188. #1 Killer of Startups

VC Minute
Founders are efficiency-seeking missiles, which is what compels them to start businesses, but it's a double-edged sword.

VC Minute – quick advice to help startup founders fundraise better

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As a startup coach, I have a whole suite of different “number one things that kill companies.” My long-term clients will go, dude, that’s the third one you’ve said this month. So take this with a grain of salt, but not a very big grain of salt. The number 1 killer of startups is solving problems that aren’t yet problems.

As founders, we are efficiency-seeking missiles. We go into the world and see things that could be better, and we want to solve them. And that’s the reason the companies are boring. And so we hire a couple of people, or even better. We just convinced a couple of people to go build something with us. Maybe we can even convince some investors to come along for the ride.

And six months in, we get really, really frustrated about managing our sales pipeline. And we think, you know, what would be great? We can solve that too. We’re efficiency-seeking missiles, and we’re really smart. So let’s go solve that problem. Let’s go spend some of our very scarce resources—time and money on solving that problem. It’s probably going to kill your company. You’re going to run out of money solving a problem that wasn’t really an issue right now.

Or you think about the classic founder trope that you want to build a company or build your software in a way that scales from day one. No janky PHP setup. We don’t use MySQL cause you know, MySQL is not scalable in the hundreds of millions of rows. We need all this fancy technology. And then you launch, and, hey, nobody comes. Because launching is the easy part. Building the customer base—that’s the hard part.

So you can spend most of your resources making sure that you’ve built a scalable product, that never gets used. And hell, if you could take that money back and just extend the runway so that you could actually figure out how to sell, maybe you’d still be alive. I am a huge believer in getting things out as quickly and dirty as possible to see whether or not they matter and solve those problems when they actually show up. Don’t try to prove that you’re smart by hitting them preemptively.

And the one thing that you and I, Rich, are both old enough to remember is back in, call it 2011, 2010, the fail whale. When you’d go to Twitter and Twitter couldn’t scale, and hell man, they just gave you a picture of a whale getting lifted in a net by little Twitter birds. If I remember correctly, that company went public and was even acquired recently for 44 billion dollars. They didn’t scale early on, and it didn’t kill them. It’s probably not going to kill your company, either.

About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast – get to know AVL Growth Partners at avlgrowth.com. (Sponsored)

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