6/6/14
6/5/14
Numercial Prefixes
Latin Prefixes 1-20
- uni
- bi, duo
- tri
- quadri, quart
- quinque, quint
- sext, se
- sept
- oct
- nonus
- decial, de
- undec
- duodec, duode
- tredec, tridec
- quatuordec
- quineci
- sedec
- septendec
- decennoct
- decennov
- vige, vice
Greek Prefixes, 1-20
- mono
- di/ dy
- tri
- tetra
- penta
- hex
- hept
- oct
- ennea
- dec
- hendec
- dodec
- trideca
- tetradeca
- pendeca
- hexadeca
- heptadeca
- octodeca
- enneadeca
- icos
Reference: http://phrontistery.info/numbers.html
Social Relationships and Math: A Researcher Looks Inside One Classroom
Reference: http://blogs.edweek.org/edweek/rulesforengagement/2014/06/by_guest_blogger_amanda_ulrich.html
University of Illinois at Chicago researcher Maisie Gholson, in a study published earlier this year in the Journal of Education, suggests that a student's standing in the classroom social hierarchy can influence her learning opportunities there. Over the course of an academic year, Gholson observed and studied a class of 3rd grade girls in a predominantly African-American public school in Chicago. Her observations led her to conclude that the girls who were more socially connected participated in mathematics class more and were perceived as more competent in the subject.
Gholson focused her study on two high-achieving students in particular. Though both students did well in mathematics, the two had very different labels within their social setting; the first girl was described by her peers as a "model student," while the other was called a "bully."
Why were the girls given such drastically different labels, despite their similar levels of accomplishment in mathematics? And how did these labels in turn affect their academic performance? The answers could be due to issues of social identity, gender, and classroom structure, the author writes.
Notions about gender come into play in this scenario when considering what actions were socially acceptable on the girls' playground. Gholson points out that it is more socially acceptable for females to engage in actions such as gossiping and other verbal taunts, but less acceptable to act in a physically aggressive manner. The girl who was considered the "model student" displayed forms of verbal bullying, but because this type of harassment was more socially acceptable, she was not deemed a "bully" by her teacher or her peers.
In this study Gholson states that the "model student" was part of the dominant social group. Because of this dominance, the student's social power translated to prominence in the classroom. Comparatively, the "bully" was more isolated from the major social group and consequently participated in class less and was not cited by her peers as being one of the top math students.
One reason for the observed connection between social status and participation was the loose structure of the classroom. This structure allowed the members of the dominant social group to interact and support each other in an academic setting, further hindering the students who were not in this prominent group. Gholson acknowledges that a loosely structured classroom is not inherently bad, only that her particular study produced these findings. She goes on to say that the specific classroom she studied is not indicative of every elementary classroom, and that her results cannot be generalized.
Perhaps the implications of this study are best summed up by Gholson herself: "If we consider social relationships to be the requisite connections for all learning, this gives new meaning to children's social networks and to mathematics learning."
For a more in-depth look, you can read Gholson's complete study here.
Social Relationships and Math: A Researcher Looks Inside One Classroom
By guest blogger Amanda Ulrich
There may be a link between girls' social connections and their participation in mathematics classes, according to recent study.University of Illinois at Chicago researcher Maisie Gholson, in a study published earlier this year in the Journal of Education, suggests that a student's standing in the classroom social hierarchy can influence her learning opportunities there. Over the course of an academic year, Gholson observed and studied a class of 3rd grade girls in a predominantly African-American public school in Chicago. Her observations led her to conclude that the girls who were more socially connected participated in mathematics class more and were perceived as more competent in the subject.
Gholson focused her study on two high-achieving students in particular. Though both students did well in mathematics, the two had very different labels within their social setting; the first girl was described by her peers as a "model student," while the other was called a "bully."
Why were the girls given such drastically different labels, despite their similar levels of accomplishment in mathematics? And how did these labels in turn affect their academic performance? The answers could be due to issues of social identity, gender, and classroom structure, the author writes.
Notions about gender come into play in this scenario when considering what actions were socially acceptable on the girls' playground. Gholson points out that it is more socially acceptable for females to engage in actions such as gossiping and other verbal taunts, but less acceptable to act in a physically aggressive manner. The girl who was considered the "model student" displayed forms of verbal bullying, but because this type of harassment was more socially acceptable, she was not deemed a "bully" by her teacher or her peers.
In this study Gholson states that the "model student" was part of the dominant social group. Because of this dominance, the student's social power translated to prominence in the classroom. Comparatively, the "bully" was more isolated from the major social group and consequently participated in class less and was not cited by her peers as being one of the top math students.
One reason for the observed connection between social status and participation was the loose structure of the classroom. This structure allowed the members of the dominant social group to interact and support each other in an academic setting, further hindering the students who were not in this prominent group. Gholson acknowledges that a loosely structured classroom is not inherently bad, only that her particular study produced these findings. She goes on to say that the specific classroom she studied is not indicative of every elementary classroom, and that her results cannot be generalized.
Perhaps the implications of this study are best summed up by Gholson herself: "If we consider social relationships to be the requisite connections for all learning, this gives new meaning to children's social networks and to mathematics learning."
For a more in-depth look, you can read Gholson's complete study here.
5/28/14
Great Quote by Teddy Roosevelt
"It's not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat."
- Theodore Roosevelt, 26th President of the United States
5/21/14
9 Google Drive Add-Ons + an interesting idea
Reference: http://www.lifehack.org/articles/technology/10-best-google-drive-add-ons-you-should-using.htm
10 Best Google Drive Add-Ons You Should Be Using
By Emmanuel Banks
10 Best Google Drive Add-Ons You Should Be Using
By Emmanuel Banks
Some Good Drive Add-Ons worth Checking Out:
- Hellofax
- Uberconference
- PandaDoc
- MapsForDocs
- DriveTunes
- Google Slides -
- definitely great for group projects, but still lean towards the familiarity of PPT and functionality of Prezi
- Mail2Drive
- great tool, I should use it more
- EasyBib
- great tool, very easy to keep track of references
- MindMeister
- IFTTT
5/20/14
5/14/14
Illustrated Guide to a Ph.D.
License: Creative Commons
I receive numerous requests to reproduce this work, and I'm happy to grant them all, subject to three small conditions:
Please attribute the original work to me (Matt Might) and link back to this page in your reproduction: http://matt.might.net/articles/phd-school-in-pictures/
as The Illustrated Guide to a Ph.D.
When you attribute, please also link my name, Matt Might, to: http://matt.might.net/
And, don't forget the "Keep pushing," at the bottom!
When you attribute, please also link my name, Matt Might, to: http://matt.might.net/
And, don't forget the "Keep pushing," at the bottom!
4/26/14
Welcome to EE/SSX Blog
Welcome to EE/SSX Blog - This is the beginning of something special. There is currently an INFORMATION OVERLOAD - EE/SSX will help you navigate your way to the next generation.
WARNING:
**UNDER CONSTRUCTION**
4/25/14
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4/17/14
How to Hire a Programmer to make your Ideas Happen
Reference: http://sivers.org/how2hire
How to hire a programmer to make your ideas happen
2010-06-19
Do you have an idea for a website, online business, or application, but need a programmer to turn that idea into reality?
1. Reduce your big idea to “Version 1.0”.
First read my short “Version Infinity” article.
Dream the big dream of everything your site/service/company might be some day, and write it all down.
But then think of the bare minimum that would make you happy, and people would find useful. What are the three most essential features? What is the most essential feature?
Call this Version 1.0. Save the rest for later. No need to even tell people about the rest unless they're really really interested.
A programmer is much more likely to say, “I can do that!” to this simple version.
Your goal here is just to get Version 1.0 built. That, alone, will be a huge accomplishment. Everything below is describing only Version 1.0.
2. Write a simple overview of what it does.
Again, remember: only describe Version 1.0. Stop there. The big version is written down somewhere else.
Leave off all details that the programmer doesn't need to know.
For example: If you want to sell videos, you don't need to say what's in the videos. Just “sell downloadable and streamable video files.” If you want the site to translate ancient Arabic poetry to Spanish to increase global tolerance, just say, “Translate paragraphs from Arabic to Spanish.”
Be succinct. Programmers love that.
Include people in a story, using the terms you use.
