50 Startup Mistakes

And how to avoid them

After several years of writing articles about business and entrepreneurship, as well as consulting for and advising many companies, I’ve come to realize there are shared lessons that all founders must learn on their startup journeys. The following list of 50 Startup Mistakes is far from exhaustive. And while there are certainly exceptions to a number of them, they provide great heuristics for anyone leading a new initiative (at any sized company).

Think of startups as a game of Minesweeper. We tend to start playing on an empty board. And although nobody can know the location of all the mines, there are certain ones that are common to every instance of the startup game. A founder can save a lot of time, money, and energy by knowing how to avoid those from the very start.

1. Thinking you have all the answers

My favorite advice for startup founders: You’ll be 90% wrong about your assumptions. The problem is that you don’t know which 90%. Therefore, do everything you can to challenge your convictions, and be willing to shed them or tweak them as needed. Rapid iteration and an open mind are two ingredients necessary for a successful startup journey.

2. Ignoring the impact of compounding

Meaningful long-term change takes time, be it learning new skills, obtaining new customers, or establishing a brand. The most underrated way to drive improvement is through small incremental steps that compound over time. Einstein apocryphally called compound interest the "eighth wonder of the world." The takeaway for startups is that success is a marathon, not a sprint, and tiny changes each day multiply to astronomical gains so long as you're consistent and committed.

3. Disregarding the law of funnels

Any action a user or customer must take starts at the top of a conversion funnel. The goal is to get them to the bottom. One of the easiest ways to lose someone along that journey (a phenomenon known as churn) is to require they go through too many steps. I call this The Law of Funnels. It states, "The more steps a user has to go through to do something, the less likely they are to complete it.”

4. Focusing on scaling too early

Many startups over-engineer and future-proof in the early days, a tactic that is almost certain to result in a tremendous waste of energy. At the start of the journey, there are very few knowns (see mistake #1 above). But one thing that is known is that there is a fundamental difference between the friction that prevents a product from taking off and the friction that prevents it from scaling.

The line of demarcation is known as Product Market Fit. Prior to that line, all of a company's energy should be directed to reaching it. Being overly concerned with what happens afterward is an exercise in futility.

5. Hiring based on experience

The most successful early stage startup employees I’ve seen are not those who have had relevant experience, but those who were adaptable and good problem solvers. As I’ve written before, “Startups have very little time and resources to focus on the wrong thing. But it’s impossible to predict what they will need to focus on. So don’t waste energy and precious hires on what a person has done in the past. It’s 97% irrelevant to what they will be doing in the future.”

6. Wearing too many hats

In my favorite brainteaser of all time, one hundred prisoners wear different colored hats and must strategize ways to identify their own hat colors. A startup often has far fewer than one hundred employees, but often has far more than one hundred hats. Context switching carries a real cost, and early stage employees who fail to delegate responsibility often end up performing all tasks poorly. Find people you can trust to take some of those hats off your head, and bring them in early.

7. Comparing your work-in-progress to others’ finished works

One of the easiest ways to get discouraged while running the startup marathon is to compare your rough drafts and works in progress to polished success stories. All difficult tasks (be them entrepreneurial, creative, educational, etc.) require iteration and iteration, revision and revision. The mistakes along the way are countless, sure, but so too are they priceless. Comparing a work-in-progress to the finished products we see every day is not only demotivating. It’s also disingenuous. It’s comparing a sapling to a fully grown tree, forgetting that even those giant trees were once as small as seeds.

8. Being frightened of incumbents

Founders are often scared to take on powerful incumbents, believing those paths to be dead-ends given the forces at large there. This is a mistake. Taking on a monopoly is often a missed opportunity with enormous upside, and with less cost than you think. There are four main reasons: Monopolies have already proven the industry is viable and lucrative, they refuse to cannibalize their own dominance, they’ve institutionalized their inefficiencies, and they have the most to lose from making mistakes. Startups, by contrast, have the most to gain.

9. Thinking you need to be first

It is a common fallacy among passionate and creative thinkers that, to succeed, they need to be the first mover. Being the first mover is often a tremendous disadvantage for reasons I’ve outlined before. What matters is not being first but having consumers think you were first, all while benefitting from the courses charted by your forerunners.

