In fact, recent research shows that 75% of startups fail (based on a study of 2,000 startups that received VC funding from 2004 to 2010). Odds are, you won’t be a Brin, a Zuckerberg, a Systrom, a Karp or a Fake.
But hard as it may be, don’t let that statistic discourage you. Some startups are destined for failure. Perhaps the team is working on a product that really isn’t that great or useful. Maybe they’re trying to tackle too many problems at once. Or maybe the co-founders have a poisonous relationship that will hinder the company’s growth. Maybe they never thought about product-market fit. Whatever your company’s “fatal flaw” may be, you can likely avoid it in your own venture if you take some advice from people who’ve gone through the early startup phase before. Lucky for you, time-strapped entrepreneur, we’ve gathered some tips from the pros to help you avoid some of the most common, game-ending mistakes committed by young startups. Check out the tips below from founders, CEOs and investors alike.
1. Forgoing Simplicity
“Building a product is like packing a suitcase: Plan out what you think you need. Then remove half.” — Jonathan Wegener, Founder, Timehop and ExitStrategy
“Young founders tend to complicate things too much, from structuring partnership agreements, financing, leases, etc. This is not a place to be creative; keep it simple, follow the norms and be transparent so everyone is on the same page.” — Jay Levy, Co-Founder, Zelkova Ventures and Uproot Wines
2. Waiting Too Long to Launch
“The biggest mistake I see is companies waiting too long to release the product. It’s easy to let the scope of what you’re building get out of hand. But equally importantly most startups build much more than they truly need to, but this is often only realized in hindsight. Whether your product is working or not, looking back it’s easy to see that you only really needed to build a small fraction of the stuff you built. Most features/options/buttons/settings/etc. simply aren’t crucial to success or failure, and for an early stage startup that means they were wastes of time — you could have done 10x more with that same amount of time and resources.” — Jonathan Wegener, Founder, Timehop and ExitStrategy
“Don’t underestimate the importance of Minimum Viable Design. Your first product will likely be just a little bit ugly, and that’s okay — it’s part of getting to market quickly and testing your idea in front of live customers. But don’t underestimate the importance of achieving a basic threshold of “this looks good (and reputable).” In my first company, people liked our product but were embarrassed to share it because the design and presentation was so poor. When we launched The Muse, the result was the opposite — nearly 25% of the people who visited our site shared it with someone else via social media!” — Kathryn Minshew, Founder/CEO, The Muse
3. Hiring Poorly
“Make sure that new hires understand your rate of innovation. You are small and agile, which means you have a high rate of innovation and growth, and with that comes work! Often times, that work eventually goes beyond your job description. At a small company, employees need to wear many hats, and they need to be prepared to wear many hats. If you don’t manage this expectation upon hiring, you will be managing employee issues six months down the line. Those issues will eat into your time, and time is money for a new CEO.” — Kellee Khalil, Founder/CEO,Lover.ly
“Someone told me recently, ‘Any time I’m talking to someone who doesn’t work for me already, I’m evaluating if I should try and hire them.’ Whether that’s someone you want to hire tomorrow or someone you’d like to work with in five years depends on your company, but every entrepreneur should always be recruiting.” — Ally Downey, Co-Founder, WeeSpring
“Some entrepreneurs think it’s a luxury to have accounting, finance, or other support functions, but it’s important not to be afraid of spending resources early on for administrative efficiency. If you don’t have someone to do that for you, you’ll end up spending all your time on things that aren’t critical to growing your company.” — Matt Salzberg, Founder and CEO, Blue Apron
4. Not Embracing Agility
“If you sat down and wrote out a pros and cons list comparing your startup to your corporate competitors, you’d probably find the big gorilla’s list of advantages more than daunting. But on your side of that chart should be words like ‘nimble,’ ‘flexible,’ ‘speedy,’ and ‘free flowing.’ Many entrepreneurs seem to approach their startup like they would a quest to win the Super Bowl, with very defined steps leading to a pre-conceived single, solitary end goal. This doesn’t really work for a startup. While it’s vital to have goals and a clear vision, to survive and thrive you’ll have to keep an open mind and stay agile enough to follow the path where it leads.” — Jeff Jackel, CEO,BuzzMob
5. Guarding The “Big Idea”
“How many entrepreneurs’ opening words are about how ‘stealth’ their project is, followed by a 10-page NDA to hear word one? I was totally guilty of this back in the day. For young entrepreneurs, especially non-technical founders like myself, it feels like our ‘big idea’ is all we have, and we want to guard it like a defenseless baby. We also want to believe that no one else out there in the world has thought of our little gem, and if they were to catch wind, everyone will pounce! Ha! First, whatever your idea is, rest assured it’s been thought of before. Secondly, an idea is by no means a business … it’s everything that comes next that makes a business happen. Execution. And no one else will execute the way you do. Third, you’re going to need help and guidance from people who know more and have been there before, so you better get comfortable sharing your ‘big idea.'” — Jeff Jackel, CEO, BuzzMob
6. Losing Focus
“I think many startups have difficulty finding a focus. As an entrepreneur, there’s a lot going on. You have countless decisions to make, and you have to keep moving quickly. Settling on a clear focus — your product, your audience, your strategy — is critical from day one. Of course, as you move forward, you must be willing to adapt. But remember to hold tight to that big idea as you go.” — Alexa von Tobel, Founder & CEO, LearnVest
“One thing I have learned building Grand St. is the value of intense focus. Trying to complete only a few things each week means doing an excellent job on all of them, whereas trying to do the 27 things I want to do usually results in mediocre or incomplete work. The same goes for the product itself — there’s a laundry list of features we want to add, but keeping the experience simple and uncluttered makes us really focus on what our users really want.” — Amanda Peyton, Co-Founder, Grand St.
