Most of you are familiar with the successful tech startups. For the blissfully ignorant, one out of ten startups succeed. Appalling, isn’t it? I will let you in on another secret. At least a good six months before a startup crashes, the employees can spot the telling signs of an impending doom.
I have been part of a couple of tech startups (not all of them have failed) and would like to share easy fixes to some of the glaring mistakes that lead to failure.
Know Thy Technology!
Yes, they might be from the most prestigious of B-Schools and can talk their way through anything, but the moment you ask them anything pertaining to technology and they turn to their tech team for answers. Most founders of Indian startups have little or no interest in coding or technology in general. This forces them to solely depend on a team of engineers to steer the product in the right direction. Any tech startup needs to be agile and quickly pivot as per the consumer expectation and market competition. This is impossible to achieve if the founders do not have even an inkling of technical skill or knowledge.
Smart fix: If you want to build a technically disruptive product, start getting your hands dirty.
Don’t Love Thy Product
To be successful, it is necessary to be passionate about your product. But you often overlook the thin line between passion and blinding love. A CEO who loves his product too much is in danger of overlooking the product’s blatant misfit in the market.
Smart fix: Have an open mind to receive/act on your product’s criticism and have a customer mimic (A person who has no idea about who you are or what you do) test your product for usability and interface
CXO Power Struggle
Technology, operation, sales/marketing, and finance are like the vital organs in our body, a malfunction in one could radically spiral our body into a deep state of apathy. Invariably power in any startup rests with the founding team and the power centres are more with the expertise of the founding team. This causes a huge imbalance in the organisational structure, resulting in blatant gaps in critical functions and thus putting your startup in a huge state of apathy
Smart fix: The CEO’s prime responsibility would be to enable every department to function at its best by giving equal importance to all, rather than siding with a department and making sure you company is pushed into the inevitable.
Skill Over Attitude Recruitment Strategy
As a fledgling company, the initial focus while recruiting is to find that resource who can immediately set off the profitability ratios soaring. This is a short-sighted way of looking at things and the only way this strategy could ever work was if, the person whom you are hiring is a “know it all”. But this is rarely the case as any agile startup would have to pivot multiple times and the skill requirement would also have to align with the pivot. Hence, it is much more important to hire the person with a right attitude than the perfect skill.
Smart fix: Skill is important but culture fit is the key for recruitment. Clearly define the culture metrics for your company and each department so that there is uniformity in hiring.
Lack Of Training
Almost all startups rely heavily on the individual’s drive to become experts quickly. In the list of to-dos which includes working on a new product design, improving the UX, upping the selling strategy and wondering if the company will make it to the next series of funding, training employees never figures. But training employees is one of the key things that the management must consider.
Smart fix: Even if organising a full-fledged training cannot be budgeted, expose the employees to relevant courses and enable them by providing the right material
Politics: Cronyism, Nepotism, Favouritism
Every founder starts out with big dreams of growth hacking, revolutionary design principles and fair and equal work culture that will completely do away with the nasty politics of a corporate world. The biggest problem is when the top management gets involved in malpractices and sets a bad example for the whole company. Right from hiring and promotions to awarding contracts to vendors there is a big nexus working in hand to do what is not the best for the company, but working for personal gains instead
Smart fix: While encouraging healthy competition among the CXOs is a positive way of keeping the race competitive, discourage politics and denounce people who encourage politics, nepotism and favouritism. But most important, lead by example and do not get involved in these office evils yourself.
Trouble With The Big “D”
Startup founders like to have undisputed control over all operations in the organisation. The mere thought of hiring the right talent for the role freaks them out. They obstinately hold to on to some niche functions (so they think!) unwilling to dilute the control which spells death for their venture.
Smart fix: Identify the right talent, delegate and move on. As a founder, your core job is to keep the employee motivated and look at strategic ways to improve the business.
Middle Management
Most of the time, startup recruiters try to poach middle managers from big companies because of the very simple reason that “They have been there and done that.” Top managers are too expensive while the lower level ones cannot just be plugged into a startup set up. But the key fact that they overlook, especially in an Indian setup is that middle managers from big companies are rarely self-driven, because they have been always told “what to do.” Most of them are caught up in a herd-like mentality and need to be whipped to toe the line which cannot be afforded by startups.
Smart fix: Nab the brightest talent by marketing an attractive job description in the right platform.
“Do Your Duty, Don’t Expect Results” Motivation Theory
Yes, this is the same quote that Krishna used on Arjuna (Mahabharata) for success and happiness. While a self-inflicted philosophy to keep you motivated as a founder is good, expecting others to work without any appreciation is the worst thing a company could do to its employee morale.
Smart fix: Cash incentives and stock option only go so far. Set clear goals and expectations. Motivating your employees to get the best out of them should be of prime focus to the top management.
Aligning With The Wrong Investors
Finding any investor may seem tough, leave alone finding the right one. Regardless of the seemingly excruciating process, it is crucial to find the investor who rides with the same passion as you and knows the market space well. Sample this: “A company is very successful while it is small, but the moment they scale up, things go haywire.” The investors worry only about return on their investment.
Smart fix: Find an investor who has a clear vision for your product and holds out long-term plans. Do some detective work on the investor culture and market history.
[This post by Mouli Srinivasan, marketing manager at RenovITE Technologies, first appeared on LinkedIn and has been reproduced with permission.]
