Ways to Kill Your Startup with Venture Capitalist & Author Paul Ahlstrom

You have 24 hours in a day.  You can build ditches, or you can build rocketships.  Wouldn’t it be more fun to go to the moon?  – Paul Ahlstrom   CLICK TO TWEET

Episode Summary

What would you ask a Venture Capitalist and author who has raised over $1B and directly invested in more than 125 different companies? How about, “What can I do to kill my startup?” In this week’s episode we talk with Paul Ahlstrom, the managing director of Alta Ventures and co-author of Nail It Then Scale It, to discuss his wealth of expertise and the 3 startup pitfalls that will guarantee you fail.

Talking Points

• Three pitfalls that will guarantee you fail:

  • Launching your product or service without the specific customer in mind. Don’t just fall in love with your idea and fail to continually think about exactly where it intersects with the customer’s pain you’re trying to resolve.

  • Going head to head with a market leader for the same customers without being better. Disruption comes from below, through going after an unserved customer. Don’t try to innovate and then go after the very same audience as the giants. It’s much easier to go after non-consumption that consumption. As that new market grows, it will niche the market above it and create M&A opportunities.

  • Scale it before you nail it. In other words, doing good and obvious things in the improper order. This will cause an inordinate cash burn rate. (By the time you get through a certain amount of cash, your company should be worth more than the amount that went in!) Starve, starve, starve the startup before you nail the PMF.

• Key startup hypothesis: For (name your customer) that have (name your problem) we do (name your solution) unlike (name your competitor) through these benefits (name your benefits).

• Big Idea Canvas: “Before you try nailing and scaling a startup of your own, you need to be sure that your idea passes the ‘who cares’ test.”

Episode Quotes

• “Disruptive ideas initially come across as a bit stupid at first glance….. If you feel like you’ve got a dumb idea, you may be onto something!”

• “Bring the sales, bring the customers, bring your hypothesis up front in the process. Make sure they think it’s just as cool as you do.”

• “Does this idea pass the ‘who cares’ test? Do you truly want to spend the next 3-5 years of your life on this? If not… kill it quickly!”

• “Force yourself to adopt the sales mindset from the start, in order to create something that sells and not just something that works. Embrace the sales process of exchanging value, and get rid of preconceived notions that it’s a scary and unapproachable animal.”

Paul Ahlstrom is a co-founder and managing director of Alta Ventures, an early-stage venture fund and co-author of Nail it Then Scale it. For more than 30 years, Paul has operated on both sides of the table as a venture-backed entrepreneur (founder of Knowlix, sold to Peregrine Systems, sold to HP) and as an investor. To date, he has raised over $1B and directly invested over $500M in more than 125 startup companies. He earned his BA in communications from Brigham Young University and an honorary doctorate from the Netanya Academic College in Israel.