Mistakes That Could Make Your Startup Fail

Every tech entrepreneur’s dream is to found the newest and hottest startup in town but what you find out is that most of these startups lose steam and traction before the year runs out and with the dreams of the founders. So what mistakes could make your startup fail?

Paul Graham, co-founder of Y Combinator has shared 14 mistakes that could make your startup fail.

In a sense there’s just one mistake that kills startups: not making something users want. If you make something users want, you’ll probably be fine, whatever else you do or don’t do. And if you don’t make something users want, then you’re dead, whatever else you do or don’t do. So really this is a list of 18 things that cause startups not to make something users want. Nearly all failure funnels through that.

1. Single Founder

Have you ever noticed how few successful startups were founded by just one person? Even companies you think of as having one founder, like Oracle, usually turn out to have more. It seems unlikely this is a coincidence.

What’s wrong with having one founder? To start with, it’s a vote of no confidence. It probably means the founder couldn’t talk any of his friends into starting the company with him. That’s pretty alarming, because his friends are the ones who know him best.

But even if the founder’s friends were all wrong and the company is a good bet, he’s still at a disadvantage. Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.

The last one might be the most important. The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws. Each thinks “I can’t let my friends down.” This is one of the most powerful forces in human nature, and it’s missing when there’s just one founder.

2. Bad Location

Startups prosper in some places and not others. Silicon Valley dominates, then Boston, then Seattle, Austin, Denver, and New York. After that there’s not much. Even in New York the number of startups per capita is probably a 20th of what it is in Silicon Valley. In towns like Houston and Chicago and Detroit it’s too small to measure.

Why is the falloff so sharp? Probably for the same reason it is in other industries. What’s the sixth largest fashion center in the US? The sixth largest center for oil, or finance, or publishing? Whatever they are they’re probably so far from the top that it would be misleading even to call them centers.

It’s an interesting question why cities become startup hubs, but the reason startups prosper in them is probably the same as it is for any industry: that’s where the experts are. Standards are higher; people are more sympathetic to what you’re doing; the kind of people you want to hire want to live there; supporting industries are there; the people you run into in chance meetings are in the same business. Who knows exactly how these factors combine to boost startups in Silicon Valley and squish them in Detroit, but it’s clear they do from the number of startups per capita in each.

3. Marginal Niche

Most of the groups that apply to Y Combinator suffer from a common problem: choosing a small, obscure niche in the hope of avoiding competition.

If you watch little kids playing sports, you notice that below a certain age they’re afraid of the ball. When the ball comes near them their instinct is to avoid it. I didn’t make a lot of catches as an eight year old outfielder, because whenever a fly ball came my way, I used to close my eyes and hold my glove up more for protection than in the hope of catching it.

Choosing a marginal project is the startup equivalent of my eight year old strategy for dealing with fly balls. If you make anything good, you’re going to have competitors, so you may as well face that. You can only avoid competition by avoiding good ideas.

I think this shrinking from big problems is mostly unconscious. It’s not that people think of grand ideas but decide to pursue smaller ones because they seem safer. Your unconscious won’t even let you think of grand ideas. So the solution may be to think about ideas without involving yourself. What would be a great idea for someone else to do as a startup?

4. Derivative Idea

Many of the applications we get are imitations of some existing company. That’s one source of ideas, but not the best. If you look at the origins of successful startups, few were started in imitation of some other startup. Where did they get their ideas? Usually from some specific, unsolved problem the founders identified.

Our startup made software for making online stores. When we started it, there wasn’t any; the few sites you could order from were hand-made at great expense by web consultants. We knew that if online shopping ever took off, these sites would have to be generated by software, so we wrote some. Pretty straightforward.

It seems like the best problems to solve are ones that affect you personally. Apple happened because Steve Wozniak wanted a computer, Google because Larry and Sergey couldn’t find stuff online, Hotmail because Sabeer Bhatia and Jack Smith couldn’t exchange email at work.

So instead of copying the Facebook, with some variation that the Facebook rightly ignored, look for ideas from the other direction. Instead of starting from companies and working back to the problems they solved, look for problems and imagine the company that might solve them. What do people complain about? What do you wish there was?

The 18 Mistakes That Kill Startups |Paul Graham

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