9 Mistakes Early-stage Founders Make, and Why Should You Avoid Them?
Updated: Dec 31, 2022
Bereket: Are you working on a startup? If so, I hate to break it to you, but there’s a good chance it will fail.
The Venture Capital Secret: 3 Out of 4 Startups Fail.
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).
Some mistakes have been shared by other founders.
Here are the 9 mistakes early-stage founders make and how to avoid them:
1. Not Validating Your Idea, First
Before you spend months building out your product/MVP, always validate your idea first. Reach out to some people that might be an audience target for your product, pitch to them your idea, and ask for feedback.
Will they use your product, and pay for it?
2. Building a Perfect Product for MVP
Your MVP product launch doesn't have to be perfect, it just needs to work and have the ability to stand out. Try to get the MVP out ASAP, get people to test it, and give you feedback such that you can improve your product.
The biggest mistake I see is companies wait for too long to release the product. It’s easy to let the scope of what you’re building get out of hand. Unfortunately, most startups build much more than they truly need to. Often, it’s easy to see that you only need to build a small fraction of the stuff you built. Most features, simply aren’t crucial to success or failure, and for an early-stage startup that means they were simply a waste of time, and resources - Jonathan Wegener, Founder, Timehop and Exit Strategy
3. Not Marketing Your Product/Service ASAP
So many founders wait, until they have a finished product/service, only then do they try to build an audience, this is a fatal mistake. This is where building in public can help, to build an audience and a product/service simultaneously.
So many founders wait until they have a finished product, THEN they try to build an audience - Jens Lennartsson
Never underestimate the importance of Minimum Viable Design. Your first product will likely be 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" - Kathryn Minshew, Founder/CEO, The Muse
4. Ignoring Your Competition (Similar Products) in the Market
A product idea that you have, might be really good, but it may not new. Make sure to find products that may be really similar to yours, find out what it's lacking (the most customers miss and are willing to pay for it), and then build (those benefits) on it.
You don't have to reinvent the wheel.
5. Ignoring Your Users/Customers
The best way to get feedback on your product/service is to talk to the people using it (customers/users). It helps by just asking them what they like about it, and what they think can be improved.
Add a survey/form on your site or better yet, ask them directly!
How to Talk to Your Users: Eric Migicovsky
Pick 3 spaces s/he is interested in.
Write down 3-4 types of stakeholders in each area (“personas”.)
Set up conversations with each.
Probe for their major problems/pain points.
Brainstorm with your entrepreneurship-minded friends on how to solve.
6. Not being Flexible and Agile
Many entrepreneurs seem to approach their startup journey with pre-defined steps, often leading to a pre-conceived single, solitary end goal. This doesn’t really work for a startup. Your journey should be nimble, flexible, speedy, and free-flowing. 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.
7. Health > Work (Always)
It's good to have a work-life balance, and during the early stages of a startup, it might seem best to work longer with no time for your mental health. But remember, try to get some exercise in during the week or make sure to always take breaks.
8. Giving Away Too Much Equity for Little Value
Save your equity until it's the right time when you take capital at a good/right value at a fair equity stake.
Founders, pay attention to your cap table. It's one of the parts of your business that is hardest to change. We recently passed on a startup and founding team that we loved because they had sold too much before pre-seed - Maren Bannon, Cofounder of January VC
Read: How to Calculate a Startup Valuation?
9. Funding Only When You Need It
Investors will throw money at you, but you shouldn't take it just like that. Maybe you don't even need funding, and that's ok. Or, maybe you don't need funding now, but in the future.
Focus on building a good product that users will love using.
Stay tuned, we will keep updating this post!