Top 5 common mistakes at the early stage of a startup
With 34 elements (www.34elements.com) and my involvement in the startup world, I’ve been working with a lot of entrepreneurs over the past years. I’ve realized there are some common patterns and mistakes that most startups make. Let me share with you the top 5 common mistakes and how to avoid them.
Many of them can be attacked with elementary practices, yet some are more troublesome and may indicate deeper problems. Each problem causes some cracks in your startup’s foundation.
The top 5 common mistakes
#1 A startup is not a product
Try this. Ask any entrepreneur the following question. What is it you do? Every time the response will be a product description. For one thing, it is very complicated to verbally convey what a product does; in addition, it’s never inspiring. Someone said, “love the problem not the solution”. A product is what a startup should decide to build based upon what problem it wants to solve and what society it wants to build. It comes from the vision and the passion of a co-founding team. Start there.
Advice: Try to describe your startup without describing your product. Take the problem angle.
#2 The power of a purpose is misunderstood
The purpose is not vision. The purpose describes why the startup exists, what are you fighting for. The vision describes what you are becoming and the impact it will have on the world around you. Finding your purpose is like finding your North Star. It should be an inspiration. In general, if when you state your purpose, I can imagine what the product does, you are on the wrong track. A purpose is bigger than a product. If you are a marketplace between decorators and homeowners, your purpose is not “ Making interior design accessible to everyone” it is more “ Making everyone feel good at home”. With the second statement, I cannot see what the product is, I am on higher grounds. It is not a theoretical exercise it is transformative.
Advice: Find your purpose. It’s not an easy task, it will require multiple iterations and probably a few months. It’s all worth it!
#3 The necessity to create a culture early on is neglected
Culture helps employees behave in the right way, although nothing has been said or written. Culture is not a bunch of strong words on the wall, such as “Empathy”, ‘Hard work” or “Respect”. Culture describes the personality of the startup. Things like how decisions are made, how to handle opinion diversity, how to communicate, how to hire, what we do not believe in, how to take time off, and so on. Most entrepreneurs think this could wait. Think again. Culture is what will attract your first key employees. If not well defined, the risk is that you’ll hire the wrong people from the start, making it very difficult to fix in the future.
Advice: Write a document that describes how you want your startup to handle things and your values.
#4 Everything that relates to market analysis and positioning is not well executed
Positioning is about occupying a meaningful space in the customer's mind. Markets are for the most part completely saturated. A product/solution exists because it is compared with alternative solutions. A meaningful market category can go a long way in positioning a product. If you do not help your clients position your offering, they will do it for you, probably not as well as you’d like. Therefore, everything from market sizing, market segmentation, competitive analysis, and go-to-market is critical.
Advice: Position your product to help potential clients understand how you want to be compared. Spend time segmenting your market and analyzing the competition (alternative solutions).
#5 Monetisation and distribution is often a poor copycat of what already exists
Entrepreneurs spend a lot of energy designing and building a product. Conversely, they spend no time trying to come up with an original business model where distribution and monetization become a competitive advantage. Often entrepreneurs look into what similar startups are doing and do the same. By doing this, you only differentiate yourself by your product. Xerox was selling copiers. There is nothing special about that, it‘s about copying paper. However, Xerox decided to stop selling machines and instead charge by usage. Clients would pay for what they use. The question was no longer whether Xerox was better than Canon. That made Xerox the #1 player.
Advice: Do not reason by analogy, try being a first principle thinker and question everything to find something original. This could be what sets you apart.
I hope that helps! Cheers everyone!