Posts Tagged ‘start-up’

The Seven Deadly Sins of Entrepreneurship

April 25th, 2014

The following post is a re-blog from a friend of mine and a brilliant human being. Feel free to check out more of his thoughts and experiences at http://www.jamesgreaves.com. This particular post rang true for me in my entrepreneurial travels and observations about what can make entrepreneurship hard. Enjoy!

Why YOU Are the Reason Your Startup Will Fail

Being an entrepreneur is, in my humble view, among the toughest things to do in the world. It stretches you in every possible way: your emotions, your belief in yourself and your self identity, your mental health, your relationships with your family and friends, your intellectual capacity, and your finances. It can consume you.

If that’s not enough, as an entrepreneur you also have to face up to the reality that if your startup fails, it will fail because of you.

Let me say that again in case you missed it. The only reason your startup will not be successful is YOU.

“But,” I hear you ask, “how can that be true, when entrepreneurship is such a risky business, with so many unknowns. Can you really be held responsible for your funding runway (or lack thereof), market conditions, consumer appetite, timing, team strength, natural disasters, acts of God, war, new entrants into the market and government intervention?”

Yes. That’s your job. Deal with it.

The problem is that we fill our lives with excuses, like “I need capital to scale this,” and “the market isn’t ready.” Platitudes that mask our own poor behavior and put the blame on others. When you can move away from excuses you can be completely honest with yourself. When you are honest with yourself, you can make proper decisions and free yourself to act in a way that will ensure success.

You heard that right too, there are ways you can act to ENSURE success in your startup. After all, a startup, at it’s core is not that complicated:

  1. Create a service or product
  2. Sell your service or product to customers (your market)
  3. Sustain competitive advantage (continue to drive your market by competing on cost, quality, or time)

The only questions you really need to ask yourself are: Is this a product that I can actually make, and make better/faster/cheaper than someone else? And, does this product meet actual customer needs; will they pay me for it?

If you can’t get started, then you are trying to sell something you can’t build, or something the market doesn’t want. If you can’t scale then you failed to manage properly, including hiring the people or engaging the partners you need to mitigate your weaknesses and plan accordingly.

If you do any of the above wrong, you likely fall into at least one of the Seven Deadly Sins of Entrepreneurship, self-defeating behaviors that directly affect your ability to do business. If you are the perpetrator of any of these mindsets you will almost certainly fail. I have seen all of these sins (individually or in groups) take down countless promising startups full of bright, hardworking people. They are those who let their inner selves derail their dreams.

The Seven Sins

  1. Arrogance: You don’t listen to your customers and you build something nobody wants, or you become disconnected with your customers and you piss them off. You think you are so smart have all the answers you need inside your own head.
  2. Lust: You get so caught up building something you want, you don’t build what you need to. You have dream to revolutionize something, and you want to do it your way on your terms. You miss the opportunities before you because you are only interested in building what’s in your brain.
  3. Pride: You celebrate too early and lose focus on your business. You get distracted or fritter away your capital on nice offices, non-core products, or similar nonsense well before your nascent empire is formed.
  4. Misdirection: You focus all your attention on the wrong things or miss the key areas you should be focusing on. There’s so many resources available to make decisions properly, but you don’t take the time to research the scientific patterns of behavior that have made other entrepreneurs successful. You’re too caught up in the myth that the best startups are risky enterprises run by mavericks, and you run off helter-skelter like a madman.
  5. Impatience: Fueled by tales of trail-blazing heroes, you force the issue by painting yourself into a corner. You spend money where it’s not needed or quit your job before your startup can support you. You believe that increased pain in the short term will somehow increase your chances of success.
  6. Blindness: You allow external circumstances to catch up with you and make excuses that aren’t true. You say your market isn’t ready when really you are selling a ridiculous product. You say you don’t have the funds to scale when you haven’t taken the effort to prove the concept to the market, investors or potential partners. Your external scapegoating is only masking the truth from yourself.
  7. Lack of Confidence: You are scared of failure, which is ironic because you act in ways that make you fail. You don’t engage your personal networks, you don’t reach out for help, you don’t fully commit to building the product you need to, or you are too timid to reach out to your customers. You fail act, or you act partially, leading to disaster.

The truth is, if you want to run a startup you can, and you can be wildly successful. But it may not be the startup you have in mind. You have to listen to your market. You have to build something you can do better than anyone else. To do either of these you have to overcome yourself, learn to listen, be patient, focus on the right things, be measured in your appetites, and be confident in the right things.

Startups are hard, but these Seven Sins are not an excuse not to try. They a challenge to try harder. But we must all try better, smarter, with more honesty and a more open mind. Once we do that, we can always find a way to succeed.

Coroner’s Report

December 16th, 2010

Post-Mortem (noun): a discussion of an event after it has occurred.

