(This essay is derived from a talk at the Harvard Computer Society. It's not meant to be complete; I skipped some topics I've already written about in 'How to Make Wealth,' in Hackers & Painters.)
You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.