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Seven Deadly Sins of Startups

Written by: Martin Zwilling

Article Overview: Everybody has his favorites for this list, so I thought I would share mine. It’s always painful when a startup fails, but as a mentor to founders I would hope that you can learn from these experiences and not stumble on the same issues.

Seven Deadly Sins of Startups

Everybody has his favorites for this list, so I thought I would share mine. It’s always painful when a startup fails, but as a mentor to founders I would hope that you can learn from these experiences and not stumble on the same issues. Here we go:

1. Your startup is not all about “me, myself, and I.” I recently watched a promising startup I know wither and die for lack of funds because the founder refused to consider stepping aside as CEO in favor of a more experienced candidate, as a condition of a $1M VC investment. I reminded him that he could easily “kick himself up to Chairman”, but he wanted it all, and let ego take precedence over good business sense.

2. “It’s the market, stupid.” It’s great to have a passion about a favorite new toy you invented, but just because you love it doesn’t mean the whole world will love it. Another variation on this theme is the person who creates a “solution” from technology, and then makes up a “problem” that it will solve. There is no substitute for understanding the market, and sizing the opportunity, before you climb out on a limb.

3. “If we build it, they will come.” The hot term these days is “viral marketing”, meaning we won’t do any marketing, but our product is so great that everyone will know about us anyway by word of mouth and through Internet social networks. In most cases, viral marketing only begins to work after you prime the pump with $1M in real marketing over a couple of years.

4. “We have no competitors.” VCs and my Angel investors hear this one all the time. The investor view is that if you can’t find any competitors, either you are not being honest, or you haven’t looked, or there isn’t any market for your product. Your funding request will likely go into the circular file.

5. “My spouse and I are co-founders.” In my experience, a business started by multiple family members rarely gets funded, and rarely works. Startups need the single “buck stops here” leadership to get through tough times, without the personal emotions and baggage that come with any personal relationship.

6. “Business plans are for dummies.” Many startups think business plans are only for investors. In reality, you should do a business plan primarily for yourself, as it forces you to think through all the elements. If it’s not written down, you can’t measure it, and thus you can’t manage it. Also written plans are much more effective communication to your employees, lawyers, accountants, and other key players in your rollout.

7. “We’re funded, now we can relax.” Quite the opposite is really true. Now the real work starts to build a sustainable business. Now you have to manage to budgets and timelines, and avoid the temptation to splurge a bit on office space or too many new employees.

You probably think these are so obvious that they are clichés. I wish that were true, but I still see them happening every day. The most successful startup founders are never too busy to listen to the market, listen to their advisors, stifle their ego, and enjoy the ride. It’s a lot more fun than the alternative.

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Article Tags: 1m, angel investors, business sense, circular file, ego, family members, founders, good business, mentor, multiple family, new toy, precedence, real marketing, social networks, startups, tough times, vc investment, vcs, viral marketing, word of mouth



Related Forum Posts
Re: 10 Reasons Who Startups Fail & Book Recommendations - Great post,but please edit the headline. I presume it is "10 Reasons Why Startups Fail & Book Recommendation


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