Can someone at YC comment on if this is still a good proxy for startup failure?
From a personal perspective, we've sent out an investor update every single month  for our startup over the last four years. We also almost ran out of money at the end of 2017. The updates around that time were the hardest ones send out, but I can confirm they did help keep the company alive by forcing me to create and articulate a survival plan to our investors to get to profitability, which we pulled off  and are still going strong today.
 The template we use for investor updates if you're curious: https://app.tettra.co/teams/tettra/pages/investor-update-tem...
 The story about how we almost ran out of money but survived: https://tettra.co/blog/navigating-the-depths-of-nearly-faili...
The people who don't want to have those hard discussions are the ones that have their startup die. People who don't reply to emails are often people who are having negative feelings they don't want to deal with.
Maybe they don't have answers and are afraid to give a status report that includes an admission that they simply don't know. Maybe they don't want to be the harbinger of bad news and are waiting until things get better.
Neither of those is a constructive response. Neither of those fixes the problem.
Avoidance tactics are usually about emotional reactions. They usually aren't actually tactical choices for effectively addressing a problem.
There are exceptions. There are times when silence is golden or when it is the least worst option. I doubt that ever applies to dealing with an ongoing relationship with your investors.
(I'm not someone with startup experience. I just know something about people.)
Sometimes it's not really tactics, it's often just a complete mental breakdown. I have founded a startup when I was 22, and completely not ready for something that would be so emotionally hard; it ended up in a a few months long depressive episode, during which I completely ghosted almost every person I knew.
Suffice to say, being emotionally and psychologically stable is one of the main traits for a CEO, and avoidance is often a very good "smell" of problems in that department.
I recognise it's not constructive to express this suspicion of sexism, except perhaps as a message of support, so hereby: Doreen, you have my +1. Ignore the haters.
I suspect a high percentage of the downvotes I get -- and I do get quite a lot of them, but I have no data on what's "normal" -- are simply people who have no idea I'm a woman, don't think the way I do, don't have the background knowledge I have, can't see how it's pertinent and are unaware of me being someone with any particular expertise that anyone "should" respect or be interested in. (Edit: In fact, I fairly often get feedback that the person I'm arguing with assumed I was male simply because it is HN and HN is overwhelmingly male, which lefthandedly implies "Doreen blends and does not read as girly.")
In this case, the downvotes occurred after I added the qualifier that I don't have startup experience, so a very good guess is that it was downvoted by someone who thinks my knowledge of how people work doesn't apply and I'm just some blowhard and armchair politician who shouldn't have added "low value content" to HN. The degree to which I have formally studied people topics (negotiation, social psychology, etc) is something alien to a lot of STEM folks who see that as a soft science and not something you can really understand with any confidence.
There is a lot of hand-wavy BS in areas like psychology. I'm quite critical of such things myself, though it often doesn't go over well for me to do that either because the degree to which I think I understand a more bright line standard for how to study social phenomenon is also not seen by most people as anything believable.
On the upside, my latest parenting blog is something some people have expressed real interest in. That's an area of social expertise and it might eventually get real traction, unlike so many of my projects.
(Hopefully, the mods will come along and hide this entire discussion of why my comment was temporarily greyed out before being upvoted. Discussion of downvotes is something the guidelines ask people to not engage in. I'm not redacting this comment cuz reasons. But this is all off topic.)
I have to say, I don't have an issue with downvote discussions when they are initiated by someone other than the original poster. Such conversations frequently lead somewhere interesting, as this one did, whereas the opposite type (in which the original poster complains) never does.
I sometimes come across fully grayed out comments that I simply cannot imagine why anyone would ever downvote. I upvote these, but I'd very much like to know why they were downvoted in the first place. Did the author get their facts wrong? Is there an angle I'm missing? Could the comment be construed as offensive?
I've heard it suggested that no one should downvote comments without leaving a reply on why they downvoted. This strikes me as completely unreasonable, but allowing users (who aren't the OP) to ask "hey, why was this downvoted" in cases where they're legitimately confused seems like a good compromise.
