October 18, 2006 at 19:4218 mistakes that make startups die
The well-known programmer and entrepreneur Paul Graham , who created in 1995 the first interactive web application on the Internet (which are now considered Web 2.0 applications), gives tips on creating Internet startups. More precisely, these are warnings about mistakes that do not need to be made. On his website, he published a list of 18 errors that are fatal for startups.
1. Sole Founder
There are few successful startups that would be founded by a single person. After all, one founder - this means that he did not find like-minded people, even from among his friends. Very alarming call.
It’s very difficult for one person to manage a startup. There is no one to consult with, no one to dissuade from stupid decisions, no one to celebrate success with.
2. Poor location.
In each country there are places most suitable for creating IT startups. In America, Silicon Valley comes first, followed by Boston, Seattle, Austin, Denver, and New York. In Russia, the best soil for the IT business, of course, is in Moscow. Even the most successful online startup based in Surgut is almost doomed to extinction.
3. Marginal Niche
Many startups make the same mistake: they choose a too narrow thematic niche in the hope of avoiding competition. This is not a good strategy due to fear. To avoid it, you can advise you to draw up a business plan as if from the outside, without thinking that you personally have to deal with this matter.
4. Derived idea
Many of the startups are imitations of some existing company. If you look at successful startups, you can see that they usually did not copy anyone, but tried to solve a problem that was not yet solved. It is desirable that this problem personally interfere with the founder of the company, that is, that he seeks a solution for himself. Just identify the problem and imagine a hypothetical company that could solve it.
5. Stubbornness
In some areas of human activity, persistence in achieving the intended goal is very important, despite all the difficulties. The foundation of a startup does not apply to such areas of activity. This business is more like a science experiment when you change your behavior based on current results. No need to go in cycles in the initial plan.
6. Bad programmers.
These guys are able to ruin any startup. If the founder of the company is a programmer himself, then he is unlikely to hire bad workers, so this problem will not affect him.
7. Wrong platform
During the first dot-com bubble, many startups crashed because they chose the Windows platform. Or take Java applets that killed almost 100% of startups that chose this technology as a platform.
8. Slow start
As programmers know, the last 10-15% of a project is always the hardest. Because of this, startups often unreasonably delay the launch of a project. This can be disastrous for a business.
9. Premature launch.
Of course, the delay in opening killed a hundred times more startups than in a hurry, but starting too quickly can also be fatal. Here the problem is also that you are risking your reputation. If the first users do not like the system, then others may not come.
10. The lack of a specific user
You cannot create a service that users will like if you do not understand these users. We already mentioned that successful startups are often created primarily for themselves. If you create a service for others, you need to clearly imagine these people.
11. Too small investments
Each startup at the beginning of its development, of course, does not bring any profit. But if you don’t invest enough in him, he will never bring this profit. The more venture capital funds raised, the more time a startup has to succeed. Money means time.
Startups can be advised to start a business by creating a working prototype with minimal investment, and only then attract more serious financial resources.
12. Too high costs
The classic way to spend money is to hire a ton of people. Here we can advise you to pay employees not a salary, but a share of the property. This will reduce costs and increase staff loyalty and diligence.
13. Too big investments.
It is clear that a lack of money leads to sad consequences, but too much finance can have a negative effect. Investors intervene in the company management process and demand a return on investment. In addition, you will lose a lot of time if you decide to start looking for investments in a large amount.
14. Improper investor communication
Of course, investors are constantly interfering in the process of managing the company, although this is not their business. Yes, you can simply ignore them as annoying flies. But if investors get a "golden share", then they de facto become at the helm of the company. This can also lead to the demise of the business.
15. Money instead of users.
Founders of a startup always have to find a compromise between the desires of users and the requirements of the business model. The advice is this: at the first stage of business development, do not think about the business model at all. Think only about what users need.
16. Reluctance to get your hands dirty
Almost every programmer prefers to do what he loves, to program for a salary, just not to get into a dirty business. It is better to instruct someone else to deal with transactions, finances, investments, and the like. Even Larry Page and Sergey Brin, when they developed an outstanding search algorithm, like real programmers, immediately tried to sell it to someone. But then they were able to convince themselves and founded Google .
17. Conflicts between founders.
Such conflicts occur surprisingly often, as a result of which one of the founders may leave the company. It happens that without this person the further development of a startup becomes impossible.
Tip: you don’t need to start a business with someone you don’t like.
