An interview with investor Paul Graham of Y Combinator. Paul Graham believes we’re not in a bubble, that startups shouldn’t worry about their business models and the best companies are the ones with potential to kill old monopolies.
Graham is a partner at Y Combinator, a Mountain View firm that invests in very early tech startups. Companies that Y Combinator has funded include the social news site Reddit, online form creation tool Wufoo (our coverage), and the online calendaring startup Kiko, whose controversial sale on eBay last month ended with a quarter million dollar winning bid. The next Y Combinator funded company to launch will be loopt, a mobile presence service also funded by Sequoia. Y Combinator’s site says, “We’re the right choice for a group of two or three young hackers who have an idea, and want some money and advice to get it launched.” Graham is known for making strong statements about innovation and economics in technology. You’re also under more pressure to grow fast, which can cause you to make design errors. The Start-up Guru: Y Combinator's Paul Graham, Venture Capi.
Of all the things that Paul Graham hates about running a start-up -- and there's not a whole lot about it that he likes -- the customers bug him the most.
Everyone has a problem with your product, and people are constantly calling to complain about things you cannot possibly fix. Then there is the fact that you are doing everything for the first time, which creates a crippling sense of uncertainty, as well as a persistent fear that a single bad decision could doom the whole enterprise. There are squabbles with co-founders and combative negotiations with investors and that gut-wrenching period when you realize that success isn't going to come quickly or easily -- Graham calls it the Trough of Sorrow. Graham's start-up days are more than a full decade behind him, but he can't help recalling them with a shudder. "It's like talking to someone who went to war," Graham says. Why is Graham, an avowed start-up hater, doing this? For aspiring business owners, this is a very good thing. R Interview: Y Combinator’s Paul Graham. Editor’s note: For the sake of accuracy, we have replaced the edited questions and answers with their unedited version (save for some minor stylistic changes).
We sincerely apologize for any confusion. This week Found|READ interviews software entrepreneur Paul Graham, co-founder of the influential startup incubator, Y Combinator. Since 2005, Y Combinator has seed-funded 250 founders and over 45 startups including Justin.TV, RescueTime, Weebly and Zecter. Many other “YC shops” have quickly achieved liquidity events, among them Reddit (Condé Nast) and Auctomatic (Live Current Media). Fresh from Y Combinator’s fourth annual Startup School ‘08, Graham talks about the competition, various success factors, and how Y Combinator picks its winners. F|R: What is the mathematical function from which Y Combinator takes its name, and why did you choose this? Graham: It’s a function that builds recursive functions without them needing to have names. Interview About Web 2.0. July 2006 (Ian Delaney wanted to interview me for his new book.
I agreed if I could post the answers online.) 1. What have we learned from the dotcom bubble? (Or, what should we have learned?) One thing people learned from the Bubble is to judge startups more critically. This is not to say we should only consider companies with detailed plans for making money. The idea of building something popular then figuring out how to make money from it was born in the Bubble. Most startups that failed during the Bubble failed because no one wanted what they built. If you can make something people want and not spend money, you're 90% of the way there. I don't mean to imply the business part is trivial. 2. I think the present startup boom has a couple causes. Another factor is Google. Startups will be ever more common because they're now so cheap to start. 3.