Shutting your eyes to a technical debt, geographic limit(lessness) of the market, unrealistic expectations of team members, not a clear enough vision, lack of persistence, wrong customer segment, not using the build – measure – learn loop, not taking the team and development metrics into account, forming the team and motivation, and lying to yourself and others about the product/market fit are the ten critical mistakes that most often cost startups their global breakthrough and success.
Entrepreneur or mentor – always have these 10 areas in full view
Based on his own experiences from working with Slovenian and international startups, Tilen Travnik, operative leader in D·Labs, experienced startup mentor and one of the initiators of the Slovenian Running Lean
movement, presented ten critical areas where startup founders get burned most often.
These are mistakes that cause young, often inexperienced entrepreneurs to miss or even lose the opportunity for global breakthrough and success. Travnik warned about them at the meeting
of mentors, partners of the Initiative Start:up Slovenia and startups that received Slovene Enterprise Fund’s investment last year. We organized the meeting in Orehov Gaj grove close to Ljubljana at the end of this August, and Travnik’s lecture systematically led us through ten areas that you should always keep in mind when consulting or mentoring startups as well as, of course, when building your own startup company.
#1 Mistake: Shutting your eyes to technical debt and homework
This problem appears relatively late, most often when startups start flirting with external investors. One of the key tasks that good and conscientious investors do is technical due diligence. If the investor isn’t interested in it, it’s questionable how serious he is. If the startup is offering a service, such due diligence shows how (un)tidy the company processes are. In service as well as technical products, this is the amount of time necessary for all given and known weaknesses to be eliminated.
Startuppers – Matej Gaser, Matevž Petek and Rok Lončarič
Mistake #2: geographic limit(lessness) of the market
It often turns out that Slovenia is neither big enough nor suitable for market testing. It’s good that startups begin by choosing a niche market, but this mustn’t be conditioned geographically, unless if it’s meant for a very specific location.
It works even better if instead of marking flags on the map, we define who our ideal customer, persona, is in as much detail as possible – for example a 35-year-old man who is buying a family van. And the challenges brought by the dispersion of potential users all across the world are still better than being buried in the comfort of the nearby market.
Mistake #3: unrealistic team expectations about achieved results
Expected yield to startup entrepreneurs’ own investments is something that’s best forgotten in the intense process of building and developing the company. Or act like you do with the box test: if you put a thing in a box, close it and put it away, then don’t open it in the next six months, you can throw it away. When building the team and inviting someone into your startup, you have to realize that you’re luring them from a safe job to somewhere where they’ll work for three years for not that much money and with a big possibility that the company will fail. Such pressure can cause unrealistic expectations in team members and leads to discord, even if they’re the owners of a smaller ownership share.
Mistake #4: a vision that isn’t clear, strong or well-communicated enough
The vision that founders and the core team have and believe in as well as the entire system surrounding the company help make better decisions. It’s a framework into which you can put all daily events and decisions.
Investors try to make entrepreneurs understand that their vision should be simple enough to be understood by their mothers, which means no technical and complicated product descriptions. And communicated well-enough and so often until every team members knows how to say it or at least describe its essence. The vision is also the lever for adjusting the thinking and functioning of employees.
Mistake #5: lack of persistence
There are always a lot of problems in startup entrepreneurship, and the energy consumption is big and time-consuming. The starting passion is the same as infatuation, the chemistry goes away after a while and persistence is what has to stay and help the entrepreneur overcome challenges.
Debate after the lecture … Tilen Travnik, Blaž Kos, Maja Tomanič Vidovič and participants at the meeting…
Mistake #6: too broad or completely wrong segment of potential customers
When looking for the right segment of potential customers, you have to be persistent and consistent, modern entrepreneurship literature also provides many tools and methods for effective market segmentation. A lot of mistakes happen in the process of looking for the right segment and achieving the fastest possible sales, when startups start panicking and they pivot without a plan, research or verifying hypotheses.
Mistake #7: not using the build-measure-learn loop
Metrics and analysis – regularly monitoring key success indicators – are very important and something that can help startups avoid the fake feeling of development and progress. Sometimes entrepreneurs think that the business is successful only because they’re developing it, but meanwhile real success indicators are stagnating or even regressing.
Mistake #8: Not taking the team and development metrics into account
The position “I’m paying so I’ll say what and how we’ll work,” can be dangerous. If the person who’s investing doesn’t like the metrics, they can miss the warnings of the team and developers who would help keep product development on the right path.
Meeting in Orehov Gaj grove was also dedicated to entrepreneurs’ feedback to products SK75 and SK200
This is heard often but very true: in life and startup development, the team is what’s most important. Don’t look for someone who is passionate about working in a startup, look for someone who feels passion towards the problem solved by the company.
Said differently – instead of an excellent programmer who isn’t interested in toys in the slightest, instead hire an average programmer who is very interested in them. Of course people need to have core knowledge and competences, but this is something that needs to be considered by those startups that don’t have an inbuilt tech competence in the team or trust someone who only has it on paper.
Mistake #10: lying to yourself and others about the product/market fit
The temptation to lie to yourself and others that you’re developing something that the market really needs is often (too) big. Because of this, what happens all too often is that entrepreneurs invest too much time and money that they could instead transfer into potentially more successful products with a healthy dose of critical thinking and honesty.
Organizers of the meeting: Initiative Start:up Slovenia and the Slovene Enterprise Fund