Article: YAFO is a Silent Killer of Promising Startups

In the fall of 2006, a Silicon Valley CEO came to Phoenix to give a talk to a small collection of software and internet entrepreneurs. Manish Chandra had just sold his community buying website called Kaboodle to Hearst Corporation, a big magazine publisher trying to figure out the internet. 

Manish created and sold Kaboodle during a confusing time in the software industry. This was between the dot-com implosion of 2001 and the mobile-social-local-SaaS explosion of the 2010s. Smartphones and fast internet and unicorns weren’t common yet. 

Many things have changed since then, but Manish’s vivid story of the “YAFO” is still a huge challenge for tech founders that won’t go away anytime soon. 

• I see YAFO when I talk to startup founders who are just getting started. 
• I see YAFO when I work with early-stage tech CEOs experiencing the challenges of fast growth--or stalled growth.
• I see YAFO when I talk to CEOs of very big companies that are struggling to modernize and adapt.
• I see YAFO in my own head running my own business. 

YAFO stands for “Yet Another Freaking Opportunity.” YAFO a common affliction for tech company leaders and it’s a growth killer.

YAFO is when we can’t resist another idea. Another marketing channel Another partnership. Another growth tactic. Another feature. Another customer segment. Another funding avenue. Another possibility.

When Manish started Kaboodle, everything seemed possible. At this stage, he could fill whiteboards with lists of possible features, customers they could serve, ways to generate traffic and revenue streams

Anything seemed possible. This was going to be easy. YAFO!

Until he got going. Then his lists shortened quickly from all the things he COULD do to the things he CAN do that actually work well. Manish eventually grew his startup by creating a focused product experience for a small set of customers. Then he stopped doing everything else he could be doing and focused on that.

Investors call this stage “product-market fit,” but it’s actually more than that. Startup winners ONLY serve a small market niche with a single product and they grow fast from there. It’s counterintuitive, but the opposite of YAFO is required at this growth stage. 

For the very few startups that find fight their way through YAFO to find their focus and start to grow, YAFO reappears when they emerge as a promising growth company. 

Manish’s company got bigger, got funding, and got noticed. A new growth game had started and anything was possible again. After years of starvation, focus, and early success, it was easy to be tempted by the many product possibilities, new channels, new investors, and new partners that suddenly appeared.

Finally, he had more resources to say YES to everything again. YAFO! 

Fortunately, Manish resisted YAFO again and sold his company during a positive growth phase. It worked out for him at the time, but most startup founders aren’t so fortunate. 

Early traction and funding don’t guarantee success. Around 75% of funded startups fail to exit and pay back their investors. Despite early traction and high optimism, most of the promising startups end up stuck and sidelined. “Failure to exit” is no fun for investors, but it’s brutally painful and life-altering for the startup founders and their teams.

The problem for funded fast-growth companies is often YAFO. Chasing too many opportunities too fast. Instead of testing and trying many things to find what works and THEN SAYING NO to all but a few options, they try to do too many things and get stuck again.

YAFO is a common and permanent problem because it’s the way our human "survival brain" works. Entrepreneurs are human and so are their investors, teams, and customers.

We all have survival brains, so YAFO will be with us for a long time.