There's No Excuse for Making Any of These 7 Fatal Startup Errors
Through my years of experience advising and investing in startups (and founding my own), it’s clear that mistakes in the beginning stages of startup development are far more the norm than the exception. Though very few startups succeed out of many that vie for funds, those that fail often make easily avoided mistakes.
Though there are many ways to make your startup successful, here are a few common missteps that, with a little forethought, startups can avoid.
1. Not speaking to users.
Startups that fail often create a product for what they think users want, not what they actually want. The product is not one that the founders themselves want or need, but they assume that the product they have created is in demand -- without doing the necessary research in the demographic for which the product was created. What do the people who are using your product desire, and what will make them use it? Avoid a huge mistake and get empirical data from your users before you sink time, money and effort into a product you think has value.
2. Not testing with users.
There are many easy ways to test your app or website with users, so there is no excuse anymore to roll out a product without having all the feedback that you need. Don’t guess at what the biggest problems or kinks are in your product. Make something that users will be excited to buy and use. Work out the kinks with your target demographics, before your launch.
3. Pushing forward for years without market feedback.
There’s little more disheartening to me than seeing a team spend years making a product, then when they’re finally in the market, realize the product needs to work in a completely different way. The value of a product is not determined by whether it stubbornly remains the same through development and launch; it is determined by how well it suits the needs of the market. Every product needs rigorous feedback, and likely multiple iterations, to reach it’s full potential.
4. Running a purely technical team.
Understandably, most startups place emphasis on having a brilliant technical team that can make slick, innovative products on par with thousands of other startups. However, chances are technicians who can make an amazing product are not so good at taking it to market. It is necessary to have a brilliant sales and marketing guru on your team who works in tandem with those who make it technically genius. One without the other is a sure recipe for failure.
5. Not enough resources at the start.
When a startup is running so lean that they have nothing, there’s an immense pressure to raise cash to keep going and advance to the next level. Unfortunately, this has the problematic effect of making a startup raise cash too early. With a huge investment, the clock starts ticking and VCs are looking to make a return on their investment, which means a startup may have to advance faster than they want or are prepared to do. The better plan is to take a reasonable, fair deal early on, creating the time and space needed to keep pushing forward at a pace that won’t kill.
6. Not enough experienced people.
There are countless startups out there with devoted teams looking to raise cash and reach success. However, a mistake I see time and time again is startups with a passionate but naive team setting out to get funded. In reality, obtaining funding requires experienced team members. VCs are looking for seasoned veterans to make a project successful. Make sure your team includes people who have a proven track record and the grit to follow through.
7. Attacking a problem that’s too small.
Aiming at an obscure market would, theoretically, help avoid business competition. While this may be true, if what you want to solve in the marketplace is too small, you’re not going to get Series B funding. In a niche market, there’s often no room for scaling into a multi-billion dollar company, which are the companies that get Series B. If your company is unlikely to to scale, it will be very tough to get Series A, because there is no hope to ever get a Series B. If your company won’t scale enough to compensate your investors, it’s not worth their, or your, time. Your company needs to be providing enough value to the marketplace that you and your investors will be compensated accordingly.