How Not to Die

Sunday, September 2nd, 2007

Paul Graham explains — to the startups he’s funded — How Not to Die:

A couple days ago I told a reporter that we expected about a third of the companies we funded to succeed. Actually I was being conservative. I’m hoping it might be as much as a half. Wouldn’t it be amazing if we could achieve a 50% success rate?

Another way of saying that is that half of you are going to die. Phrased that way, it doesn’t sound good at all. In fact, it’s kind of weird when you think about it, because our definition of success is that the founders get rich. If half the startups we fund succeed, then half of you are going to get rich and the other half are going to get nothing.

If you can just avoid dying, you get rich. That sounds like a joke, but it’s actually a pretty good description of what happens in a typical startup. It certainly describes what happened in Viaweb. We avoided dying till we got rich.

It was really close, too. When we were visiting Yahoo to talk about being acquired, we had to interrupt everything and borrow one of their conference rooms to talk down an investor who was about to back out of a new funding round we needed to stay alive. So even in the middle of getting rich we were fighting off the grim reaper.

You may have heard that quote about luck consisting of opportunity meeting preparation. You’ve now done the preparation. The work you’ve done so far has, in effect, put you in a position to get lucky: you can now get rich by not letting your company die. That’s more than most people have. So let’s talk about how not to die.

We’ve done this five times now, and we’ve seen a bunch of startups die. About 10 of them so far. We don’t know exactly what happens when they die, because they generally don’t die loudly and heroically. Mostly they crawl off somewhere and die.

For us the main indication of impending doom is when we don’t hear from you. When we haven’t heard from, or about, a startup for a couple months, that’s a bad sign. If we send them an email asking what’s up, and they don’t reply, that’s a really bad sign. So far that is a 100% accurate predictor of death.

Whereas if a startup regularly does new deals and releases and either sends us mail or shows up at YC events, they’re probably going to live.

I realize this will sound naive, but maybe the linkage works in both directions. Maybe if you can arrange that we keep hearing from you, you won’t die.

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