How to Start a Startup as a Student

so it seems more and more students in the University want to be doing startups in the future and I'm making the video that I basically wish I had when I was in college for wanting to do a startup and I think a natural question is why you should listen to me and I think one reason is that I did a pretty famous accelerator called why culminated and then things like kind of went South which I explained in the previous video and I also have done my own fair share of startups and projects since graduating two and a half years ago and I think it's pretty beneficial to learn from someone who's a few years ahead of you and also someone who is like 10 20 30 years ahead of you and then take both of the advice into

account so to begin with what even is a startup and I think a lot of people confuse startups for being small businesses but not all small businesses all startups for example your local restaurant and your local hotel is not a startup because they can't expand quickly I think the whole idea of a startup is basically something that can grow and expand very quickly in the future for example your local restaurant if they had a huge sge in demand they wouldn't be able to like meet all the demand because it would take many like months or even years to make an expansion to the like restaurant whereas many online related businesses for example like software products or apps or startups because they can expand very quickly to fulfill any demand so for example if an app got 100,000 downloads overnight they can just spin up more servers to handle that demand in like a few seconds or minutes and by the nature of this being able to scale very quickly it also means you can make a lot of money very quickly as well if you play your cards right now the whole definition is kind of vague and there are many other things you would counter stups for example SpaceX even though they do mostly hardware and like rockets and stuff there still a startup but generally startup is just any early stage company that's capable of massive growth in the future by whatever systems they have in place or the fact they're working on something which is massively scalable for example like a coding related products like an app or software but of course you'll meet many like biotech startups and like Hardware related startups that exist in the physical world so I think there are three main things when it comes to startups first Rel who you work with then it's what you work on and then it's like the Venture Capital set of things as well so to begin with who you work

with is perh the most important thing when it comes to doing a startup many Venture capitalists and many people say they'd rather invest in a good set of founders with a bad idea than invest in a bad set of founders with a good idea because good Founders for a startup can always change their idea to a better idea whereas bad Founders even if they change their idea to an even better idea they may not be able to get it to work so I think that if you're in college or university one of the highest value things that you can be doing is finding someone who you can potentially work with in the future on a business or startup because the university is such a massive concentration of people who are like interested in one particular thing in your local department and just like small people in general and you have many chances of just generally meeting new people free Friends free societies just randomly free classes and so forth that it's a really optimal environment for like finding people to work with compared to like the outside real world instead but of course you hear of cases where people met their co-founders outside of University so it's not the be all on end all so for example like the YouTube Founders met when working at PayPal together like back in 2005 2004 or something and there are many people who meet online through platforms such as like YC Coan matching but I think generally if you're in University you can take advantage of the fact that you are in University to meet a lot of people who you can potentially work with and it may not be the case that you work together now it may just become friends now but you know they're really talented at such and such a thing and then in the future you may work together like 5 10 years after graduating because usually when people have business ideas like 5 10 years later after graduating they try to hit up like some older College friends or something being like hey I had this idea for a thing do you want to work on it together because College friends and University friends are usually the first people I come to mind when starting a new project or a new business or something so I think it's a good idea to try and find Opportunities to work with people throughout University so for example that could be like a class project that you have for a class coming up or it could be like an event that you're planning for a society that you run or like any society like Administration stuff itself or it could be even working on an actual business idea with a friend and usually working together on a business related idea is like the best way of telling if you actually work well together because there's a whole like money aspects of the business that you don't find in the other things that I mentioned and this could be something much more simple like selling merchandise on your University campus with your friend or was starting like a merch brand or something or it could be something which is like more startup related for example building an app or a software and trying to sell out instead so I think there are three things you should generally look for when working together with someone firstly if you have complimentary skills secondly if they're smart and determined and thirdly of course if you work well together so firstly for complimentary skills like ideally they have skills that you don't and you have skills that they don't and the most common example you see of this is one person is quite good at the technical side of things for example like programming coding doing Hardware stuff and the other person is good at like the sales set of things and that could be generally pitching clients like making content which advertise a product like sending cold emails like getting on meetings with potential customers and like all that kind of thing and I think a pretty common bad example that you see is two salese who are really good at like selling things but