As a Stanford and Y Combinator alumni, I often have aspiring entrepreneurs ask me “when should I start a startup?” From running a company for over a year and watching hundreds of my peers work through the startup life cycle, here’s a principled answer to this question that is missed by media narratives, but is critical to young entrepreneurs.
The answer to "when should I start a startup?" isn't "when I graduate" or "when I get bored of this big company." If you want to start a successful company, rather than penciling in a calendar date to be a founder, simply always ask yourself:
This sounds simple, but a suprising number of aspiring founders get this question wrong or even fail to ask it seriously at all. The right way to ask this question is to ask it honestly and consistently over your career, not just at one time. Do this long enough, and there may be a period that the planes of your expertise, personal biography and market needs intersect - a point called opportunity. Here's some ways to recognize opportunity.
Opportunity is a wild beast. Unlike the study-apprentice-master progressions of your career, it doesn’t care about your graduation cycle. Nor does it care if you don’t like waiting for it in big companies. Sometimes the best opportunity is with someone else’s idea that’s on a timeline you hadn’t planned for. This timing uncertainty relative to your career is one of the reasons that starting a company is still risky in the era of easy seed funding and aquihires.
Early in your career, it’s unlikely that it will be there will be an opportunity, you simply haven't experienced that many problems yet or developed sufficient skills. This is also the time that the noise will be the strongest, especially among your peers and the Silicon Valley media that loves young founders.
There's one conflated indicator of opportunity, in particular, that gets repeated at places with easy access to VCs, like Stanford:
It’s tempting to think that being able to raise money is a sign that the opportunity bit has flipped. While it’s true raising money is often necessary, it’s not sufficient.
The reason many people confuse the two indicators is that they are used to being validated by schools or bosses that have aligned incentives. Your school cares if the average alumni has an impactful career, your boss’s career depends on whether the majority of his or her reports can reliably code. However, because VCs get to manage a portfolio of investments and can soak up rewards from a single hit without friction, they can afford to be much more speculative in their investments. This is easy to understand in theory but becomes surprisingly hard to grasp when an investor is waving hundreds of thousands or even millions of dollars in front of you.
Resist the urge to find validation in moneyand go back to the fundamentals:
What is founder-market fit? Well, it’s simply the best proxy for product-market fit that one can have pre-product:
To get to product-market fit, you need to build a product in the first six months of officially being a company. Why six months? Well, that’s the maximum attention span that you’ll get from VCs and high-quality team members. Pre-product, though, the best proxy for whether you can do this is whether you have a team that has built products like this or can recruit one.
Probably one of the most common mistakes that startups make is that they overestimate their ability to deliver a product.. In reality, most of your past experience in big companies, internships or degree programs is unlikely to be sufficient to build the first product, even if you were developing software engineering skills then. In a startup, the most important tasks are scoping the MVP, listening to people and influencing people, none of which are developed in entry-level roles. The types of backgrounds that are successful in this role are those who have shipped side projects that got some traction or have written impactful papers.
A product founder is someone who has a track record of shipping real products that look similar to the MVP without squinting .
Sometimes, if the MVP is too large to build with one person, you need not just one product founder, but several, with different areas of expertise. In this case, the MVP is called a team, and the same guidelines apply as above. The first product founder then is someone who has assembled real teams similar to those that will be needed to build the MVP.
To get to product-market fit, you also want to verify quickly whether your scoped MVP meet the user’s needs. The process should take minutes, not days. If you have to build and ship a product in one day to test a need, you’re iterating 1000x slower than a team who has that end user in their office all the time. Having an end user on your team is par for most competitive verticals in 2017.
A market founder is someone who is the end user without squinting. Don’t start without one on your team.
If you have a market founder and a product founder (possibly the same person) then congratulations - you've found an opportunity! You can skip the next section and go read Paul Graham's essays. If you haven't, don’t worry - this is the state most smart people are in, and you can improve your chance at finding opportunities in the future through the expert play.
Pick a subfield that that’s useful to peopleand develop and communicate your expertise. If you communicate well enough, others will start coming to you with their problems, and you’ve created a lifelong idea-generating machine that will continue to work regardless of whether you choose to do a startup or work in a large company.
Note that building expertise won’t necessarily improve all the skills that a product founder needs. For example, recruiting or storytelling skills typically aren’t developed until you reach positions of management later in your career. If you want to develop those quicker, you need to practice entrepreneurship.
The good news is that most skills needed by product founders can be learned. But you won’t learn them through attending lectures in “entrepreneur classes” or going to “entrepreneur clubs,” or even hanging out with VCs (these can be good to socialize and have fun, but don’t pretend they are teaching you entrepreneurship). You will, however, get there by practicing through side projects.
Think about the problems that you or your friends and family have encountered, reach out and convince your initial team to commit their weekends to the project for free. Set real deadlines and ship to real users. It’s fairly easy to do this for simple websites or in a PhD program (where you ship papers to scientists and sometimes the public). If you’re outside of these two environments, this can be challenging, however. The best thing that you can do in those cases is join a fast-growing part of a company and look for product management opportunities when you’re ready.
Ultimately, starting a company is a product choice, not a career. Think about what simple products that people want and you can build, pick one, and ship it. Keep doing this consistently throughout your career and one of these products may grow into a company.