5 Big Mistakes Young Entrepreneurs Just Keep Making
The allure of being your own boss is strong, but the reality of running a high-growth startup is that the company is your boss.
The world we live in has glamorized the idea of starting one's own business, to the point that children now dream of becoming celebrity entrepreneurs like Elon Musk and Mark Zuckerberg. As a result, engineers, designers and marketers are diving headfirst into the world of entrepreneurship from a young age.
While young founders have all the poise and promise needed to start a company, there are some experiences and information you simply cannot replace with hustle. First-time founders often have to spend a great deal of time overcoming their naivety, as they overestimate their likelihood of success while underestimating the amount of work ahead of them.
Here are five lessons I've learned from building my own company at 18, including what you should avoid doing as a young entrepreneur:
1. Losing focus.
One of the hardest parts about building a business is identifying where and how to invest your team's scarce resources (time, money and talent). It can be easy to get overwhelmed by the sheer number of different channels you have at your disposal. Making a decision and sticking to it can be challenging.
Without a clear objective, founders can inadvertently drift away from their initial company vision. First-time entrepreneurs often become distracted by flashy ideas, whether they come from inside or outside the company. Mature entrepreneurs, however, learn to say no to 99 percent of ideas that are likely to steer their team off course. Overworking your employees by chasing too many opportunities and spreading your resources too thinly is a recipe for disaster.
As the founder, you are the filter responsible for blocking out all of the noise from the outside world that could take your team off course. Many opportunities will inevitably come up that look promising in the short run, but that can damage your long-term ceiling.
2. Raising too much capital.
As a wide-eyed first-time founder, it can be easy to say yes to any investor (or wannabe angel) who offers you a large, enticing check for a portion of your fledgling business. Raising capital, when it is easily available, generally feels like the right thing to do. And it makes sense intuitively: additional funds can translate to more growth and opportunity for your company. But, the reality is that raising money at the wrong time or from the wrong people can do serious damage to your company's long-term value ceiling.
Finding the right group of venture capitalists to raise from is arguably just as important as the size of the check and the specific terms of the deal. Loud, poisonous investors can erode your company's culture, terrorize board meetings and take your team in the wrong direction.
Saturating your cap table with "negative-value" investors will hurt your chances of raising funds down the road. No one wants to work in a toxic environment. However, working with competent venture capitalists can be incredibly valuable, as they are able to provide access to mentorship and share years of learnings and observations.
Timing is important, too. Fundraising when your company is still trying to find product market fit can give your team false validation. At the end of the day, what is important is that you are building a product that solves real user pain points, not one that does what the investors think it should do. Detaching your ego from your choices can help you make clearer decisions on the best time and place to raise money.
3. Dealing with imperfection.
Startups often beat out incumbent players because they are able to ideate and iterate more quickly. Because of this, founders must learn to be comfortable shipping products that they know are imperfect. While makers tend to be product and design perfectionists at heart, shipping an unfinished product for the sole sake of testing an assumption is one of the best ways to accelerate learnings.
At a high level, this is the core philosophy behind the "lean startup model" now implemented by thousands of entrepreneurs across the globe.
Startups that subscribe to "lean sprints" apply the concept by quickly shipping minimum viable products (also known as MVPs). An MVP, according to its inventor Eric Ries, is "that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least input of effort." Unlike big enterprises, startups can fail often and cyclically test ideas to learn about their customers more quickly.
4. Trying to do everything alone.
Many first-time founders fail to realize that starting a company is not a single-player game. To be successful, you must learn how to be a leader and empower others to help you achieve your company's mission.
Instead of trying to be a jack of all trades, invest in a great team that will scale as your business grows. You can try to diversify your talent pool by employing people who can do jobs you cannot. Your early hires will shape your team's culture for years to come, and will be influential in determining the fate of your business.
Young entrepreneurs, who may be used to coming up with projects on their own, tend to be micromanagers. Micromanagers ruin their team's chemistry when they step over boundaries, frustrate workflows and over-exercise their powerful position. As a founder, you need to find a balance between paying attention to small details and giving your employees the autonomy they need to feel important and be responsible.
Reaching any level of success in the business world takes a degree of luck and, more controllably, lots of hard work. There are no shortcuts you can leverage to accelerate past the years of hustle, failure and persistence that are usually necessary if an entrepreneur wants to be successful. In a world marked by immense competition and market challenges, the only way to differentiate is to outwork the rest of the players in the space.
Some people start a company for the allure of being their own boss and setting their own hours. While this may be true for a stable company, the reality of running a high-growth startup is that the company is really your boss. You are at the mercy of the company's needs. Whether that is a two a.m., Friday-night fire you have to put out or dealing with a customer complaint, you have to be there for your team whenever necessary. Be prepared for a long journey, because the overnight success story is a myth made up by "wantrapreneurs."
Entrepreneur Leadership Network VIP