I do also see how this might get out of hand if it was officially allowed... but maybe worth a try?
Even here people confuse downvotes with "i don't like it"s.
For example regarding your previous comment,
I found it interesting on the psychology topic, but slightly off topic regarding the subject. The discussion is about startups and investors as entities, not as persons, and the OP explicitly ask for information of someone with experience startup investors, specifically YC.
In short your comment is interesting but not relevant to the discussion. Personally I don’t downvote these kind of comments but I can understand other people do. Nothing to do with your background or how you think in my opinion.
She posts a lot, mostly solid content
I think that's a lot of your answer right there. The companies that don't respond, don't articulate a plan and get feedback on it, or perhaps additional help. It's not that companies that keep communication open won't fail, but the ones that don't keep it open do (according to this).
I almost quit a year ago, exactly today, then my company got acquired. A story (with pictures! only on Twitter though, link at the bottom.)
This is what I looked like last March 27.
One month prior... My dad passed away. I wasn't having a good month. But that wasn't what happened on March 27. I took a photo on March 27 because it was probably the worst I had felt in the last 5 years. Even worse than my dad's death. (We had a complicated relationship).
So yeah. We were dead. Like dead dead. I got my cofounders together on Monday, March 26 (today) for our team meeting. I laid out our situation and that I was going to fire myself.
[journal entry photo explaining the situation]
I woke up a lot of days and worked as hard as I could. But honestly it didn't matter. My fate had actually been set in motion five to ten years prior.
I didn't give up, and I didn't sit on my laurels. Ironically, I started reading a book called "Performing Under Pressure", and the entire premise of the book is basically: Act like you're not under pressure and you'll do your best work.
See, this idea that I had been working on? I started working on the seeds for it in roughly 2008. It's the same idea I'm working on now. Here's me giving a talk about the idea in 2011, roughly 3 years before founding Vidpresso.
As @justinkan and now my coworkers at Facebook know, I'm tenacious AF about this idea, and I know it's gonna happen.
But last year, it didn't seem like it was going to happen. Not only that, it seemed like the entire last 7 years were about to unwind, and I was going to start back from scratch.
Lots of entries like this one in my
[Dead tired journal image.]
And some like this one unfortunately. #openup #mentalhealth #suicide
[suicidal journal image]
But then, one week later. This entry hits my journal.
[Wow, yesterday was insane. journal entry]
Then my journal kind of goes silent because I got really busy for a while.
But then this really cool thing happened.
This isn't some sort of rags to riches story: I knew my idea was solid and I can have people vouch for me, I'm tenacious AF, don't give up, and really the issue with me was that my idea was / is too early (still!)
But the other lesson is that for a certain subset of people: You'll probably always be happiest working on the problem you find most interesting, with your best friends, at a company who cares about your interests. Find that, and hold on to it.
It took me a long time to get those things together, but I think I have all of them now. It's very, very surprising, but I've learned a lot and I'm very grateful.
I now want to try to help others. If you're in your founder journey, feel free to DM! I'll try to help! It takes a long time though... it took me well over 10 years, and I'm still just getting started. Don't be in a hurry.
Also an addendum: The timing is really what worked out. We happened to have the right tech at the right time with the right partners. I'm in love with my job at FB, mostly because I had been derisking it for years.
When we joined FB, Interactivity had just become very important to FB. So it really was all about timing and persistence. We were in the game long enough for it to work out.
It doesn't work out for everyone, but it did for me. :)
This lands into my list of valuable quotes. Thanks.
It's really a false dichotomy, only a small fraction of the companies that avoid dying manage to explode. You just don't hear about the rest.
That once you've taken on enough funding, your options are get rich or die. Not that if you build a non-vc stable business your options are get rich or die.
A lot of the reason business owners aren't more content with "small but sustainable" is because it isn't compatible with the venture capital model. It doesn't "return the fund".
And none of the companies that die do. Surviving gives you infinitely better odds of success than dying.
That said, for personal success it is often important to let bad projects die.
It's a false dichotomy. It's like comparing the chances of you living to the age of 60 given that a brick had fallen on your head yesterday to someone who didn't get that lucky yet (rephrasing as "what are the chances you are dead if you're already dead?").