For example: “A company creates an account, then creates a new project with a title and description. In the project, they upload multiple documents to be translated. Each document has a from-language, to-language, and a name. The system counts how many words are in each document. When the company marks the project as ready, it is announced to the translators. The announcement shows how many documents, how many words, and a price. The translator rejects or approves. They log in to translate the documents, one at a time, marking each finished when done, which sends the file back to the company for review.”
From this, the programmer will look for nouns and verbs, so start to think in those terms to help you communicate better. (A programmer would see: Company, Project, Document, Translation, Translator, etc.)
5. Make your first milestone a stand-alone project.
To find a programmer you like, you need to take just the first milestone, and treat it as a complete project
Open a new text file, and copy just the parts of the story and walk-through that are included in the first milestone.
If a feature doesn't come until after the first milestone, remove it from this copy of the story. Remove it from this copy of the walk-through.
This text file should contain a start-to-finish project that sounds like a day's work, and mentions nothing else.
Now start to prepare it like a help-wanted ad. Say, “We are hiring a developer to create only the beginning of an application. If this milestone is completed well, there will be more work immediately. The requirements are as follows....” Then paste just the story and walk-through for your first milestone.
Because you don't want them to just say, “I finished. Here's the source code,” make sure you finish with something like, “For completion of this project, please have this up and running on a development webserver I can access to test its functionality as described.”
Because posting this help-wanted ad will bombard you with dozens of offers that sound legitimate but have never read your ad, you should really do this step:At the end of your post, write something like, “VERY IMPORTANT: To separate you from the spammers, please write I AM REAL as the first line of your bid. We will delete all bids that do not start with this phrase, since most bidders never read the requirements. Thank you for being one who does.”
Get this all in a plain-text file, ready to paste.
6. Post it at elance, guru, odesk, vworker.
Go to the following sites to open an account at each: elance.com, guru.com,odesk.com, vworker.com
Post this short project at each site. Use their escrow service. Location of provider doesn't matter - they can work from anywhere. Don't pay for a highlighted listing. Pay by the hour. Set the bidding time limit to 7 days. Most bids will come in the first 3 days.
You'll get many offers, but if they don't have your magic phrase at the top (“I AM REAL” or whatever), delete them. This is very hard to do, since you'll feel thrilled that so many people are offering to help, saying things like, “We have looked at your project and would be glad to complete it immediately,” but trust me and delete those. If they didn't read something marked as VERY IMPORTANT already, you don't want to work with them.
Also important: Only go for providers who have great reviews from many past customers. This shows they are used to working this way through this site. Decline bids from providers without many great reviews.
Don't aim for the lowest bid. Use these sites to find someone that seems great and capable, even if they are twice as much as the lowest bid, they might work 10 times faster and better.
Each of these sites has its quirks, so sorry I can't recommend specifics for everyone. But be considerate and nice, once they've mentioned your VERY IMPORTANT phrase to prove they really read your requirements. That's cold enough. Once they've passed that test, be very responsive and friendly.
I've found it easier to choose one provider from each site, so you can “award this project” to just one, and track their work there. They don't need to know there are others.
Some will definitely go bad. Just expect it and don't let it upset you.They'll say something has come up, that they can't start until next month, that it's harder than they thought, or just disappear and never reply. When this happens, just mark that person's project as cancelled or complete, and say goodbye nicely. Then carry on with the rest.
Lastly, ask each one to send you a zip file of the entire source code after each completed milestone. Even if you don't know what to do with it yet, save it. Unzip it and look through it in any text editor. You might actually understand some of it.
8. Continue with the one you like best.
The goal of this project is to find just one programmer (or team) you really like.
If you don't, then just go back to re-post that first milestone again, but changing it based on any feedback you got. Perhaps set a higher price or describe it better.
Once you do, you can let them in on the whole project. Send them your full “Version 1.0” story and walk-through. Get them involved in the whole thing. Hire them to make the next milestone happen, and the next and the next.
They may ask you to continue working and paying through the website, to boost their reputation there, or they may want to just go direct. Either way is fine.
I left out many things, of course, but if you feel something needs to be mentioned, please leave a reply in the comments, below.
Let me know how it goes!
Reference: http://sivers.org/how2hire
© 2010 Derek Sivers
How to hire a programmer to make your ideas happen
2010-06-19
Do you have an idea for a website, online business, or application, but need a programmer to turn that idea into reality?
Many of my friends have been in the same position, so here's my best advice, below.
But first, a quick request: If you are a programmer, please leave a reply below with YOUR best advice. Feel free to include your URL and email for anyone to contact you. I know my advice is not complete, (and you may totally disagree!), so any further advice is appreciated.
But first, a quick request: If you are a programmer, please leave a reply below with YOUR best advice. Feel free to include your URL and email for anyone to contact you. I know my advice is not complete, (and you may totally disagree!), so any further advice is appreciated.
1. Reduce your big idea to “Version 1.0”.
First read my short “Version Infinity” article.
Dream the big dream of everything your site/service/company might be some day, and write it all down.
But then think of the bare minimum that would make you happy, and people would find useful. What are the three most essential features? What is the most essential feature?
Call this Version 1.0. Save the rest for later. No need to even tell people about the rest unless they're really really interested.
A programmer is much more likely to say, “I can do that!” to this simple version.
Your goal here is just to get Version 1.0 built. That, alone, will be a huge accomplishment. Everything below is describing only Version 1.0.
2. Write a simple overview of what it does.
Again, remember: only describe Version 1.0. Stop there. The big version is written down somewhere else.
Leave off all details that the programmer doesn't need to know.
For example: If you want to sell videos, you don't need to say what's in the videos. Just “sell downloadable and streamable video files.” If you want the site to translate ancient Arabic poetry to Spanish to increase global tolerance, just say, “Translate paragraphs from Arabic to Spanish.”
Be succinct. Programmers love that.
Include people in a story, using the terms you use.
For example: “A company creates an account, then creates a new project with a title and description. In the project, they upload multiple documents to be translated. Each document has a from-language, to-language, and a name. The system counts how many words are in each document. When the company marks the project as ready, it is announced to the translators. The announcement shows how many documents, how many words, and a price. The translator rejects or approves. They log in to translate the documents, one at a time, marking each finished when done, which sends the file back to the company for review.”
From this, the programmer will look for nouns and verbs, so start to think in those terms to help you communicate better. (A programmer would see: Company, Project, Document, Translation, Translator, etc.)
3. Write a detailed walk-through of every click.Close your eyes and imagine yourself using the site.
Describe every thing you can click on the first page.
What happens when you click it? Exactly what did the system do? What happens next?
Describe every thing you can click on the first page.
What happens when you click it? Exactly what did the system do? What happens next?
Start to think in IF-THEN branches. Example: “If it's a new user, it takes them to this welcome page. If they've been here before, it takes them to their account page. If it asks for a number, but they type a word, send them back to the same page but with a message.”
In a text file, write down every thing you know this Version 1.0 needs to do. Every click. Every action. A long list of small simple things.
Start to think of the exact wording of what you want it to say, but save that somewhere else. Don't clutter this list with wording.
The goal is to keep this long list of actions very clear and simple, so that a programmer can see it, and see that each step is easy. For them it should be like eating chips, not an elephant.
In a text file, write down every thing you know this Version 1.0 needs to do. Every click. Every action. A long list of small simple things.
Start to think of the exact wording of what you want it to say, but save that somewhere else. Don't clutter this list with wording.
The goal is to keep this long list of actions very clear and simple, so that a programmer can see it, and see that each step is easy. For them it should be like eating chips, not an elephant.
4. Break it up into milestones.
We tend to think of other people's work as easier than it is.
So break Version 1.0 up into many “milestone” steps. Think of it as a day's work. (It might take more or less than a day.) The point where they upload their work for you to test. Where you test it and are happy that little piece works.
Don't expect it to look pretty at this stage. Expect it incredibly ugly but functionally working. Like building a house, the paint and decor goes last.
For example: in my translation site story, above, the first milestone might be just a plain ugly web page where a company can create an account, create a new project, then upload named documents into that project. That's it! If that works, that's a good start.
Thinking of your project in milestones makes all the difference. You'll stop and communicate at each, making sure you're happy before continuing. Misunderstandings can't run on too long. You'll estimate time and cost better. And you'll both feel a good sense of momentum.
We tend to think of other people's work as easier than it is.
So break Version 1.0 up into many “milestone” steps. Think of it as a day's work. (It might take more or less than a day.) The point where they upload their work for you to test. Where you test it and are happy that little piece works.
Don't expect it to look pretty at this stage. Expect it incredibly ugly but functionally working. Like building a house, the paint and decor goes last.