they don't actually have a product or just anything to sell so they try and like recruit someone like tacal monkey who would like make the product for them and then give them like a few hundred or something and I think that strategy generally just doesn't work in the long term it's usually better that you have either two technical people and one technical person trains themselves in like selling stuff or you have one technical person and you have one sales related person but of course you can have like three or four people in a startup and you can have multiple technical people sales related people as well but I think Beyond maybe four people there's too many coordination problems and then one person just kind of gets away with not doing any work the second part is that if they're smart and determined and I think the determination aspect of matter is more than the smartness because I'm sure you've met many people who are really smart but they just don't really have many big goals or they don't dream of like becoming rich like working really hard and making a new product but there are many people in the world who are very determined and may not be that smart but they were still able to make something of themselves because they had the determination or they had this fire inside of them that really pushed them to like do something amazing and the final aspect is that if you can just work well together with the person sure there are many great people and you can have many great friends but in may just be the case that there are many friends that you can't work with well and there's no point trying to force yourself to work with a friend or someone who you know you can't work well with because often it's just better to preserve the friendship as it is like many of my friends are many that I would never work with on any kind of company because I just know that better as a friend instead of like a friend and a business partner I think another advantage of working with people as well is that person may have different life experiences than you or like have a different understanding of the world than you and you can find like an idea that you both can work on well together so for example I knew of two people one person did like programming computer science like related stuff and another person did law and the person who did law like um he intended a law firm and then he noticed all these different problems inside the law firm and then he got with the computer science related person to start like a AI lawyer like two or four lawyers I'm not really sure how it works but apparently they're still doing really well and the computer science person like the guy who programs only was able to find out about this problem because he had a friend who did Law related stuff otherwise he would never have heard about this problem so what this means is that you can usually rely on the experiences of your friends to help with any business ideas for what you should be working on but I'll talk more about that in the next section so like ultimately it's worth working with a few different people during college or university on potential startups or ideas and then you will generally have a sense of who you can work well with in the future and it may be the case that you start something successful in college or university or you graduate and then you start something successful with someone who you knew that you worked well with during college or university and that might not be immediately after graduating it might be a few years after graduating but you still had them in mind because you remember working well together or it might be the case that you just really work well together something takes off during your summer holidays or something during college and then you decide to drop out because you made a bunch of money now as for what

you should be working on there are a few things to bear in mind here so the first thing is fandom Market fit and this is a term that you hear thrown a lot around and it basically means like how well are you and your friends or the founders of the company or at like the problem that you or the product that you're making so for example like if you are making a product for like real estate developers and you don't know of any real estate developers or none of you are real estate developers then you you're not going to make a good product for them like ideally you are suffering from the problem that you're making a product for or like if you're making like a research AI tool or something but neither of you have done any good research before then you might not even know where to stop and you might just make like a support tool so you might make like a very average tool but you can't make it like an amazing user experience or you can't make the product like a top 5 10 1% product because neither of you have experience in the thing that you're trying to do and I think one pretty Pro prominent case of this that I heard about during y combinator was one of the group Partners mentioned there were fre people who applied they all three of them had physics phds and they applied with an idea for a dating app and they were accepted but they were like the uh YC group Partners were like you should not be working on a dating app because all three of you have phds in physics so you should be working on something related to physics instead you have no advantage in making a dating app compared to basically like most other people and I think there was another pretty famous YC case of where two like people made a stripe like payment process for Brazil as a previous startup then they applied to YC and then they were saying like oh we're going to do something like related to Virtual Reality mixed reality whatever and they tried to do that for like a couple months and it didn't really go anywhere and then they were just like let's start something else in the payment space instead because we're already very familiar with that space and we know we can make something work there so ultimately it's about what you and your friends have an advantage in so for example if one of your friends who you're working with did law and he like worked at a law firm as an intern for one summer and he noticed all these problems at law firm's face and had like a pretty deep understanding of the problem because he faced it himself when working there then you can make a product around that and then you can use the previous connection that you had to be able to sell back to Lo like