From the closure of the Rice Network: A guide to the death of a start-up company!

Recently, a hot spot is the closure of the rice, a ten-year-old shop to the sudden collapse of the site to enter everyone's vision.

Company death, there are generally two killers, one is the sound killer-products, one is silent killer-people.

1. One of the killers of rice is group buying. Internal staff: The biggest blow to the rice network was in 2010, at that time, the rapid rise of group purchase site, including the main competition of the rice network in the public comments are in the group, the Rice network began to hesitate, but also be forced to follow up, but too slow, by the United States and other competitors fall too much.

2, another killer is mobile internet. Catering industry in recent years is the largest mobile internet impact of the industry, a company can not keep up with changes, will be eliminated.

3, Silent killer is the equity dispute, this reason should be the most crucial. Media interview an employee: "This March, the rice network and the last investor fell out, both sides do not recognize the company is their own, the CEO Sanli never appeared in the company, the company has no one to control, we can only disperse." "

For the traditional enterprise's Internet transformation, this silent killer is the most terrible, how to beware of this silent killer, the United States entrepreneurial coffee Y Combinator summed up a series of "Start-up Companies to Die Guide", it is worth learning.

(The following sources include Forbes Hollie Slade)

Jessica Livingston Jessica Livingston, one of the founding partners of U.S. venture capital Y Combinator, helped shape a Silicon Valley heavyweight start-up company, the online cloud storage service Dropbox, the home short rental services website Airbnb, Social news aggregation sites Reddit and stripe, for example. As of today, Y Combinator has invested 630 start-up companies. These startups will advertise their business plans to selected audiences for a three-month training camp in Silicon Valley to show up in the best possible state on demo day, to "Demo Day."

Right now, Y Combinator is reviewing 3,000 applications this summer training camp, up nearly 20% from last year. Of these 3,000 applications, only 2% will be selected. Although the incubator has done well in the past, some start-ups will inevitably disappear without a trace. In this, Livingston and Forbes share her each period of financing will see some of the enterprises can be eliminated in the invisible key problem, these silent killers could have been completely avoided.

"Even ten years ago, that's when Y Combinator was just set up, and I thought that relationships started in a more natural way," Livingston said, "and Larry and Sergei worked together to develop the project in college and eventually turned into Google--that's a more normal approach. ”

Chose the wrong co-founder

Livingston saw more and more people board, they know each other one months or even not to the Y Combinator application. They often meet at the "programming Marathon" or the hackathons weekend, and entrepreneurs may be just a superficial relationship.

"This relationship is not that natural," Livingston said. "The reality is that these people created the company and things started to go wrong. The situation is getting worse, and the relationship does not last long and does not have the trust needed to overcome the difficulties, and the co-founder then parted. ”

Livingston says this is the problem she sees repeatedly in every investment cycle in Y Combinator. "If people can't work together, it's going to be a big problem for a company and it's going to ruin the company's future," he said. "Sometimes, especially if we give them some money--they get 100,000 dollars, and suddenly one of the co-founders thinks: Oh, 50,000 of them are mine--this problem is going to be tricky." ”

"Be careful when choosing a co-founder, because your relationship will be tested again and again over the next seven or so years, and if you don't have a solid foundation, your company will probably fail." "she said.

Equity distribution Uneven

Another deep-rooted problem that may exist among founders is the uneven distribution of equity. If a co-founder of the company had spent half a year on a plan before another co-founder joined, it seemed reasonable to have an equity distribution.

"I often see this happen," Livingston said, "and I urge people to consider the long term, not the one-year agreement." The person you want to be introduced to as a co-founder will be able to devote yourself fully to the number of shares they have gained, and work hard and share the company's joys and sorrows in the long run. ”

No clear leader

It often happens when friends start a company together, Livingston says. "It makes us a little nervous-no one is responsible for advancing the vision." ”

"If three good friends from school, they might think: ' Why is this person responsible, not me. "And I see some people will be arguing internally," she said, "and this is something to be careful about, because the work will not be done effectively." ”

Distraction

In the early stages, the most important thing is to develop ideas and create a product that people want to use, Livingston said.

"So far, the biggest killer of early startups is that they haven't created what people want to use," he said. For early start-ups, a huge silent killer is distraction. Many of the things that entrepreneurs can do feel like work, they feel important, but they are not related to creating a product. Those things may be drinking coffee with an investor, forming a team of advisers, and so on, because it looks like something a startup should do, but it actually leads to serious distraction. "she said.

It is much more important to build a product and talk to the user than to attend meetings and events that connect with the relationship.

Developing relationships with investors at an early stage can be particularly risky, as startups may be pulled into the financing model before they are ready.

"Some people will email us in the first few months and say that Sequoia Capital (Sequoia) has heard from a friend that we want to join us for coffee, do you think we should meet? We would say no unless you are ready to jump into financing mode. "Livingston said. When the time is right, the founders often forget that they want to start the auction process and not just accept the first offer, she said.

Beware of talent Acquisition

In Silicon Valley, large companies, such as Google, sometimes buy companies that are still in very early stages, just to get their team.

"High-tech companies desperately want to hire good people, so many of them will take advantage of talent acquisitions, in which case they buy early-stage companies and then abandon the company and retain the talented program team." "Livingston said.

They tend to lure these companies into a series of talks and say they want to work together. "They're not talking about cooperation, they're trying to find out if they can buy you millions of dollars." "Livingston said.

It takes skill to reject such cunning proposals. "I never said to entrepreneurs not to pursue being bought by big companies, but that means their startups will never be the next Facebook because they were taken down in the first part." "she said.

Worse, most of these meetings will not produce any concrete results, and the founders are accustomed to selling the company's ideas for 2 million of dollars, and stop developing their companies.

"Communicating with people in the corporate development team is the most dangerous form of distraction. "Livingston said.

Don't know the problem

"We've received a lot of applications from people trying to solve problems they don't understand at all." "Livingston said. Successful companies are born to conquer the real life needs to solve the problem and problems.

"You have to be really sure that your ideas have developed in a way that is realistic, from the problems you encounter, rather than artificially fabricating a solution for a problem you don't know much about," he said. "Livingston said.

If this is something you've been through, it means that you are a user. "You can stand in the user's shoes and think about what you're creating and understand the solution." "she said.

Can't cope with the ups and downs

"When we describe a start-up as an emotional roller coaster, we always laugh, but it is," Livingston said, "One day you may be on top of the world, but the situation is changing, and the next day someone has withdrawn your venture capital agreement. ”

In the end, the situation is so dramatic that a lot of people can't deal with it. "You have to understand the degree of rejection you face, and you're not like joining a big company, and many of these ups and downs in big companies have been weakened because every day is not going to change that much." "she said.

Cost control

If you want to expand the size of your company, it's important to control costs so that you can stay long enough to get financing, Livingston said.

Here, spending more for expensive domain names and flashy videos is a serious problem. "When they don't even create a product, entrepreneurs spend tens of thousands of dollars on domain names simply because they have a unique name for the company." "she said.

"Finally, if you burn up cash and you can't get financing, if you don't have some attraction, you're not going to get the money, you're done." "she said.