Yesterday, as part of some of its newest programming for startup founders, the startup incubator Y Combinator posted a new interview with its widely revered founder Paul Graham. The apparent idea was for Graham to share some deep thoughts about startups with fellow founder and current YC partner Geoff Ralston, though the two spend much of the (entertaining) interview discussing Graham’s formative career, and his cofounders — one of whom is a famous hacker Robert Morris, who became the first person convicted under the then-new Computer Fraud and Abuse Act.
Much of the advice that Graham did eventually dispense to founders in the audience was interesting to us, however.
Some of what stood out to us was Graham’s views on competition, which can essentially be boiled down to the idea that companies fail owing to poor execution, not because of me-too startups. In fact, said Graham, though companies worry about competitors, YC’s dataset suggests that “maybe one out of 1,900” of its portfolio companies has been killed by a rival that’s tackling the same problem.
Graham also repeated another point that we’ve heard him make in the past, which is that determination is far more important than intelligence when it comes to becoming a successful startup founder. Take away determination bit by bit, and you have “this ineffectual but brilliant person,” said Graham. But subtract out intelligence bit by bit and “eventually you get to some guy who owns a bunch of taxi medallions but he’s still rich. Or [who has] a trash hauling business, or something like that. You can take away a lot of smart.”
Yet our favorite part of the sit-down centered on the audience’s questions. One of these, for example, was a question about how founders deal with the varying commitment levels of their cofounders, which often change over time based on how the company is faring, as well as external events. Graham’s answer was simply for founders to ask themselves: “Would I rather have 30 percent of this [one] person, or 100 percent of another person?” (He said in the case of Morris, he would have taken 10 percent of him over 100 percent of another individual.)
Asked about the right founder DNA, Graham also offered up an unsurprising insight but one we personally hadn’t heard him say before, which is that YC isn’t so crazy about funding people who’ve worked at “certain” large companies for long periods, as it has learned over the years that they aren’t natural founders. He didn’t specify what the tipping point if for YC, but he offered that “if you’ve worked for a large company for 20 years, you might not be a founder, unless you were forced to [stay there] for visa reasons. Because if you were the kind of person who would make a good founder, you wouldn’t be able to stand working for a large company for 20 years.”
Related to this same question, Graham was asked about the trend in Silicon Valley to employ — and fund — ever-younger individuals. It’s clearly a trend that Graham finds objectionable.
Noting that he doesn’t “think on behalf of YC anymore” — not since handing the reins to President Sam Altman in early 2014 — he said YC “better not be [funding high school students], because that would be an evil thing to do, There are plenty of high school students who could start successful startups,” he said, “but they shouldn’t . . . Because if you start a successful startup, like, the footloose and fancy-free days of your life are over. You’re working for that company.”
At this point, Ralson piped in to say that YC has “funded high school students,” adding that it isn’t looking to encourage them but has funded them “only because they are already going” with their companies. That didn’t stop Graham from warning that people who start companies at too young an age are engaging in “premature optimization. When you’re in high school and even in college, you should be figuring out what the options are, not picking one option and running with it . . . it’s good to mess around with a whole bunch of things in your early 20s, whether this messing around takes the form of college or something else.”
It’s not just a matter of losing out on precious time that could be better spent on exploration, he suggested. The real risk in taking the leap too soon is that it could work. “Starting is startup is like catching a dragon by the tail if it works. Be careful at what point you do that.”
You can check out the full interview here.