When Valleywag is not promocking (promoting/mocking) Robert Scoble or Jason Calacanis, it publishes interesting commentary or identifies insightful reads [side note, I think I just invented the term promocking.]
Anyway, today, Valleywag points to Paul Graham’s How Not to Die post where he basically talks about what startups need to do to avoid from dying (shutting down) so that they can, well, get rich.
As I read Graham’s piece, I found numerous nuggets of wisdom. I’ll copied and pasted the best ones, but from a personal perspective, all I could think of was a personal experience from last year. Shortly after I started Mojo Supreme, I got attacked personally and legally. Our flagship unit WatchMojo.com was losing money and there was no way to assume that we’d one day, in the context of Graham’s post, “get rich” over it.
So in essence, I had to fight back (in fact increase our burn rate) to defend myself and avoid our company from shutting down, or dying. But the more I had to defend myself to avoid getting killed by the courts, the more I increased the likelihood that we’d die from too much expenditures.
And, if I were successful in defending myself and my company in the courts, then my prize, at least in the short term was essentially losing more money from operations!
My friends thought it was crazy, my family thought I was insane; thankfully, my wife supported me.
Today, it’s obvious that I would do what I did all over again, but at the time, it was anything but obvious.
Anyway, some highlights from Graham’s piece:
A couple days ago I told a reporter that we expected about a third of the companies we funded to succeed. Actually I was being conservative. I’m hoping it might be as much as a half. Wouldn’t it be amazing if we could achieve a 50% success rate?
Another way of saying that is that half of you are going to die. Phrased that way, it doesn’t sound good at all. In fact, it’s kind of weird when you think about it, because our definition of success is that the founders get rich. If half the startups we fund succeed, then half of you are going to get rich and the other half are going to get nothing.
If you can just avoid dying, you get rich.
(…)
You may have heard that quote about luck consisting of opportunity meeting preparation. You’ve now done the preparation. The work you’ve done so far has, in effect, put you in a position to get lucky: you can now get rich by not letting your company die.
(…)
We don’t know exactly what happens when they die, because they generally don’t die loudly and heroically. Mostly they crawl off somewhere and die.
For us the main indication of impending doom is when we don’t hear from you. When we haven’t heard from, or about, a startup for a couple months, that’s a bad sign. If we send them an email asking what’s up, and they don’t reply, that’s a really bad sign. So far that is a 100% accurate predictor of death.
Whereas if a startup regularly does new deals and releases and either sends us mail or shows up at YC events, they’re probably going to live.
(…)
When startups die, the official cause of death is always either running out of money or a critical founder bailing. Often the two occur simultaneously. But I think the underlying cause is usually that they’ve become demoralized. You rarely hear of a startup that’s working around the clock doing deals and pumping out new features, and dies because they can’t pay their bills and their ISP unplugs their server.
Startups rarely die in mid keystroke. So keep typing!
If so many startups get demoralized and fail when merely by hanging on they could get rich, you have to assume that running a startup can be demoralizing. That is certainly true. I’ve been there, and that’s why I’ve never done another startup. The low points in a startup are just unbelievably low.
(…)
Startups almost never get it right the first time. Much more commonly you launch something, and no one cares. Don’t assume when this happens that you’ve failed. That’s normal for startups. But don’t sit around doing nothing. Iterate.
(…)
I like Paul Buchheit’s suggestion of trying to make something that at least someone really loves. As long as you’ve made something that a few users are ecstatic about, you’re on the right track. It will be good for your morale to have even a handful of users who really love you, and startups run on morale. But also it will tell you what to focus on.
(…)
The number one thing not to do is other things. If you find yourself saying a sentence that ends with “but we’re going to keep working on the startup,” you are in big trouble.
(…)
A startup is so hard that working on it can’t be preceded by “but.”
In particular, don’t go to graduate school, and don’t start other projects. Distraction is fatal to startups.
(…)
One of the most interesting things we’ve discovered from working on Y Combinator is that founders are more motivated by the fear of looking bad than by the hope of getting millions of dollars. So if you want to get millions of dollars, put yourself in a position where failure will be public and humiliating.
(…)
So I’ll tell you now: bad shit is coming. It always is in a startup. The odds of getting from launch to liquidity without some kind of disaster happening are one in a thousand. So don’t get demoralized. When the disaster strikes, just say to yourself, ok, this was what Paul was talking about. What did he say to do? Oh, yeah. Don’t give up.
(…)
Indeed, starting a new business is not for the faint of heart… but once things start to roll then it’s the best thing you could ever imagine…
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