startup secrets
TRANSCRIPT
the traps, pitfalls, mistakes, and best practices on the journey towards the
summit
Startup Secrets
blockbusters, successes, and failures
There are 3 types of startups
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NO! But avoiding stupidity is easier than seeking brilliance
Is there a formula for success?
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team issues, market issues, resources issues, and growth issues are determinant
But there is a clear pattern
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Team Issues
winners are 38 years old at founding (average), and 80% are second-timers with experience in tech
Experience is a key ingredient
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winners that have mentors, use OKRs, are knowledge seekers raise 7x more capital and have 3.5x
better traction
Learning agility is a secret weapon
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winners are typically 3-founders with history of working together
It is a team game
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business-heavy are 6.2x better at enterprise software, technical-heavy are 3.3x better at product-centric startups,
and balanced teams are 2.9x better at marketplaces, ecommerces
Picking the right battle
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lack of flexibility on cap-table and understanding of how to slice the pie
But 1 in 4 fails due to founder conflict
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Market Issues
~50% of new product launches fail. Winners spend 41% of their time deciding what goes in products
Product no one wants
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most of the times, first mover is a curse
Bad timing
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1 in 6 fails for bad CAC, churn, gross margin, working capital
Bad unit economics
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two types: david x goliath or the gorilla fight
Competitive fine tuning
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Money Issues
1 in 3 startups fails for lack of cash. It takes 2-3x longer to validate than expected
Too much optimism
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Seeds have 25% chances of raising Series A, which have 50% chances of getting to Series B
It is a funnel (multi-turn game)
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less money reduces in 70% chances of next round, more money reduces in 25% chances of next round
Too much or not enough money
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fat startups ends up with less than 10% of equity, lean startups ends up with more than 40% of equity
Dilution kills
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Growth Issues
1 in every 10 startups fails due to premature scaling (traffic no conversion, product, no sales, sales no margin, CAC no
LTV, people no sales)
False positive (out of synch!)
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1 in 5 fails when transforming from family to tribe, to village, to city, to nation
Organizational breaking points
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1 in 10 fails for carrying too much weight (several personas, products, markets, and channels)
Lack of focus
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Wrong talents reduce 2.6x the speed of startups (cultural fit x technical fit, generalists x specialists, scope x autonomy, do
best x do worst)
Garbage in, garbage out
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Summing up
There are no formulas, but there are patterns
Stages can be measured with specific milestones
Learning is a fundamental unit of progress for startups
Most startup advice is wrong
The score takes care of itself (skill & luck)
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Sources
https://techcrunch.com/2013/11/02/welcome-to-the-unicorn-club/http://avc.com/2011/06/there-arent-many-exits-over-100mm/https://www.cbinsights.com/blog/startup-failure-reasons-top/http://paulgraham.com/startupmistakes.htmlhttp://paulgraham.com/startupideas.htmlhttps://codingvc.com/startups-are-risk-bundles/https://www.quora.com/Is-the-80-product-failure-rate-statistic-actually-truehttps://speckyboy.com/2014/09/18/building-minimum-viable-products-spotify/http://pmarchive.com/guide_to_startups_part4.htmlhttp://startupmanagement.org/2013/08/23/productmarket-fit-is-a-continuum/http://labs.openviewpartners.com/product-market-fit/http://mediafiles.pragmaticmarketing.com/pdf/PragmaticSurvey2016.pdfhttp://paulgraham.com/ds.htmlhttps://techcrunch.com/2016/10/15/overdosing-on-vc-lessons-from-71-ipos/https://mattermark.com/too-much-startup-seed-funding-bad/https://mattermark.com/startup-graduation-rate-surprisingly-low/
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www.astellainvest.com
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