Thursday, October 19, 2006

Paul Graham's latest...

Paul Graham makes some great points in his latest essay, about the top 18 mistakes that kill startups. Hopefully it's not actually ordered in terms of importance, since the list starts out in typical "Paul Graham made it up" style, but ends with some really good points.

Let's cover them one by one.

1. Single Founder - This is just silly. He argues that a single founder means you couldn't get anyone to believe in your idea. How about this... I don't want to share revenues with a buddy just for the sake of having a partner? He's not completely off base though. No one is 100% well rounded, and having a partner that compliments your bad points can be a good thing. In fact, if you look at the successful partnerships, its usually "one business guy" and "one tech guy". But if you grab another tech guy, and you are techy too, I think the partnership is more likely to end in fighting then success. Either way, I believe you can succeed as a single founder.

2. Bad Location - I've covered this in previous posts, but again Paul reveals that he lives in the Paul Graham snow globe. Let's look at his ranking for top startup towns:

"Silicon Valley dominates, then Boston, then Seattle, Austin, Denver, and New York. After that there's not much"

Boston??!!! The number two?? Are you joking Paul? I know you live in Boston, but give me a break! In fact, outside of the Y combination companies, I can't think of a single startup from the Boston area. I can think of quite a few from Seattle and Austin though. New York seems like an odd pick too. I think in terms of startups per capita, New York is not a very big one. I know of a lot more startups in the DC area then Boston and New York combined. He uses Chicago as a counter example, yet I can still think of at least four tech startups from Chicago, and still zero from Boston.

Bad Location will not kill you. If you want Venture Captial, it helps to be in an urban area, but if you are a mISV, it really doesn't make a difference where you are, and I know quite a few successful startups in the boring suburbs of Maryland.

3. Marginal Niche - This is a good one. I have experience with this one. Chimney Sweeps are an extremely marginal niche. You will never retire selling entirely to Chimney Sweeps, I realized this from day one, but the plan was and still is to expand from Chimney Sweeps using the basic ChimSoft engine.

4. Derivative Idea - Paul...seriously. Where is your evidence here? Most of the BEST startups come from Derivative ideas. Google. Microsoft. Sun. Oracle. FogBugz. All of these companies made a better version of something that sucked. Better to improve an existing market then try to create your own.

5. Obstinacy - I probably would have had to look that word up...but yeah, don't be too stubborn to change your plan mid-course. Especially when it's your first company. I have NEVER gotten it right on the first try.

6. Hiring Bad Programmers - No argument or praise here... certainly this is more important in your early hires then your late hires.

7. Choosing the Wrong Platform - Ironic from someone who wrote a web based store in Lisp... ;) ... This is only a problem if you cannot handle your platform. Users have no idea what platform you are using. Reddit started in Lisp and MySpace started in ColdFusion, but neither of these mistakes KILLED the startups. If you decide to write a new web CRM in C++ instead of Ruby On Rails, ensure you can make the switch when you need to

8. Slowness in Launching - Here is where he starts to hit his stride. I've known quite a few developers in person that just NEVER get around to launching. Don't be afraid! Launching your product, even if you don't think it's complete gives you such motivation to improve it or at least move on.

9. Launching Too Early - No personal examples of this, but I've certainly seen company's rush a half assed product to the market only for it to be quickly forgotten (*cough* 80% of Google Labs *cough*).

10. Having No Specific User in Mind - So true. Usually when people come to me with brilliant business ideas, this is where I punch a hole in their plan. "Well, WHY exactly would someone pay our company $50 to place an add for a yard sale when CraigsList is free? Who are these people finding us?"

11. Raising Too Little Money - No comments here, I don't think this is KILLER, but it may make the difference between you being Google vs you being a much smaller company that still does alright.

12. Spending Too Much - Should be obvious, but some companies go nuts hiring people and building infrastructure while forgetting about the core business.

13. Raising Too Much Money and 14. Poor Investor Management - No comment here either, good points.

15. Sacrificing Users to (Supposed) Profit - Another mistake early startups make... pay attention to what a user wants. If you yourself would not buy or use your product, maybe you are not alone?

16. Not Wanting to Get Your Hands Dirty - I have this problem, and I think it's what kills so many startups. You must put yourself out there and be bold about getting sales contacts. Google AdWords won't work for every business, being social and selling are very important differentiators.

17. Fights Between Founders - Right...see my counter to point one. Don't start businesses with friends.

18. A Half-Hearted Effort - Pure gold here. I've seen so many people and startups give up if their product doesn't succeed in the first month. Things take time. Things take hard word. Occasionally companies get dugg on their first announcement and go public two months later, but occasionally people win the $200 million powerball. Don't play those odds. Figure out why your product isn't selling and improve it. Don't give up unless you have exhausted every possible avenue. Hard work is underrated these days.


At 8:39 PM, Anonymous Anonymous said...

u think u summary works good uh??


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