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Hard Startups

blog.samaltman.com

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Re: Hard Startups

#51

Post by arkades »

ummonk wrote: post #18
rafiki6 wrote: post #11

Something that really bugs me about this is the lack of examples where this succeeds. In my mind, a good one is Intel. To that end, how many microprocessor startups actually ended up succeeding at the same working on some fundamental and challenging things? Also, the thing about hard startups is there is a lot of luck involved. Counter to what the author is saying, you do need a degree or some level of measurable exp…

It seems odd, given that highly successful startups overwhelmingly were "easy" startups (including one of the examples he mentions - Instagram).

He didn't say easy startups couldn't be successful - just that Insta had to stand up to several orders of magnitude more competition than a 'hard' startup was/would have been.

As a matter of survivorship bias, it would be shocking if there wasn't some surviving 'easy' photo-sharing startup. But looking at it prospectively, I think his point was: you could be fending off 9 competitors rather than 999 competitors, not knowing in advance if you're going to be the 1 survivor.

Re: Hard Startups

#52

Post by jpmattia »

rafiki6 wrote: post #11

Something that really bugs me about this is the lack of examples where this succeeds. In my mind, a good one is Intel. To that end, how many microprocessor startups actually ended up succeeding at the same working on some fundamental and challenging things? Also, the thing about hard startups is there is a lot of luck involved. Counter to what the author is saying, you do need a degree or some level of measurable exp…

> Counter to what the author is saying, you do need a degree or some level of measurable expertise to start a hard startup, because not only do you need the expertise, you also need the credibility to get people to work with you and you need that solid team to get funding.

Interestingly, this criterion causes Microsoft to be in the "Easy Startup" column. (Facebook too, but that seems more correct.)

The Elizabeth Holmes example is also interesting to consider. Lack of degree in a hard field was no barrier to raising a ton of money.

> In my mind, a good one is Intel. To that end, how many microprocessor startups actually ended up succeeding at the same working on some fundamental and challenging things?

Nit: Intel's first products were memory, not CPUs.

https://www.google.com/search?q=intel+first+product&oq=intel... )

Re: Hard Startups

#53

Post by ssorallen »

sp527 wrote: post #9

It’s odd (read: motivated by self-interest) that he didn’t make any attempt to establish the failure rate of these startups and the distribution of outcomes for employees. Further, he didn’t even argue for a referendum on equity comp. He’s blatantly peddling the same broken model of “sell them your fugazzi so they can’t tell their talent is being plundered for (founder/investor) economic gain”. It’s downright insulti…

> Don’t fall for their “mission” nonsense. It’s a monstrous lie designed to keep funneling tremendous amounts of money to the people at the top.

100%. I've recently run into this with companies peddling that they're "mission-driven", as if that's somehow a replacement for compensating their employees appropriately. If it's a for-profit company then this "mission-driven" term is absolutely nonsense because the cap tables prove the people at the top with the large chunks of equity aren't foregoing any compensation to achieve this "mission".

Re: Hard Startups

#54

Post by qchris »

spectramax wrote: post #45

What bothers me about Sam Altman's writing is the following: 1) He talks about X, X being an observation with survivorship bias painted all over it, but Sam Altman asserts as if it is true. Stop writing with authority over unsubstantiated claims - you can only be humble and say "Perhaps X is true because of my observations, take it with a grain salt". 2) Statements like "Easy startups are easy to start but hard to ma…

The first point on your list is something that I come back fairly frequently when reading through blog posts like this, or (for example) listening to things like TED talks. I understand that there's a need to stand behind any given thesis, but it seems to me that there is often a lack of distinction between "I'm claiming this to be true primarily based on my experience" and "I'm claiming this to be true based on widely-accepted external factors, like peer-reviewed papers, industry standards, statistically-significant trends, etc.".

When people don't meaningfully differentiate between those two positions while communicating, it passes the burden of deciding which claims fall into which category onto the reader. And since I'm then unable to distinguish if the writer themself recognizes that difference, I find myself less easily able to give any of their claims the benefit of the doubt. That isn't a recipe for taking their advice or conclusions to heart.

Re: Hard Startups

#55

Post by arkades »

ssivark wrote: post #32

“When all you have is a hammer, everything looks like a nail.” Seems like Sam Altman’s hammer is startup investing, so he tries to solve everythin... even the most challenging/ambitious problems through those means. Doesn’t necessarily mean it’s a bad approach, but that seems to be his bias. It’s worth having a more nuanced discussion. The current piece sounds more like cheerleading than advice.

Strong agree.

I found Sam Altman's writing on quora and followed it off-and-on long, long before I found out "who he is." And his advice is so overly-positive and one-note that, honestly, I thought he was a snake oil salesman or self-help guru. I would never have guessed he was actually a VC / successful entrepreneur.

Frankly, his arguments and writing continue to sound like Self-Help Guru shined through the lens of SV VC to me. Nuance isn't really on the table.