the two people that I mentioned before did but of course if you don't have any problems yourself you can ask friends and family members for problems I think one of the biggest problems with being a student is that you don't have much exposure to the real world so you don't have an understanding for what kind of problems people face and businesses face and I think if you do have experience in the real world for internships or are doing an actual job then you usually have a better sense of what kind of problems that people face and then you can make a better product around it and then sell it back to those people but most students don't have that kind of experience so you can potentially ask like relatives or uncles or like your parents or something who may have experience in like a particular sector so for example like your uncle or Aunt may be doing something in real estate and she always complains about like this particular problem or some software that's like 15 years old in real estate that everyone is using and it just hasn't been updated and there all these problems whatever like you can work with her and like ask a bunch of questions and use her as like a trial like demo user and then build a product around that and then basically use her to help you figure out if the product is good and then use her to help you like distribute the product but I think it's still better if you and your co-founders have seen the problem yourself or even face the problem yourself so for example you may have like done an intership at a marketing company once Sumer and you realize that many marketing companies struggle to identify like influencers on Tik Tok who are able to convert very highly in terms of sales for whatever products because there are so many influencers out there that they're just not able to like process all the data and they have to do tons of manual work and if you solve this problem firsthand or you had to do it firsthand when doing an internship for the company you kind of realiz that there's some kind of like software solution that you could be making here and if you're a student and you're spending all your time studying then you may not necessarily have encountered this problem before because you just don't have the exposure to real world and if you made a solution then you can sell it back to the company that you intent for and then sell it to all the competitors and everything else as well or like let's say you're a physics student and want some of you internet like a Quantum Computing lab or something and you realize that they're really bad at like storing all the experimental data and querying then you made like a few hacky Solutions or scripts that help if you do this much more simply and easily and manage the data then you could turn this into startup and then sell it back to lab or sell it back to like other labs as well so yeah generally I think work experience and internships at real companies is useful in the sense that you get exposure to real world problems that companies and people are facing that they would pay for a solution for now the next part of

what you're working on is about idea validation so a validating idea basically means to make sure that it works and usually startups are usually working on a new idea or like are one of the first people working on particular idea because most of the ideas out there that are already very well validated there's just not much room for like Market domination or like huge growth in those ideas so for example like if you go on the Apple App Store or like the Google Play Store and you search like habit tracking app apps you will see that there are hundreds of habit tracking apps and each of them may be making like a few hundreds or like thousands of dollars the top ones may be making like tens of thousands of dollars but there are no there's no one big app that's dominating the market so if you wanted to work an idea that you knew was going to make some money then you would just copy whatever people are doing or you would make whatever ideas that already out there so for example you can make like a habit tracking app or some kind of photo editing accounting software or something because you know those ideas are already out there they may validated businesses have been running on that model or like have been making money from those apps and software like an accounting firm is a validated idea if you started an accounting firm which is not a startup then you would make some money because cuz you know that all of accounting firms have business coming in but it just means that you won't make as much money because you have so much competition out there already from all of accounting firms basically what it means is that the more validated an idea is the likelihood is that there's much more competition in that particular idea now this is necessarily isn't a bad thing some people want to work on idea straight away that makes some money and then work on a more risky idea that may or may not make money in the future and while some people even do is that they just look in the app store they see what apps are already out there even though they won't be able to make like thousands tens of thousands from a particular app they just like make like 10 20 different apps which are all small tools and then they would make many thousands of dollars a month from like $100 coming in from one app $300 coming in from another app 700 from another app and so forth now the other aspect of this is like ideas that are new and are still being validated but they show like huge signs of success so for example you may have noticed like there are many more like AI programming coding ands recently and that's because like cursor AI which is like an a I think it's the most popular AI programming editor they reached like $100 million in like annual reording revenue after 2 years and now like 10 20 more have popped up because they realize that this is a market that they can also compete for since it's been kind of validated but it hasn't been around for so long and comparatively compared to other markets or Industries there are much fewer competitors here which Venture capitalists usually like because they usually want whatever company they invest in to like dominate the whole Market in a particular sector and then the final aspect of this is ideas that have not been validated yet so for example there may only be one or two other companies doing that thing and you're not really sure if they're making money