Common Mistakes that Early Stage Startups Make (And You Should Avoid)
Startups are, unfortunately, prone to failure. Avoid these common mistakes made by new entrepreneurs and you’ll be one step closer to success
As the new kid on the block, early stage startups are prone to failure and disappointment. Nearly 95% of startups fail way before they are even able to raise funds for their venture. Depressing as this may sound, young entrepreneurs should retain hope in the fact that firstly, entrepreneurs characterize their success based on their failures, and secondly, many entrepreneurs have come before and are more open and willing than ever to share their narratives of failure. Hence the recent rise of “F*ck Up Nights” (excuse our language) — entire evenings of entrepreneurial reflection on failure and which mistakes to avoid on the road to success. For the most part, positive insights result from these sessions of negative reflection, which is why we’ve come up with a list of common mistakes made by young entrepreneurs.
Paul Graham, the co-founder of Y Combinator, put it best when he said: “If you have a list of all the things you shouldn’t do, you can turn that into a recipe for succeeding just by negating”.
- Missing the point of product fit, market fit
Out of a hunger for success (or just plain hunger), entrepreneurs just starting out often make the mistake of missing out on what the users’ or clients’ actual unrealized need is. Researching these needs or pain points is an absolutely necessary step in the entrepreneurial process because, like many ventures, you could find out further down the road (after investing many hours and funds) that your product is totally irrelevant. This is a bigger challenge for business to customer (B2C) startups than it is for business to business (B2B) because it involves A/B testing and putting your product on the line to receive feedback from a few potential users. However, and this cannot be stressed enough, without initial user/client feedback, you will have no idea where your product stands in the market, how much money you are likely to generate, and which directions you should pivot in. View your first users/clients as your product design partners — key elements of your company’s success — and you will be many steps closer to achieving success.
2. Choosing the wrong investors and partners
In a desire to get their product to market, new entrepreneurs often feel pressure to agree to terms with investors or partners that don’t make sense for them. This is a BIG no-no because it could not only pose a huge risk for you financially, but to your future as an entrepreneur in the bigger picture sense. Make sure that you and your founders sit eye to eye on the MVP and overall product goals, and that you are able to divide responsibility efficiently in a way that maximizes each of the partners’ potential. When it comes to investors, remain on the weary side, to say the least. Now more than ever investors are on the look out for their latest “catch”, and there are more VCs than ever before. Know your legal jargon, where you’re willing to wiggle, and the limitations of your team, product and potential. Don’t fool yourself into thinking you need funding at all costs because, and we’re not saying this coyly, it could cost you down the road.
3. Build your company DNA from day one
Of course your product is the beating heart of your startup — don’t let anyone tell you differently. But a very common mistake that young startups make is to forget about the importance of establishing company norms. Instead, create your company’s culture and product in unison. Consider, for instance: Will your teams communicate via email or Telegram? Will you insist on enforcing a dress code? What will your office space look like — will everyone sit together at the same table or will there be separate offices? Serial entrepreneur and Waze founder Uri Levine mentions creating company DNA among the top priorities for a new venture. Considering your company’s vibe may seem like a waste of time before if you don’t have a slew of employees, but heed our words — your attention to detail will pay off in the long run.
4. Hire people who inspire
Employment is a sticky subject at new ventures — how many people to hire and which kinds of minds are suitable to the company’s DNA (see above)? Some of the best advice here is to hire people you want to listen to, who are able to make you think, and will challenge your assertions about what your product needs. Make sure to get marketing people on board too because, though it is a common misconception that marketing is for established companies, they will help you reach the outstanding kind of people we’re talking about. The bottom line: get rid of your ego and hire people who are better than you!
Our list could go on, and on, because as any entrepreneur knows — they know best. Paul Graham’s list of “The 18 Mistakes That Kill Startups” was the first and most comprehensive, and many of his insights remain true despite that fact that it was written over a decade ago.
If you think that you have additional mistakes to add to this list, please feel free to do so in the comments and we will respond!
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