Startup D.O.A



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How often have you seen startups go down the following road?

  1. A couple people come up with an idea. They’re excited. Really, really excited.
  2. They get nervous about competition or people stealing their plans. So they get very hush hush.
  3. They start building something. This usually involves locking themselves in a small, dark room with lots of caffeine.
  4. They raise money quickly. It’s quite often a seed round to get them through to launch.
  5. Lots of code is being written. Lots of ideas are on a whiteboard. People are pumped. And there’s money in the bank.
  6. Development is taking longer than expected. Scope creep is insidiously sneaking its way in. Estimates are out of whack. But there’s no turning back.
  7. They hire an extra person or two to try and accelerate things.
  8. Money is running out, but motivation is still fairly high.
  9. They launch! Time to party and await huge success.
  10. No one cares.

Now at this point, or possibly around step 8 or so, some amount of panic has set in. It depends a lot on how much blind faith the founders are running on and/or how successful they are at convincing themselves everything is going to work out.

One of the huge problems is that the number of points of failure actually increase as you move through these steps. You’re not eliminating points of failure or risk, you’re adding to them.

This path towards launching a startup is what I would call: Startup D.O.A — Startup Dead on Arrival. It sucks big time. It’s painful to watch. It’s depressing and frustrating. And it’s extremely common.

Here are three major problems that too many startups end up facing:

1. Not enough systematic validation early on.

Validating a startup idea is a very big challenge in and of itself. But without some amount of systematic validation you’re flying completely blind. Some ideas are harder to systematically validate than others. Business-to-consumer web apps, for example, can be hard to validate. How would you validate a Twitter before it existed? But even in that case if you’re going exclusively on a hope and a prayer there’s a very good chance you’re D.O.A. We hear plenty about the success stories; a lot less about all the failures.

Please, please, please, please find a way to validate. Sit down with your co-founders and talk this out. Think about how you could validate. Think about who you should speak to. Don’t be shy. Get past the fear of rejection as quickly as you can. Please.

Please, please, please, please be rigorous about it and have the gumption to say, “We went through a systematic validation process and this isn’t flying. Let’s kill it now before we’re Startup D.O.A.”

2. Not enough money.

If you raise money for a 6-month runway you have to start raising a follow up round the next day. That’s because it takes ~6 months to raise financing. If you don’t give yourself enough time to launch and iterate thereafter to build up traction and measurable milestones, you’ll have a freaking hard time raising more money. This isn’t necessarily an argument to raise tons of money out of the gate, but it is an argument for understanding how to spend the money properly, launching more quickly (so you have time to reach better, measurable milestones), and not getting bogged down in trying to build massive systems that will be overwhelmed by scope creep. Solve small problems well. Start small, stay focused and have a clear value proposition. Make a frequent use product. Please.

3. Not knowing how to run a business.

First-time entrepreneurs generally don’t know how to run companies. That’s because they never have. It’s just the reality of the circumstance they find themselves in. Even people who have kicked the startup can a few times still have issues in this regard. It’s hard. Get help. As much of it as you can. Get good help. Recognize that you don’t know what you’re doing and find out who is willing to help. Please.

Being Startup D.O.A sucks.

You pour your heart and soul into it (and a lot of blood, sweat and tears … and money!) only to launch, fall down and not have the resources, wherewithal or strength to keep going. But there are ways you can change this. And now is exactly the time that you need to, even if that means massive shifts in your strategy, your team, your roadmap, etc. Change everything and anything that needs changing. Don’t wait and hope it gets better. Don’t wait and expect millions of people to visit your site and pay you. The sooner you make the change you need to make, the better your chances.

If you enjoyed this post, please share it!

February 2, 2010 Posted in Customer Development by

  • cmer

    Excellent article Ben. So true. I can think of a few startups currently in this situation. I hope they'll recognize themselves in what you wrote and take proper actions.

  • http://www.instigatorblog.com Benjamin Yoskovitz

    I hope so too because it's frustrating to see time and time again this sort of experience. It's not a prerequisite of startup life that you have to go through such a painful process.

  • Phil

    If your startup is targeting a specific business domain, then I think one of the founders (at least) must be an expert in the domain. This is the guy that will do most of the validation early on with potential clients…

    If all the founders are tech-oriented people who think they could disrupt any domain with their great ideas….then…I wish them best of luck…

  • josephlogan

    Excellent, excellent, excellent. Someone needs to say this from time to time. Reason #3 that startups get into trouble is the whole reason I do what I do.

  • http://ndemir.com/ Nurullah

    Excellent article :)

  • Monica

    Terrific post. Doesn't just apply to IT. I've had a similar experience but made it through via major shift of strategy and other quickly learned lessons. I like what Derek Sivers says, “start crappy” – just get it out there… you'd be able to tell from that point if there's value in going forward

  • http://www.decodecarhire.co.uk/car-hire/spain/lanzarote/lanzarote-airport.html Diana

    Great and true article.

  • http://aggiebooks.com/ Texas A&M

    Thanx for the useful tps…It proves to be of great use….

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  • http://www.toolsunplugged.co.uk/ Steve

    I see this all of the time. Why don't people spend the time on planning and research before they start spending? The right planning can mean the difference between success or failure – there's a very fine line! Hare and the Tortoise.

  • submitstartup

    You got me to Point Number 3 and explained my situation EXACTLY. But I launch the project in a premature stage to see the BUZZ and WOW do I get a buzz from the projects I launch. Problem is I do this to prove it to myself it will be successful before investing any money but by the time I launched the startup and found it to be successful it has already been copied by 100 other sites (Exaggerating a little actually, maybe 2 only) before I could continue developing it.

