The Launch Pad

For seed-stage investors, a convertible note is attractive because of its simplicity—there is no wrangling over the valuation of the company.

He says that at the beginning of the summer the Start Fund’s backers, Yuri Milner and Ron Conway, had made $150,000 investments in startups that in almost every case were undeserving.

“Launch Fast” is Paul Graham’s mantra. Move from the idea to a minimally functional product as quickly as possible. Only by getting a product into the hands of customers, even if the product is only a prototype, is it possible to know what customers want.1 Launching fast is how to make something people want.

The essential nature of a startup is not that it is a new business but that it is a new business set up to grow very quickly—in Paul Graham’s phrasing, it must be “designed for scale.”1 Thus, a programmer who decides to open a consulting business to help clients build Web sites is starting a small business, not a startup.

They offered a $150,000 investment to every one of the forty-four members of YC’s winter 2011 batch. The venture capital world had never seen blanket approval of so many companies in one fell swoop.

The session—or “batch,” which can refer to the session as well as to the group—culminates in Demo Day, at which the teams have the opportunity to make a pitch to several hundred investors.

Paul Graham is fond of a Silicon Valley saying: “You make what you measure.”6 The act of measuring some aspect of performance leads to caring about that one thing and lavishing your attention on it, which, in turn, leads to improving it. He suggests that startups set a specific weekly target for growth, which can be measured in terms of revenue or

Graham has his own term but it is a clunker: a “quantum of utility,” which means, in his words, a product that would make the world “one incremental bit better.”

What he most needed to learn—“to think outside the box, live the consequences of my