or if they're successful at the thing that they're doing if the idea hasn't been validated then there're usually signs that you can take over that market and make much more money in the long term but it also means that there's a much larger risk of you not making any money at all in that particular Market cuz that idea has not been validated and if you're approaching an idea that hasn't been validated at all and you see other companies aren't doing the thing or there are very few companies doing the thing and you're not even sure if they're making money or not doing the thing then there are very cheap tests that you can do to validate that CL idea so for example two of the people in my yated batch they had made like a sleeping app so originally they worked on like influencer related stuff but they realized they couldn't make that successful because neither of them were influencers and they couldn't they didn't understand what influencers and online creators wanted so then they realized that there's a problem that they both suffer with which is insomnia so they thought about making a whole app around this but of course making an app can take many weeks and months to do especially if you wanted to be a good app and you're not really sure if you have that time and you're not really sure if people would pay for it to make in so what they did instead is they set up like a website or a landing page where they claimed they were selling a like PDF guide about how to beat insomnia because they basically wanted to test if people would pay for a solution so you would go on their website and then you would see like a buy button and it explains what the guide is about and what it has and stuff like that and then you would entertain your credit card details but the thing is that guide didn't actually exist because they set up the website very quickly because they wanted to see if people would pay for it so what would happen is you would put in your credit card details and then it would automatically refund you the payment and they just wanted to see if people were willing to buy this like insomnia guide and the way they knew this was an idea or like a very validated idea was because they got an email from someone who's really angry and they were like man I tried to buy your PDF guide like five times but the system keeps rejecting my payment and of course I was rejecting the payment because they said set it up to like reject refund the payment because a guy didn't actually exist and then they were like oh if there's one person who has this problem and they're really desperate to like buy a solution for this because they tried putting in their credit card details five different times then so likely there are many thousands or tens of thousands of other people in the world just like this person so what they did is that they then wrote the PDF guide and then they got like a couple like hundreds of dollars thousands of dollars in sales from just selling the PDF guide and then they were like oh this idea is pretty validated like people are willing to pay for a solution to insomnia let's turn whatever we wrote in the guide into an app so to summarize they set up a like simple landing page claimed they were selling a product which was a PDF guide they didn't write it they had the system automatically rejected to refund the payment they just basically wanted to see if people would pay to help them validate the idea and then once they realize people were paying they wrote the guide they sold like a couple hundreds or thousands of dollars in that I can't remember the exact amount and then they turned everything into an app which they call like the DU lingo for sleep instead and after launching the app they said 9 months after launch they reached $1 million in annual incurring revenue and this is a pretty common tactic that people use to save a lot of time on ideas which they are not sure would generate money or basically validating ideas very quickly now there was another pretty like common case or like one case I remember from my badge of YC where two people started like a AI event planning company so for example like if you worked at a real company before or like did an internship you would know that many companies hold annual Retreats where the team get together in a particular location and then like basically have a retreat and the planning for this Retreat can be very cumbersome because you have to find a venue you have to arrange transport you have to like find like catering team or like staff you have to like arrange AC is you may have to like have things to deliver to V you and everything like this it's basically a very long incumbent process that can take up a lot of time within the company just for the annual company Retreat and since one of the founders had noticed this problem at a previous company that she worked with she was like what if an AI could just do all of this so what they did is they set up a website where they claimed to have made an AI events planner but in reality there was no AI it was just one of the founders doing things manually in the background themselves but then they noticed many companies were willing to pay money for this and were actually like giving money even though it was done manually and not using AI that they decided to make like the actual AI which does all the event planning so basically the technique even though it sounds a little bit unethical cuz you don't actually have a thing and you're claiming to have the thing I guess as long as you're not scamming people out of their money in the sense you're giving them refunds then like maybe it's fine but basically it's a very good way of like validating ideas where you claim to have the thing you test if people would be willing to give money especially strangers because like people getting out their wallets and giving money is the best form of validation and if they're willing to give money then either you refund them the money or you like put it on hold or you like ex say that you're experiencing delays difficulties and then you would quickly make the product and then you would give them the product and this is basically how you validat an idea which you're not sure really would work in a few hours like you don't have to make the AI events plan it if you're not sure it makes money you claim to have made it you like try and sell it see that people actually interested in it and they're willing to pay money for it and then you would make deliver on like the thing and this approach is pretty Universal like you see when it comes to games for example like people pre-order games because they want to Signal interest to the game developers that people are willing to like buy this game like if a game developer opened up their pre-orders for a game and then got zero pre-orders then they would just cancel the game or you also see this on Kickstarter as well where they have a prototype for the product and then you pay money won't get it for like another year or two years but if you're using this approach don't scam people don't take money and then just don't deliver on anything that you promised it's merely a way to gauge interest that people have in your product and whether they're willing to give money to it to begin with and the added Advantage is that it can just be done very quickly like you can set up the website where you're accepting like payments or pre-orders or whatever in basically an afternoon now

