Paul Graham’s Advice to Startups

TechCrunch published a post referencing Paul Graham’s (of Y Combinator) advice on why you should start a company now. He makes some great points. I would argue that Mr. Graham’s advice should apply in any economic environment.

A financial nuclear winter may be upon us, but many startups will still survive and even thrive in this environment. Y Combinator’s Paul Graham argues that, in fact, now may be the best time to launch a startup. In an essay titled “Why to Start a Startup in a Bad Economy,” he notes that “what matters is who you are, not when you do it.”

[From Paul Graham’s Startup Survival Guide For The Coming Nuclear Winter: Be a Cockroach]

One of the downsides to VC funding is that it forces a company to immediately chase exponential growth – ready or not. Often that leads to strange thinking. The metrics become out of touch with reality and revenues (and profit) take a back seat to subscriber growth, or aggregating eyeballs (remember when portals were huge and search was not?).

Listen – VCs are smart. But they want big multiples (if the invest 3MM they way 300MM back – that is their ideal deal). The problem with that is it is really, really rare. You should take Mr. Graham’s advice and focus on managing costs, generating revenues and being sustainable.

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