Why Companies Fail: Common Problems Outside and Inside YC

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Gustaf Alströmer is a Group Partner at Y Combinator, where he’s worked with over 600 startups in his 6.5 years there. He’s also a fellow Airbnb alumnus and even started the original Airbnb growth team. In today’s podcast, Gustaf discusses common reasons startups fail and how he helps coach founders on avoiding these mistakes. He explains the attributes that the best founders tend to have, and signs that a company has potential. We also cover the growing space of climate tech, for which Gustaf has a huge passion and where he’s already had an incredible impact. He shares some key areas of innovation and investment in climate tech, some notable companies he’s helped fund, and where he sees potential going forward.

Find the full transcript here: https://www.lennysnewsletter.com/p/lessons-from-working-with-600-yc

Where to find Gustaf Alströmer:

• Twitter: https://twitter.com/gustaf

• LinkedIn: https://www.linkedin.com/in/gustafalstromer/

Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• Twitter: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

Referenced:

• Airbnb tweet: https://twitter.com/gustaf/status/1580330162725347330

• Startups Are an Act of Desperation: https://blog.eladgil.com/p/startups-are-an-act-of-desperation

• The 18 Mistakes That Kill Startups: http://www.paulgraham.com/startupmistakes.html

• Do Things That Don’t Scale: http://paulgraham.com/ds.html

• Marc Andreessen: https://a16z.com/author/marc-andreessen/

• How to Talk to Users: https://youtu.be/z1iF1c8w5Lg

• How to Get Your First Customers: https://youtu.be/hyYCn_kAngI

• Pachama: https://pachama.com/

• Request for Startups: Climate Tech: https://www.ycombinator.com/blog/rfs-climatetech

• Climate Draft: https://www.climatedraft.org/

• Seabound: https://www.seabound.co/

• Fleetzero: https://www.fleetzero.com/

• Unravel Carbon: https://www.unravelcarbon.com/

• CarbonChain: https://www.carbonchain.com/

• Sinai: https://www.sinaitechnologies.com/

• Enode: https://enode.com/

• Statiq: https://www.statiq.in/

• Heart Aerospace: https://heartaerospace.com/

• The 100% Solution: A Plan for Solving Climate Change: https://www.amazon.com/100-Solution-Solving-Climate-Change/dp/1612198384

• Without a Doubt: How to Go from Underrated to Unbeatable: https://www.amazon.com/exec/obidos/ASIN/1982147903?tag=simonsayscom

• Emily in Paris on Netflix: https://www.netflix.com/title/81037371

• Everything Everywhere All at Once on Showtime: https://www.sho.com/titles/3493875/everything-everywhere-all-at-once

• How to Apply and Succeed at Y Combinator, by Dalton Caldwell: https://www.youtube.com/watch?v=8yiOcCPvyNE

• Y Combinator on YouTube: https://www.youtube.com/c/ycombinator

In this episode, we cover:

(00:00) Gustaf’s background

(04:15) What made Airbnb so special

(07:21) How culture interviews and hiring founders contributed to Airbnb’s success

(10:31) Motivations for starting companies

(13:17) Why Gustaf helps founders understand their motivations

(14:13) Reasons you should not start a company

(16:03) The magic that happens at YC office hours

(20:45) Why founders in coworking spaces should schedule time to talk 

(21:36) Questions Gustaf asks founders

(22:26) Common reasons startups fail

(26:23) Getting over the fear of rejection 

(27:57) The importance of solving for pain points and why you should watch users

(34:21) The value of having a technical co-founder

(37:42) How founders without technical expertise have succeeded

(40:46) Attributes of the most successful founders

(44:57) Why it’s hard to predict success and how YC advises against failures

(46:59) Indications of potential for success

(50:03) Speed vs. quality

(51:11) Confidence vs. humility

(52:48) Execution and tactics vs. strategy

(54:36) Autocratic vs. collaborative-driven founders

(56:27) Why you should focus on product first

(59:03) The economic incentive for investing in climate tech

(1:02:16) The clean-tech bubble of 2008

(1:04:59) Why you don’t need to be super-scientific to work in climate tech

(1:06:51) Areas of climate tech and promising companies

(1:12:27) What’s going well in the climate-change space

(1:16:49) Lightning round

Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

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