You have to compare the odds before the fact.
Things were really really different then. Youtube was two years old, Facebook had only been open to non students for less than a year. Things like making databases of electronic parts or other less sexy B2B style ideas were often still wide open green fields with almost no competition. Plus just making websites work was tough, the cloud existed but just getting servers to work and stay up was a non trivial part of launching something.
You can't just do the X + Software formula anymore and expect to get anywhere.
There’s a bias when looking at the past. We tend to assume the future was both inevitable and easily predictable. Not like these uncertain times today.
Now pre-2000s was a little different. VCs were taking to me on the phone about my “robotics” company. I was 10.
In fact, I even had it as a banner on my desktop for a while: "JUST KEEP TYPING!"
In 2016 I was working on a UX team, making improvements to components that were used across the entire front-end of the new platform we were building. One spring afternoon I was working on a new hierarchical selector widget while a quarterly executive town hall was playing on the projector in our team room. Midway through writing an AngularJS directive, our head of product surprise announced that we were pivoting and that the platform we had been building for the past year was going to be mostly thrown out. I basically closed my editor and never touched that component again.
The upshot here is that in startups or big companies, change can come very suddenly. And when big problems with a strategy are only known to those at the top, it makes the sudden changes even more surprising for those down the ladder. If you’ve got a bad board, you might find out about a change that you need to make the day that you need to make it.
I think a lot of what I see in this post is a mixture of survivorship bias/selection bias. We want to believe that the reasons startups succeeded was because they just kept trying, while not seeing the many that did die mid keystroke due to any number of reasons.
Furthermore, it's misleading because it implies that things are within your control. That, all you have to do is the right thing and you'll be successful. Nothing could be further from the truth. When you have a bad idea that didn't work out because of lack of consumer demand (the #1 reason why software startups die), then, after you've tried everything, there's not much else to do. It's better to shut down or pivot to something where there is demand.
>And however tough things get for the Octoparts, I predict they'll succeed. They may have to morph themselves into something totally different, but they won't just crawl off and die. They're smart; they're working in a promising field; and they just cannot give up.
>All of you guys already have the first two. You're all smart and working on promising ideas. Whether you end up among the living or the dead comes down to the third ingredient, not giving up.
He admits that this speech is made for the startups in the room; ones that already passed the bar.
The audience was YC founders at the end of a YC batch. Probably after demo day. The entire audience had already been funded once (by YC at the start) and as a whole they had much better than average prospects for raising money. Some may have already raised or been close.
I agree that it is questionable as generic advice. The August 2007 date suggests the Summer 07 batch. That's Disqus, Dropbox, and Twitch (among others). https://yclist.com/
My last startup was firing on all cylinders, with addicted early adopters, and our team literally shipped features the last day we could pay them because they loved the project and team so much. It didn't matter much to the VCs who declined to invest further. If you can't pay your people, they can't eat, and they can't work on the startup any further. So if you're not profitable, you're always subject to investor sentiment and calculus to survive, and that can often be a totally separate question of if you still have the drive to push further and continue to reply to emails.
In those scenarios where you have investors, you can't just go into 'hibernation mode' and get the founders back on the ramen lifestyle to keep going if you are hitting the trough, because on the way down you will be forced to sell or liquidate all the existing IP and other assets to help existing investors and debtholders recoup their losses. So you're left with nothing but the idea, and insofar as you want to continue to pursue similar ideas you run the risk of getting sued since you've sold the IP.
So, its certainly possible for the market to 'correct' you out of existence, even if you have the deepest will to keep going and are willing to sacrifice almost anything to do so. The best thing you can do at this point is to move on and try to leverage what you've learned or the networks you've built into something you're similarly interested in.
If you're a genius, then sure, not giving up makes a lot of sense. But if you're just pretty smart, you better think two, three, or four times before committing to do a startup. It's really easy to end up over thirty and broke.
Or end up a zombie startup. I'm not buying this stuff. It sounds more like an exploration of what works than a recommendation. Signs of success rather than suggestions for how to succeed.
