Blitzfail: Why Startups Go off the Rails

Nivi: Entrepreneur and investor David Sacks, who serves as a Spearhead mentor, recently published a popular blog post, “BlitzFail: How Not to Go Off the Rails.” We’re going to discuss the article and ways that scaling companies go off the rails.

David is a founder and general partner of Craft Ventures. He was previously a founder of Yammer, CEO of Zenefits and COO of PayPal.

What motivated you to write the piece?

David Sacks: There’s a lot of content out there for founders about how to find product-market fit and scale their companies. But there’s not a lot of information explaining how founders can keep from going off the rails once they find product-market fit and begin to scale.

Every year we see promising startups derail after finding product-market fit. It happens quickly, and it can even happen on the verge of an IPO. WeWork filed an S-1 one week, and three weeks later it was potentially on the verge of bankruptcy.

Blitzfails are neither random nor unpredictable

I started thinking: Is each of these derailments a unique event, totally bespoke? That’s how it’s portrayed in the press; you see a sensational story every time it happens.

Yet, these failures are not random. They share common denominators and happen regularly—so frequently that it’s become an epiphenomenon of Silicon Valley. In the post I attempt to drill into common reasons why this happens.

But it’s not enough to simply point out how startups go wrong: I also examine why these underlying issues so often are missed by founders, seeming to sneak up on them out of the blue.

It’s gratifying to see the reaction I’ve gotten to the piece. A lot of founders and employees see it as a mirror reflecting their own experience. They say, “Yep, I recognize that,” “That happened to me,” “This was cathartic to read,” or “Yeah, we had numbers 4, 7 and 11.” It seems to be resonating with people.