February 6, 2007

Paul Graham:18 mistakes that kill startups

Just came across Paul Graham when I was reading something on startups.He has an interesting coverage of startup fundas and there was an article titled "18 ideas that kill startups" which caught my eye and I found it very practical as well as very interesting.

I have just listed below some of the important points from that article.It is a bit lengthy(but very informative), but I am sure at the end of it , you would say "It is a nice learning" and this is what I felt about it!!!

"I" in the article refers to Paul Graham

1. Single Founder:
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.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.

2. Bad location:
Startups prosper in some places and not others. As per Paul Graham, Silicon Valley dominates, then Boston, then Seattle, Austin, Denver, and New York.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.

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.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.

4. Derivative idea:
Many of the applications we get are imitations of some existing company.Instead of copying an existing idea,take the problems which were not solved by the other startup.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.

5. Obstinacy:
Don't get too attached to your original plan, because it's probably wrong. Most successful startups end up doing something different than they originally intended—often so different that it doesn't even seem like the same company.There's someone you can ask for advice: your users. If you're thinking about turning in some new direction and your users seem excited about it, it's probably a good bet.

6. Hiring Bad Programmers:
What killed most of the startups in the e-commerce business back in the 90s, it was bad programmers. A lot of those companies were started by business guys who thought the way startups worked was that you had some clever idea and then hired programmers to implement it.I was about to say you'd have to find a good programmer to help you hire people.

7. Picking up the wrong platform:
Platform is a vague word. Platform could mean an operating system, or a programming language, or a "framework" built on top of a programming language.How do you pick the right platforms? The usual way is to hire good programmers and let them choose. But there is a trick you could use if you're not a programmer: visit a top computer science department and see what they use in research projects.

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.

9. Having no specific user in mind:
You can't build things users like without understanding them. I mentioned earlier that the most successful startups seem to have begun by trying to solve a problem their founders had. Perhaps there's a rule here: perhaps you create wealth in proportion to how well you understand the problem you're solving, and the problems you understand best are your own.When designing for other people you have to be empirical. You can no longer guess what will work; you have to find users and measure their responses. So if you're going to make something for teenagers or "business" users or some other group that doesn't include you, you have to be able to talk some specific ones into using what you're making. If you can't, you're on the wrong track.

10. Raising too little money:
If you take money from investors, you have to take enough to get to the next step, whatever that is. Fortunately you have some control over both how much you spend and what the next step is.

11. Sacrificing Users to (Supposed) Profit:
The companies that win are the ones that put users first. Google, for example,they made search work, then worried about how to make money from it. And yet some startup founders still think it's irresponsible not to focus on the business model from the beginning.It's just ten times more irresponsible not to think about the product.

12. Not Wanting to Get Your Hands Dirty:
If you want to start a startup, you have to face the fact that you can't just hack. At least one hacker will have to spend some of the time doing business stuff.

13. Fights Between Founders:
Fights between founders are surprisingly common.Fortunately it's usually the least committed founder who leaves. If there are three founders and one who was lukewarm leaves, big deal. If you have two and one leaves, or a guy with critical technical skills leaves, that's more of a problem. But even that is survivable.Don't start a company with someone you dislike because they have some skill you need and you worry you won't find anyone else. The people are the most important ingredient in a startup, so don't compromise there.

14. A Half hearted effort:
Statistically, if you want to avoid failure, it would seem like the most important thing is to quit your day job. Most founders of failed startups don't quit their day jobs, and most founders of successful ones do. Many of these would-be founders may not have the kind of determination it takes to start a company, and that in the back of their minds, they know it. The reason they don't invest more time in their startup is that they know it's a bad investment.The biggest mistake you can make is not to try hard enough.

15. Launching Too Early
16. Poor Investor Management
17. Spending Too Much
18. Raising Too Much Money

Do not miss the complete article

Labels: ,


At Feb 6, 2007, 7:58:00 PM , Anonymous Hiral Shah said...

Hi, Himanshu

At the end of the article, I must say it is nice learning...


At Feb 7, 2007, 12:28:00 AM , Blogger Himanshu Sheth said...

HI Hiral,
Yes it was very interesting and lot of things to learn :-)


At Feb 8, 2007, 12:24:00 AM , Blogger Nidhi said...

Hey Himanshu,

thoughtprevail provide all the happenings of Indian online Business and Entrepreneurship gyan & thats the reason people cudn't resist themselves to come here again & again :)

For this article I would say : Perfect article at the perfect place, a source to be succeed.

- Nidhi

At Feb 8, 2007, 11:41:00 PM , Blogger Himanshu Sheth said...

Hey Nidhi,
There is lots of things to learn from entrepreneurs like you and this is just the start to my Entrepreneurial journey.

Thanks for looking into this blog.


At Feb 11, 2007, 9:55:00 PM , Blogger Phalgun said...

Very good post. I loved to read it. It is a very long post but interesting.

At Feb 11, 2007, 10:07:00 PM , Blogger Himanshu Sheth said...

Hey Phalgun,
I agree that the post is a big one but at the end of the post,the returns are very high :-)



Post a Comment

Subscribe to Post Comments [Atom]

<< Home