In 1997 I started a company with two professors from MIT in the emerging Internet healthcare field.  We made a lot of mistakes, but probably the biggest mistake was made at inception.  We did not have the right DNA in the company for what we were trying to accomplish. 

The two professors were academics and I had a consulting services background (albeit a consulting startup).  Their research had been on using lightweight web based systems on bringing information on the same patient from disparate systems to the point of care.  What was missing was someone with product management DNA (and to a lesser degree someone who had sold to healthcare organizations before).  The bottom line is that we failed initially to deliver a product that met anyone’s actual needs and reverted to a consulting model.  From that we eventually developed another product which was quite successful until the company was sued by a much large company (but that is a different story).

I have since then seen many variants of this pattern.  Probably one of the more common ones is to have founders from within an industry that they understand incredibly well and in which they have identified an opportunity.  The opportunity requires the development of a technology-based product or service.  The missing DNA: none of the founders have any product development or tech experience.  I can’t think of many examples from my own experience where that was ultimately a successful.  Most of the companies eventually failed to deliver a successful product or service.  Either a complete failure (meaning the people or companies hired to build the product did not complete it at all) or a failure to meet the actual needs of the customers (due to a lack of product management).

It will be interesting to see what happens to many of the YCombinator startups over time.  They are all long on engineering DNA, so products/services are always getting delivered (which reduces one kind of startup risk dramatically).  But whether or not these are a good match for the respective opportunities is not always as clear.  Sometimes the differences between a product / service that takes off and one that does not are fairly subtle and it takes a special skill to get that right.

The most important lesson for myself as an investor and for prospective/current founders is to always ask whether all the key skills and experience are in place early on to make the company a success.