The "animal test" for hiring: call the person's image to mind and imagine the sentence "so-and-so is an animal." If you laugh, they're not. It means someone who takes their work a little too seriously—who crosses from professional into obsessive. You don't need this in big companies, but you need it in a startup.

You can recognize genuinely smart people by their ability to say things like "I don't know," "Maybe you're right," and "I don't understand x well enough." When nerds are unbearable it's usually because they're trying too hard to seem smart—the smarter they are, the less pressure they feel to act smart.

The rule of thumb for apportioning founder stock: when everyone feels they're getting a slightly bad deal—that they're doing more than they should for the amount of stock they have—the stock is optimally apportioned.

In technology, the low end always eats the high end. It's easier to make an inexpensive product more powerful than to make a powerful product cheaper. Sun did it to mainframes, Intel is doing it to Sun, Word did it to Interleaf. If you build the simple, cheap option, you'll find it easier to sell and be in the best position to conquer the rest of the market. It's very dangerous to let anyone fly under you.

Can you think of one restaurant that had really good food and went out of business? Can you think of one startup that had a massively popular product and still failed? In nearly every failed startup, the real problem was that customers didn't want the product—"ran out of funding" is only the immediate cause.

Aim for grad student, not law firm. PG's test of whether a startup understood this was whether they had Aeron chairs. His own offices were in a wooden triple-decker with a claw-footed bathtub and walls stuffed with aluminum foil—and that grad-studenty atmosphere was something they did right without knowing it. Apartments are also better than offices because you want people to come back to work after dinner.

Hiring people is the worst thing a company can do. They're a recurring expense, they cause you to grow out of your space, and worst of all they slow you down—instead of sticking your head in someone's office, eight people have to have a meeting. Don't hire to fill gaps in an a priori org chart; the only reason to hire someone is to do something you'd like to do but can't.

Working through the Forbes 400, after Warren Buffett you don't hit another MBA until #22, Phil Knight. The rulers of the technology business tend to come from technology, not business. If you want to invest two years in something that will help you succeed in business, you'd do better to learn how to hack than get an MBA.