There are many painful ways for a startup to fail — including founders who ultimately throw in the towel and turn off the lights.
But assuming a founder intends to keeps moving forward, there are a few pitfalls that Garry Tan has seen during his career as a founder, Y Combinator partner and, lately, co-founder of venture firm Initialized Capital.
During a fun chat during last week’s TechCrunch Early Stage, he ran us through these avoidable mistakes; for those who couldn’t virtually attend, we’re sharing them with you here.
1. Chasing the wrong problem
This sounds insane, right? How can you be blamed for wanting to solve a problem?
Tan says people choose the wrong problem for a wide variety of reasons: Founders sometimes choose a problem that isn’t problematic for enough people, he said, citing the example of a hypothetical 25-year-old San Francisco-based engineer who may be out of touch with the rest of the country. When founders target the wrong problem, it typically means that the market will be too small for a venture-like return.
Sometimes, too, entrepreneurs pick problems that are massive but that the founding team is unsuited to solve because they lack resources, the right path or a solid go-to-market strategy. Tan pointed to how much harder Facebook and Google have made it for consumer startups to get in front of people because of the monopoly they have on users’ time and attention. It has “never been harder to do consumer,” as a result, said Tan, which is a lot to overcome for most teams.
2. Founders with too much authority
Tan said this problem typically begins to develop at the Series A stage and beyond, not at the beginning. Getting a startup off the ground requires “someone who has taste, who has opinions about how to build that thing. To create something great requires a great amount of authority,” said Tan. “But once you’ve made it, how do you bring it to the world in the right way?”
Tan pointed to Asiana Airlines Flight 214, a flight from South Korea headed for San Francisco in 2013 that crash-landed at the airport, killing a small number of passengers and injuring more than 200 others. The “pilot wasn’t aware that the ground was coming up very quickly, and the junior pilot knew but didn’t override the senior pilot,” said Tan. “Authority is such a dumb reason to crash a plane, but if you look at why a lot of planes crash, it’s too much authority,” and the same is true of startups, he said. The leader of an organization needs to “build the team that will keep you from flying [your startup] into the ground,” yet many fail to adequately empower those around them to do this.
3. Idea disease
Tan said he stole from Steve Jobs with this one, but the concept is that founders get too caught up in an idea without giving enough care to its execution. (Jobs accused John Sculley, who famously took over as CEO of Apple for a decade, of doing this.)
Founders hobble themselves by failing to think through the idea with the right people around the table, including realists and critics. It’s great to have a visionary founder, but beyond the idea, the questions that should arise are: how to build that thing and whether to build that thing.
Step one is open brainstorming — anything goes. Tan suggested that founders think as if they had no constraints on people, money or time. The next step, done the right way, is to figure out what they can build that’s rooted in that original, big idea but also tied to reality (meaning with limited resources). Last, before a founder starts to build, he or she should involve the right people in addressing the question: Should this thing exist? What might the impact of this product or service be, and on whom?
You can check out the full conversation, which covered a range of ideas, including whether or not we live in a meritocracy, below.
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