11 big mistakes startups should avoid (or die)

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Vincent Dignan is the founder of Magnific, a Techstars-backed agency which helps early stage companies acquire users and grow their social communities. In this article, he examines some of the big mistakes startups must avoid.

I’ve spent 10 times more time with early-stage founders than I have with my friends and family in the last year. I’ve coached over 50 entrepreneurs, mentored or given talks to thousands of early-stage entrepreneurs at places like SXSW and Nasdaq Entrepreneurial Center in San Francisco, put on a conference attended by hundreds of founders, run an agency whose main clients are startups and written a step-by-step guide to growth hacking.

Between all of this, and teaching and giving classes on digital marketing and content marketing at General Assembly, here are some mistakes I see founders make extremely often, leading them into the deadzone of not being able to raise money/make revenue/properly launch their company:

1. Not focusing on product or market fit/Not talking to users enough: Only two things matter on day one of your company: Product development and customer development. Speak to potential customers/users every day to find out if you’re focusing on a problem that’s worth solving, how they currently solve this problem/what they think of your product etc. Then put that learning directly into the product, with weekly deadlines. Which brings us on to…

2. Outsourcing tech/building their product: Tech products require constant changes. If you outsource the making of your app/product to someone else, particularly someone working remotely, it makes it extremely difficult to quickly make changes, work crazy hours to get it complete on time etc. I hear horror story after horror story from startups who have tried to do this. The finished product doesn’t match your vision, and now it’s a big, expensive hassle to fix.

3. Non-technical CEO not being head of growth: It’s a really bad thing if you’re the CEO and can’t code (believe me, I know). You need to OWN getting users/customers through the door. The number of founders I speak to with no growth plan is shocking. A good plan where you get everything wrong is fine, but too many founders have woeful user acquistion ideas riddled with potential failure points, and nothing approaching a concrete plan. If you’re not doing this, what do you do all day? Which brings us on to…

4. Whenever I hear a founder say “hopefully”, they’re normally in trouble: 99 times out of 100 This word signifies you don’t know what you’re doing, haven’t really thought things through, or can’t be bothered to go deeper to win.

5. No attempt at differentiation/no secret sauce: Your company either needs to do something not many people are doing, or it should have some secret weapon in a crowded market which will mean you win (ideally both). Some examples of secret sauce: Intense industry knowledge/background, serious industry contacts, an interesting user acquisition method/channel.

6. Looking for Investment way too early: Surprisingly common, this one. You need traction, team and product, to get funded quickly. If one or two sides of these triangle are really strong, you can get funded within a few months. If you don’t have any, it will be virtually impossible. The easiest win if you want investment is to get traction. If you have a lot of traffic/signups, you can do without most of the other things, as you are evidently building something people want. Likewise:

7. Trying to monetize too early: When you have only 50 people who have just started using the first version of your app/product and you want to start charging them £10+ a month, you’re going to suddenly need a hell of a lot of paid users out of nowhere to pay the wages. It’s hard enough to get people to use/try things for free!

8. No internal viral growth engine: This comes after product/market fit, but this is seriously underlooked in most companies I speak to. How can one user invite others? What discount or free trial can be extended if people invite others? It is VERY HARD to get users. So if those users you get don’t invite others, it’s going to be very hard to scale.

9. Not getting enough feedback/asking difficult questions: There are office hours where you can speak to investors everywhere, and so many ways/pitching events you can get feedback at, you have no excuse to not get feedback from smart people. Here are some questions I never hear early stage founders ask: “Why do you think my idea won’t work?”, “what do you think will be our biggest challenge?”, and my personal favourite if you’re speaking to a potential partner/investor: “Why wouldn’t you invest in us?”. You need to ask the questions that scare you. As a sidenote, I’d generally recommend if this is your first company that you apply to some accelerators. This will get you to these questions quickly if you make it to the admission interviews.

10. Being all talk: Early-stage founders love to post “hustle” quotes on their social networks, but when it comes down to it, too many have excuses for not executing. Normal excuses: Don’t have the money to make it happen, don’t have the time, got sidetracked. You need to ask yourself every day how much you want it. Would you move back in with your parents? Would you give up seeing your friends or drinking? Would you change your diet, sleep pattern and addiction to your smartphone/Netflix and chill? Ultimately, will you give up your excuses? If you can, your business has a chance. Always ask yourself this: “How are the people who are successful managing it?” There’s always a way, if you want it.

11. Not knowing their space/competitors: This happens surprisingly often. Someone is building a piece of software and you ask them “How is it different from (large competitor)” and they tell you they haven’t heard of them. Ah…

Ultimately, try and hammer out any naivety you’re carrying. This is one of the biggest killers of early stage companies. The good news is, once you understand what not to do, you’re ahead of the competition. As Omar Little once said in The Wire: “The game is out there, and it’s either play or get played.”