Andrew Goldner, GrowthX co-founder, explains why funded startups fail: lack of market need, not bad technology. He describes GrowthX's seed fund and accelerator model, and argues that go-to-market skills matter more than product features.
In fact, the number one reason why funded startups fail, not just in the Valley but globally, are founders that build interesting products that don't solve any market needs.
Hi, I'm Andrew Goldner. I'm one of the founders of GrowthX, and I'm here at Draper University.
And if you want to be a great entrepreneur, I suggest coming here, Draper University. After several years of being the publisher of Reuters News and running some other businesses for Thomson Reuters, living in Hong Kong and Singapore and traveling the region, I wanted to come back to the early stage of a company, and so moved my family back to the United States, came to Palo Alto, had a really interesting journey of a couple of years to figure out what I wanted to do next, and it was through that journey that I realized something that I think was very important about Silicon Valley, and I'm afraid to say it's still somewhat prevalent here, and it's something that I just want you guys to think about as you go through Draper University, as you build your relationships, and you seek to become entrepreneurs. And that is, in Silicon Valley, if you know how to build a product, they call you a founder. But if you know how to sell a product, they call you a non-technical founder, and it's meant as a second-class citizen. Why is that? Right? In my world, it's not dog food until I see a dog eating it. Right? Now, if you think about Silicon Valley, when I started practicing here in the Valley when I was a lawyer, let's call it 21 years ago, technology was extremely expensive. Technology was extremely complex. And very few people in this world understood technology and how to build with it. Flash forward to today, when technology has never been cheaper, has never been less complex, and thanks to computer science degrees and coding boot camps, technologists have never been more plentiful. And the reality is, just here in the Valley, how many founders really need access? How many of you in the audience, with the entrepreneurial journey that you're going to go on, really need to have proximate access to a jet propulsion laboratory? How many of you are truly going to invent a new molecule or even build hardware? The reality is, is most founders nowadays are living, as we all are, in the age of applied technology. We've graduated from the age of developed technology when the talent to develop and the resources to develop were what was important and what ultimately got funded and what differentiated you. Today we live in the age of applied technology. And the data proves it now. CB Insights is annually coming out with a report about the top 10 reasons why founders fail. And don't you know that 70% of the reason why funded founders fail have to do with the behavior of the people in the markets. They have nothing to do with the features and the functions of the product. In fact, the number one reason why funded startups fail, not just in the Valley but globally, are founders that build interesting products that don't solve any market needs, right? So imagine a huge graveyard with headstones everywhere, and they say, herein lies your product. Cause of death, no market need. And so on the journey while I was back in Silicon Valley and noticing these things, I was blessed to meet who are now my co-founders, And we founded GrowthX. GrowthX started out as a seed-stage fund, but where we tried to differentiate ourselves was that rather than focusing on giving you all undifferentiated capital, we tried writing checks, but only to those folks who had a recognized need and a desire to complement their product development skills and interests with market development skills and interests. And so we built a private accelerator inside of our fund that operates as a reverse paywall. You can't get access to my team until we give you money. And that's actually how we get our best deal flow. And that's also part of our core values of gratefulness and transparency, because as funders, we believe that we should be grateful to meet you. And that's why the first words you hear from us when we do meet you are thank you, because we express our gratitude. And we believe that we have to earn the right to invest in you, and we earn that right by being helpful. As it turns out, help is also an amazing way to conduct due diligence. And we help where we feel that help is needed the most, and data is now proving that out, and it's where we are experts. We're experts at very few things, but the things we are experts at, coincide with where help is needed the most in Valley and in other nascent startup ecosystems around the world, and that is how do innovators get their products into the hands of customers predictably, profitably, and scalably? Hey, I'm Andrew Goldner. I'm the co-founder of GrowthX, and I'm just off the stage talking with the new cohort at Draper University. What an amazing audience, super international, super diverse, and a lot of great questions. That was one of the best audiences I've had here at Draper University.
