10 Start-Up Screw Ups

One of the most frequently asked questions about start-ups is “how do you make a startup succeed?” The answer to the question is easy, but completely useless: you make something that users want. Answering exactly what users want is the hard part because it changes over time and is affected by many factors. Besides, if it were easy, no startup would ever fail and everybody will be a startup millionaire.

The better question is “how do you make a startup fail?” because the answers are based on examples of past failed startups. Additionally, the answers can be used to eliminate things that wouldn’t work, making it easier to get a startup to succeed. Here are 10 of the most common (and easily avoided) start up screw ups:

1. Having Only One Founder – quick, think of a successful startup that was founded by a single person. Can’t think of one? Even companies that look like they were only founded by a single person, like Oracle, actually have more. This is not a coincidence. The thing is that having no other founder is a sign that the person can’t talk any of his friends to start the company with him, which shows that nobody except him is confident in the idea. Next, running a startup is hard work that no single person can do alone. The amount of work required and the pressures involved in getting the business up and running requires multiple founders that can help and support each other even in the lowest points.

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2. Avoiding Competition – many startups failed because the founders are so afraid of competition that they end up choosing marginal niches. The thing about competition is that they’re usually a good indication of the demand people have for the niche. Businesses flock to certain industries because that’s where the money is, resulting in aggressive competition. This doesn’t mean you should choose an overly saturated niche or avoid ones that don’t have many competition – it just means that your choice shouldn’t be based on fear. Choose a niche because you believe there’s demand for it, not because you’re afraid of going toe to toe with other companies in another niche.

3. Derivative Idea – it’s true that a lot of successful software these days are derived from other pre-existing applications, but look at the company’s first product – the one that made them successful. Then look at other successful startups that only have a single product to their name so far. What’s the common factor? The ideas were unique and solved problems that were unaddressed before the startup came along. Very few of them became successful because they copied what another successful company is doing. In fact, that’s a great way to kill a startup – do something that a more established, more experienced company is already doing well.

4. Poor Location – in the age of telecommuting and online businesses, it may seem weird that location will even matter in a startup’s success, but there’s a reason why many successful startups are based on cities, particularly tech-oriented cities like Silicon Valley or Seattle. It’s because those cities are where the experts are. It’s where the people you want to hire live, it’s where the people who are sympathetic to your cause live, and it’s where supporting industries are located. These are all minor things but they add up to one big thing, helping provide your startup with a network of support and culture that is conducive to success.

5. Being Stubborn – some startup founders are stubborn to the point that they consider their original vision as a point of pride, which prevents them from scrapping their original plan if it fails or a better one comes along. The thing about startups is that it rewards adaptability and flexibility over determination. You need determination in the business, but not to the point where you blatantly ignore user feedback and market trends. It is best to treat it like scientists approach their experiments. They don’t give up on the first sign of failure – they test, and they look at data in order to decide whether to continue with an experiment or to move on to another one.

6. Having No Technical Guys on Top – there are a lot of startups that failed to get off the ground simply because nobody at the top rung of the ladder is a programmer or an engineer. They can have the best marketers or businessmen at the helm, but things slow down to a halt because they kept hiring bad programmers.

They have no idea what makes a good programmer. They kept looking at credentials and certifications and think that the person is a coding virtuoso, while the programmer just lazes off and blasts them with jargons and excuses that they don’t understand. Mark Zuckerberg is a programmer, Bill Gates is a competent programmer during his time, and Steve Jobs had Wozniak by his side. They were able to hire competent programmers because of their technical background, and it also allowed them to have a more hands on approach to their operations instead of being isolated by department silos.

7. Too Slow to Launch – there are a number of factors that could lead to startups being too slow to launch. It could be working too slowly, or failure to understand the problem, excessive perfectionism, procrastination, fears. All of these lead to the same thing: a delay in launch that could result in the product being obsolete by the time it’s launched, either because a much more agile competitor has already launched a similar product or the problem it aims to address was already solved by the users on their own.

8. Premature Launch – a launch that is too delayed can kill a startup, but trying to launch too fast can also be a problem, because you run the risk of launching a product that’s not yet ready for mass consumption. This is very dangerous for established companies because it could tarnish their reputation, but it’s fatal for a startup because it kills their name even before they get a chance to build it. It’s not much of a help, but the trick is to find the sweet spot. Launch as soon as the product is ready for the market, not a minute sooner, nor a minute later.

9. No Target Demographic – successful startups became successful because they solved a problem that many users had. If you have no target user in mind, there’s very little chance of you coming up with a problem to tackle. Many failed startup founders tend to put the cart before the horse: they conceptualize an idea and then try to market it to people that might want it. It should be the other way around: find people with problems, then build an idea that addresses those problems.

10. Hiring Too Many People – many startup founders, particularly ones with no prior background in business management, tend to see the glamour in owning a company. They want the company to be big, to have many people, to have excellent employee amenities. They want to be Google. The thing is that Google only started having those things when they became a profitable company with many profitable products and brands available.

A startup cannot afford the same practice, especially since hiring lots of people has the double whammy effect of making you burn funding faster while requiring it to last longer due to the amount of people you have to manage and pay. The trick is to avoid hiring people as much as possible – prioritize hiring of people who will write code and people who will go out and find customers/users. Those are the two kinds of employees you need as a startup. Additionally, you can offer to pay in equity instead of a big salary, simply because the only people who will accept that setup are ones who are committed and loyal to your vision.

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