Jessica Livingston - What's Different about "Unicorns"

Hi everyone! I can't see you, but I'm so excited to see you. Um, this is actually my first time back in the Bay Area in more than a year. Um, I've been living in England for the past year with my family, and I just could not miss this day. So here I am, back for 24 hours, jet lag and all! So hopefully I can deliver this, it's okay, in one piece.

Um, before I get started, I just would love to take a moment to thank the women who've recently come forward, um, so bravely on the record to speak out about the sexual harassment they've faced working in Silicon Valley. Um, I just cannot thank them enough. They're my heroes. Um, hopefully their actions will cause more women to speak up and help put an end to the discrimination and the harassment that we as women can face working in the startup community. So one more round of applause! So, so awesome!

All right, where am I here? All right, here we go. So last year, if you were here, you'll remember that I spoke about all the problems that can arise in a startup and how to avoid them. And to be honest, I think last year's talk was the best general startup advice I could give you. Uh, so if you haven't read it, please go to this link and read it. Even if you have read it, it's worth a reread because these are the type of problems that can get you even when you think you're already watching out for them. So there's the link.

Uh, last year I ended by saying that I want there to be more women founders of the big companies, um, of the so-called unicorns. And these are the founders who make the most influential role models, and role models are what we need most if you want to encourage more women to start their own companies. Um, in recent years, there's been an increase in the number of women who are starting startups and in the number of women who've raised significant seed and series A rounds, and this is good.

Uh, but now we've got to focus on the next target. We need to have more women who are founding billion-dollar startups. So that's what I'm going to talk about today—what it takes to start a startup that's not merely successful but is massively successful. Um, and I'm not saying everyone has to do this; you don't have to start a startup. And if you do, you don't have to start a Google. But if you do want to start a Google, what does it take? What's the difference between a successful startup and a massively successful startup?

Fortunately, I've seen enough of both types up close that I can see patterns of differences. So I've made a list of things that I think are different about the unicorns, and there are nine of them. I want to get this one out of the way from the very start. Um, in addition to having everything else that they need, the unicorns are lucky.

And one of the most important kinds of luck is timing. The most successful founders have the right idea at the right time, and you have less control over that than you might think, actually, because the best ideas are not deliberate; they tend to grow organically out of the founders' lives. Uh, however, while the most successful founders are all lucky, they're not merely lucky. It's never like they have this great idea and then boom, a few years later they're a billionaire. Far, far from that!

One of the most noticeable differences between founders of the super successful startups and the moderately successful startups is their motives. And in particular, the founders of the super successful startups never are in it mainly to get rich or to seem cool. They're always fanatically interested in what the company is doing. Incidentally, it's perfectly fine to start a startup mainly for the money, but, uh, unless your motives change throughout the course of it, it probably won't wind up being one of the big ones.

There are multiple reasons why startups do better when the founders are truly interested in the idea. Um, they work harder because they love the work, and their enthusiasm is infectious. They think longer term, and they're much harder for another company to capture with an acquisition offer because they don't actually want to quit.

So this one is going to sound really obvious. Um, to be a huge startup, you have to have a huge market. You have to make something that a lot of people will pay for or that people will pay a lot for. Um, and this is one place luck actually has a very big effect because market sizes are impossible to predict.

Uh, for example, the Airbnbs didn't know how many people would want to stay in other people's homes. Um, all they knew was that enough would to make it an idea that was worth working on. Um, the founders of most successful startups never realize early on how big they're going to get. Uh, so our advice at Y Combinator is not even to try to hit a big market early on.

Uh, since you can't predict these things, it's better just to work on something you yourself want and then hope that there are lots more people like you. When you describe the biggest startups, most all of them are doing something very basic.

Uh, Google is how you find information. Facebook is where your friends are. Uber gives you rides. Airbnb gives you somewhere to sleep. I mean, these are all things you could explain in a few words to a 5-year-old. Um, however, don't use this as a test for what to work on because ideas often start out less general.

