Y Combinator teaches a class at Stanford on startups: http://startupclass.samaltman.com

These are my notes on Lecture 2:

Ideas, Products, Teams and Execution Part II

Q&A on Lecture 1

How to identify markets that are growing quickly:

Trust your instincts. Younger people/students have an advantage. Just watch what you and others are doing.

How to deal with burnout as a founder:

It sucks, but you just have to keep going. Address the things that are going wrong . . .

Lecture 2


The co-founder relationship is very, very important – one of the most important decisions. The track record for companies whose founders don’t know each other well is very bad.

A solo founder is better than a random co-founder.

A founder should be relentlessly resourceful. A founder’s role model should be James Bond (really!). You need someone who behaves like James Bond.

You want to have known your co-founders for years.

You want a tough, calm co-founder.

Two or three co-founders work well. Five are really bad.

When should co-founders decide on the equity split? Very soon after they start working together. It should be near equal.

You have to discuss what happens when a co-founder leaves. Shares should vest over four years. Anyone who leaves within the first year gets nothing.

Co-founders should be in the same location. Sam is very skeptical about remote teams in general.


Try not to hire! Be proud to have as few employees as possible.

The most successful YC companies have no or very few employees. In the early days, the goal should be not to hire.

The cost of getting an early hire wrong is very high. It usually kills the company.

Write down a list of core values a hire should have. Most importantly, he should love the product. (Would you still want to work on our project if you got a medical diagnosis that you had only one year left to live?)

Have a very high bar. Get the best people.

It can easily take a year to recruit someone very good.

How much time should you spend on hiring? Either 0 or 25% of your time.

Mediocre engineers do not build great companies. Mediocre engineers infect the culture of a startup and destroy it.

The best people to hire are people you or your coworkers already know.

For most early hires in a startup experience does not help very much, but appetite does.

What to look at:

  • Are they smart?
  • Do they get things done?
  • Do I want to spend a lot of time around them?

Call references. Dig in. Is this person in the top 5%? Why don’t you try to hire this person again?

  • Good communication skills
  • Maniacally determined (they should also like risk)
  • Pass the “animal test” (see Paul Graham )
  • You would feel comfortable reporting to them

Care more about giving equity to employees than investors. Be generous with equity to early employees.

After you hire someone, you have to retain them. They have to feel happy and valued.

Praise your team. Give your team credit for all the good that happens. You take responsibility for the bad things.

Fire fast. It’s better for the company, it’s better for the employee.


Whatever the founders do becomes the culture. The founders have to be execution machines.

Ideas themselves are not worth anything without someone executing them.

The CEO has five jobs:

  • Set the vision
  • Raise money
  • Evangelize the company
  • Hire and manage
  • Make sure the entire company executes

Execution: Can you figure out what to do? You get it done.


Focus. Identify the most important two or three things and work on them. Ignore or delegate the others. If you don’t, you will never be great about getting stuff done.

Many startups/founders work really hard, but they work on the wrong things. If you work really hard on the wrong things, nobody will care.

Communicate the goals. This keeps the company focused and everyone works in the right direction. Communicate them over and over again.

Focus on growth and momentum. Have metrics for this. If you don’t focus on these two things, you are probably doing it wrong.


You have to outwork your competitors.

  • Relentless operating rhythm (move fast and break things)
  • Obsession with execution quality

You need to move fast, but maintain high quality (of course it’s tricky)

  • Bias towards action: you need to make decisions.

The best founders are:

  • Quick: they respond to email quickly . . .
  • Present: they show up at meetings . . .

Always keep momentum. Never take your foot off the gas peddle. A winning team keeps winning. A losing team gets demotivated and keeps losing.

Software startups: always keep growing.

Hardware startups: don’t miss shipping dates.

Getting the product right in the beginning is the best way to avoid losing momentum later.

If you have a demotivated team, you have to find small wins. “Sales fix everything.”

Don’t worry about competitors unless they beat you with a real, shipped product. Don’t give a shit about press releases.

Don’t spend more money than you have.