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Capital, co-founders, community
Three things stand between wanting to start a company and doing it: capital, co-founders, and community. Founding is lonely, as anyone who has started anything knows. A room of people working just as hard, who don't think you're crazy and who bring networks you aren't exposed to, supplies the third.
The sixth gear
Being around the best of the best is the US Open of startups. A founder finds a sixth gear there and learns quickly whether they have what it takes. For those it lights up, it is a good signal to keep going, and those who find out it isn't for them can get off the venture treadmill.
Finding out early
Most of the people who have failed in this business failed for one of three reasons: the wrong thing, the wrong people, or too little capital. The same weeks can show that a business should be built with debt or acquisition capital instead of venture money, or that a founder should be a co-founder or first employee rather than the CEO.
Why is founding a company so isolating?
Few people around a founder face the same decisions, and many problems cannot be shared with employees or investors. A 2015 study led by psychiatrist Michael Freeman of the University of California, San Francisco surveyed 242 entrepreneurs. About half of them reported having at least one lifetime mental health condition. Peers who have gone through the same pressures are among the few people who can speak to it directly.
How do founder cohorts speed up learning?
Y Combinator began in 2005 in Cambridge, Massachusetts, founded by Paul Graham, Jessica Livingston, Robert Morris, and Trevor Blackwell. It grouped startups into batches that met together, including weekly dinners with speakers. Founders in a batch compare progress and borrow solutions from each other. Many accelerators and residencies since then have copied the cohort model.
Why do so many startups fail?
CB Insights has analyzed startup post-mortems and repeatedly found that lack of market need ranks among the top stated reasons for failure. Running out of cash and team problems also appear near the top of those lists. The categories overlap, since a company without demand runs out of cash and one with a weak team often misreads demand. No single reason accounts for every failure.
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