Too Much Funding, Too Easily Raised, Can Be the Start of Disaster

Paul Graham’s maxim is ‘Make something people want,’ because that is the only way your company can grow, and growth is a startup’s defining characteristic. YC’s internal benchmark is whether you can grow 10% every week. Paul Graham places great emphasis on frugality. He does not want startups to have lots of money; he wants you to make every dollar count, because only then are you forced to concentrate on getting things right. YC teaches you how to win investors over with a story—for example, by drawing a connection between your company and a well-known unicorn. But YC’s greatest strength is probably its network. Your company may have been unknown before, but joining YC immediately brings it to the attention of many VC firms. As YC graduates grow, they return as investors, creating a vast alumni network whose members help one another. Quite apart from anything else, simply having thousands of companies willing to learn about or even try your product because you graduated from YC is enormously valuable. Through its reputation and network, YC has created a scale advantage in venture capital. ----- Robin Many Taiwanese startups feel they cannot expand into the market if they raise too little. But founders should calculate the capital required at each stage carefully. Raising too much, with money arriving too easily, is often the beginning of disaster. Focusing your energy on making every dollar count is the key to startup success. --- Frank Lloyd Wright: ‘The human race built most nobly when limitations were greatest.’ The greatest buildings humanity has produced have often been built under the greatest constraints.