For almost 18 years, I have been working in product-based Start-Ups. During this time, I have seen a fantastic range of mistakes made during virtually every stage of their lifecycle. This range starts with something small, such as wrong employees’ computer equipment and massive investments in expensive server equipment or shady marketing agencies. However, I can categorize five mistakes as showstoppers for every Start-Up. They can instantly kill your company:

  • No business need: Unfortunately, many companies start developing a product without proper business research. I have done that at least five times in my professional journey. However, creating a technical product without adequate business verification is the number one reason for a Start-Up failure.
  • Erroneous business team: As we speak about business, many entrepreneurs and investors follow the “A player” hiring mantra. The business development teams in the Start-Ups I was part of were with quite mixed backgrounds (including people from Harvard and St. Gallen). And still, the results were mixed. You will need the team, which can do the job for you, but not the team with the flashiest CVs.
On the diagram, you can see a standard distribution of the mistakes made in one start-up. The most significant percentage is always for no business need
  • Erroneous technical team: Absolutely the same as the previous point, but for your technical team structure. I have worked with people from different backgrounds (including people from companies such as Google, Facebook, Twitter, Amazon, etc.). Again the results were quite mixed. I cannot deduce a trend where the more prominent the background is, the better. The only trend I could figure was that your team needs the right attitude.
  • Not enough team compensation: Many entrepreneurs think they must take a big part of the equity pie after giving the money and the idea. However, this kind of thinking is wrong. Ideas and money are nothing without proper execution. And if you cannot motivate your team to execute, this is quite an excellent way to shoot yourself in the foot.
  • Aiming too high: Many Start-Ups aim too high in terms of customers. However, this is quite a harmful strategy, bearing in mind that big companies’ decision-making process is notoriously slow. Better start small and acquire a pool of smaller customers and then scale (ideally, you can bootstrap this part and take funding only for marketing and scaling). Using this strategy, you achieve two things – traction and early verification. Hunting deers and elephants[1][2] can come on the next iteration.

In conclusion, building Start-Ups is hard. Almost 95%[3][4] of the Start-Ups fail during the first 2-3 years of their lifeline. Keeping in mind that people around the World start over 100M new Start-Ups every year, this is a sad statement. The listed five mistakes and given that the average Start-Up founder comes with a huge ego are a recipe for trouble. Leaving you with a thought  – you can print new money, but you cannot issue new brains. Please treat your team well.

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