This is where hindsight becomes conventional wisdom. Before writing this I looked for a few examples of other Start-up Post-Mortems to see if there was a particular pattern or commonality in the termination of new ventures. Our friends over at ChubbyBrain did a great job of compiling a list of 25 startup failures in which the founders reflected back on the decisions and regrets. Good read.

So here’s my attempt at a few lessons learned.

Spec before you jump

Back when I decided to take a jump from working for someone else to just myself I had been working on it for a few months with my partners. The concept had been kicked around, we created a logo, got a domain name with accompanying YouTube, Facebook and Twitter accounts. We had server space ready and available. We just needed to get our website up and going.

Little did I or my partners realize how much that would take to complete. Some of that had to do with our team being semi virtual and the rest had to do with my limited experience of development. I had been spoiled working at a company in which a small, talented team could dedicate their full attention to a quick turnaround.

Now my partner was talented but only part-time and until we sat in the same room with a whiteboard and talked through the use cases he didn’t know what was in my brain other than the occasional gibberish I’d communicate on our weekly team conference call.

So I left a paying gig thinking he’d be able to do it all within a relatively short-time. Come to find out the total estimated cost using a developer shop in Latin America would be about $20k and a few months. I should have waited a few months longer to be able to partially finance the majority of the development.

 Test your biggest assumptions first

The other problem was that we were going off assumptions of what the customer might want and that people would behave a certain way. As we started to work with our customers we were much like someone who was learning to drive a stick shift, stopping and going and stopping again. Redesigning or reprioritizing what needed to be done and shifting our business model to something that required more resources and expertise we didn’t have readily available.

Is your team investable?

We were a trio of co-founders. I pitched an idea to a couple of friends who were willing to jump on the crazy train with me. Thanks guys! However, only 1 out of the 3 (not me) had expertise or experience in what we were about to do. I had chosen them because I trusted them and they were willing. I had looked at their skill set and imagined that we each could fulfill certain roles. I told myself that commitment and trust were more important. I still believe that but I also came to recognize during a pitching event that our team didn’t instill confidence in the investing community. Too bad that is one of the main things they look for in start-ups. What I should have done is find an idea in which our experience or passions did natural fit instead of forcing an idea that required different skill sets than we possessed.

Equity early w/vesting on the side sprinkled with milestones

I botched this one big-time. We waited awhile to create the paperwork that officially designated who got what equity but began with a handshake 3-way split. I wanted partners that were as committed as I was and was tired of corporate compensation handing out slivers of equity for people that give their lives to the company. My partners were wise and expressed concern regarding how much they were getting for what they weren’t putting in. I insisted it was okay and that we’re in this together.

It wasn’t okay. Expectations weren’t met, life priorities shifted, and I dragged my feet to talk about it because I didn’t want it to be about money or that an altruistic approach couldn’t work. My friends were gracious enough to patiently let me bungle through it. They even were helping me by offering to take less and ultimately signing over their equity claim when we parted ways.

When the first partner left we were in the process of putting the paperwork together and decided to utilize vesting to minimize the impact that could happen if one of us had a change of heart or didn’t deliver on what was expected. It made it much easier when he decided to move on. His departure brought me to my last and perhaps biggest lesson.

You can’t do it alone

Even if you’re a sole owner you still rely on others to help you get set-up and run your business. Finding the right logistics partner took much longer and was much more important to our business viability than I previously had supposed.

As my partners left I found the concept testing at a critical point. If it didn’t work then what was the point of finding someone. I should have continued recruiting; it is always easier to make the right decision when you have someone else to keep you in check or encourage you. I’d also failed to create an advisory board that we could go to for counsel and resources. So the majority of my recruiting efforts were limited to my own network of individuals that didn’t necessarily overlap with what I needed.

Well there it is. My own startup post-mortem. A couple of major mistakes, quite a few lessons learned, some debt and one great life-changing experience. Man that was fun!

The i’s have it!

August 20th, 2010

Last night I had a chance to catch up with two companies involved in the Boom Startup group that I mentioned previously. The first was iCount.com (formerly known as Voycit), a website that facilitates conversations with your elected officials. After verifying that you’re a registered voter you can get informed about what is going on in a particular topic, engage with your local representatives by voting on issues that come up.

Their business model is currently based on display ads, providing analytics to politicians, and allowing lobbyists to contact you for calls to action. They will be holding a contest to see who can invite the most people. An iPad will be given to the winner so sign-up as soon as you can.

The second company wasn’t presenting but was there in the audience and I had a chance to chat with them about their progress. iActionable.com is a website that offers an easy API plug-in that is gives you a customizable reputation system. Meaning you can have the power of game mechanics available to reinforce whatever behavior you want.

It can also keep track of users and what sort of things they’ve done. For example, if someone were to leave a comment or review on a site that was using iActionable you would be able to see what other subjects or products this person has made the past providing you with a little better context regarding their credibility.

They’re both ramping up and getting ready for the big investor day coming up in September. I wish them the best of luck to both of them.

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