    Anybody had a similar experience??

  • http://www.apluswriter.com/ APlus

    Where are people getting the money to even try a start-up? Today, the belts of tightened so much that a few of my own ideas are on hold until I can find someone willing to lend me even the first dollar. I think most people have enough sense (I hope) to adjust during their first experiences with owning a business. The problem that I see often is that individuals have a very difficult time making decisions. There are a few books I have read which help individuals make the right decisions and I recommend that if you are trying to start-up; read, ask, and read some more! Good luck all.

  • http://www.flowers-page.com Flowers

    Thanks for very interesting blog!

  • coronahomesforsale

    Validating a startup idea is key validating the business module, product, project sales. Is very hard when you are just starting up. But somehow you have to come up with some conservative and realistic numbers.

  • http://www.letseatonline.com/blog LetsEatOnline

    Ben very true article, as you know there are about 8,000 new start-ups everyday and how many of them actually success? not that many, Its hard, the only solution is not to give up so many people give up after few weeks, maybe months but It takes at least 8months to get few people interested in your start-ups so be patient. and never give up

  • http://www.cervirite.com/ Cervirite

    Excellent indeed. I think I've been through this. Maybe it would be a good idea to have a copy of this post if we are to start a business. We need to check if we're following on this side of the road.

  • http://www.instigatorblog.com Benjamin Yoskovitz

    Any good idea will have competition, it's inevitable, and for the most part you can't stop something you're working on because of competition. If there's no competition, that's when you should really worry…

  • http://www.acspacific.com/ Philippine call center

    This is EXACTLY what happened to me. I now have a 4-month old startup that isn't going anywhere and is gathering dust…although that's because I stumbled on a huge monetary roadblock. I think if I just had enough money I could make it work.

  • http://intelligentforex.wordpress.com/ Mark

    Great topic, Ben! You made some good points! I am looking forward to read more your posts!

  • http://www.complaintcentre.com/ David

    Its funny when you think about how the internet has changed over the last 5 years. Unless your idea is 110% unique, there is little need to lock yourself in a room with caffine and search startup capital. Most scripts exist and can be mashed together. you can now buy a script for a few huindred to a few thousand dollars that would have originally cost 500K 5 years ago.

  • http://www.getridofclutter.net/ Chris

    Great Article Ben. Thanks

  • san_diego_website

    It definitely hurts the soul when you take that final plunge. I think the main thing for me last time was the I started far too large and focused entirely on the product and not the sales of such.

    What I learned the second time around was to sell early. Sell long before the product is ideal, in your opinion. You'll at least learn about your target markets and this will provide you with excellent feedback with which you can be agile and alter your product while its still in early evolution. As long as you support what you release, regardless of stage in the product cycle, your clients will be happy and word of mouth will flow.

  • http://juicy-forex-signals.blogspot.com/ Forex signals

    Very well written post…quality content! Keep up the great work! Thanks, Ben!

  • http://www.thenewbiesuniversity.com/ Lee

    Thanks for this timely post Ben, I've been working with a few newbies who have fallen into this mode of behavior and am working to help guide them to higher ground.

  • AdventureCyclist

    Great topic and superb points. I am probably still a year or so away from hoping to avoid the pitfalls you describe :)

  • http://www.increaseyourtraffic.co.uk/ AdventureCyclist

    Great topic and superb points. I am probably still a year or so away from hoping to avoid the pitfalls you describe :)

  • http://www.missouritaxcredits.com/ tax credits

    Sheesh, always short on money, aren't we fellow entrepreneurs?

    Of course, we could always run up $30k in credit debt to fund something ourselves!

  • bestgiftsfor

    I don't work for a startup, but I've witnessed first hand many new projects that happen with this same exact sequence of events. Sometimes it seems that no matter what you say (when you're a peon:-) ) they don't listen. Even though you live in the trenches and sometimes know better than they do what your customers want….it's an ugly progression for sure.

  • http://financialsecrets101.com/ Griff

    Great post! well put. I have experience this same “DOA” to a small extent. There have been several businesses that I have started and have failed miserably. But from those mistakes I have learned to surround myself with wise counsel before making the “jump”.

  • cbacon

    Thanks for getting to the root of many problems with startups. While I agree with your assessment, I really don't know what to do about it. It seems to me that the same process that gives us DOA companies is the same one that gives us the great new firm. I'm starting to think the best approach is to keep the cost (money and time) low and repeat the process enough times to have one work.

  • http://www.alabamabusinesstoday.com/ CBacon

    Thanks for getting to the root of many startup problems. It seems to me that the same process that gives us DOA startups gives us the next great company. I am wondering if the best solution is to keep costs low (time and money) and keep trying until an idea pays off.

  • http://www.snazzycat.com/ silver beads

    i believe it takes a team of people, (minimum 2 ) to start something that will work, its rare to find one single indivisibly to start something and be able to control both business aspect of things with the technical, its safe to say 95% of successful businesses started out with a solid team to cover all aspects of the business…if im wrong correct me :)

  • http://www.norfolkhome.net/ Norfolk Home

    Very true, some excellent points. I’ve had some of the same problems my self in starting up a business.

  • http://www.facebook.com/people/Artemis-Ephesus/100000688697130 Artemis Ephesus

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Ben Yoskovitz
I'm VP Product at GoInstant.

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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