7 Startup Mistakes to Avoid
There’s no blueprint for building a successful company. Your business will need to find it’s own path to growth. But that doesn’t mean you can’t learn from where others have failed. You’ll have to move quickly to stay competitive, so it’s easy to overlook some of these simple, yet incredibly influential decisions.
1 — Hiring the wrong people
When you begin your hiring process, it’s easy to grab the lowest-hanging fruit. But a company is only as strong as its employees. Hiring friends and family, or doing someone a favor might be fine in the short-run, but over time it can have an extremely taxing effect on the company. What’s harder: hiring someone, or firing them?
If you’re a four-person team and there’s one person that isn’t a good fit — that’s 25% of the company! See yourself as a “Chief Editor” says Jack Dorsey, CEO of Square.
2 — Not understanding your customers
Many founder stories start with the founder building something for his/herself, then selling it to other people with the same problem. But that’s not always the case, and sometimes founders get the customer’s needs very very wrong.
Questions to ask: Who are we building this for? What do those people care about? How do we tell them? For a great example of understanding your customer, see Pack (for people who love their dogs).
3 — No value proposition
Knowing your customer isn’t the same as giving them something valuable. Altruism is nice in theory, but if people aren’t willing to pay you for your service, then it’s time to rethink the value proposition you’re offering. I see too many teams giving away services to acquire customers only to discover later that nobody is willing to pay for the product.
The value proposition shouldn’t look like a page from a Where’s Waldo book.
4 — Using the wrong metrics
Measuring growth is great, but don’t fool yourself. Are you measuring what matters? Find the statistics (revenue, profit, users, profit/user etc.) that provide the most insight, and only focus on those. The other metrics are just a product of those core few, and it’s very easy to track the effects instead of the causes.
5 — No clear long-term mission
What does the company look like 5 years from now? Have you thought about it? Most founders are so myopic in their focus that they fail to plan a sustainable company. What’s the one thing your company does better than anyone else? Does that correlate with the mission for the business?
Check out Evernote CEO, Phil Libin talking about his vision for the 100-year company.
6 — No sales team
If a tree falls in a forest and nobody’s around to hear it fall, does it make a noise? So many teams launch their product expecting the market to beat a path to their doorway only to discover that two weeks after launching, there still aren’t any customers! You don’t have to hire the team from The Boiler Room. But sales are critical. Without sales, there’s no revenue. Without revenue, there’s no business.
Once you’ve launched a product, hire or contract at least one sales person to get the product in front of your customers.
7 — Taking the first-idea (easiest way out)
The famous design firm IDEO talks about looking for “third-ideas” rather than “first-ideas”. A first-idea is the most obvious solution to a problem. While worth considering, great thinkers harness the power of constraint to come up with more creative solutions. Often times the first-idea will be in the form of paying someone a large sum of money to just take care of the problem for you. These kind of decisions add up. For companies without a lot of cash, it’s important to get scrappy and look for third-idea solutions.
For additional mistake-avoiding goodness, check out Paul Graham’s list of 18 mistakes.
