Is your startup a zombie? Why you should pivot more.
Great post by Y Combinator alumnus and Referly founder Danielle Morrill about zombie startups. She says that her biggest fear is to become one of those companies that are seemingly alive, but are really dead: “Kind of like in the 6th Sense when Bruce Willis doesn’t realize he is dead and tries to have a nice dinner with his wife, there are startups out there who are still “operating” but might as well not be.”
She also implies that a few of her ex-colleagues at Y Combinator are probably in this league. She even has a hint about how to spot them: “You could simply cross reference yclist.com with alexa.com, and any company that shows little to no growth in web traffic in the past year that claims to still be operating is probably a zombie. Yes, even companies that focus on mobile or enterprise sales should see healthy growth in web traffic at the early stage.”
(I did this with a few high profile European startups and sadly, it seems some of them are walking dead. The ones that are doing great immediately jump out: that curve really goes up and away).
Danielle Morrill has the courage to come out and say that her idea didn’t work, while highlighting what’s probably the most difficult dilemma for founders: do you toughen it out because you internalized Paul Graham’s truism that startups should be ugly, small but basically indestructable like cockroaches, or do you pivot?
What surprised me in her blog is that apparently, for all the talk about pivots, it seems not a lot of people are actually doing pivots. See this quote from an investor:
“The biggest problem we see with early stage companies coming out of YC, or really any program, is that they’ll approach a year or two after they’ve graduated to raise a seed round. It’s exciting to see they’re still alive and pursuing their vision, but then we ask about the growth of the team and the ways they’ve been capturing the opportunity of the business in the time they’ve had… and discover everything is the same. The same 2 or 3 people, the exact same idea, very little growth around key metrics like engagement or revenue. So why should try raise a series A? What have they proved?”
Morrill also includes this checklist for you – if reading the list makes you antsy, it’s probably time to do something:
- You don’t want to get out of bed in the morning
- You don’t want to go out in public for fear you’ll have to explain what you do
- You haven’t hit 10% week-over-week growth on any meaningful metric (revenue, active users, etc)
- You’re working on the same idea after 12+ months and still haven’t launched
- You’ve launched a consumer service and have less than 2% week-over-week growth in signups
- You’ve launched an enterprise service and have less than 2% week-over-week growth in revenue pipeline
- You are the CEO and hole yourself up in the offices so you don’t have to talk to employees and can read TechCrunch
- You’ve hired consultants to figure out revenue, culture, or product in a company of less than 10 people
- You’re at SXSW right now reading this post and trying not to cry
I think people might be a bit afraid of leaving the painful but familiar route behind. It might be helpful for them if you tell us about your pivots in the comments.[Read more: Danielle Morrill] [Photo: Grmisiti, Flickr]
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