For example: in my translation site story, above, the first milestone might be just a plain ugly web page where a company can create an account, create a new project, then upload named documents into that project. That's it! If that works, that's a good start.
Thinking of your project in milestones makes all the difference. You'll stop and communicate at each, making sure you're happy before continuing. Misunderstandings can't run on too long. You'll estimate time and cost better. And you'll both feel a good sense of momentum.
5. Make your first milestone a stand-alone project.
To find a programmer you like, you need to take just the first milestone, and treat it as a complete project
Open a new text file, and copy just the parts of the story and walk-through that are included in the first milestone.
If a feature doesn't come until after the first milestone, remove it from this copy of the story. Remove it from this copy of the walk-through.
This text file should contain a start-to-finish project that sounds like a day's work, and mentions nothing else.
Now start to prepare it like a help-wanted ad. Say, “We are hiring a developer to create only the beginning of an application. If this milestone is completed well, there will be more work immediately. The requirements are as follows....” Then paste just the story and walk-through for your first milestone.
Because you don't want them to just say, “I finished. Here's the source code,” make sure you finish with something like, “For completion of this project, please have this up and running on a development webserver I can access to test its functionality as described.”
Because posting this help-wanted ad will bombard you with dozens of offers that sound legitimate but have never read your ad, you should really do this step:At the end of your post, write something like, “VERY IMPORTANT: To separate you from the spammers, please write I AM REAL as the first line of your bid. We will delete all bids that do not start with this phrase, since most bidders never read the requirements. Thank you for being one who does.”
Get this all in a plain-text file, ready to paste.
6. Post it at elance, guru, odesk, vworker.
Go to the following sites to open an account at each: elance.com, guru.com,odesk.com, vworker.com
Post this short project at each site. Use their escrow service. Location of provider doesn't matter - they can work from anywhere. Don't pay for a highlighted listing. Pay by the hour. Set the bidding time limit to 7 days. Most bids will come in the first 3 days.
You'll get many offers, but if they don't have your magic phrase at the top (“I AM REAL” or whatever), delete them. This is very hard to do, since you'll feel thrilled that so many people are offering to help, saying things like, “We have looked at your project and would be glad to complete it immediately,” but trust me and delete those. If they didn't read something marked as VERY IMPORTANT already, you don't want to work with them.
Also important: Only go for providers who have great reviews from many past customers. This shows they are used to working this way through this site. Decline bids from providers without many great reviews.
Don't aim for the lowest bid. Use these sites to find someone that seems great and capable, even if they are twice as much as the lowest bid, they might work 10 times faster and better.
Each of these sites has its quirks, so sorry I can't recommend specifics for everyone. But be considerate and nice, once they've mentioned your VERY IMPORTANT phrase to prove they really read your requirements. That's cold enough. Once they've passed that test, be very responsive and friendly.
7. Hire one from each.
Here's the real reason why you're stopping at a simple milestone: you're going to hire at least two different people to do this first step, expecting that one will go bad, one will be so-so, and one will be great.
Yes it means you're paying multiple times for this first milestone, but it's worth it to find a good one.
Here's the real reason why you're stopping at a simple milestone: you're going to hire at least two different people to do this first step, expecting that one will go bad, one will be so-so, and one will be great.
Yes it means you're paying multiple times for this first milestone, but it's worth it to find a good one.
I've found it easier to choose one provider from each site, so you can “award this project” to just one, and track their work there. They don't need to know there are others.
Some will definitely go bad. Just expect it and don't let it upset you.They'll say something has come up, that they can't start until next month, that it's harder than they thought, or just disappear and never reply. When this happens, just mark that person's project as cancelled or complete, and say goodbye nicely. Then carry on with the rest.
Lastly, ask each one to send you a zip file of the entire source code after each completed milestone. Even if you don't know what to do with it yet, save it. Unzip it and look through it in any text editor. You might actually understand some of it.
8. Continue with the one you like best.
The goal of this project is to find just one programmer (or team) you really like.
If you don't, then just go back to re-post that first milestone again, but changing it based on any feedback you got. Perhaps set a higher price or describe it better.
Once you do, you can let them in on the whole project. Send them your full “Version 1.0” story and walk-through. Get them involved in the whole thing. Hire them to make the next milestone happen, and the next and the next.
They may ask you to continue working and paying through the website, to boost their reputation there, or they may want to just go direct. Either way is fine.
I left out many things, of course, but if you feel something needs to be mentioned, please leave a reply in the comments, below.
Let me know how it goes!
Reference: http://sivers.org/how2hire
© 2010 Derek Sivers
3/19/14
2/27/14
2/22/14
Work in Progress
This is not a finished product, this is a work in progress
The idea behind dynamic programming is quite simple. In general, to solve a given problem, we need to solve different parts of the problem (subproblems), then combine the solutions of the subproblems to reach an overall solution.
Resource: http://en.wikipedia.org/wiki/Dynamic_programming
The idea behind dynamic programming is quite simple. In general, to solve a given problem, we need to solve different parts of the problem (subproblems), then combine the solutions of the subproblems to reach an overall solution.
Resource: http://en.wikipedia.org/wiki/Dynamic_programming
2/16/14
CustomFood
http://customfood.blogspot.com/
foodtrux.org
customfood.org
By using his design, tech and entrepreneurship abilities, Seth has combined his interests to offer a user-friendly customizable food eating experience.
Seth's thoughts and conversations are usually based around food, and after being introduced to the world of Food Trucks, a statistician estimated that approximately 38% of his time was spent thinking, discussing and rating Food Trucks. (Note: 68% of all statistics are made up.)
At UPenn in University City, PA Seth decided to pursue an individualized major and investigate complex human behavior and evolution. As a student in the engineering school, his major gave him the flexibility to work with both engineering and college professors.
Recently, Seth has had more time to dedicate to his true passion of food. After spending time with foodtrux.com, he knew there was a niche to be filled in the food market and decided to spread the idea of Food Trucks to students in the greater Philadelphia area.
When Seth was on Campus, CustomFood helped offer customers the ability to order in advance, choose a time to pick up the food and to use credit card to pay.
He strives to understand the food markets of Philadelphia. He hopes to offer a user-friendly service that can improve, customize and incentivize the food experience for firms, individual users, and family food providers.
foodtrux.org
customfood.org
By using his design, tech and entrepreneurship abilities, Seth has combined his interests to offer a user-friendly customizable food eating experience.
Seth's thoughts and conversations are usually based around food, and after being introduced to the world of Food Trucks, a statistician estimated that approximately 38% of his time was spent thinking, discussing and rating Food Trucks. (Note: 68% of all statistics are made up.)
At UPenn in University City, PA Seth decided to pursue an individualized major and investigate complex human behavior and evolution. As a student in the engineering school, his major gave him the flexibility to work with both engineering and college professors.
Recently, Seth has had more time to dedicate to his true passion of food. After spending time with foodtrux.com, he knew there was a niche to be filled in the food market and decided to spread the idea of Food Trucks to students in the greater Philadelphia area.
When Seth was on Campus, CustomFood helped offer customers the ability to order in advance, choose a time to pick up the food and to use credit card to pay.
He strives to understand the food markets of Philadelphia. He hopes to offer a user-friendly service that can improve, customize and incentivize the food experience for firms, individual users, and family food providers.
2/13/14
2/12/14
Startup = Growth by Paul Graham
http://www.paulgraham.com/growth.html
Great Blog Post by Paul Graham
September 2012
A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth.
If you want to start one it's important to understand that. Startups are so hard that you can't be pointed off to the side and hope to succeed. You have to know that growth is what you're after. The good news is, if you get growth, everything else tends to fall into place. Which means you can use growth like a compass to make almost every decision you face.
Redwoods
Let's start with a distinction that should be obvious but is often overlooked: not every newly founded company is a startup. Millions of companies are started every year in the US. Only a tiny fraction are startups. Most are service businesses—restaurants, barbershops, plumbers, and so on. These are not startups, except in a few unusual cases. A barbershop isn't designed to grow fast. Whereas a search engine, for example, is.
When I say startups are designed to grow fast, I mean it in two senses. Partly I mean designed in the sense of intended, because most startups fail. But I also mean startups are different by nature, in the same way a redwood seedling has a different destiny from a bean sprout.