“Founders of a young company will come up with hundreds of new ideas every day (I know my co-founders and I do). While most of these ideas are sure to be good ones, we’ve learned that we need to be thoughtful and selective about which to move forward with in order not to overwhelm ourselves and our employees. We all have limited time and resources, which is why we need to focus and prioritize.” — Matt Salzberg, Founder and CEO, Blue Apron
“At times we have sat on ideas for months, before testing them and finding out that they are runaway successes. At other times, we have exhausted ourselves trying out 100 different things, when none of them work. I watched a great video with Barbara Corcoran, called “How to get more customers, step 1.” What she describes is that many businesses, when they are looking for more customers, will try 100 different things, when they already have one thing that isworking. As she puts it, this strategy leads to very few new customers and lots of exhaustion. She recommends that instead, founders look at what has been working and double or triple their efforts there.” — Adda Birnir, Co-Founder, Skillcrush
7. Assuming Virality
“A lot of new founders think, ‘If I build it, they will come.’ I have news for you: They’re not coming and you’re not going to ‘go viral.’ Services don’t spontaneously go viral. High virality is almost always the product of early and deliberate product design decisions. Spend some serious time thinking about how and why people are going to discover and share what you’re building.” —Jeremy Fisher, CEO, Days and Wander
8. Obsessing Over Funding
“I think a lot of young startups assume that fundraising is not only a necessary component of running a business but an important marker of success. We spent six months fundraising only to walk away once we had a term sheet in hand because we realized we were making enough money to sustain and grow the business on our own terms. Ultimately that felt like a much bigger marker of success than closing a round. If your business makes money, you may well be better off not fundraising, and in doing so, retain control and ownership of your business. And if your business doesn’t make money (or have a solid plan as to how it will), then perhaps there are some bigger issues to tackle before you start pitching investors.” — Claire Mazur, Co-Founder,Of a Kind
“Many young entrepreneurs think that raising VC money is a measure of success. There is a lot of money chasing bad ideas. The only thing that matters is building a viable, growing and profitable business.” — Brian Garrett, Co-Founder, StyleSaint and Venture Capitalist
9. Chasing Investors Instead of Befriending Investees
“A common mistake startups make in trying to meet investors is, counterintuitively, focusing too much on networking with actual investors. The best way to get a meeting with a VC is not by incessantly pursuing him or her, but rather by getting an intro from a founder that the VC has already invested in. Befriend funded entrepreneurs. Every VC will tell you that they will take meetings with 100% of the companies that their existing portfolio founders recommend. Don’t spend all your energy emailing and LinkedIn-ing VCs; instead, get to know founders who have been funded and win them over because their stamp of approval is one of the most valuable data points for an investor.” — Sam Teller, Managing Director, Launchpad LA
10. Dwelling on Things
“A lot of new founders tend to over-optimize every single decision, which makes it difficult to actually move forward with anything. One of the most important lessons my co-founders and I have learned is that sometimes the best course of action is to make a call and just move forward. As a young company, nothing is ever perfect, but if you believe in an idea or strategy, you just need to move forward and manage the logistics and risks as you go.” — Matt Salzberg, Founder and CEO, Blue Apron
11. Getting Distracted By Feedback
“A startup is not a newly democratic nation state: Not every decision needs to be made by the collective. While we love getting ideas from our team and have seen some stellar product development and user experience decisions generate from brainstorming and having an open office environment, we try not to let everything come to a vote. We hire smart and capable people to come up with an idea and execute it: Not to have to balance the opinions and feedback of everyone, all the time.” — Elizabeth Scherle, President & Co-Founder, Influenster
“You will have a ton of people constantly sharing their feedback and opinions of your business with you. It’s easy to get wrapped up in it and want to tweak things immediately. Keep in mind that people will give you feedback based off of their market knowledge and domain experience — it is your job to apply that knowledge to your company without losing sight of your vision.” —Allison Beal, Co-Founder & CEO, StyleSaint
12. Not Having the Right Co-Founder