> keep typing
Telling you about our progress leads to success? I believe you have your cause and effect out of order.
> 90% of those who get into Newsweek would survive.
Source? I see no evidence to support this is the survival factor. Why did those who got into Newsweek get there? It's comorbidity at best.
This sounds like it was pulled directly from an episode of Silicon Valley.
And there was even a podcast I saw on YouTube where a former YC company founder worked for Silicon Valley after his startup shutdown. He moved down to LA as far as I remember.
Oh yeah here it is:
Or they could have just read PG's blog. The writers got a lot of stuff right so I wouldn't doubt it. Though I guess I was surprised there was no "ycombinator" in the show. There was Erlich and his hacker house / accelerator, who doesn't seem a lot like PG :)
Since many start-up ideas are bad ones, it often will be rational for start-up founders to quit and do other things.
If the startup is able to execute on building things of unique value, I don't necessarily think it is rational to stop.
So often however, the startups don't build anything unique, and many don't seem to build anything at all.
A good idea doesn't mean you won't fail. A bad idea does mean you will fail.
Sorry but it sounds to me that you are not speaking from experience but just from reading many "startup culture" posts. In reality there just are many startups that have ideas and build products that never get to profitability. Most even have users that love the product but that doesn't help you if you can't get enough money.
And ideas matter a lot. Some are just almost impossible to execute to profitability while others are a relatively easy win. I have seen both and no, you can not just "move the asset to a more viable market".
Is Uber a bad idea, given it is not profitable?
Feel free to share your experience, since you are implying you have any.
Or pivot. If I'm remembering it right, PG has an entire essay about pivoting.
I am personally trying to balance Paul's advice of "the number one thing not to do is other things" with being able to bootstrap for an indefinite period of time.
It wasn't easy, but it was necessary for me to get over the "rent and health insurance hump". I do agree that it's hard to reconcile bootstrapping/consulting with pg's advice to "not do other things".
My main advice is: make sure consulting (or whatever "auxiliary income source" you are spending time on) is a means-to-an-end for you, and that it doesn't become the main thing. And also make sure to carve out time to actually work on the startup daily -- whether that's early mornings, "lunch breaks", or late nights. (In my case, it was all 3 :-) ...)
Avoid the easy way out. During my multi-year consulting/bootstrapping journey, I got a lot of offers to join other startups or take on big consulting clients. But I knew that wasn't what I wanted, however tempting. Ultimately, I had to turn down lucrative short-term gain for taking a stipend salary on my startup when it finally landed seed funding. Pulling the trigger on that was tough, but worth it, in retrospect. This was only possible because I had already mentally convinced myself that consulting/bootstrapping revenue was a means-to-the-end for the startup.
But yeah, life is messy, and we aren't all in the privileged position of being able to work without income for months or years on end, which unfortunately is often the vantage point taken by some of our "wise startup elders".
One small piece of practical advice based on some mistakes I saw other founders make: don't use debt.
"If I hadn’t worked on my consulting projects last year, Parse.ly would have died. PERIOD. PG is often right, but he’s wrong on this one. I agree that startups require your undivided attention. But surviving isn’t a compromise — it’s a necessity. Do it however you possibly can."
Funny how much that single sentence changed what life was like on the West Coast. Now we are witnessing mini-Valleys springing up in other cities desperate to replicate what San Francisco did for startups.
Scroll down to "Places with 'Silicon' names"
Without the culture to support it.
A bunch of broke ideas people sitting in a wework or coffee shop with no angel investor in sight, no diversity in VC portfolios. There is a reason that interest rates are negative, because nobody wants to “stimulate the economy“ by giving broke entrepreneurs their money
> The distributors want to prevent the transparency that comes from having prices online.
Some manufacturers are worse, they don't publish datasheets (looking at you, Intel VDSL chipset department, laptop keyboard manufacturers, Broadcom). It's almost as if there are companies that want to lock out anyone not a multi-million company to tinker with their products...