Re: Hard Startups

#56

Post by ssorallen »

tr00586 wrote: post #48
sp527 wrote: post #9

It’s odd (read: motivated by self-interest) that he didn’t make any attempt to establish the failure rate of these startups and the distribution of outcomes for employees. Further, he didn’t even argue for a referendum on equity comp. He’s blatantly peddling the same broken model of “sell them your fugazzi so they can’t tell their talent is being plundered for (founder/investor) economic gain”. It’s downright insulti…

Is it really so crazy that people might care about more things than money when considering what to work on? If I were given the opportunity to go back in time and work at Bell Labs or Xerox PARC, I would probably do so even if paid no money at all. This seems rational to me, both in terms of how much knowledge I could accumulate and just the self-actualization of working on such interesting problems. I imagine the ca…

A mission and a reasonable distribution of equity with fair terms do not need to be mutually exclusive, that's how I read the original comment.

If the C-levels are still getting massive chunks of equity with tiny strike prices while you get 0.01% and a 90-day post-termination exercise window and a massive AMT bill, then this talk of a "mission" is vacuous and likely a diversion from the fact that you as the employee are being under-compensated.

Re: Hard Startups

#57

Post by staticautomatic »

ablekh wrote: post #47
im_down_w_otp wrote: post #10

This is an interesting perspective, but not one I found to be broadly shared by the dozens of VCs that I interacted with during fundraising. That we were doing a hard thing, despite having an experienced, capable, and "battle tested" founding team, as well as early revenue that was nothing to sneeze at, was very often a knock against us. Early on, it was kind of hard not to take this a bit personally, but that quickl…

Interesting thoughts. Since you apparently have significant experience raising VC funding, I'm curious about your opinion on the following (others, of course, are welcome to chime in). If you were working on a deep tech (science-based) startup and considered using venture capital, would you prefer pitching your idea(s) to VCs, who happen to have relevant domain expertise (most likely, as their educational background)…

If someone with domain experience thinks you can't do what you're trying to do or are doing it the wrong way:

1. They're correct and you should not get a check.

2. They're incorrect, and you wouldn't want them to be the person writing the check.

3. They have good reasons for their concern which you had not yet considered.

All of these sound like good outcomes to me.

Re: Hard Startups

#58

Post by nickpinkston »

Also, when laying out your strategy, don't make the mistake of betting everything on the hard problem working quickly. Uber started as a taxi hailing service, not a self-driving taxi service, and that was the right plan.

Make a model that makes money now using low-risk tech/ops approaches so you have the money to build your flux capacitor to plug into the business you already built to unleash the phase II hard-tech-powered model.

Re: Hard Startups

#59

Post by hef19898 »

jiofih wrote: post #50
jkubicek wrote: post #49

I feel like the money quote was buried in the postscript. > Another solution to this problem is to think about startups that can become quite successful with less than ten people. As compensation packages from the giant tech companies continue to increase, I suspect this will become a trend. As cash comp at big public companies grow and the future value of startup options plummet, we need to start thinking about diff…

That’s not exactly what he is aiming for; the quote is most likely related to Instagram which reached a $1bn valuation with ~10 people. A lifestyle business is worthless to VC (and unsustainable if it decides to take VC money).

Slowly I having my doubts about that. At least for early stage and angle investment. Investors need a 10x exit. Now imagine an early stage investment of 250k in a small business that grows to 10 million revenue. Healthy, because it is a lifestyle business not geared towards hyper growth. Assuming the company is profitable and cash positive, buying back the investor for 2.5 million through a bank loan is a reasonable thing.

But that hints at an interesting problem. 250k is angle and seed, not traditional VCs. And there seems to be so much desperate money out there in the current "no interest for your bank account" times that there simply aren't enough small businesses like that strategy to work. Hence VCs, hyper growth, and, ultimately, things like SoftBank.

Whether that is healthy is everyone's guess.

Re: Hard Startups

#60

Post by sp527 »

tr00586 wrote: post #48
sp527 wrote: post #9

It’s odd (read: motivated by self-interest) that he didn’t make any attempt to establish the failure rate of these startups and the distribution of outcomes for employees. Further, he didn’t even argue for a referendum on equity comp. He’s blatantly peddling the same broken model of “sell them your fugazzi so they can’t tell their talent is being plundered for (founder/investor) economic gain”. It’s downright insulti…

Is it really so crazy that people might care about more things than money when considering what to work on? If I were given the opportunity to go back in time and work at Bell Labs or Xerox PARC, I would probably do so even if paid no money at all. This seems rational to me, both in terms of how much knowledge I could accumulate and just the self-actualization of working on such interesting problems. I imagine the ca…

Saying that a VC-funded startup can provide the same experience as Bell Labs or Xerox Parc is a tremendous false equivalency. Some exceptions might resemble those R&D behemoths. Most will not because VC - with its attendant growth expectations - is antithetical to “tinkering” (a great word another commenter here used).

And good luck picking the exceptions as a potential employee when every such startup has a reality distortion field. I can assure you you’re more likely to end up somewhere run by an Elizabeth Holmes type, who can sell you a compelling narrative that will ultimately flatline. Employees have no window into the reality of a startup from the outside. Very often they don’t get to see that much more on the inside either.

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