18 Mistakes That Kill Startups

From Paul Graham’s essay.

1. Single Founder
   • This is an almost certain path to failure.
   • Starting a startup is simply too hard a problem to tackle alone. You need someone to brainstorm with, to carefully weigh unusual decisions, and to stand by your side when things go wrong.
   • The sheer uncertainty you must endure as a startup founder is so great that there is almost no chance one person can bear it alone.
2. Bad Location
   • You need to start in a good location where people congregate — places like Silicon Valley, Boston, or Seattle.
   • Experts are concentrated there, the bar set by your peers is much higher, you can hire great people, you can get help from great people, related companies are clustered nearby, and the people you meet at parties will be doing similar things.
3. Niche Market
   • Good ideas inevitably attract competitors. A niche market with no competitors has no competitors precisely because it has no market. Don’t try to avoid competition.
4. Derivative Thinking
   • It’s easy to copy what existing companies are doing, but great companies didn’t start that way.
   • Apple was started because Wozniak wanted a computer, Google because its founders found it hard to find information online, and Hotmail because its founders found it difficult to exchange emails at work.
5. Obstinacy
   • Most successful startups rarely take off right from the start — they often end up doing something entirely different from what they began with.
   • Keep an open mind to new ideas, and listen to the users of your product.
6. Hiring Bad Programmers
   • Bad programmers were the ones who brought down many e-commerce businesses in the nineties.
   • Good programmers are hard to find, but if you can’t find them, how do you expect to succeed at a startup?
7. Choosing the Wrong Platform
   • Choosing the right platform for development is essential and should be delegated to skilled developers.
   • Hotmail ran on FreeBSD for a long time even after being acquired by Microsoft. Had it been migrated to Windows, the business likely would have suffered.
8. Launching Too Late
   • Most companies ship software late. Software is always only 85% finished.
   • Nothing is done until it ships.
9. Launching Too Early
   • Shipping too quickly damages your brand.
   • Early adopters who could have loved your product leave and never come back.
   • When a product launches, it must have at least a minimum level of usefulness.
10. Ignoring Your User Pool
    • You can’t solve a problem without understanding your users, and you need to understand them through experimentation, not guesswork.
11. Raising Too Little Money
    • Most startups raise funding, and the amount raised determines how much time they have.
    • Raising too little money means the plane never gets off the ground. You need to raise enough to reach the next milestone.
12. Spending Too Much
    • Similarly, some startups spend money too freely.
    • Startups in particular tend to overspend on hiring.
      • If there’s a way to get by without hiring, don’t hire.
      • Compensate with equity rather than salary.
      • Only hire people who can code or sell.
13. Raising Too Much Money
    • The more money you raise, the higher the expectations. You can’t just leave the money sitting in the bank.
    • There will be pressure to move faster, leading you to hire more people and expand your office space.
    • Raising more money also takes more time.
14. Poor Investor Management
    • Don’t ignore your investors. Especially if a VC who has put in a lot of money holds a board seat — they are, in effect, your boss.
    • It doesn’t matter much when things are going well, but it becomes a serious problem when they aren’t. Even Steve Jobs was forced out of Apple.
15. Sacrificing Users for Profit
    • The first thing a startup should do is create value (= how many people want something × how much they want it), not convert that value into money.
16. Unwillingness to Get Your Hands Dirty
    • Nobody cares about an idea that never becomes a real product.
    • In the beginning, founders need to be ready to hustle — scrappily going out to recruit users one by one.
17. Fighting Among Co-Founders
    • In about 20% of startups, co-founders fight and one of them leaves.
    • Some successful startups have gone on to do well even after losing a co-founder.
    • But if the co-founder who leaves was talented or truly essential to the startup, it can be devastating.
    • Don’t start a company with someone you don’t like.
18. Half-Hearted Effort
    • Continuing your old job while founding a startup is a sure path to failure.
    • Most startups fail because the product isn’t compelling enough, and the leading reason for that is not working hard enough.