diff --git a/README.md b/README.md
index ceb114f..fc4cf66 100644
--- a/README.md
+++ b/README.md
@@ -70,14 +70,14 @@ We regularly run competitions with clear due dates but for beginners we will alw
 
 ### Setup
 
-Bootstrap a project with Popcorn skill scaffolding and a submission template. You can overwrite existing files with `--force`.
+Bootstrap a project with Popcorn skill scaffolding and a submission template.
 
 ```bash
-# Create project skill scaffolding + submission.py
+# Create a project folder with skill scaffolding + submission.py
 popcorn setup
 ```
 
-This will create a new agent skill based on the [templates](templates/setup) and add it to your `.claude/skills` or `.codex/skills` directory.
+This will create a new folder named after the selected problem (e.g. `softmax/`), containing a `submission.py` template and agent skills in `.claude/skills` and `.codex/skills`. If a folder with that name already exists, a `-N` suffix is appended (e.g. `softmax-1/`).
 
 ### Submit
 
diff --git a/docs/helion-hackathon.md b/docs/helion-hackathon.md
index 5986ad0..40c9f7b 100644
--- a/docs/helion-hackathon.md
+++ b/docs/helion-hackathon.md
@@ -35,7 +35,7 @@ popcorn setup
 # Select "Helion Kernel Challenge", then pick a problem and GPU
 ```
 
-`popcorn setup` fetches the latest problems from reference-kernels, downloads the submission template with `#!POPCORN` directives pre-filled, and scaffolds agent skills for Codex/Claude Code.
+`popcorn setup` fetches the latest problems from reference-kernels, creates a project folder named after the selected problem (e.g. `causal_conv1d_py/`), downloads the submission template with `#!POPCORN` directives pre-filled, and scaffolds agent skills for Codex/Claude Code. If a folder with that name already exists, a `-N` suffix is appended (e.g. `causal_conv1d_py-1/`).
 
 Alternatively, you can clone the full reference-kernels repo to browse all problems locally:
 
diff --git a/src/cmd/setup.rs b/src/cmd/setup.rs
index eb6c892..06e490b 100644
--- a/src/cmd/setup.rs
+++ b/src/cmd/setup.rs
@@ -262,15 +262,28 @@ pub async fn run_setup() -> Result<()> {
     )
     .await?;
 
-    // Write scaffolding files
-    let popcorn_dir = cwd.join(".popcorn");
+    // Create a unique project folder for this kernel
+    let project_dir = unique_folder_name(&cwd, &chosen_problem.directory);
+    fs::create_dir_all(&project_dir).with_context(|| {
+        format!(
+            "Failed to create project directory at {}",
+            project_dir.to_string_lossy()
+        )
+    })?;
+    println!(
+        "\nCreated project folder: {}",
+        relative_display(&cwd, &project_dir)
+    );
+
+    // Write scaffolding files into the project folder
+    let popcorn_dir = project_dir.join(".popcorn");
     let skill_dir = popcorn_dir.join("skills").join(SKILL_NAME);
     let skill_path = skill_dir.join("SKILL.md");
     let native_skill_dir = popcorn_dir.join("skills").join(NATIVE_SKILL_NAME);
     let native_skill_path = native_skill_dir.join("SKILL.md");
     let manifest_path = popcorn_dir.join("setup.json");
-    let submission_path = cwd.join(SUBMISSION_FILENAME);
-    let agents_path = cwd.join("AGENTS.md");
+    let submission_path = project_dir.join(SUBMISSION_FILENAME);
+    let agents_path = project_dir.join("AGENTS.md");
 
     fs::create_dir_all(&skill_dir).with_context(|| {
         format!(
@@ -313,11 +326,12 @@ pub async fn run_setup() -> Result<()> {
     let agents_md = build_agents_markdown(&skill_path, &native_skill_path);
     let agents_status = write_text_file(&agents_path, &agents_md, true)?;
 
-    let codex_link_status = create_agent_skill_view(&cwd, "codex", &skill_dir, true)?;
-    let claude_link_status = create_agent_skill_view(&cwd, "claude", &skill_dir, true)?;
-    let codex_native_link_status = create_agent_skill_view(&cwd, "codex", &native_skill_dir, true)?;
+    let codex_link_status = create_agent_skill_view(&project_dir, "codex", &skill_dir, true)?;
+    let claude_link_status = create_agent_skill_view(&project_dir, "claude", &skill_dir, true)?;
+    let codex_native_link_status =
+        create_agent_skill_view(&project_dir, "codex", &native_skill_dir, true)?;
     let claude_native_link_status =
-        create_agent_skill_view(&cwd, "claude", &native_skill_dir, true)?;
+        create_agent_skill_view(&project_dir, "claude", &native_skill_dir, true)?;
 
     let submission_status = write_text_file(&submission_path, &submission_content, true)?;
 
@@ -344,27 +358,39 @@ pub async fn run_setup() -> Result<()> {
     println!(
         "{} {}",
         codex_link_status.label(),
-        relative_display(&cwd, &cwd.join(".codex").join("skills").join(SKILL_NAME))
+        relative_display(
+            &cwd,
+            &project_dir.join(".codex").join("skills").join(SKILL_NAME)
+        )
     );
     println!(
         "{} {}",
         codex_native_link_status.label(),
         relative_display(
             &cwd,
-            &cwd.join(".codex").join("skills").join(NATIVE_SKILL_NAME)
+            &project_dir
+                .join(".codex")
+                .join("skills")
+                .join(NATIVE_SKILL_NAME)
         )
     );
     println!(
         "{} {}",
         claude_link_status.label(),
-        relative_display(&cwd, &cwd.join(".claude").join("skills").join(SKILL_NAME))
+        relative_display(
+            &cwd,
+            &project_dir.join(".claude").join("skills").join(SKILL_NAME)
+        )
     );
     println!(
         "{} {}",
         claude_native_link_status.label(),
         relative_display(
             &cwd,
-            &cwd.join(".claude").join("skills").join(NATIVE_SKILL_NAME)
+            &project_dir
+                .join(".claude")
+                .join("skills")
+                .join(NATIVE_SKILL_NAME)
         )
     );
     println!(
@@ -376,6 +402,21 @@ pub async fn run_setup() -> Result<()> {
     Ok(())
 }
 
+fn unique_folder_name(parent: &Path, base_name: &str) -> PathBuf {
+    let candidate = parent.join(base_name);
+    if !candidate.exists() {
+        return candidate;
+    }
+    let mut n = 1;
+    loop {
+        let candidate = parent.join(format!("{}-{}", base_name, n));
+        if !candidate.exists() {
+            return candidate;
+        }
+        n += 1;
+    }
+}
+
 fn relative_display(cwd: &Path, target: &Path) -> String {
     match target.strip_prefix(cwd) {
         Ok(relative) => relative.to_string_lossy().to_string(),