched: October 16th, 2005 Funded: May 2006 Acquired: January 15th, 2010 StyleFeeder roughly falls into a category I call “next generation e-commerce,” a rather broad umbrella that describes a reinvention of the classic e-commerce model in which companies sell stuff online directly to consumers. From the consumer perspective, companies in this space offer Web-wide product search/discovery and organization through social and algorithmic techniques. Competitors Partnerships
Facebook App Virality: Not Dead Yet But Dying Slowly At the Social Gaming Summit in San Francisco today, the overall consensus among many speakers and attendees was that viral growth on Facebook isn’t dead yet, but it is definitely dying slowly. Kavin Stewart of LOLapps articulated the state of development on Facebook effectively when he suggested that with the ongoing changes on the Platform, it’s necessary to “keep your chin up”, as developers have historically figured out a way to continue growing. The term “viral growth” essentially means the art and science of free user acquisition. Top application developers have essentially become “viral growth scientists”, focused on two things: optimizing viral channels and finding platforms that provide those channels. As any developer in this space knows, Facebook is no longer the viral platform that it once was. The changes made by Facebook have slowly squeezed many developers into an awkward business position.
Structural Change Is Always a Good Theme to Invest In What are venture capitalists looking for? If you are a startup entrepreneur looking for funding, it’s always a good idea to know what investment themes a VC is interested and tailor your pitch to those themes. Yesterday morning, I saw presentations from three venture firms—Union Square Ventures, DFJ Gotham Ventures, and First Round Capital—at an event hosted by the Media Kitchen. Each of the presenters outlined some of the themes their venture firms are trying to ride. They all boil down to structural change in one form or another. One common theme everyone seemed excited about is that, after years of hope and anticipation, the mobile Web finally seems within reach. Albert Wenger, a partner at Union Square Ventures, notes that we might be a little bit ahead of ourselves in the hype cycle (see slide above), but that the impact of some of the changes we are just now seeing now on the Web will eventually catch up to the hype. The risks he worries about are:
How to Validate Your Start-up Idea At my marketing agency, Ciplex, I deal with a lot of clients who hire us to build a website for their business idea--based solely on their gut feeling that idea will be successful. They skip the step of figuring out first if they're solving a real problem in the world. Big mistake. Before investing any time and money in a business, you need to validate your idea. I asked members of the Young Entrepreneur Council, an invite-only organization for young, successful entrepreneurs about the best ways to validate ideas. Check out their responses below: Use smoke tests. An easy way to gauge interest in an idea is to run some basic tests fist. Travis Steffan, a serial entrepreneur, says he generally places an idea on a site like LaunchRock, which helps people to quickly set up a "Launching Soon" page. Assess yourself. This one sounds basic but it's worth remembering. Find a mentor or industry advisor. There are always going to be people who have expertise or experience you lack. Conduct a survey.
How many of you built a profitable startup while having a day job I built review site ten years ago and sold it. It was profitable within 6 months off organic traffic and lead gen. Approximate revenue by year: $10k, 40k, 70k, 100k, 150k, 250k, 500k, 750k, 1.5M, 2.5M. Built entirely while working for another startup (unrelated), first 3 years I was in graduate school, year 4 I was a product manager for another startup. I was the sole owner, never had more than 7 employees, and I sold it for a bit over $10M (ttm revenue was around $700k at the time). Leading up to launch, I typically worked 10-7 at my day job, then wrote my code from 8p-1a M-F (20 hrs) and all day on the weekends (20 hrs), so 40 hrs per week. It's definitely doable, but your SO needs to be on-board because you'll be taking the time away from them.
Top 5 Elements for Virality of Social Games | Demystifying Digital Commerce For today’s social game developer, virality is key to driving user growth and lowering customer acquisition costs. Here’s a look at five elements that boost the virality of social games: 1. 2. 3. 4. 5.