So we just had a sales guy join from a large electronics components distributor - the kind that handles the interfaces between
a) globally known consumer hardware brands both in "the west" and in PRC
b) the hardware manufacturers (mostly PRC, some TW)
c) the component manufacturers (mixed)
I had been assuming they had been running some super sophisticated globally integrated software system. I was really curious about how this stuff actually worked, in real life. It turns out it's just excel sheets and phone-calls in the end. They are working to introduce ERP systems, but..no.
This seems like something that's ripe for a software-based revolution.
It came with Windows so that's that, they can't be bothered to try anything else. Not even after mangled sheets cause repeated mistakes.
I would so love to work on something like this, but when people won't even use a free solution suggested by one of their trusted employees, selling one will be tough.
All you have to do is give them their data in the se excel sheets they are used to. Preferably by e-mail, portals and such are the devil.
Their market cap is 4b, so very unlikely. Probably ended up with a few million each, with a large chuck of it being some type of shares.
Sure, tweak-and-try-again can keep going on until you eventually stumble on the right formula, since you'll eventually exhaust all possible related ideas, but it may be 2 years or 2 centuries until you hit it.
Somebody may have to put a time limit on how long they'll try. For example, "I'll try for 4 years, and if nothing looks viable after 4 years, I'll get a real job or go to grad school."
(Are there public estimates of his current net worth?)
Does this not appear to be really terrible to others? That the metric of success is just founders getting rich? At minimum, what about employees? But really, shouldn’t we be aiming higher where the companies are creating useful impact on the world and improving it?
I understand he’s saying this as a contrast to the investors getting rich, but this train of thought and the people chasing it is what has caused SF to lose its soul IMHO.
Oh that's not the best factor to look for, as one can go beyond the fear of failure and this won't work anymore.
Et tu PG?
This one doesn't mention Lisp at all. It's pretty good.
- don't invent excuses
- don't lose faith
- talk to others a lot
- keep making them happy
My most important takeaway.
2. Reach cash flow positive asap.
Oh, boy. Why can't we have a world where I can pursue my interests without the fear of loosing something. I guess if people read Bertrand Russell  instead of Paul Graham, the world would be a better place.
This has no bearing on what motivates people to do things generally in their spare time.
Perhaps he selects for those who prepare well to not fail to get his approval.
People's motivation systems vary a lot, but it works for me.
Secondly, a lot of people have conflicting desires and actually want one of those desires to win out. For instance, some people want to be in good shape, but they also want to lay around on the couch all day reading novels or watching TV or playing video games. If you do that every day for a few months, you will not be in good shape. You want to be in good shape but you don’t want to go to the gym, so you are unhappy. The solution may very well be to trick yourself into doing things you don’t want to do, by making yourself want to do them, because you want to reap the benefits of having done the thing.
And yeah, people are motivated more by fear than by hope. It sucks but it’s true. Our evolutionary environment led us to prioritize not losing things like social status or safety over trying to attain our wildest dreams, because most of the mammals before us who ignored risks to their safety and social status didn’t reproduce.
One example of a commitment device is to tell your friend something like "I'm going to write a book and get it published in six months and if I don't I'll give you $5k"
... the problem is, what if you legitimately decide that writing a book is just not for you?
By putting a cost on failure, you can sort between "I genuinely no longer want to do this" and "I'm getting akrasia because doing things is hard and quitting is easy".
If you've made the cost of walking away higher than the expected value of the commitment (five grand would be a lot of money to make on many books), you should have some strong, intrinsic reason for it.
A startup is not about "pursuing interests," that's a side project. A startup is about making money by eating market share. Every product or service that comes out of it is intrinsically connected to that goal.
You are free to pursue whatever interest you want on your own time, especially in this field. Every cloud provider gives you a free tier; most major database server software are free; all the major Git providers give you free private repos; every major library is free and open source; as is every major operating system and IDE, compiler, linker, interpreter, syntax checker...
In fact, as an individual, you will be hard pressed to actually find paywalls stopping you from using new technologies.
Of course it would be nicer if we all got free stuff without having to work for it. But this isn't about that, this is about business.
The entire start-up industry is a get-rich-quick scheme and a cancer on society.