The 3 Worst Mistakes An Entrepreneur Can Make Before They Even Start

My co-founder, Dennis, and I built our first startup right out of college called TrackingSocial. It was, essentially, a reputation management and social media analytics tool, and we thought it was a perfect fit for the retail and hospitality industries. We were pumped about the idea, and like any 21-year-old millennials, we thought we were more than capable of pulling it off.

Fast-forward one year: Our execution in building and selling TrackingSocial was horrible. It was actually a textbook case of what not to do when building a product/company.

Looking back, the mistakes we made were all easily avoidable, and, in many ways, killed our chances for success before we even got started.

This experience isn’t one that’s terribly unique amongst startup founders. Most entrepreneurs make early mistakes — especially when building out their first businesses. The thing is, some mistakes are more damaging than others and should be avoided at all costs.

Here are three which, if you’re starting a company today, you should strive to steer clear of — and how you can do exactly that.

Mistake #1: Underestimating your development timeline and not forecasting where the market will be at the end of that development cycle.

When Dennis and I started TrackingSocial back in 2011, we’d correctly identified a big opportunity in the social media analytics space. Many marketing departments of companies both big and small were starting to take their social presence/reputation much more seriously. Most of the social analytics tools available at the time, however, were marketed and priced for big enterprise companies. So Dennis and I thought there was an opportunity to capture some marketshare amongst those unserved small and medium-sized businesses.

Our first “killer feature,” in fact, was built simply to provide easy-to-digest daily reports for small business owners. But instead of just sticking with that feature, making it amazing, and getting out to market quickly, we convinced ourselves that in order to compete with current players in the space, we needed to also clone their current “essential” features.

Unfortunately, we underestimated the demands of our development cycle, and by the time we finished cloning all the “essential features,” we were over our dev estimate by months.

In just 6 months time, by the time we finally came to market, our “killer feature” was no longer “killer.”

Many of our competitors also started rolling out “flash reports,” as well, and started positioning some of their offerings to SMBs. As a cherry on top, the “essential” features we decided to clone were outdated by the time we were in market. We cloned features that were relevant 6 months ago and overlooked the fact that our competitors would be constantly improving and tuning those features during our dev cycle.

Key Takeaways:

• If you’re going to clone a feature, make sure you can either do it extremely quickly or make sure you are carefully watching how your competitors are improving upon that feature during your dev cycle.
• It’s better to have 1 great “killer feature” that is forward-thinking than a bunch of mediocre features.
• Ask yourself: how long will your development/production cycle actually be? How will the market change by the time it’s done? Whatever estimate you come up with, double it and ask yourself if your product will still be relevant if dev takes twice as long as your estimate.
• Ask yourself, too: how quickly could someone else duplicate your “killer feature”? If it’s not highly defensible, you should try to get a V1 out as fast as possible.

Bottom line: If you start development today, know the landscape 6 months or a year from now will likely look wildly different. Prepare for that.

Mistake #2: Not having a plan for user acquisition or thinking through distribution in advance.

When we started TrackingSocial, Dennis and I knew that small and medium-sized businesses would want social media management tools — and they did. But we underestimated how many businesses would actually pay for those tools, how much they would pay, and how hard it would be to sell to them.

The truth was, we lacked anything resembling a sales strategy. We just sort of assumed that we would build our products, run Google/Facebook ads, share our exciting tool on social media, and the sign-ups would start tumbling in.

Needless to say, that didn’t happen.

Key Takeaways:

• Identify potential user-acquisition channels and get an understanding of your Customer Acquisition Cost (CAC) on each channel far before you finish development (preferably before you even start development). Had we done this, we would have seen that it’s in fact easier to sell these kinds of tools to enterprise customers, who are also generally willing to pay more. It turned out that, for TrackingSocial, all of our top customers ended up being large enterprises, and our assumptions about reaching SMB’s were flat out wrong.
• Mark Suster from Upfront Ventures writes a great article about how important it is for a startup to really define early on which types of customers it is going to “hunt.” You can read his piece called “Most Startups Should be Deer Hunters” here.

Bottom line: It’s unlikely that your product will be a viral sensation that takes off organically like Facebook or Instagram once did. Most of the products that are popular today boast that popularity because the people behind them devised sound sales, growth, and distribution strategies, and then executed them with fidelity.

Mistake #3: Always trying to innovate on every feature, big and small.

Looking back on TrackingSocial, it’s clear that one of the reasons our development cycle took so long is we tried to reinvent the wheel on way too many features or parts of features, big and small. We were innovating for the sake of being “different,” but not innovating with the goal of being “better.” I remember it even got to the point where we were trying to reinvent the wheel on new types of clever data visualizations.

Suffice it to say, those visualizations had no impact on the competitiveness of our product.

Key Takeaways:

• You don’t need to innovate on everything. But if you are going to innovate on a feature, or part of a feature, make sure it will be an innovation in an area your customers actually care about.
• If you’re going to clone a competitor’s feature, start off by quickly cloning it one for one. There’s likely a reason your competitor’s version works so well — a lot of strategy and iteration likely went into that specific design, along with the underlying mechanics.
• Watch out for the side effects of innovation. You see these side effects a lot in game development, where changing even a small part of the game’s economy design and progression system can have far-reaching ripple effects. A game design is, at its core, a system of incentives and “pinch points,” so changing a piece of the design will likely affect the underlying game mechanics.

Bottom line: You don’t need to reinvent the wheel on everything. Additionally, don’t feel bad about cloning a competitor’s feature one-for-one, especially if it’s something you know your customers/users will appreciate. Instagram Stories is a great example of this. Use the time you save here to instead innovate on specific “killer features,” which will help in setting you apart.

The companies that avoid these mistakes are the ones that last.

Examples are everywhere. Mark Pincus, founder of Zynga, suggests founders keep or clone what already works and only innovate on one or two “killer” features. Candy Crush, for example, is, for all intents and purposes, a reskin of the game Bejeweled. King (the company behind Candy Crush) didn’t need to change the Match-3 gameplay. They knew from Bejeweled that the gameplay was already fun for players, so why change it and introduce more risk? What they did innovate on, however, was its fun theme/art style, showing the levels on a visual path where the player could see their linear progression over time, and making the game social by integrating with Facebook so the player can see how they match up against their friends.

Drew Houston, meanwhile — founder of Dropbox — exemplifies the importance of forecasting far into the future and building for tomorrow. He founded Dropbox in 2007 when people were still using FTP servers to store their files. He was years ahead of the curve, so by the point cloud storage had become a common desire amongst consumers, Dropbox was a clear winner in the space.

At the end of the day, it’s hard not to make mistakes when you’re building a startup — especially when it’s your first. However, awareness of critical mistakes to avoid might help ensure you don’t shoot yourself in the foot, so to speak — as I did when building my first company.