That difference is why there's a distinct word, "startup," for companies designed to grow fast. If all companies were essentially similar, but some through luck or the efforts of their founders ended up growing very fast, we wouldn't need a separate word. We could just talk about super-successful companies and less successful ones. But in fact startups do have a different sort of DNA from other businesses. Google is not just a barbershop whose founders were unusually lucky and hard-working. Google was different from the beginning.
To grow rapidly, you need to make something you can sell to a big market. That's the difference between Google and a barbershop. A barbershop doesn't scale.
For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. Barbershops are doing fine in the (a) department. Almost everyone needs their hair cut. The problem for a barbershop, as for any retail establishment, is (b). A barbershop serves customers in person, and few will travel far for a haircut. And even if they did the barbershop couldn't accomodate them. [1]
Writing software is a great way to solve (b), but you can still end up constrained in (a). If you write software to teach Tibetan to Hungarian speakers, you'll be able to reach most of the people who want it, but there won't be many of them. If you make software to teach English to Chinese speakers, however, you're in startup territory.
Most businesses are tightly constrained in (a) or (b). The distinctive feature of successful startups is that they're not.
Ideas
It might seem that it would always be better to start a startup than an ordinary business. If you're going to start a company, why not start the type with the most potential? The catch is that this is a (fairly) efficient market. If you write software to teach Tibetan to Hungarians, you won't have much competition. If you write software to teach English to Chinese speakers, you'll face ferocious competition, precisely because that's such a larger prize. [2]
The constraints that limit ordinary companies also protect them. That's the tradeoff. If you start a barbershop, you only have to compete with other local barbers. If you start a search engine you have to compete with the whole world.
The most important thing that the constraints on a normal business protect it from is not competition, however, but the difficulty of coming up with new ideas. If you open a bar in a particular neighborhood, as well as limiting your potential and protecting you from competitors, that geographic constraint also helps define your company. Bar + neighborhood is a sufficient idea for a small business. Similarly for companies constrained in (a). Your niche both protects and defines you.
Whereas if you want to start a startup, you're probably going to have to think of something fairly novel. A startup has to make something it can deliver to a large market, and ideas of that type are so valuable that all the obvious ones are already taken.
That space of ideas has been so thoroughly picked over that a startup generally has to work on something everyone else has overlooked. I was going to write that one has to make a conscious effort to find ideas everyone else has overlooked. But that's not how most startups get started. Usually successful startups happen because the founders are sufficiently different from other people that ideas few others can see seem obvious to them. Perhaps later they step back and notice they've found an idea in everyone else's blind spot, and from that point make a deliberate effort to stay there. [3] But at the moment when successful startups get started, much of the innovation is unconscious.
What's different about successful founders is that they can see different problems. It's a particularly good combination both to be good at technology and to face problems that can be solved by it, because technology changes so rapidly that formerly bad ideas often become good without anyone noticing. Steve Wozniak's problem was that he wanted his own computer. That was an unusual problem to have in 1975. But technological change was about to make it a much more common one. Because he not only wanted a computer but knew how to build them, Wozniak was able to make himself one. And the problem he solved for himself became one that Apple solved for millions of people in the coming years. But by the time it was obvious to ordinary people that this was a big market, Apple was already established.
Google has similar origins. Larry Page and Sergey Brin wanted to search the web. But unlike most people they had the technical expertise both to notice that existing search engines were not as good as they could be, and to know how to improve them. Over the next few years their problem became everyone's problem, as the web grew to a size where you didn't have to be a picky search expert to notice the old algorithms weren't good enough. But as happened with Apple, by the time everyone else realized how important search was, Google was entrenched.
That's one connection between startup ideas and technology. Rapid change in one area uncovers big, soluble problems in other areas. Sometimes the changes are advances, and what they change is solubility. That was the kind of change that yielded Apple; advances in chip technology finally let Steve Wozniak design a computer he could afford. But in Google's case the most important change was the growth of the web. What changed there was not solubility but bigness.
The other connection between startups and technology is that startups create new ways of doing things, and new ways of doing things are, in the broader sense of the word, new technology. When a startup both begins with an idea exposed by technological change and makes a product consisting of technology in the narrower sense (what used to be called "high technology"), it's easy to conflate the two. But the two connections are distinct and in principle one could start a startup that was neither driven by technological change, nor whose product consisted of technology except in the broader sense. [4]
Rate
How fast does a company have to grow to be considered a startup? There's no precise answer to that. "Startup" is a pole, not a threshold. Starting one is at first no more than a declaration of one's ambitions. You're committing not just to starting a company, but to starting a fast growing one, and you're thus committing to search for one of the rare ideas of that type. But at first you have no more than commitment. Starting a startup is like being an actor in that respect. "Actor" too is a pole rather than a threshold. At the beginning of his career, an actor is a waiter who goes to auditions. Getting work makes him a successful actor, but he doesn't only become an actor when he's successful.
So the real question is not what growth rate makes a company a startup, but what growth rate successful startups tend to have. For founders that's more than a theoretical question, because it's equivalent to asking if they're on the right path.
The growth of a successful startup usually has three phases:
The slope is the company's growth rate. If there's one number every founder should always know, it's the company's growth rate. That's the measure of a startup. If you don't know that number, you don't even know if you're doing well or badly.
When I first meet founders and ask what their growth rate is, sometimes they tell me "we get about a hundred new customers a month." That's not a rate. What matters is not the absolute number of new customers, but the ratio of new customers to existing ones. If you're really getting a constant number of new customers every month, you're in trouble, because that means your growth rate is decreasing.
During Y Combinator we measure growth rate per week, partly because there is so little time before Demo Day, and partly because startups early on need frequent feedback from their users to tweak what they're doing. [6]
A good growth rate during YC is 5-7% a week. If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing.
The best thing to measure the growth rate of is revenue. The next best, for startups that aren't charging initially, is active users. That's a reasonable proxy for revenue growth because whenever the startup does start trying to make money, their revenues will probably be a constant multiple of active users. [7]
Compass
We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week. The key word here is "just." If they decide to grow at 7% a week and they hit that number, they're successful for that week. There's nothing more they need to do. But if they don't hit it, they've failed in the only thing that mattered, and should be correspondingly alarmed.
Programmers will recognize what we're doing here. We're turning starting a startup into an optimization problem. And anyone who has tried optimizing code knows how wonderfully effective that sort of narrow focus can be. Optimizing code means taking an existing program and changing it to use less of something, usually time or memory. You don't have to think about what the program should do, just make it faster. For most programmers this is very satisfying work. The narrow focus makes it a sort of puzzle, and you're generally surprised how fast you can solve it.
Focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem. You can use that target growth rate to make all your decisions for you; anything that gets you the growth you need is ipso facto right. Should you spend two days at a conference? Should you hire another programmer? Should you focus more on marketing? Should you spend time courting some big customer? Should you add x feature? Whatever gets you your target growth rate. [8]
Judging yourself by weekly growth doesn't mean you can look no more than a week ahead. Once you experience the pain of missing your target one week (it was the only thing that mattered, and you failed at it), you become interested in anything that could spare you such pain in the future. So you'll be willing for example to hire another programmer, who won't contribute to this week's growth but perhaps in a month will have implemented some new feature that will get you more users. But only if (a) the distraction of hiring someone won't make you miss your numbers in the short term, and (b) you're sufficiently worried about whether you can keep hitting your numbers without hiring someone new.
It's not that you don't think about the future, just that you think about it no more than necessary.
In theory this sort of hill-climbing could get a startup into trouble. They could end up on a local maximum. But in practice that never happens. Having to hit a growth number every week forces founders to act, and acting versus not acting is the high bit of succeeding. Nine times out of ten, sitting around strategizing is just a form of procrastination. Whereas founders' intuitions about which hill to climb are usually better than they realize. Plus the maxima in the space of startup ideas are not spiky and isolated. Most fairly good ideas are adjacent to even better ones.
The fascinating thing about optimizing for growth is that it can actually discover startup ideas. You can use the need for growth as a form of evolutionary pressure. If you start out with some initial plan and modify it as necessary to keep hitting, say, 10% weekly growth, you may end up with a quite different company than you meant to start. But anything that grows consistently at 10% a week is almost certainly a better idea than you started with.
There's a parallel here to small businesses. Just as the constraint of being located in a particular neighborhood helps define a bar, the constraint of growing at a certain rate can help define a startup.
