Sam Altman, the head of Silicon Valley’s prestigious Y Combinator startup accelerator program, shared in a blog entry some hard truths about the 75% failure rate of the startups that it mentors:
A lot of founders get so caught up in the startup lifestyle that they forget to build their product. It’s a lesson that applies to all startups, Y Combinator or otherwise.
During the three months of the Y Combinator program, Altman writes, the companies grow nicely. Y Combinator has fostered high-profile startups like Airbnb, Dropbox, and Zenefits.
But then, after the program is over, “[growth] essentially flatlines” for some of the startups.
What happens to those startups is that they go on to focus more on speaking at conferences, talking to the media, or rearchitecting their infrastructure than they do at focusing on growth.
“In general, startups get distracted by fake work. Fake work is both easier and more fun than real work for many founders,” Altman writes.
Moreover, there can come “a reduction in intensity” that comes alongside landing a big funding round. Compounding the matter is the fact that a well-funded startup is more resistant to a change in direction. And, no matter what, as a startup gets bigger, it’s harder to keep the growth train moving.
Altman says the way to avoid this is to just focus on building the product, and making it into something people will actually want to use. Basically, stay hungry and don’t let up on getting better.
“Don’t ever let yourself feel like you’ve won before you have. I still don’t think the Airbnb founders feel like they have won. You have to keep up a high level of intensity for many, many years,” Altman writes.
Some startups never learn this lesson, Altman says, and by then “it’s too late and for all it’s a waste of time.”
But if more founders embraced the idea of keeping up the Y Combinator rate of intensity, Altman writes, “the number of successful startups would probably double.”