startup mistakes

5 Mistakes Derailing Startup Founders

Latest posts by Ran Craycraft (see all)

Your startup idea is your golden child – and it should be. But keep blind enthusiasm in check and move forward strategically and realistically to avoid the mistakes that can derail your project.

You know that feeling when an idea is so good it wakes you up? You fumble around in the dark for your phone to jot memorable notes. Fast-forward to the afternoon when you pull up your overnight notes and have no idea why you thought renaming your company Chumbawamba was mission-critical. Sometimes when you’re in the zone as a founder, a case of the twisties can utterly derail progress.

After 20 years in the business, I’ve seen great ideas become billion-dollar businesses and great ideas fall face-first on the doorjamb. As a consultant to many of the world’s most innovative global brands as well as motivated founders looking for a jump-start, it’s important to be able to know what steps along the way are absolutely necessary and which ones are nice to have.

I often tell prospective entrepreneurs: If you have the ability to do anything else – I mean anything – you should do it. Being an entrepreneur can be the hardest, most thankless job you will ever have. If you’re motivated by money, don’t be an entrepreneur. Work in finance. If you want respect, forget your idea and start climbing the corporate ladder.

But if you believe so strongly in your idea that it wakes you up at night and your drive is too passionate for any manager to tolerate, then it’s time to think bigger.

The top 5 mistakes founders make right before burning their startup to the ground:

Waiting too long to launch

As the saying goes, if you’re not embarrassed by your first product, you waited too long to launch. OK, so you don’t have to be embarrassed when you launch, but after you’re wildly successful and looking back, your launch product should make you cringe.

Arriving at a minimum viable product or MVP is torture for founders. There’s nothing worse than having to trim down your product’s features before the big reveal. It feels like each feature must work in harmony for users to get it, right?

Let’s deconstruct that thinking

First, MVPs are necessary. If you believe otherwise, you’re wrong – iteration shapes innovation. Before you spend money (or more importantly, your time) on a big idea that made a lot of sense in your dream, it’s important to first prove your theories. If you skip the MVP and go straight to version 1, you’re not saving time, you’re actually spending unnecessary time shoring up a bloated infrastructure for scale that will likely need to be ripped out very soon.

mvp burger

Consider the MVP pyramid of doom

​If you stack all of the critical features of your business into a pyramid, as the founder, you need to decide what’s critical for launch and what’s not. Building out the entire pyramid unfortunately isn’t an option. So, it’s up to you to decide what portion of the pyramid to build before your initial launch and what can come later.

Many founders mistakenly believe that in order to be successful, the key features need to be entirely built out along with as much added polish as necessary – leaving some lesser features completely untouched. Instead, consider taking a bite off the side of that delicious startup pyramid sandwich, building out enough of each critical feature for users and investors to taste the full flavor profile of your new startup, and — more importantly — giving you data to learn and adapt from. You can’t experience the magic of an In-N-Out burger by just eating the bun, right?

It makes perfect sense that you’re looking for TechCrunch press and hoping to ride high on Reddit or ProductHunt, but that’s never how it starts. Be realistic. Consider instead a soft launch of your earliest concept with your friends and family followed by outreach beyond your circle to users you don’t know. Your friends and family will be proud of you, they’ll tell you what you want to hear, but the real insights come from people you don’t know. Also, consider spending some ad dollars to A/B test some calls to action or even assembling a paid focus group to quickly bang on your MVP theories. These two examples will get you unbiased, target audience feedback. If you weren’t wrong about some of the theories that shaped your idea, then you’re not testing the right concepts. Make assumptions, test them, iterate quickly, and think of launch as an evolving process, not a hard date on a calendar.

Waiting on the perfect cofounder

Just like trying to build too many features at launch, waiting on the perfect cofounder is another one-way ticket to startup purgatory. Founders need to move quickly and the perfect partner isn’t always in plain sight. It can be overwhelming and frustrating to essentially be on the clock to find someone to marry without getting a chance to date, but sometimes shopping around for the perfect partner to trust your company with can be a massive time sink. Meanwhile, as you’re busy swiping left, Danny Boy and his Whiskey Drink just beat you to market.

What’s an alternative? Launching a tech company in 2021, you need a tech partner. The internet is fickle and she can be a mean, mean girl. Browsers and devices constantly change and although everything was fire today, your app could very well be on fire tomorrow. Launching without a trusted tech partner to extinguish emergencies is a nonstarter.

If finding an individual doesn’t make sense right now, then it’s time to turn to a consultant or agency for help. Keep in mind, agency engagements are typically structured around project deliverables, while others will also help you get to market and acquire customers. Others go beyond the short-term engagement and also help you hire the best people in the right places. If you find yourself three or four months in and still don’t have your tech partner, it’s time to call an audible.

