What is a common cause of failure for post-seed companies?

Fake product market fit is a common cause of failure for post-seed companies.

What signs indicate fake product market fit?

Signs of fake product market fit include excessive hiring, more business people than engineers, lack of metrics dashboards, and scaling the sales team without seeing any progress.

How can startups prevent fake product market fit?

Startups can prevent fake product market fit by choosing an honest KPI, tracking retention carefully, capping burn, raising less money in the seed round, and starting with strong technical co-founders.

What can cause co-founder conflict in a startup?

Co-founder conflict can be caused by weak previous relationships, unclear roles and responsibilities, lack of trust, and unrealistic expectations.

How can startups improve product development?

Startups can improve product development by establishing a repeatable product development cycle, involving the whole team in brainstorming, collecting qualitative and quantitative feedback, and using product management software.

Achieving Startup Success: Essential Strategies for Growth

This article is a summary of a YouTube video "The 5 things that kill startups after their seed rounds with Michael Seibel, CEO of Y Combinator" by SaaStr

TLDR To achieve real product market fit and prevent false beliefs about success, startups should focus on honest KPIs, track retention, cap burn, hire essential employees, and make revenue generating employees pay for themselves, while avoiding co-founder conflict, unrealistic expectations, and aggressive spending, and instead, establish a repeatable cycle, involve the whole team, and focus on solving top problems for customers.

Strategies for Startup Success

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"The failure rate at startups is so high that being average amongst smart people isn't enough, you've got to be extraordinary."
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The people around you are the floor and not the ceiling - as a founder, it's important to understand this and strive for excellence.
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To become extraordinary, embrace the idea that you can get better over time, form good habits, seek advice from a "Jedi council" of extraordinary people, and set measurable goals that challenge you.
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Having a repeatable product development cycle and process for deciding what to build is crucial for startups to take as many shots on goal as possible.
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Excellent technical talent is crucial for startups, with the ability to build software and lack of intimidation being key factors.
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In the early days of a startup, it's more important to focus on getting paying and retaining customers who love your product than on marketing and sales channels.
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Being an underdog is a superpower: "Being an underdog being underestimated is a superpower of a startup."

Common Causes of Startup Failure

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"Fake product market fit" is a common cause of startup failure after seed rounds, with founders falsely believing they have achieved it.
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Lack of talking to customers can kill startups: "When you stop talking to customers, you stop getting insights on what's wrong and what's right about your product."
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Co-founder conflict is one of the biggest things that causes companies to die, with "relationship debt" being a key factor.
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"The biggest mistake that founders make is they spend too much money too quickly after they raise their seed round."
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1. Startups that don't focus on the basics will likely lose to competitors who do.

Q&A

What is a common cause of failure for post-seed companies?

— Fake product market fit is a common cause of failure for post-seed companies.
What signs indicate fake product market fit?

— Signs of fake product market fit include excessive hiring, more business people than engineers, lack of metrics dashboards, and scaling the sales team without seeing any progress.
How can startups prevent fake product market fit?

— Startups can prevent fake product market fit by choosing an honest KPI, tracking retention carefully, capping burn, raising less money in the seed round, and starting with strong technical co-founders.
What can cause co-founder conflict in a startup?

— Co-founder conflict can be caused by weak previous relationships, unclear roles and responsibilities, lack of trust, and unrealistic expectations.
How can startups improve product development?

— Startups can improve product development by establishing a repeatable product development cycle, involving the whole team in brainstorming, collecting qualitative and quantitative feedback, and using product management software.

Timestamped Summary

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00:00
Achieving real product market fit requires profitable usage and the right type of users, while ignoring important metrics and misconceptions can lead to false beliefs about success.
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05:21
Choose honest KPI, track retention, cap burn, raise less money, hire essential employees, and make revenue generating employees pay for themselves to prevent fake product market fit and aggressive spending.
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08:25
Don't let investors dictate your decisions, have a mentor but don't rely on replicating their success, communicate with customers, avoid co-founder conflict, and don't let fundraising news create unrealistic expectations.
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15:27
Define roles, be extraordinary, believe in yourself, form habits, seek advice, set measurable goals to reach for extraordinary.
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19:32
Slow product development can lead to startup failure, but establishing a repeatable cycle, collecting feedback, involving the whole team, and meeting deadlines can prevent bad product development.
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24:45
Raising too much money in the seed round can hurt long-term success, while technical talent and focus on important metrics are crucial for startup success.
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27:59
Set aggressive goals, focus on solving top problems for customers, hire mostly software engineers, and understand that raising money does not equal success.
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34:19
Fund your startup with revenue to avoid giving up equity and have higher valuations for pre-a rounds.