You'll generally do best to follow that constraint wherever it leads rather than being influenced by some initial vision, just as a scientist is better off following the truth wherever it leads rather than being influenced by what he wishes were the case. When Richard Feynman said that the imagination of nature was greater than the imagination of man, he meant that if you just keep following the truth you'll discover cooler things than you could ever have made up. For startups, growth is a constraint much like truth. Every successful startup is at least partly a product of the imagination of growth. [9]
Value
It's hard to find something that grows consistently at several percent a week, but if you do you may have found something surprisingly valuable. If we project forward we see why.
Great Blog Post by Paul Graham
September 2012
A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth.
If you want to start one it's important to understand that. Startups are so hard that you can't be pointed off to the side and hope to succeed. You have to know that growth is what you're after. The good news is, if you get growth, everything else tends to fall into place. Which means you can use growth like a compass to make almost every decision you face.
Redwoods
Let's start with a distinction that should be obvious but is often overlooked: not every newly founded company is a startup. Millions of companies are started every year in the US. Only a tiny fraction are startups. Most are service businesses—restaurants, barbershops, plumbers, and so on. These are not startups, except in a few unusual cases. A barbershop isn't designed to grow fast. Whereas a search engine, for example, is.
When I say startups are designed to grow fast, I mean it in two senses. Partly I mean designed in the sense of intended, because most startups fail. But I also mean startups are different by nature, in the same way a redwood seedling has a different destiny from a bean sprout.
That difference is why there's a distinct word, "startup," for companies designed to grow fast. If all companies were essentially similar, but some through luck or the efforts of their founders ended up growing very fast, we wouldn't need a separate word. We could just talk about super-successful companies and less successful ones. But in fact startups do have a different sort of DNA from other businesses. Google is not just a barbershop whose founders were unusually lucky and hard-working. Google was different from the beginning.
To grow rapidly, you need to make something you can sell to a big market. That's the difference between Google and a barbershop. A barbershop doesn't scale.
For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. Barbershops are doing fine in the (a) department. Almost everyone needs their hair cut. The problem for a barbershop, as for any retail establishment, is (b). A barbershop serves customers in person, and few will travel far for a haircut. And even if they did the barbershop couldn't accomodate them. [1]
Writing software is a great way to solve (b), but you can still end up constrained in (a). If you write software to teach Tibetan to Hungarian speakers, you'll be able to reach most of the people who want it, but there won't be many of them. If you make software to teach English to Chinese speakers, however, you're in startup territory.
Most businesses are tightly constrained in (a) or (b). The distinctive feature of successful startups is that they're not.
Ideas
It might seem that it would always be better to start a startup than an ordinary business. If you're going to start a company, why not start the type with the most potential? The catch is that this is a (fairly) efficient market. If you write software to teach Tibetan to Hungarians, you won't have much competition. If you write software to teach English to Chinese speakers, you'll face ferocious competition, precisely because that's such a larger prize. [2]
The constraints that limit ordinary companies also protect them. That's the tradeoff. If you start a barbershop, you only have to compete with other local barbers. If you start a search engine you have to compete with the whole world.
The most important thing that the constraints on a normal business protect it from is not competition, however, but the difficulty of coming up with new ideas. If you open a bar in a particular neighborhood, as well as limiting your potential and protecting you from competitors, that geographic constraint also helps define your company. Bar + neighborhood is a sufficient idea for a small business. Similarly for companies constrained in (a). Your niche both protects and defines you.
Whereas if you want to start a startup, you're probably going to have to think of something fairly novel. A startup has to make something it can deliver to a large market, and ideas of that type are so valuable that all the obvious ones are already taken.
That space of ideas has been so thoroughly picked over that a startup generally has to work on something everyone else has overlooked. I was going to write that one has to make a conscious effort to find ideas everyone else has overlooked. But that's not how most startups get started. Usually successful startups happen because the founders are sufficiently different from other people that ideas few others can see seem obvious to them. Perhaps later they step back and notice they've found an idea in everyone else's blind spot, and from that point make a deliberate effort to stay there. [3] But at the moment when successful startups get started, much of the innovation is unconscious.
What's different about successful founders is that they can see different problems. It's a particularly good combination both to be good at technology and to face problems that can be solved by it, because technology changes so rapidly that formerly bad ideas often become good without anyone noticing. Steve Wozniak's problem was that he wanted his own computer. That was an unusual problem to have in 1975. But technological change was about to make it a much more common one. Because he not only wanted a computer but knew how to build them, Wozniak was able to make himself one. And the problem he solved for himself became one that Apple solved for millions of people in the coming years. But by the time it was obvious to ordinary people that this was a big market, Apple was already established.
Google has similar origins. Larry Page and Sergey Brin wanted to search the web. But unlike most people they had the technical expertise both to notice that existing search engines were not as good as they could be, and to know how to improve them. Over the next few years their problem became everyone's problem, as the web grew to a size where you didn't have to be a picky search expert to notice the old algorithms weren't good enough. But as happened with Apple, by the time everyone else realized how important search was, Google was entrenched.
That's one connection between startup ideas and technology. Rapid change in one area uncovers big, soluble problems in other areas. Sometimes the changes are advances, and what they change is solubility. That was the kind of change that yielded Apple; advances in chip technology finally let Steve Wozniak design a computer he could afford. But in Google's case the most important change was the growth of the web. What changed there was not solubility but bigness.
The other connection between startups and technology is that startups create new ways of doing things, and new ways of doing things are, in the broader sense of the word, new technology. When a startup both begins with an idea exposed by technological change and makes a product consisting of technology in the narrower sense (what used to be called "high technology"), it's easy to conflate the two. But the two connections are distinct and in principle one could start a startup that was neither driven by technological change, nor whose product consisted of technology except in the broader sense. [4]
Rate
How fast does a company have to grow to be considered a startup? There's no precise answer to that. "Startup" is a pole, not a threshold. Starting one is at first no more than a declaration of one's ambitions. You're committing not just to starting a company, but to starting a fast growing one, and you're thus committing to search for one of the rare ideas of that type. But at first you have no more than commitment. Starting a startup is like being an actor in that respect. "Actor" too is a pole rather than a threshold. At the beginning of his career, an actor is a waiter who goes to auditions. Getting work makes him a successful actor, but he doesn't only become an actor when he's successful.
So the real question is not what growth rate makes a company a startup, but what growth rate successful startups tend to have. For founders that's more than a theoretical question, because it's equivalent to asking if they're on the right path.
The growth of a successful startup usually has three phases:
- There's an initial period of slow or no growth while the startup tries to figure out what it's doing.
- As the startup figures out how to make something lots of people want and how to reach those people, there's a period of rapid growth.
- Eventually a successful startup will grow into a big company. Growth will slow, partly due to internal limits and partly because the company is starting to bump up against the limits of the markets it serves. [5]
The slope is the company's growth rate. If there's one number every founder should always know, it's the company's growth rate. That's the measure of a startup. If you don't know that number, you don't even know if you're doing well or badly.
When I first meet founders and ask what their growth rate is, sometimes they tell me "we get about a hundred new customers a month." That's not a rate. What matters is not the absolute number of new customers, but the ratio of new customers to existing ones. If you're really getting a constant number of new customers every month, you're in trouble, because that means your growth rate is decreasing.
During Y Combinator we measure growth rate per week, partly because there is so little time before Demo Day, and partly because startups early on need frequent feedback from their users to tweak what they're doing. [6]
A good growth rate during YC is 5-7% a week. If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing.
The best thing to measure the growth rate of is revenue. The next best, for startups that aren't charging initially, is active users. That's a reasonable proxy for revenue growth because whenever the startup does start trying to make money, their revenues will probably be a constant multiple of active users. [7]
Compass
We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week. The key word here is "just." If they decide to grow at 7% a week and they hit that number, they're successful for that week. There's nothing more they need to do. But if they don't hit it, they've failed in the only thing that mattered, and should be correspondingly alarmed.
Programmers will recognize what we're doing here. We're turning starting a startup into an optimization problem. And anyone who has tried optimizing code knows how wonderfully effective that sort of narrow focus can be. Optimizing code means taking an existing program and changing it to use less of something, usually time or memory. You don't have to think about what the program should do, just make it faster. For most programmers this is very satisfying work. The narrow focus makes it a sort of puzzle, and you're generally surprised how fast you can solve it.
Focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem. You can use that target growth rate to make all your decisions for you; anything that gets you the growth you need is ipso facto right. Should you spend two days at a conference? Should you hire another programmer? Should you focus more on marketing? Should you spend time courting some big customer? Should you add x feature? Whatever gets you your target growth rate. [8]
Judging yourself by weekly growth doesn't mean you can look no more than a week ahead. Once you experience the pain of missing your target one week (it was the only thing that mattered, and you failed at it), you become interested in anything that could spare you such pain in the future. So you'll be willing for example to hire another programmer, who won't contribute to this week's growth but perhaps in a month will have implemented some new feature that will get you more users. But only if (a) the distraction of hiring someone won't make you miss your numbers in the short term, and (b) you're sufficiently worried about whether you can keep hitting your numbers without hiring someone new.
It's not that you don't think about the future, just that you think about it no more than necessary.
In theory this sort of hill-climbing could get a startup into trouble. They could end up on a local maximum. But in practice that never happens. Having to hit a growth number every week forces founders to act, and acting versus not acting is the high bit of succeeding. Nine times out of ten, sitting around strategizing is just a form of procrastination. Whereas founders' intuitions about which hill to climb are usually better than they realize. Plus the maxima in the space of startup ideas are not spiky and isolated. Most fairly good ideas are adjacent to even better ones.
The fascinating thing about optimizing for growth is that it can actually discover startup ideas. You can use the need for growth as a form of evolutionary pressure. If you start out with some initial plan and modify it as necessary to keep hitting, say, 10% weekly growth, you may end up with a quite different company than you meant to start. But anything that grows consistently at 10% a week is almost certainly a better idea than you started with.
There's a parallel here to small businesses. Just as the constraint of being located in a particular neighborhood helps define a bar, the constraint of growing at a certain rate can help define a startup.
You'll generally do best to follow that constraint wherever it leads rather than being influenced by some initial vision, just as a scientist is better off following the truth wherever it leads rather than being influenced by what he wishes were the case. When Richard Feynman said that the imagination of nature was greater than the imagination of man, he meant that if you just keep following the truth you'll discover cooler things than you could ever have made up. For startups, growth is a constraint much like truth. Every successful startup is at least partly a product of the imagination of growth. [9]
Value
It's hard to find something that grows consistently at several percent a week, but if you do you may have found something surprisingly valuable. If we project forward we see why.
| weekly | yearly |
| 1% | 1.7x |
| 2% | 2.8x |
| 5% | 12.6x |
| 7% | 33.7x |
| 10% | 142.0x |
A company that grows at 1% a week will grow 1.7x a year, whereas a company that grows at 5% a week will grow 12.6x. A company making $1000 a month (a typical number early in YC) and growing at 1% a week will 4 years later be making $7900 a month, which is less than a good programmer makes in salary in Silicon Valley. A startup that grows at 5% a week will in 4 years be making $25 million a month. [10]
Our ancestors must rarely have encountered cases of exponential growth, because our intutitions are no guide here. What happens to fast growing startups tends to surprise even the founders.
Small variations in growth rate produce qualitatively different outcomes. That's why there's a separate word for startups, and why startups do things that ordinary companies don't, like raising money and getting acquired. And, strangely enough, it's also why they fail so frequently.
Considering how valuable a successful startup can become, anyone familiar with the concept of expected value would be surprised if the failure rate weren't high. If a successful startup could make a founder $100 million, then even if the chance of succeeding were only 1%, the expected value of starting one would be $1 million. And the probability of a group of sufficiently smart and determined founders succeeding on that scale might be significantly over 1%. For the right people—e.g. the young Bill Gates—the probability might be 20% or even 50%. So it's not surprising that so many want to take a shot at it. In an efficient market, the number of failed startups should be proportionate to the size of the successes. And since the latter is huge the former should be too.[11]
What this means is that at any given time, the great majority of startups will be working on something that's never going to go anywhere, and yet glorifying their doomed efforts with the grandiose title of "startup."
This doesn't bother me. It's the same with other high-beta vocations, like being an actor or a novelist. I've long since gotten used to it. But it seems to bother a lot of people, particularly those who've started ordinary businesses. Many are annoyed that these so-called startups get all the attention, when hardly any of them will amount to anything.
If they stepped back and looked at the whole picture they might be less indignant. The mistake they're making is that by basing their opinions on anecdotal evidence they're implicitly judging by the median rather than the average. If you judge by the median startup, the whole concept of a startup seems like a fraud. You have to invent a bubble to explain why founders want to start them or investors want to fund them. But it's a mistake to use the median in a domain with so much variation. If you look at the average outcome rather than the median, you can understand why investors like them, and why, if they aren't median people, it's a rational choice for founders to start them.
Deals
Why do investors like startups so much? Why are they so hot to invest in photo-sharing apps, rather than solid money-making businesses? Not only for the obvious reason.
The test of any investment is the ratio of return to risk. Startups pass that test because although they're appallingly risky, the returns when they do succeed are so high. But that's not the only reason investors like startups. An ordinary slower-growing business might have just as good a ratio of return to risk, if both were lower. So why are VCs interested only in high-growth companies? The reason is that they get paid by getting their capital back, ideally after the startup IPOs, or failing that when it's acquired.
The other way to get returns from an investment is in the form of dividends. Why isn't there a parallel VC industry that invests in ordinary companies in return for a percentage of their profits? Because it's too easy for people who control a private company to funnel its revenues to themselves (e.g. by buying overpriced components from a supplier they control) while making it look like the company is making little profit. Anyone who invested in private companies in return for dividends would have to pay close attention to their books.
The reason VCs like to invest in startups is not simply the returns, but also because such investments are so easy to oversee. The founders can't enrich themselves without also enriching the investors. [12]
Why do founders want to take the VCs' money? Growth, again. The constraint between good ideas and growth operates in both directions. It's not merely that you need a scalable idea to grow. If you have such an idea and don't grow fast enough, competitors will. Growing too slowly is particularly dangerous in a business with network effects, which the best startups usually have to some degree.
Almost every company needs some amount of funding to get started. But startups often raise money even when they are or could be profitable. It might seem foolish to sell stock in a profitable company for less than you think it will later be worth, but it's no more foolish than buying insurance. Fundamentally that's how the most successful startups view fundraising. They could grow the company on its own revenues, but the extra money and help supplied by VCs will let them grow even faster. Raising money lets you choose your growth rate.
Money to grow faster is always at the command of the most successful startups, because the VCs need them more than they need the VCs. A profitable startup could if it wanted just grow on its own revenues. Growing slower might be slightly dangerous, but chances are it wouldn't kill them. Whereas VCs need to invest in startups, and in particular the most successful startups, or they'll be out of business. Which means that any sufficiently promising startup will be offered money on terms they'd be crazy to refuse. And yet because of the scale of the successes in the startup business, VCs can still make money from such investments. You'd have to be crazy to believe your company was going to become as valuable as a high growth rate can make it, but some do.
Pretty much every successful startup will get acquisition offers too. Why? What is it about startups that makes other companies want to buy them? [13]
Fundamentally the same thing that makes everyone else want the stock of successful startups: a rapidly growing company is valuable. It's a good thing eBay bought Paypal, for example, because Paypal is now responsible for 43% of their sales and probably more of their growth.
But acquirers have an additional reason to want startups. A rapidly growing company is not merely valuable, but dangerous. If it keeps expanding, it might expand into the acquirer's own territory. Most product acquisitions have some component of fear. Even if an acquirer isn't threatened by the startup itself, they might be alarmed at the thought of what a competitor could do with it. And because startups are in this sense doubly valuable to acquirers, acquirers will often pay more than an ordinary investor would. [14]
Understand
The combination of founders, investors, and acquirers forms a natural ecosystem. It works so well that those who don't understand it are driven to invent conspiracy theories to explain how neatly things sometimes turn out. Just as our ancestors did to explain the apparently too neat workings of the natural world. But there is no secret cabal making it all work.
If you start from the mistaken assumption that Instagram was worthless, you have to invent a secret boss to force Mark Zuckerberg to buy it. To anyone who knows Mark Zuckerberg that is the reductio ad absurdum of the initial assumption. The reason he bought Instagram was that it was valuable and dangerous, and what made it so was growth.
If you want to understand startups, understand growth. Growth drives everything in this world. Growth is why startups usually work on technology—because ideas for fast growing companies are so rare that the best way to find new ones is to discover those recently made viable by change, and technology is the best source of rapid change. Growth is why it's a rational choice economically for so many founders to try starting a startup: growth makes the successful companies so valuable that the expected value is high even though the risk is too. Growth is why VCs want to invest in startups: not just because the returns are high but also because generating returns from capital gains is easier to manage than generating returns from dividends. Growth explains why the most successful startups take VC money even if they don't need to: it lets them choose their growth rate. And growth explains why successful startups almost invariably get acquisition offers. To acquirers a fast-growing company is not merely valuable but dangerous too.