the final aspect I want to mention is topit ideas many college students face this problem where they come up with the same idea they like thousands or tens of thousands that people have thought about before a pretty common example of this is like oh man it's like so hard for me and my friends to like a range of time to hang out like what if there was an app for this and then they make an app and then they realize they get almost no downloads like no one is using the app because the idea fundamentally doesn't work I think if you have an idea for a product then you should ask yourself like does like they exist and if not why not like it's very unlikely that you will have been the first person to think about that idea another common example is like man like in my city or in my town there are like no good restaurants what if there was an app to help you find better restaurants but the reality is like these ideas usually have an underlying core reason for why they're not working for example the events planning app people don't want to like message or like open up like a calendar or something to like plan which day to meet their friends or something because it's just not a common thing that people do they'd rather message on group chats like back and forth and then arrange of time that way or they'd rather call their friends and arrange of time or in the case of the restaurant example like there's a physical like amount of restaurants that are in a city and if there's no good app that will help you find the good restaurants in your city it just means that there aren't good restaurants in your city like making a new app won't suddenly make more restaurants and pay out of nowhere so often when working on idea you should be asking a question of why now like why should be working on this idea right now instead of like 5 years ago or 10 years ago in the case of an appp which helps groups of friends arrange a time to meet or something like that could have been done 5 years ago 10 years ago 15 years ago it's like what technology has changed now that makes it possible or like makes this idea like better for example in the sense of like the AI events planning app like AI has gotten really good in the last couple years that now it can like potentially plan it whole events as well and that idea would not have been possible like 5 years ago or 10 years ago cuz AI just wasn't that good then or it may be the case that some kind of law has changed in your country or something that makes something that previously was legal now legal and that's also used as a common why now and this is a question a lot of venture capitalists ask if you're asking for investment they basically asking like why is it a good idea to work on this idea at this moment in time compared to like 5 10 years ago and I think this is a question you should be asking yourself as well this is why you see so many AI related companies and startups these days because that is a why now like it's just gotten so good that they're now able to make ideas that were previously impossible now possible now the final

big aspect of startups is VCH Capital why exactly do they need it usually because like the idea won't make a lot of money in the short term but it has a potential to make a lot of money in the long term either by taking over the market or just that it requires a lot of upfront capital for example like many Hardware or like hard tech related startups like require a lot of like inventory and like machinery and stuff that would not be possible and so far you can only make a prototype of like a very simplified version of the product or it's the fact that you have a product it's growing but you want it to grow faster and you need to explore like other like acquisition channels for users and like pay influencers and like run paid ads and do various other things that you would decide to accept some amount of money up front and exchange for giving away equity in your company to the Venture capitalists now you can even get Venture Capital through startup accelerators such as Y cator where you don't even need to have a product you just need to have some friends or like a group of Founders and idea and you apply with just that but it's usually even better if you have a product or you have some kind of prototype because it's more convincing that you can actually make the thing that you said you were going to make this is generally true for other Venture capitalists as well the most convincing thing you can do when you're reaching out to them is to show that you have a product and that can be in the form of a video where you show like a screen recording of the product running locally on your computer or like a screen recording or a YouTube video of the Prototype or something generally the mistake a lot of people make is that they have an idea they don't have a product they just have like an IDE and like a bunch of fers and then they try and get V capital and in many cases it does work but most of the time it doesn't because the most convincing thing for them is to have revenue from the idea and of course the more Revenue that you're making with your idea the more Venture capitalists will be interested and also depending on how fast your Revenue has grown that would also be very interesting for them so for example like if you went from $100 one month to $500 the next month to 5,000 the following month to like 30,000 like a month later like that would be very convincing for a lot of V capitalists if you're reaching out to them but don't mistake getting VCH Capital to be