Silicon Valley Investor Paul Graham Reveals One Of The Biggest Mistakes Startups Should Avoid

He co-founded the renowned Y Combinator startup school that produced successes such as Dropbox and Airbnb, and he has a piece of advice regarding a common mistake among startups.

According to Graham, too many startup founders spend time talking to corporate development executives from larger companies.

That's the department you'll usually hear from if someone is interested in buying your startup.

This is a bad thing, Graham wrote in a recent essay on his website, because many founders talk to corporate development at the wrong time.

You should only talk to corporate development if you're ready to sell your company right now and believe you're going to get a sufficiently high offer, Graham writes.

So, this means you should only engage in these discussions if your startup is doing really poorly or really well, since you'd either have nothing to lose or know that the offer would have to be high.

Graham writes that too many founders talk to corporate development when their company is in that middle stage. This is bad, according to Graham, because it poses a distraction to the founder. Here's what he wrote:

Distractions are the thing you can least afford in a startup. And conversations with corp dev are the worst sort of distraction, because as well as consuming your attention they undermine your morale.

To be clear, Graham isn't saying you should never sell your company - he's just saying you should have a clear idea of whether or not you'd want to sell and avoid being manipulated.

Check out his full essay for more detail.