It's not just that if you want to succeed in some domain, you have to understand the forces driving it. Understanding growth is what starting a startup consists of. What you're really doing (and to the dismay of some observers, all you're really doing) when you start a startup is committing to solve a harder type of problem than ordinary businesses do. You're committing to search for one of the rare ideas that generates rapid growth. Because these ideas are so valuable, finding one is hard. The startup is the embodiment of your discoveries so far. Starting a startup is thus very much like deciding to be a research scientist: you're not committing to solve any specific problem; you don't know for sure which problems are soluble; but you're committing to try to discover something no one knew before. A startup founder is in effect an economic research scientist. Most don't discover anything that remarkable, but some discover relativity.
Notes
[1] Strictly speaking it's not lots of customers you need but a big market, meaning a high product of number of customers times how much they'll pay. But it's dangerous to have too few customers even if they pay a lot, or the power that individual customers have over you could turn you into a de facto consulting firm. So whatever market you're in, you'll usually do best to err on the side of making the broadest type of product for it.
[2] One year at Startup School David Heinemeier Hansson encouraged programmers who wanted to start businesses to use a restaurant as a model. What he meant, I believe, is that it's fine to start software companies constrained in (a) in the same way a restaurant is constrained in (b). I agree. Most people should not try to start startups.
[3] That sort of stepping back is one of the things we focus on at Y Combinator. It's common for founders to have discovered something intuitively without understanding all its implications. That's probably true of the biggest discoveries in any field.
[4] I got it wrong in "How to Make Wealth" when I said that a startup was a small company that takes on a hard technical problem. That is the most common recipe but not the only one.
[5] In principle companies aren't limited by the size of the markets they serve, because they could just expand into new markets. But there seem to be limits on the ability of big companies to do that. Which means the slowdown that comes from bumping up against the limits of one's markets is ultimately just another way in which internal limits are expressed.
It may be that some of these limits could be overcome by changing the shape of the organization—specifically by sharding it.
[6] This is, obviously, only for startups that have already launched or can launch during YC. A startup building a new database will probably not do that. On the other hand, launching something small and then using growth rate as evolutionary pressure is such a valuable technique that any company that could start this way probably should.
[7] If the startup is taking the Facebook/Twitter route and building something they hope will be very popular but from which they don't yet have a definite plan to make money, the growth rate has to be higher, even though it's a proxy for revenue growth, because such companies need huge numbers of users to succeed at all.
Beware too of the edge case where something spreads rapidly but the churn is high as well, so that you have good net growth till you run through all the potential users, at which point it suddenly stops.
[8] Within YC when we say it's ipso facto right to do whatever gets you growth, it's implicit that this excludes trickery like buying users for more than their lifetime value, counting users as active when they're really not, bleeding out invites at a regularly increasing rate to manufacture a perfect growth curve, etc. Even if you were able to fool investors with such tricks, you'd ultimately be hurting yourself, because you're throwing off your own compass.
[9] Which is why it's such a dangerous mistake to believe that successful startups are simply the embodiment of some brilliant initial idea. What you're looking for initially is not so much a great idea as an idea that could evolve into a great one. The danger is that promising ideas are not merely blurry versions of great ones. They're often different in kind, because the early adopters you evolve the idea upon have different needs from the rest of the market. For example, the idea that evolves into Facebook isn't merely a subset of Facebook; the idea that evolves into Facebook is a site for Harvard undergrads.
[10] What if a company grew at 1.7x a year for a really long time? Could it not grow just as big as any successful startup? In principle yes, of course. If our hypothetical company making $1000 a month grew at 1% a week for 19 years, it would grow as big as a company growing at 5% a week for 4 years. But while such trajectories may be common in, say, real estate development, you don't see them much in the technology business. In technology, companies that grow slowly tend not to grow as big.
[11] Any expected value calculation varies from person to person depending on their utility function for money. I.e. the first million is worth more to most people than subsequent millions. How much more depends on the person. For founders who are younger or more ambitious the utility function is flatter. Which is probably part of the reason the founders of the most successful startups of all tend to be on the young side.
[12] More precisely, this is the case in the biggest winners, which is where all the returns come from. A startup founder could pull the same trick of enriching himself at the company's expense by selling them overpriced components. But it wouldn't be worth it for the founders of Google to do that. Only founders of failing startups would even be tempted, but those are writeoffs from the VCs' point of view anyway.
[13] Acquisitions fall into two categories: those where the acquirer wants the business, and those where the acquirer just wants the employees. The latter type is sometimes called an HR acquisition. Though nominally acquisitions and sometimes on a scale that has a significant effect on the expected value calculation for potential founders, HR acquisitions are viewed by acquirers as more akin to hiring bonuses.
[14] I once explained this to some founders who had recently arrived from Russia. They found it novel that if you threatened a company they'd pay a premium for you. "In Russia they just kill you," they said, and they were only partly joking. Economically, the fact that established companies can't simply eliminate new competitors may be one of the most valuable aspects of the rule of law. And so to the extent we see incumbents suppressing competitors via regulations or patent suits, we should worry, not because it's a departure from the rule of law per se but from what the rule of law is aiming at.
Thanks to Sam Altman, Marc Andreessen, Paul Buchheit, Patrick Collison, Jessica Livingston, Geoff Ralston, and Harj Taggar for reading drafts of this.
Our ancestors must rarely have encountered cases of exponential growth, because our intutitions are no guide here. What happens to fast growing startups tends to surprise even the founders.
Small variations in growth rate produce qualitatively different outcomes. That's why there's a separate word for startups, and why startups do things that ordinary companies don't, like raising money and getting acquired. And, strangely enough, it's also why they fail so frequently.
Considering how valuable a successful startup can become, anyone familiar with the concept of expected value would be surprised if the failure rate weren't high. If a successful startup could make a founder $100 million, then even if the chance of succeeding were only 1%, the expected value of starting one would be $1 million. And the probability of a group of sufficiently smart and determined founders succeeding on that scale might be significantly over 1%. For the right people—e.g. the young Bill Gates—the probability might be 20% or even 50%. So it's not surprising that so many want to take a shot at it. In an efficient market, the number of failed startups should be proportionate to the size of the successes. And since the latter is huge the former should be too.[11]
What this means is that at any given time, the great majority of startups will be working on something that's never going to go anywhere, and yet glorifying their doomed efforts with the grandiose title of "startup."
This doesn't bother me. It's the same with other high-beta vocations, like being an actor or a novelist. I've long since gotten used to it. But it seems to bother a lot of people, particularly those who've started ordinary businesses. Many are annoyed that these so-called startups get all the attention, when hardly any of them will amount to anything.
If they stepped back and looked at the whole picture they might be less indignant. The mistake they're making is that by basing their opinions on anecdotal evidence they're implicitly judging by the median rather than the average. If you judge by the median startup, the whole concept of a startup seems like a fraud. You have to invent a bubble to explain why founders want to start them or investors want to fund them. But it's a mistake to use the median in a domain with so much variation. If you look at the average outcome rather than the median, you can understand why investors like them, and why, if they aren't median people, it's a rational choice for founders to start them.
Deals
Why do investors like startups so much? Why are they so hot to invest in photo-sharing apps, rather than solid money-making businesses? Not only for the obvious reason.
The test of any investment is the ratio of return to risk. Startups pass that test because although they're appallingly risky, the returns when they do succeed are so high. But that's not the only reason investors like startups. An ordinary slower-growing business might have just as good a ratio of return to risk, if both were lower. So why are VCs interested only in high-growth companies? The reason is that they get paid by getting their capital back, ideally after the startup IPOs, or failing that when it's acquired.
The other way to get returns from an investment is in the form of dividends. Why isn't there a parallel VC industry that invests in ordinary companies in return for a percentage of their profits? Because it's too easy for people who control a private company to funnel its revenues to themselves (e.g. by buying overpriced components from a supplier they control) while making it look like the company is making little profit. Anyone who invested in private companies in return for dividends would have to pay close attention to their books.
The reason VCs like to invest in startups is not simply the returns, but also because such investments are so easy to oversee. The founders can't enrich themselves without also enriching the investors. [12]
Why do founders want to take the VCs' money? Growth, again. The constraint between good ideas and growth operates in both directions. It's not merely that you need a scalable idea to grow. If you have such an idea and don't grow fast enough, competitors will. Growing too slowly is particularly dangerous in a business with network effects, which the best startups usually have to some degree.
