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This guide captures lessons learned from years of investing in startups; and, it is just as relevant to social organisations. Read about converting a good idea into a great product, the CEO’s job, hiring talent, fundraising, growth and more.

Below are excerpts from Sam Altman’s playbook.

We spend a lot of time advising startups. Though one-on-one advice will always be crucial, we thought it might help us scale Y Combinator if we could distill the most generalizable parts of this advice into a sort of playbook we could give YC and YC Fellowship companies.

Then we thought we should just give it to everyone.

startup
Illustration: Gregory Koberger

A great team

Good founders have a number of seemingly contradictory traits. One important example is rigidity and flexibility. You want to have strong beliefs about the core of the company and its mission, but still be very flexible and willing to learn new things when it comes to almost everything else.

The best founders are unusually responsive. This is an indicator of decisiveness, focus, intensity, and the ability to get things done.

Founders that are hard to talk to are almost always bad. Communication is a very important skill for founders—in fact, I think this is the most important rarely-discussed founder skill.

startup
Illustration: Gregory Koberger

Hiring and managing

Do not hire chronically negative people. They do not fit what an early-stage startup needs—the rest of the world will be predicting your demise every day, and the company needs to be united internally in its belief to the contrary.

Value aptitude over experience for almost all roles. Look for raw intelligence and a track record of getting things done. Look for people you like—you’ll be spending a lot of time together and often in tense situations. For people you don’t already know, try to work on a project together before they join full-time.

Invest in becoming a good manager. This is hard for most founders, and it’s definitely counterintuitive. But it’s important to get good at this. Find mentors that can help you here. If you do not get good at this, you will lose employees quickly, and if you don’t retain employees, you can be the best recruiter in the world and it still won’t matter. Most of the principles on being a good manager are well-covered, but the one that I never see discussed is “don’t go into hero mode”. Most first-time managers fall victim to this at some point and try to do everything themselves, and become unavailable to their staff. It usually ends in a meltdown. Resist all temptation to switch into this mode, and be willing to be late on projects to have a well-functioning team.

Speaking of managing, try hard to have everyone in the same office. For some reason, startups always compromise on this. But nearly all of the most successful startups started off all together. I think remote work can work well for larger companies but it has not been a recipe for massive success for startups.

startup
Illustration: Gregory Koberger

Fundraising

It is a bad idea to try to raise money when your company isn’t in good enough shape to attract capital. You will burn reputation and waste time.

Don’t get demoralized if you struggle to raise money. Many of the best companies have struggled with this, because the best companies so often look bad at the beginning (and they nearly always look unfashionable.) When investors tell you no, believe the no but not the reason. And remember that anything but “yes” is a “no”—investors have a wonderful ability to say “no” in a way that sounds like “maybe yes”.

It’s really important to have fundraising conversations in parallel—don’t go down a list of your favorite investors sequentially. The way to get investors to act is fear of other investors taking away their opportunity.

View fundraising as a necessary evil and something to get done as quickly as possible. Some founders fall in love with fundraising; this is always bad. It’s best to have just one founder do it so the company doesn’t grind to a halt.

The first check is the hardest to get, so focus your energies on getting that, which usually means focusing your attention on whoever loves you the most. Always have multiple plans, one of which is not raising anything, and be flexible depending on interest—if you can put more money to good use, and it’s available on reasonable terms, be open to taking it.

An important key to being good at pitching is to make your story as clear and easy to understand as possible. Of course, the most important key is to actually have a good company. There are lots of thoughts about what to include in a pitch, but at a minimum you need to have: mission, problem, product/service, business model, team, market and market growth rate, and financials.

The full playbook can be found here.

Sam Altman

Sam Altman

Sam Altman was cofounder and CEO of Loopt, which was funded by Y Combinator in 2005 and acquired by Green Dot in 2012. At Green Dot, he was the CTO and is now on the board of directors. Sam also founded Hydrazine Capital. He studied computer science at Stanford, and while there worked in the AI lab.

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