What’s the best way to survive?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

You either have to fire good people, get some or all of the employees to take less salary for a while, or increase revenues. Getting people to take less salary is a weak solution that will only work when the problem isn’t too bad. Which leaves two options, firing good people and making more money. While trying to balance them, keep in mind the eventual goal: to be a successful product company in the sense of having a single thing lots of people u… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

It may seem facile to suggest a startup make more money, as if that could be done for the asking. Usually a startup is already trying as hard as it can to sell whatever it sells. What I’m suggesting here is not so much to try harder to make money but to try to make money in a different way. For example, if you have only one person selling while the rest are writing code, consider having everyone work on selling. What good will more code do you wh… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

There may be nothing founders are so prone to delude themselves about as how interested investors will be in giving them additional funding. It’s hard to convince investors the first time too, but founders expect that. What bites them the second time is a confluence of three forces: The company is spending more now than it did the first time it raised money. Investors have much higher standards for companies that have already raised money. The co… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

Founders overestimate their chances of raising more money, and so are slack about reaching profitability, which further decreases their chances of raising money.

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

Y Combinator tells founders who raise money to act as if it’s the last they’ll ever get. Because the self-reinforcing nature of this situation works the other way too: the less you need further investment, the easier it is to get.