Way back in 2014, an aspiring entrepreneur came to us with an idea for SMS customer support as a service. He was fresh off a corporate job and wanted to fast-track his MVP. After polishing the idea and unsuccessfully shopping around for a technical cofounder, he hired our team to design and build out the MVP. That prototype (and his incredible energy) got him in the door for demos with some pretty incredible companies for a newborn startup. After some initial feedback and interest, he was able to raise venture capital money and build out additional features and integrations. Over the next several years, his team grew significantly, but our external agency remained his innovation partner, building new feature after new feature while his growing internal team managed the infrastructure. After 25 million customer support text messages between brands and their customers, Teckst was acquired without ever finding that elusive technical cofounder.



Hiring consultants in the wrong places

A wrong hire or bad hire can be an expensive mistake in both dollars and time. Especially in the beginning, it makes sense to cut costs and increase efficiencies where you can. But it’s important to strike a balance between building a great team of employees and bringing on an outside firm to complete tasks quickly. So how do you know what you should hire out and what you should hire in?

A general rule of thumb is to keep your core business in-house and outsource the pieces that will help you launch and learn more quickly. If you’re an automotive brand, your industrial designers and engineers should be in-house since your core business rides on the quality of their work. However, your automotive brand’s logo and new companion mobile app should be driven by experts in usability and interface design, not the career automotive lady designing your firmware.

There’s a really good chance your startup doesn’t yet need a dedicated branding agency. There’s also a really good chance you’re not ready for bleeding-edge video production. And if you’re a founder and someone talked you into business consulting to help you shape your idea before you’ve launched, you’re in too deep, man. Too deep. Take a beat and instead consider a versatile digital partner with a focus in the areas you need most with decent enough chops to efficiently cover the rest of your bases. This will ensure you have consistent coverage across-the-board as your brand comes to life and, meanwhile, will keep you sane as you shape the business. When you’re trying to get to market quickly, failing fast and often, look for versatile consultants with demonstrated experience that can elevate and complement your unique industry experience. Don’t fall for high-priced specialist consultants working independently.


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Spending too much on lawyers

Another expensive mistake I made exactly once was spending too much money on lawyers when building a startup. When you come straight from a corporate job and think it makes sense to hire a big law firm to help you form your new company, think again. Unless your business operation already has significant assets to protect, it’s probably too early to hire a law firm with an ampersand in the name. Incorporation can be done easily online and don’t even think about paying a lawyer to write your terms and conditions or privacy policy until you’re ready to launch.

When it comes to most startups, you have the opportunity to launch with some basic personal and professional protections to shore up any gaps as you gain traction. Be sure to incorporate. Check out your competitors’ terms and privacy policy to help put some basic stakes in the ground, make sure you cover the basics, and then spend the rest of your early time and money actually getting to market. If you’re lucky, your investors might even cover the cost of a more sweeping legal review once you have business assets to protect.

There are a lot of new privacy laws to consider if you’re primarily doing online business in the European Union or California. However, until you have tens of thousands of users, you’re likely in the clear for CCPA (California Consumer Privacy Act,) and GDPR (General Data Protection Regulation), but depending on your own unique business and location, you may want to consult an attorney on this one. In general, if you catch yourself spending more dollars on lawyers than you have active users, you’re probably spinning your wheels.

Competitive analysis paralysis

It’s the user experience designer’s ultimate kryptonite. Writers suffer writer’s block, designers hit a creative wall, and founders get analysis paralysis. No matter your industry, it can be easy to overanalyze your product or overthink your place in the market, stalling you from innovating and generating unique ideas to move your company forward. Instead, do the research and networking your industry might require, but don’t ignore the value of bringing some ignorance to the table, as that can sometimes shift to courage.

We had a client who insisted on iterating behind closed doors for months, which soon became years, before ever testing their concept with real users. After an initial rush to build out the platform, more and more features kept getting added to our scope and soon we realized it was our client trying to keep pace with their assumed competition – fearing a launch with fewer features wouldn’t make the splash they wanted. This is an ill-fated (and expensive) startup journey to travel.

It all comes down to the build-measure-learn feedback loop, and all successful startups have this mastered. Seeing what customers actually do with a product is much more valuable than asking them what they might do. Walking this line of “just enough” can be tricky and the pitfall lies in both under- or overdeveloping your product.

By now, you probably have a good idea of what your competitors are doing. Don’t overthink it. Once you have your angle that makes your approach better than the rest, run with it, don’t obsess over your competitors’ Google Alerts. Be aware, but not obsessed – if you’re constantly trying to pivot to set yourself apart, you’ll end up in a barren land far from the eye-opening idea that lit your fire.

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