like the end goal of startups the end goal is to make a product that people use and love and like actually want like there are many startups that raise like tens or even hundreds of millions of dollars in V capital and you think that they're going to be successful but often times they just completely flop or fail for whatever reason sometimes it's because like their convicts are fraud other times it's because no one actually wanted the product other times they just had a bunch of problems internally other times they were spending way too much money on like paid acquisition that their numbers just weren't sustainable and they couldn't raise a number around there are a lot of cases where even companies that have raised vure Capital just don't end up succeeding now you might be wondering where does the money even go like a company raised $2 million where is that money going by far the biggest contribution is salaries because they're expanding and like wanting to hire more people and they get Venture Capital so they can hire more people like in the short term for example like with Adventure Capital they may be able to hire like 10 people one year from now because revenue is still coming in but they have to wait until enough Revenue comes in or they can hire in 10 people now is and grow much faster F than they would have otherwise done and that leads me onto the other thing which is growth a lot of VC money goes to growth and that can be in the form of like paid ads like paying influencers marketing campaigns and so forth basically to acquire as many users as possible companies can end up spending like hundreds of thousands of dollars on ads because the thing with ads is that the targeting is very fine often times if you just put out any old promotion out there then you might be targeting the wrong people whereas many ad networks and AD systems are designed such that it will slowly identify which people like are most likely to convert to your ad because what happens is when you're running an ad you set up an event and that could be like an app download or app install or like signing up for an account or like buying a membership and then it runs the ad for you send like the data back to Facebook ads Network or like Google's ads Network or something of this event happening and then Google Facebook or whatever will find more people who are likely to do that event which is maybe purchase a product and then you send more data back and then it becomes more accurate and it just increases its accuracy over time but to get really accurate results with ads you would have to spend like thousands or even tens of thousands of dollars on them and that's where a lot of venture capital money ends up going and then of course there are other things such as equipment office bace food employee benefits and everything else now let's say you tried to do a

startup and it didn't work out for whatever reason for example you made a product it grew a little bit and then it just stopped growing afterwards or something or it didn't work out with your co-founder or something else it usually depends on how much time that you spend doing a startup if you spend like a year or two years doing it then you're still likely to get hired by like another company or another startup and often startups like to hire people who have previously been startup Founders because they understand the whole like idea of a startup and they don't have many biases in favor of like if you hire someone who worked at like a big corporate company for 20 years into a startup it might like disrupt or destroy the culture in the startup so usually people like to hire people who were previously startup fers because they have more of traits they're looking for which is being really obsessed with a good product like not wasting time in like a random meetings generally them being younger and them having more energy to like make things happen and like do work for longer hours and then generally just being like a good cultural fit so for example like many startups who have raised a lot of money and are now growing quite quickly they would often rather high like a college kid who tried to do startups in college and many of them didn't work out but was still very talented over someone who has been working at Google for 20 years because someone may not necessarily have like a well-rounded experience of building a good product and they just spent 20 years doing whatever the product manager at Google told them to do I heard of some cases where like a startup high as a Google engineer or something and then they immediately break the production environment or they break the product because at least at Google like they have so many God rails in place to prevent one developer or one engineer breaking the whole product whereas many startups don't have that God rail in place because they just don't have as many employees there's a quote from an old Paul gra essay that I like and I think it's still relevant now even though it was written many years ago and it says that even if your startup does tank you won't harm your prospects with employers to make sure I asked some of my friends who work for big companies I asked managers at Yahoo Google Amazon Cisco and Microsoft how they'd feel about two candidates both 24 with equal ability one tried to do a startup that tanked and never spent 2 years since College working as a web developer for a big company every one of them responded they would rather hire the guy who tried to start his own company zard Naim who's in charge of engineering at Yahoo said I actually put more value on the guy with a failed startup and you can quote me so there you have it once get hired by Yahoo start your own company but yeah hopefully that video was useful to some of you and you can find much more useful resources on the Y combinated YouTube channel of course there's a lot in the whole startup ecosystem and environment and a lot of things that you can learn so I wouldn't recommend spending like 100% of your time like learning just sitting down because you might just procrastinate starting all together so I would recommend maybe doing a 5050 split or you spend a half of your time learning and you spend half your time doing and as like things ramp up and you need to do more things then you would spend more and more of your time doing like 70 80% of your time and then like 20 30% of your time still learning and just getting better anyway that's all for this video I'll see you in the next one bye