Paul comes up with his list of 18 Mistakes That Kill Startups and shares a bunch of conventional wisdom that I’ll try to summarize quickly …
It’s easier to catch yourself doing something you shouldn’t than always to remember to do something you should.
In consulting, “Best Practices” is all the rage. But, often, they’re not universal. They’re really “Best Practices for a specific condition or environment,” and those constraints can often be fine-grained. On the other hand, actual “Worst Practices” are more likely to be universal. This makes them orders of magnitude more useful.
1. Single Founder
Either you’re greedy and don’t want to share success, or you and/or your ideas suck and nobody will join forces with you. Smell that? It’s failure, cooking.
2. Bad Location
Why are there more startups in Silicon Valley than, say, New Jersey? I call it “density of interest.” There’s a high density of people who are interested in startups are. Like gravity, there’s a poorly understood and mysterious attractive force that continues to draw more people in, further increasing density. How’d it start? Perhaps there was a big bang. (Paul writes more about this here: How to Be Silicon Valley.)
3. Marginal Niche
Competition is good and healthy. If your idea is so great, wouldn’t you expect others to follow and try to compete? If you have no competition, perhaps it’s because your idea sucks. Smell that … ?
4. Derivative Idea
Someone has a great idea. Should you take it as your own and compete directly? Or, can you do them one better? Oh, an idea that scratches an itch you personally have improves the chances you’ll be passionate enough about it to make it work.
Be resilient and tenacious. “A man can fail many times, but he isn’t a failure until he gives up.” But, learn from your mistakes. Repeating an action and expecting different results is insanity. Listen to people who care: your users.
6. Hiring Bad Programmers
A startup’s founders have to be experts in the necessary skills to get the startup started. If you want it done right, do it yourself. Hire less talented people later on, when you can afford the risk.
7. Choosing the Wrong Platform
“Buying more hardware is cheaper than engineering time” is a lie. Anyone who says otherwise probably sells hardware or has friends who do. If startups could ever possibly succeed having made fundamentally wrong decisions, we’d be seeing a lot more successful startups in the news. In other words: don’t build your castle on a swamp.
8. Slowness in Launching
Don’t let the perfect be the enemy of the good. You don’t have a product until it’s out the door.
9. Launching Too Early
Don’t be a victim of your own success. If you’re not ready to win, don’t get in the game yet. Look what happened to Friendster (PDF). Don’t be a Friendster.
10. Having No Specific User in Mind
If you want to sell ice to eskimos, you have to have ice and you have to know some eskimos. If you don’t know any eskimos …
11. Raising Too Little Money & 12. Spending Too Much
Over ten years ago, Norm Brodsky said just because you run out of money doesn’t mean you were undercapitalized. Paul echoes this again, today. Yes, you need enough money to make your idea a reality, but the easiest way to end up with a million dollars is to start with ten million (and losing nine).
13. Raising Too Much Money
Unless your startup idea is “how to raise lots of money,” don’t spend too much time doing it. Raise enough to get going, then get back to work. Don’t let money be the boss of you.
14. Poor Investor Management
Just because someone gave you money doesn’t make them an expert in your area. A talented investor should be an expert in evaluating risk. If they insist on having control, that’s probably because they believe there’s too much risk to leave it in your hands. If they’re investing anyway, that’s probably a bad sign. Don’t let your investors destroy your startup.
15. Sacrificing Users to (Supposed) Profit
It’s harder to make something people actually want to use than to make something people are willing to pay for. If people actually want to use it, those who can afford to will pay for it. Don’t ignore monetization strategies, but remember: if you have nothing to monetize, what’s the point?
16. Not Wanting to Get Your Hands Dirty
Regardless of who wears the hats (or wants to), the hats are there. Between everyone in the team, they’ve all got to be worn by someone at some point.
17. Fights Between Founders
Every rose has its thorn. People change. Lives change. Hedge your bets, diversify: see #1 on this list.
18. A Half-Hearted Effort
Success and failure are binary states. The more effort you put in, the higher your chances of success.
Of course, my interpretation and condensation of Paul’s ideas may be incorrect. This was just an attempt to explain my understanding as tersely as possible. If you disagree with my interpretations or anything else for that matter, let me know in the comments below. Are there other “startup worst practices” you can think of that should have been on this list?