Paul Graham AI Essay Writer
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How to Start a Successful Business
January 2023
I&#x27;ve been writing for a while about how to start a startup, and I&#x27;ve noticed a pattern in the mistakes founders make. I thought I&#x27;d write a little about what I think is the most common mistake, because it&#x27;s so easy to avoid.<p>The most common mistake founders make is to underestimate the founders. They think they&#x27;re smarter than they are.<p>This is the mistake I made when I started Viaweb. I thought I was smarter than I was. I thought I could build a web application, but what I actually built was a Lisp application that ran on a web server. That was not what I wanted to build. Only when I realized I couldn&#x27;t build what I wanted did I switch to building something I could build: the web.<p>(I was lucky to realize this when I did. I was only a few months from running out of money.)<p>The reason this mistake is so common is that it&#x27;s usually harmless. It&#x27;s usually harmless to overestimate your own abilities. If you think you can do a 10 day project in 7 days, and you&#x27;re right, you save 3 days. If you think you can do a 10 day project in 4 days, and you&#x27;re right, you save 6 days. The difference between 7 days and 4 days is the same as the difference between 4 days and 1 day. [1]<p>Only when you&#x27;re building something new can underestimating your own abilities be harmless. Only then can you be sure you&#x27;re going to hit a point where you realize you can&#x27;t do what you thought you could. And then you&#x27;re in trouble. [2]<p>The reason founders make this mistake is that they&#x27;re optimists. It&#x27;s the nature of founders to overestimate their own abilities. They have to be. If they thought about how hard it would be to start a successful startup, they&#x27;d never do it.<p>But it&#x27;s not just founders who overestimate their own abilities. It&#x27;s everyone. This is a mistake that can only be made by people who are both optimists and trying to do something new.<p>Fortunately, it&#x27;s also a mistake that&#x27;s easy to avoid. The reason founders underestimate their own abilities is that they&#x27;re pessimists. They have to be. Otherwise they wouldn&#x27;t be founders; they&#x27;d be investors. So if you want to avoid this mistake, you have to consciously take on some of the pessimism of a founder. [3]<p>If you want to start a successful startup, you have to be as pessimistic as a founder, but only about yourself. You have to be as pessimistic as a founder about the chances of success, and as optimistic as a founder about your own ability to make it.<p>Notes<p>[1] There is one case where overestimating your abilities can be a good thing: when you&#x27;re doing something you know you can do. Then you can save time by underestimating.<p>[2] The reason this mistake is so dangerous when you&#x27;re building something new is that you&#x27;re forced to make it at exactly the worst time. You&#x27;re forced to realize you can&#x27;t do what you thought you could at exactly the moment when you need to be able to.<p>[3] There are two ways to be pessimistic. You can be pessimistic about the chances of success, or you can be pessimistic about your own ability to achieve it. I&#x27;ve found the latter to be more effective.<p>For example, if you believe you can achieve a 10x improvement over existing solutions, but believe there&#x27;s only a 1% chance you can succeed, you&#x27;re overestimating your own abilities. You should instead believe you can achieve a 10x improvement, but there&#x27;s only a 10% chance you can succeed.<p>In the first case you&#x27;re overestimating your ability to achieve a 10x improvement. In the second you&#x27;re underestimating it. But the second way of being pessimistic leads to the right answer.<p>For example, if you believe there&#x27;s only a 10% chance you can succeed, you should either not start a startup, or only start one as a hobby. But if you believe there&#x27;s only a 10% chance you can achieve a 10x improvement, you should definitely start a startup to try.<p>If you believe there&#x27;s only a 10% chance you can achieve a 10x improvement, you have a 90% chance of failing. But the payoff if you succeed is not merely a 10x improvement. It&#x27;s a 10x improvement multiplied by the percentage of the market you capture. So the expected value of the bet is a 100x improvement in the world. Which is a good bet.<p>(There is a case where overestimating your ability to achieve a 10x improvement is also a good bet: when you&#x27;re so good at what you do that<p>Thanks to John Collison, Patrick Collison, Elon Musk, and Geoff Ralston for reading drafts of this.<p>Upvote this essay
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