The Biggest Mistakes That Kill Startups

Y Combinator (YC) is a prominent American seed money startup accelerator renowned for its pioneering approach to funding early-stage startups. Over its 20-year history, YC has played a crucial role in launching more than 3,000 companies, including tech giants like Airbnb, Instacart, Coinbase, and Stripe. The partners at YC, with their extensive experience, have seen a vast array of startup successes and failures. They have shared their insights widely, offering valuable advice on what aspiring entrepreneurs should and shouldn’t do to succeed.

According to YC, here's what not to do if you want your company to succeed

Give Up - One of the most common stories is the founder giving up on the startup because they no longer believe in it. Most highly successful founders somehow go through these seemingly insurmountable lows where all the signals point to the company not working out, and somehow still (almost deliriously) believing that it will. This is an important skill to have and cultivate, and the founders that have it, are indomitable. If you ever find yourself in this position, a good rule of thumb is to ask yourself if you are still enjoying the journey and see how many more strong moves you have left. If you don't have many more moves left in your company for it to succeed, and are only coming up with bad ideas (e.g. increase ad-spend), and don't think you are enjoying it anymore, then maybe it is time to move on or pivot.

Be a Single Founder - Another common problem is trying to succeed on your own as a single founder. Having at least one other co-founder creates an emergent effect where the result is much more than the sum of its parts. Moreover, people have their strengths and weaknesses. So having a co-founder who has your weaknesses as strengths, and vice versa - your productivity will skyrocket.

Not Talking To And Understanding Your Users Intimately - A lot of founders, and especially ones with an engineering background, really don't like to talk to users. Or they think that talking to them only at the beginning for a little bit, is enough. The problem is that your startup needs to solve your customers' problems, and so everything you need to be working on is an extremely tight coupling with what the users actually want. Without continuously talking to them at every stage of your startup's growth, you run the risk of veering off track.

No Product Market Fit - This is a derivative of not understanding your customers deeply enough. Without an intimate knowledge of what your customers want, who they are, and where they hang out - it is impossible to understand what the market is, and whether your product offers a solution to what the market needs.

Not Solving A Big Painpoint - So your customers like your product, but it doesn't solve a big enough problem for them where they are beckoned to use your product all the time, and maybe even pay you for it. If you don't see users coming back or paying, and when talking to them, they seem quite nonchalant about the problem space you are innovating in - chances are you are not solving a big enough problem and need to pivot.

No Openness to Pivot/Change - There are very few startups that succeeded which didn't have to do a major pivot in their lifetime. Change is growth, even when it seems like the wrong thing to do - listen to what your customers want.

Co-Founder Split/Fights - Just like romantic couples divorce, there may come a time when you and your co-founder either become incompatible or get into big fights and arguments that are existential to your startup. While this is very difficult to avoid, it certainly helps if you know your co-founder very well, and are over-communicating so that small fights don't turn into existential threats later on. Your co-founder(s) running off with ~50% of your company creates enough chaos to throw a huge wrench in your company's progress and vision.

Spending Too Much Money Too Quickly - Scarcity forces innovation and forces you and your team to be very meticulous about how to spend time and resources. This is incredibly hard to achieve if a VC or accelerator gives you 500k - it may seem like you're on top of the world. However, that 500k runs out faster than you think if you are not incredibly meticulous and reserved in how you use it. Live and work like a cash-strapped bootstrapper and give yourself more runway!

Not Moving Fast Enough - Speed builds momentum, and momentum creates success/serendipity. If you are not spending at least 10 quality hours on your company per week, chances are that you are not moving fast enough for the company to ever get anywhere - in most cases.

Not Having A Rockstar Technical Co-Founder - First of all, find a technical co-founder if you're not one yourself. Then make sure that whoever is a technical dev has had enough experience to not be phased about creating something that they haven't done before, from scratch. Make sure that they have been put in that position time and time again and succeeded. Also make sure that they understand how startups work, and how quick/lean they have to operate. Spending two months building out the end-to-end test suite for your product is hardly a good time investment unless you are working on launching rockets.

Scaling Too Fast - You have Product-Market Fit and users are begging to use your software, breaking things in the process as users are flooding your servers - what a great problem to have. Instead of trying to 10x everything (e.g. employees, servers, procedures, etc.) you should think twice about what the right scaling is for your company. Scale to fit the demand or maybe even slower, so that your employees, customers, procedures, and culture can keep up with the change. Super rapid change over the span of a few months can cause havoc on your culture, profits, churn, and much more - scale carefully.

Raising Too Little or Too Much Money - Be extra judicious about how much money you need, and only ask for that. It helps to think and run lean, most teams that run this way tend to be very creative, resourceful, and innovative - succeeding in the process.

No Differentiation in the Market - Do something different, and do it better. This ensures you stand out in a saturated market and captures the interest of your potential customers effectively.