Almost every company needs some amount of funding to get started. But startups often raise money even when they are or could be profitable. It might seem foolish to sell stock in a profitable company for less than you think it will later be worth, but it's no more foolish than buying insurance. Fundamentally that's how the most successful startups view fundraising. They could grow the company on its own revenues, but the extra money and help supplied by VCs will let them grow even faster. Raising money lets you choose your growth rate.
Money to grow faster is always at the command of the most successful startups, because the VCs need them more than they need the VCs. A profitable startup could if it wanted just grow on its own revenues. Growing slower might be slightly dangerous, but chances are it wouldn't kill them. Whereas VCs need to invest in startups, and in particular the most successful startups, or they'll be out of business. Which means that any sufficiently promising startup will be offered money on terms they'd be crazy to refuse. And yet because of the scale of the successes in the startup business, VCs can still make money from such investments. You'd have to be crazy to believe your company was going to become as valuable as a high growth rate can make it, but some do.
Pretty much every successful startup will get acquisition offers too. Why? What is it about startups that makes other companies want to buy them? [13]
Fundamentally the same thing that makes everyone else want the stock of successful startups: a rapidly growing company is valuable. It's a good thing eBay bought Paypal, for example, because Paypal is now responsible for 43% of their sales and probably more of their growth.
But acquirers have an additional reason to want startups. A rapidly growing company is not merely valuable, but dangerous. If it keeps expanding, it might expand into the acquirer's own territory. Most product acquisitions have some component of fear. Even if an acquirer isn't threatened by the startup itself, they might be alarmed at the thought of what a competitor could do with it. And because startups are in this sense doubly valuable to acquirers, acquirers will often pay more than an ordinary investor would. [14]
Understand
The combination of founders, investors, and acquirers forms a natural ecosystem. It works so well that those who don't understand it are driven to invent conspiracy theories to explain how neatly things sometimes turn out. Just as our ancestors did to explain the apparently too neat workings of the natural world. But there is no secret cabal making it all work.
If you start from the mistaken assumption that Instagram was worthless, you have to invent a secret boss to force Mark Zuckerberg to buy it. To anyone who knows Mark Zuckerberg that is the reductio ad absurdum of the initial assumption. The reason he bought Instagram was that it was valuable and dangerous, and what made it so was growth.
If you want to understand startups, understand growth. Growth drives everything in this world. Growth is why startups usually work on technology—because ideas for fast growing companies are so rare that the best way to find new ones is to discover those recently made viable by change, and technology is the best source of rapid change. Growth is why it's a rational choice economically for so many founders to try starting a startup: growth makes the successful companies so valuable that the expected value is high even though the risk is too. Growth is why VCs want to invest in startups: not just because the returns are high but also because generating returns from capital gains is easier to manage than generating returns from dividends. Growth explains why the most successful startups take VC money even if they don't need to: it lets them choose their growth rate. And growth explains why successful startups almost invariably get acquisition offers. To acquirers a fast-growing company is not merely valuable but dangerous too.
It's not just that if you want to succeed in some domain, you have to understand the forces driving it. Understanding growth is what starting a startup consists of. What you're really doing (and to the dismay of some observers, all you're really doing) when you start a startup is committing to solve a harder type of problem than ordinary businesses do. You're committing to search for one of the rare ideas that generates rapid growth. Because these ideas are so valuable, finding one is hard. The startup is the embodiment of your discoveries so far. Starting a startup is thus very much like deciding to be a research scientist: you're not committing to solve any specific problem; you don't know for sure which problems are soluble; but you're committing to try to discover something no one knew before. A startup founder is in effect an economic research scientist. Most don't discover anything that remarkable, but some discover relativity.
Notes
[1] Strictly speaking it's not lots of customers you need but a big market, meaning a high product of number of customers times how much they'll pay. But it's dangerous to have too few customers even if they pay a lot, or the power that individual customers have over you could turn you into a de facto consulting firm. So whatever market you're in, you'll usually do best to err on the side of making the broadest type of product for it.
[2] One year at Startup School David Heinemeier Hansson encouraged programmers who wanted to start businesses to use a restaurant as a model. What he meant, I believe, is that it's fine to start software companies constrained in (a) in the same way a restaurant is constrained in (b). I agree. Most people should not try to start startups.
[3] That sort of stepping back is one of the things we focus on at Y Combinator. It's common for founders to have discovered something intuitively without understanding all its implications. That's probably true of the biggest discoveries in any field.
[4] I got it wrong in "How to Make Wealth" when I said that a startup was a small company that takes on a hard technical problem. That is the most common recipe but not the only one.
[5] In principle companies aren't limited by the size of the markets they serve, because they could just expand into new markets. But there seem to be limits on the ability of big companies to do that. Which means the slowdown that comes from bumping up against the limits of one's markets is ultimately just another way in which internal limits are expressed.
It may be that some of these limits could be overcome by changing the shape of the organization—specifically by sharding it.
[6] This is, obviously, only for startups that have already launched or can launch during YC. A startup building a new database will probably not do that. On the other hand, launching something small and then using growth rate as evolutionary pressure is such a valuable technique that any company that could start this way probably should.
[7] If the startup is taking the Facebook/Twitter route and building something they hope will be very popular but from which they don't yet have a definite plan to make money, the growth rate has to be higher, even though it's a proxy for revenue growth, because such companies need huge numbers of users to succeed at all.
Beware too of the edge case where something spreads rapidly but the churn is high as well, so that you have good net growth till you run through all the potential users, at which point it suddenly stops.
[8] Within YC when we say it's ipso facto right to do whatever gets you growth, it's implicit that this excludes trickery like buying users for more than their lifetime value, counting users as active when they're really not, bleeding out invites at a regularly increasing rate to manufacture a perfect growth curve, etc. Even if you were able to fool investors with such tricks, you'd ultimately be hurting yourself, because you're throwing off your own compass.
[9] Which is why it's such a dangerous mistake to believe that successful startups are simply the embodiment of some brilliant initial idea. What you're looking for initially is not so much a great idea as an idea that could evolve into a great one. The danger is that promising ideas are not merely blurry versions of great ones. They're often different in kind, because the early adopters you evolve the idea upon have different needs from the rest of the market. For example, the idea that evolves into Facebook isn't merely a subset of Facebook; the idea that evolves into Facebook is a site for Harvard undergrads.
[10] What if a company grew at 1.7x a year for a really long time? Could it not grow just as big as any successful startup? In principle yes, of course. If our hypothetical company making $1000 a month grew at 1% a week for 19 years, it would grow as big as a company growing at 5% a week for 4 years. But while such trajectories may be common in, say, real estate development, you don't see them much in the technology business. In technology, companies that grow slowly tend not to grow as big.
[11] Any expected value calculation varies from person to person depending on their utility function for money. I.e. the first million is worth more to most people than subsequent millions. How much more depends on the person. For founders who are younger or more ambitious the utility function is flatter. Which is probably part of the reason the founders of the most successful startups of all tend to be on the young side.
[12] More precisely, this is the case in the biggest winners, which is where all the returns come from. A startup founder could pull the same trick of enriching himself at the company's expense by selling them overpriced components. But it wouldn't be worth it for the founders of Google to do that. Only founders of failing startups would even be tempted, but those are writeoffs from the VCs' point of view anyway.
[13] Acquisitions fall into two categories: those where the acquirer wants the business, and those where the acquirer just wants the employees. The latter type is sometimes called an HR acquisition. Though nominally acquisitions and sometimes on a scale that has a significant effect on the expected value calculation for potential founders, HR acquisitions are viewed by acquirers as more akin to hiring bonuses.
[14] I once explained this to some founders who had recently arrived from Russia. They found it novel that if you threatened a company they'd pay a premium for you. "In Russia they just kill you," they said, and they were only partly joking. Economically, the fact that established companies can't simply eliminate new competitors may be one of the most valuable aspects of the rule of law. And so to the extent we see incumbents suppressing competitors via regulations or patent suits, we should worry, not because it's a departure from the rule of law per se but from what the rule of law is aiming at.
Thanks to Sam Altman, Marc Andreessen, Paul Buchheit, Patrick Collison, Jessica Livingston, Geoff Ralston, and Harj Taggar for reading drafts of this.
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