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The Obvious Mistake Most Startups Know Not to Make (But Still Make Anyway)

Rome wasn't built in a day and neither is a business. Start small and then scale out.
The Obvious Mistake Most Startups Know Not to Make (But Still Make Anyway)
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How many business books does an aspiring entrepreneur have to read before they learn that Rome wasn't built in a day? Or a week. Or even a year.

Rome became Rome by first being a small town on the banks of the Tiber River.

Your startup is that small town. It's not Rome.

Ask any aspiring entrepreneur what they want to build, or are building, and they'll respond with something along the lines of: "It's like Uber, but for clothing," or "It's like Facebook, but for cats."

They are thinking about Rome.

Related: Some Startup Strategies Entrepreneurs Can Learn From The Lord of the Rings

But that's not how successful companies are built. Uber was a private black car service before it was Uber. Facebook was a digital college network. Snapchat was a sexting app -- not a mogul advertising platform. All the glorified startups that are praised today have become their own version of "Rome." But when they started out, they were just a measely little town on the banks of the Tiber River.

When this is pointed out, however, and people are reminded to "start small," co-founders everywhere nod and smile and say, "Of course, of course," without really believing what they're agreeing to. They want to move fast. They want to raise millions. They want the office in Silicon Valley with a coffee bar and a barista. They don't want to start small.

And what happens then?

They fail. They run out of funding. Their user acquisition flatlines. And they pack up and go home.

Because they weren't building something viable from the beginning.

Related: Need a Solid Startup Strategy? Try On-Demand Talent

Deep down, every entrepreneur knows not to make this mistake. They know to first find something that works, creatively and mathematically, and then scale it. They know when they're lying to themselves. They know when things are "too good to be true." But they don't listen -- or they don't care. They aim for Rome regardless.

Rome wasn't built in a day. 

This is a perfect example of how destructive believing your own bias can be in the world of entrepreneurship. You tunnel-vision on your idea, so much so that you forget to check your own math. You don't even bother "crunching the numbers" because you believe your vision for Rome to be that fantastic (or you do "crunch the numbers" and you inflate them with excitement). 

Related: 7 Creative Strategies for Marketing Your Startup on a Tight Budget

The clearest example of this is seen by running a Facebook advertising campaign. If you do the math correctly, and your marketing funnel is working effectively, you can see, without a doubt, that for every $X you spend on ads, you make $Y net positive. So you know for every $5 you spend acquiring users, you are making $20 on the backend.

That's great. Now that you've got the equation down, you can scale. You can spend $5,000 on ads and make $20,000 on the backend. 

You start small. You figure out your model. And then you scale.

Most startups do the opposite of this. They raise money before they even know what they need money the money for. They talk about "changing the world" before they've even come to a conclusion on what it is they are going to do differently in their own industry. They create picture-perfect pitch decks selling an idea that sounds great in theory but has absolutely no practical data proving that it works, or could work in the first place.

Serial entrepreneur Gary Vaynerchuk talks about this all the time. We are in a golden age of entrepreneurship -- and the "golden" part he is referring to is the fact that people are raising millions upon millions of dollars for startups that will never work. And the investors themselves are only contributing to the problem, because they are throwing money at industries that sound "hot" and "enticing," without really understanding how or where the money will actually be made. Or whether that model is going to still be viable a year, or two, or five down the road.

It's so obvious. And everyone knows not to make these mistakes -- and yet they continue to go on building.

Don't worry about Rome just yet.

Build a sustainable small town first. Then go from there.