Why Startups Die? Source: “18 Mistakes That Kill Startups” by Paul Graham

YC Background

Why Startups Die? 1. Single Founder? Colleagues to brainstorm? Colleagues to talk you out of dumb moves? Colleagues to cheer you when things go wrong Power of “I can’t let my friends down”

Why Startups Die? 2. Bad location? Where chance meeting occur Where the experts are Where standards are higher Where the folks to hire are Where people “understand” Where the money is

Why Startups Die? 3. Marginal niche? If there’s a business, there’s competition! Often an unconscious problem. someone else What’s a “good idea for someone else to do as startup?”

Why Startups Die? 4. Derivative idea? Few successful startups are imitations. Best problems to solve are those we face ourselves Look for problems and imagine ventures that solve them

Why Startups Die? 5. Obstinacy? Hold true to it no matter what setbacks you encounter? Most successful startups end up doing something different than they originally intended Switching to a new idea every week will be equally fatal. Works where the problem is well-defined…. for something like winning an Olympic gold medal, Startups are more like science, … where you need to follow the trail wherever it leads.

Why Startups Die? 6. Hiring Bad Programmers? Business guys often can’t even recognize a good programmer

Why Startups Die? 7. Choosing the Wrong Platform? Difficult decision What do leading university researchers use?

Why Startups Die? 8. Slowness in Launching? Several distinct problems manifest themselves as delays in launching: working too slowly; not truly understanding the problem; fear of having to deal with users; fear of being judged; working on too many different things; excessive perfectionism. Fortunately you can combat all of them by the simple expedient of forcing yourself to launch something fairly quickly. - Paul Graham, Founder, YC Fast Launch: Forces you to actually finish some quantum of work Only by bouncing your idea off users that you fully understand it.

Why Startups Die? 9. Launching Too Early? Minimum to launch? Identify a core that's: useful on its own and something that can be incrementally expanded into the whole project

Why Startups Die? 10. Having No Specific User in Mind? Build something for yourself, or be very empirical!

Why Startups Die? 11. Raising Too Little Money? You have to take enough to get to the next step Advance to a visibly higher level Idea >> working prototype >> launch >> growth

Why Startups Die? 12. Spending Too Much? Lots of $ = Lots of new hiring >> Higher costs / Slower org Only hire people who are either going to write code or go out and get users, because those are the only things you need at first.

Why Startups Die? 13. Raising Too Much Money? Once you take a lot of money it gets harder to change direction. The time required to raise money grows with the amount. Economically, startups are an all-or-nothing game.

Why Startups Die? Pissing off investors by ignoring them is probably less dangerous than caving in to them How hard you have to work on managing investors usually depends on how much money you've taken 14. Poor Investor Management?

Why Startups Die? 15. Sacrificing Users to (Supposed) Profit? It is irresponsible not to think about business models. It's just ten times more irresponsible not to think about the product Making something people want is much harder than making money from it Business models can wait

Why Startups Die? Extracting money out of a business is messy? Just sell “the idea”? No… OK just “license the technology”? Nothing like lots of users to convince an acquirer! 16. Not Wanting to Get Your Hands Dirty?

Why Startups Die? 17. Fights Between Founders Surprisingly common Often related to lack of care in selecting co-founders

Why Startups Die? 18. A Half-Hearted Effort? Starting startups is just like everything else. The biggest mistake you can make is not to try hard enough. To the extent there's a secret to success, it's not to be in denial about that. - Paul Graham, Founder, YC Most common startup failure doesn’t do much of anything Project couple guys started on the side, while working on their day jobs Never got anywhere …was gradually abandoned Don't invest more time… because they know it's a bad investment?