“Starting a business is a lot like falling in love. At first, we tend to see the business and our partners at their best, full of promise, and can’t conceive that they will ever be anything but their best. But as in any relationship, eventually their flaws and their failings are clearly exposed. What I have learned is that we need to do a thorough SWOT analysis not only on the market opportunity, but also on our partners. Some faults we can accommodate, but sometimes our partners’ weaknesses in combination with our own constitute a deadly cocktail. A key aspect of our personal due diligence is then is assessing our partners, particularly learning how they react under stress.” — Whitney Johnson, Co-Founder, Rose Park Advisors
“Your early partners, co-founders, investors and hires are crucial to get right. While the ideal partner balances you or brings skills to the table you don’t have, the most important thing to look for is alignment of values. Do you fundamentally want similar things out of this endeavor? Are you willing to take more or less the same amount of risk? Are you comfortable with your prospective partner’s ethics and moral decision-making? I’ve seen the last one in particular cause a lot of heartbreak in early-stage companies.” — Kathryn Minshew, Founder/CEO, The Muse
13. Trying to Win Over Everyone
“Among the biggest mistakes I made when fundraising early on was trying to turn every nonbeliever into a diehard fan, working to convince everyone who pushed back that they were wrong about Greatist and about the space. What I quickly learned was that it was more productive to find the investors who already believed, who were already my fans, and capitalize on the potential for them to become my biggest champions. I think a lot of new entrepreneurs face situations like this, and the quicker that realization comes, the easier the fundraising process can be.” — Derek Flanzraich, Founder & CEO, Greatist
14. Not Listening to Current (or Future) Customers
“Every time I sit down with a customer, I learn something. And usually, it’s something that has a serious revenue-generating impact on my company. In Running Lean, Ash Maurya says that you know when you have spoken to enough customers when you can start to predict what they will say. I have done dozens of interviews with customers, and it’s incredible. There are certain phrases that everyone uses. That stuff is business gold (or platinum). Every time we have been unsure about a product or direction and we have taken the time to talk to users, we have always walked away with the insight we needed to move forward. But keeping up that practice up is hard! Sometimes it feels so much easier just to sit at your desk, banging your head against a wall, trying to figure things out on your own.” — Adda Birnir, Co-Founder, Skillcrush
“One of the common mistakes young startups make is developing a product without enough input. As much as you’re executing on your vision and keeping things under wraps until launch, engaging potential customers early — even when it’s just a twinkle in the eye—- can help put you on the right path. It also helps validate the demand for your product. Others can help provide feedback on your differentiation or competition. The fact of the matter is, as a startup, you’re extremely strapped for time and resources. So, it’s that much more important to try to get close to the target around product-market fit and iterate from there. At Kiwi Crate, we spent quite a bit of time working with parents and kids to develop our product. Even today, we have kids come into our offices at least once a week to help test what we’re doing. It’s been invaluable for us.” —Sandra Oh Lin, Founder/CEO, Kiwi Crate
“Young startups can fall so deeply in love with their idea, they aren’t open to tweeks in the business. If you never get product-market fit, you’ll never really have a company (or you’ll struggle the whole time).” — Nicole Glaros, Managing Director, Techstars
15. Jumping to Decisions
“Don’t hire someone till you have interviewed at least ten people for that position. Don’t fall in love with anything, and stay objective. Get to know potential co-founders quite well before bringing them on to the team. In all the times I’ve seen companies fall apart due to co-founder issues, it was in young founders who didn’t clearly specify roles and expectations and really didn’t get to know each other.” — Jay Levy, Co-Founder, Zelkova Ventures and Uproot Wines
16. Not Maintaining Relationships
“Be consistent in your outreach with mentors and other key connectors in your network. Set a schedule for yourself and stick with it, whether it’s weekly for your inner circle, quarterly for acquaintances, or somewhere in between. Every time you consider putting off one of those updates, think about the headache of starting off an email with, ‘It’s been too long since we’ve caught up!’ and the effort it takes to re-build that relationship.” — Ally Downey, Co-Founder, WeeSpring.
[Editor’s Note: This article is a guest post & originally also appeared on Mashable.]