10. Trying to solve unbounded problems

To be solved effectively and efficiently, problems must be segmented and bounded. First, split your intractable problems into small digestible challenges with a single goal in mind for each. Second, ensure that their solution is bounded to a finite solution space. Not realizing this is almost always a recipe for wasted resources and disappointing outcomes.

11. Fearing the pivot

For most startups, there are only two viable outcomes. In the unlikely case, they will be a big success. In the more likely scenario, they will fail. Don’t stick to early product or strategy decisions that raise the likelihood of the latter. If your startup fails, the value of all your decisions will be zero. So, do everything you can to maximize the likelihood of success. If that requires pivoting from what you know and are comfortable with, so be it.

12. Not understanding employee motivation

Your employees are motivated by different things, and failing to recognize their different styles often leads to poor management as well as to employee dissatisfaction. I've categorized people into a Climber, Hiker, Runner framework. Climbers are driven by the prospect of unlocking future opportunities. Hikers prefer to take on new challenges and learn new things. And Runners are happy when they can dive deep into what they're good at. Approaching motivation this way has made me a better manager, and has helped me identify effective ways to keep employees happy.

13. Catering too much to existing users

Your existing users or customers are critically important; you wouldn’t have a business without them. But focusing too much on their needs necessarily comes at the expense of the audience you haven’t yet reached, and for whom you’re still struggling to showcase value. Catering to those who have reached the bottom of your funnel prevents you from serving the needs of those higher in the funnel whose needs have not yet been served. This is the push and pull of product development, and there is a flip-side to it. That’s the next mistake…

14. Catering too much to potential users

The danger outlined in mistake #13 swings the other way too. Neglecting to serve the needs of your existing users runs the risk of causing unnecessary churn. The cost of retaining customers you have already converted is substantially lower than the cost of obtaining new ones. Don’t be overly protective of the users you have, but don’t be overly dismissive either.

15. Putting off hard conversations

Your life is divided into two parts: that which occurs before you have the awkward/unpleasant/emotionally taxing conversation you’re putting off, and that which occurs after. Which would you rather extend? If it’s the latter, why not do everything in your power to cross the boundary right now?

16. Failing to recognize power laws

Power laws govern everything you do. Most of the work you put into your startup will yield little clear benefit. Most of the success you see will come from a handful of bets. Internalizing this phenomenon leads to better decision making, less emotional turbulence, and healthier sustainable businesses.

17. Focusing too much on short term gains

Startups are a marathon (see mistake #2). Short term wins offer little beyond dopamine hits and the stroking of egos. In real long-term success stories, it is the hard things that take a long time which yield meaningful and lasting benefits. While it takes many short term wins to get there, don't miss the forest for the trees. Those incremental achievements are not the true goal. They are the means to an end.

18. Over-protecting your idea

Have a brilliant idea and an NDA shielding anyone from peeking at it? You're likely not doing yourself any favors. Truly successful companies win with superior execution, not superior ideas (see mistake #9). And by over-protecting your idea from being prodded and challenged, you're weakening its probability of ever coming to fruition. Often, those individuals who frighten you as potential competitors are those whose feedback is most valuable. And if you fear them stealing the idea, be comforted in knowing that there is no shortage of great ideas in the world. There is, however, a dire shortage of people who know what to do with them.

19. Not getting your team to interact outside of work

Whether in person or remote, the value of having your team “break the ice” cannot be overstated. I mean “break the ice” in two ways. First, it of course helps your colleagues actually get to know one another (and hopefully like one another), which leads to happier employees and higher productivity. But it also “breaks the ice” of the day-to-day mayhem of startup life. It’s what I’ve called “a necessary thawing period.”

20. Not putting things in perspective

A chance encounter on an elevator over a decade ago led me to develop a critical framework for managing the stress of startup life:

When lost in the hustle and bustle of the early stages of a company, it’s important to remember that most things that stress you out don’t actually matter in the long term. They will do little to affect the eventual outcome, but they will heavily drain you in the near term. That is unless you regularly stop yourself, point at those small stressors, and ask, “This matters in life?”

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