Um, at first, Facebook wasn't where everyone's friends were; they were where a couple thousand Harvard students were. A site for a couple thousand students at one college doesn't sound like a very promising idea, does it? Um, it may seem promising now because we all know how the story turned out, um, but at the time it did not.

Um, almost all the really big startup ideas seemed dubious at first. Um, I know exactly how Airbnb's idea seemed at first because I was one of the people whose job it was to judge it, and I didn't think much of it at the time, to be perfectly honest. Um, and it's not just that these ideas don't seem as big at first as they eventually turn out to be; they seem to most people like bad ideas.

Um, you need to be a certain type of person who can work on one of these bad ideas that eventually turns into a good one. You need to be independent-minded; you cannot care what other people think. Um, it's now kind of part of the conventional picture of a successful founder to be a maverick, and that part of the conventional picture is accurate.

I really, I can't think of one that I would describe as a conformist. You also have to be ambitious. Um, because what happens with these initially unpromising ideas is that they blossom into terrifyingly big ones. You start a site for college students, and pretty soon you realize you could sign up the whole world if you wanted to.

Um, and at this point, most people's reaction is fear. Um, signing up the whole world seems like a lot of work, and it also seems like a valuable prize, and you have to fight to win those. Um, the fear of big ideas prevents most people from even realizing they could start, uh, you know, a site for college students and turn that into a site for the whole world.

But a few people are more excited than afraid when this happens. Another thing I noticed about the founders of the really huge startups is that I would not want to stand between something they wanted and them. Um, all 100% of them have exceptional, exceptional drive. But it's not always straightforward to tell how driven someone is.

Um, drive can be suppressed when someone else has authority over you, like in most schools or in a job. And in these situations, people who are really driven may even read as less promising than people who are merely obedient. So not only is it hard for me to tell how driven someone is, people often can't even tell themselves.

Um, you can tell after they start a startup, though. Um, no one has authority over you in a startup. Most people find the authority vacuum uncomfortable, but a few people expand into it, and those few people think this is what life is supposed to be like.

Drive by itself is not enough, though. You have to be driven to work on this particular company. In all the really huge startups, the company is at least one of the founders' life's work, so they'd never willingly be acquired, for example.

Uh, if you sell your life's work, then what are you going to do? Early on, starting a startup is all about the product, but that changes as a startup gets really, really big. A founder who wants to keep running the company has to become a manager. You don't have to have management ability initially; there's plenty of empirical evidence to show that you can learn this on the job.

Um, but you have to be able to learn it, and you probably even have to like it. Designing cool products and managing people are really different things. Um, most people who like building dislike the idea of being a manager; probably know some people like that.

Uh, it's a rare person who can be great at both, but you have to be if you want to create one of the really big startups. Those are the nine things, as far as I can tell, that are the differences between startups that are merely successful and the ones that become really big.

But they're not just a list. Uh, when you put them all together, they make a story of how a unicorn happens. The founders work on something their experience shows them that the world needs. It wouldn't seem like a promising idea to most people, but the founders work on it anyway, partly because they understand the promise of the idea a little bit better and partly just because they think it's cool.

Um, they work on the idea, and they realize they become even bigger than they had realized. Um, instead of shrinking from this realization, they embrace it eagerly, and they realize this is what they want to do with their lives. And they're so committed to the company that they're willing to morph themselves into whatever the company needs.

There's a lot of variety in startups, but this is the most common path for the really big ones. So remember, you don't have to start a startup, and if you do, it doesn't have to be a unicorn. But if you do, this is probably what it's going to look like: an unpromising idea that blossoms into a frighteningly big one, and the driven founders who see the opportunity and run with it.

And I'm hoping that there are some of you in this audience who hear this description and think to themselves, "Oh my gosh, it's like she's describing me." Um, the people on the path to becoming huge don't usually realize it themselves early on, but I'm hoping if I can encourage even a few of you to keep going, then when you're successful, your example will encourage more new women to start their own companies.

And yes, this is a very long-term plan, but after all, it's my life's work. So, so thank you!