My takeaways after reading ~20 Paul Graham essays over the past week (Part 1)

Welcome to the fourth edition of the Startup Strategist by Stratupai. Last week we mentioned we were drafting a survey to be released on Tuesday to potentially better understand what you might like to read about, but here it is instead: https://stratupai.beehiiv.com/forms/d3861904-ad2a-41f7-87aeb353483ddac6

I hope you find today’s edition interesting.

Three news stories

1. Electric vehicle charging startup is raising $20M (Tech Crunch)

2. Inflation is closing in on Fed’s target (WSJ)

3. Sam Altman releases new blog post (S. Altman)

Quote of the Day

Meme of the day

My takeaways and interesting quotes I found from reading some Paul Graham essays (Part 1)

Paul Graham is one of the most well-known people in the startup world as the founder of YC, the most successful startup accelerator ever. So, you’ve probably at least heard of him. If not, I hope your introduction to him might help you learn something of use.

One of the reasons for his popularity are the essays he publishes on his blog. According to this website, he has written 188, from 1993 to 2020. Much of them revolve around the topic of startups, but he sometimes writes about life, society, the education system, world events, etc.

Given the breadth of the topics he writes about, my reading of a large number of essays by him, to offer my perspective and curate the points I find most interesting, are inherently going to have some breadth, rather than dealing with one specific issue.

Also, I certainly wouldn’t want this to be a substitute for you reading his essays yourself (if you think they might be worth your time).

I had originally intended this article to be called “I read every Paul Graham essay….”, but I ran out of time, so maybe sometime in the future.

Also, I wanted to take this time to say that these writings on startups are less about me teaching you about startups, and more about myself sharing my learning journey, which may hopefully be of some utility or interest to you. Regardless, let's get into the essays.

Many of the points he makes sound intuitive and obvious in his words, but it can be very easy for many to make decisions that go against the principles he discusses, for the worse.

Investor Herd Dynamics

For example, in Investor Herd Dynamics (August 2013), he says, “The best investors aren’t influenced much by the opinions of other investors. It would only dilute their judgment to average it together with other people’s.” You might be more of a founder-type than an investor, in which case, the same rule can apply.

As I discussed last week, founders tend to congregate around certain areas of the market, thereby increasing founder supply, and reducing the relative ratio of market demand to founder supply, which can be a bad mix as there are often other areas of the market that are underserved. And, the main reason they aren’t being served may be because of social/herd dynamics. Indeed, Graham goes on to state that “…investors are so much influenced by other investors’ opinions…”.

Meaning, most investors will probably underperform, as do most startup founders”.

Trained to talk when we have nothing to say

Coincidentally (if I recall correctly) the day before reading this essay, I was thinking about this same following idea. Quoting Graham from Investor Herd Dynamics, he says, “One of the artifacts of the ways schools are organized is that we all get trained to talk when we have nothing to say. If you have a ten-page paper due, then ten pages you must write, even if you only have one page of ideas.”

This reminds me of a discussion Buffett had about investing (though this can extend to other life decisions). Imagine you are standing to bat in a baseball game. In baseball, you should usually try to take a swing for most balls that come your way.

In investing, however, Buffett says you can (and should) wait for a great pitch (for you). In his world, this would maybe manifest itself as an undervalued business. For a startup founder, it might be a good startup idea.

Customer relations

Basically, he says to treat your customers with respect and kindness. For example, he states, “Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them.”

Another point I found interesting: “Sometimes we advise founders of B2B startups to take over-engagement to an extreme, and to pick a single user and act as if they were consultants building something just for that one user. The initial user serves as the form for your mold; keep tweaking till you fit their needs perfectly, and you'll usually find you've made something other users want too. Even if there aren't many of them, there are probably adjacent territories that have more.”

Indeed, this is likely more applicable to B2B founders (business to business), rather than B2C, as Graham specifies.

On startup ideas

One of the somewhat common things to say in business books/articles nowadays is, “Who not what”. Graham shares this sentiment when saying, “Another trick I've found to protect myself against obsolete beliefs is to focus initially on people rather than ideas. Though the nature of future discoveries is hard to predict, I've found I can predict quite well what sort of people will make them. Good new ideas come from earnest, energetic, independent-minded people.” (emphasis my own)

A recurring theme you may be noticing is the idea of independent-mindedness.

Because this might be getting too long for this newsletter, I’ll share the second part next week, which will also help give me more time to refine the writing.

paulgraham.com

Three Resources (not sponsored):

1. Podcast: Y Combinator

2. Essays: Paul Graham

3. Books: Smart Startups, Catalina D.

Three Ideas of the Week by the Stratupai Generator

1. Fast-charging network for electric vehicles

2. Childcare matchmaking platform

3. Personalized video advertising platform

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