18. The development of half-strength
It is very difficult to achieve maximum success if the founders of the company do not give their brainchild all their time. If they, for example, are involved in this project in the evening, after work. Many founders of failed startups did not leave their main job. The reason is that people initially doubted the success of their business.
1. Sole Founder
There are few successful startups that would be founded by a single person. After all, one founder - this means that he did not find like-minded people, even from among his friends. Very alarming call.
It’s very difficult for one person to manage a startup. There is no one to consult with, no one to dissuade from stupid decisions, no one to celebrate success with.
2. Poor location.
In each country there are places most suitable for creating IT startups. In America, Silicon Valley comes first, followed by Boston, Seattle, Austin, Denver, and New York. In Russia, the best soil for the IT business, of course, is in Moscow. Even the most successful online startup based in Surgut is almost doomed to extinction.
3. Marginal Niche
Many startups make the same mistake: they choose a too narrow thematic niche in the hope of avoiding competition. This is not a good strategy due to fear. To avoid it, you can advise you to draw up a business plan as if from the outside, without thinking that you personally have to deal with this matter.
4. Derived idea
Many of the startups are imitations of some existing company. If you look at successful startups, you can see that they usually did not copy anyone, but tried to solve a problem that was not yet solved. It is desirable that this problem personally interfere with the founder of the company, that is, that he seeks a solution for himself. Just identify the problem and imagine a hypothetical company that could solve it.
5. Stubbornness
In some areas of human activity, persistence in achieving the intended goal is very important, despite all the difficulties. The foundation of a startup does not apply to such areas of activity. This business is more like a science experiment when you change your behavior based on current results. No need to go in cycles in the initial plan.
6. Bad programmers.
These guys are able to ruin any startup. If the founder of the company is a programmer himself, then he is unlikely to hire bad workers, so this problem will not affect him.
7. Wrong platform
During the first dot-com bubble, many startups crashed because they chose the Windows platform. Or take Java applets that killed almost 100% of startups that chose this technology as a platform.
8. Slow start
As programmers know, the last 10-15% of a project is always the hardest. Because of this, startups often unreasonably delay the launch of a project. This can be disastrous for a business.
9. Premature launch.
Of course, the delay in opening killed a hundred times more startups than in a hurry, but starting too quickly can also be fatal. Here the problem is also that you are risking your reputation. If the first users do not like the system, then others may not come.
10. The lack of a specific user
You cannot create a service that users will like if you do not understand these users. We already mentioned that successful startups are often created primarily for themselves. If you create a service for others, you need to clearly imagine these people.
11. Too small investments
Each startup at the beginning of its development, of course, does not bring any profit. But if you don’t invest enough in him, he will never bring this profit. The more venture capital funds raised, the more time a startup has to succeed. Money means time.
Startups can be advised to start a business by creating a working prototype with minimal investment, and only then attract more serious financial resources.
12. Too high costs
The classic way to spend money is to hire a ton of people. Here we can advise you to pay employees not a salary, but a share of the property. This will reduce costs and increase staff loyalty and diligence.
13. Too big investments.
It is clear that a lack of money leads to sad consequences, but too much finance can have a negative effect. Investors intervene in the company management process and demand a return on investment. In addition, you will lose a lot of time if you decide to start looking for investments in a large amount.
14. Improper investor communication
Of course, investors are constantly interfering in the process of managing the company, although this is not their business. Yes, you can simply ignore them as annoying flies. But if investors get a "golden share", then they de facto become at the helm of the company. This can also lead to the demise of the business.
15. Money instead of users.
Founders of a startup always have to find a compromise between the desires of users and the requirements of the business model. The advice is this: at the first stage of business development, do not think about the business model at all. Think only about what users need.
16. Reluctance to get your hands dirty
Almost every programmer prefers to do what he loves, to program for a salary, just not to get into a dirty business. It is better to instruct someone else to deal with transactions, finances, investments, and the like. Even Larry Page and Sergey Brin, when they developed an outstanding search algorithm, like real programmers, immediately tried to sell it to someone. But then they were able to convince themselves and founded Google .
17. Conflicts between founders.
Such conflicts occur surprisingly often, as a result of which one of the founders may leave the company. It happens that without this person the further development of a startup becomes impossible.
Tip: you don’t need to start a business with someone you don’t like.
18. The development of half-strength
It is very difficult to achieve maximum success if the founders of the company do not give their brainchild all their time. If they, for example, are involved in this project in the evening, after work. Many founders of failed startups did not leave their main job. The reason is that people initially doubted the success of their business.