12 rules to avoid stupid startup failure.
I recently saw an article on BusinessInsider about these 10 startups that failed in 2017, this is a quick reminder that most of these startup CEOs giving speeches, writing books and teaching about how to run startups are really not good with business, they just happen to have more funding available.
Be careful not to run your own startup according to what you learnt from them only. Your own environment is the best teacher. Here are some points from my observations argue with your village tree:
1. If you don’t need the money, don’t raise it. Period. Don’t build your business around raising funds, well, unless you aren’t really building a business just working towards exiting as your ultimate end game.
2. Free model will never turn profitable in some cultures. Don’t start with a free model and hope to start charging for it sometime later, too risky. The moment you introduce paid features in some cultures, your product becomes a taboo.
3. PowerPoint presentations can lie. All those figures, charts and big grammar may not represent the actual reality on ground.
4. Not all clever ideas are good ideas. That the idea sounds super cool, does not mean it will yield profit. Don’t pour resources into executing an idea just because the idea tickles your fancy and makes you feel like Steve Jobs. I mean ideas like Uber for condoms.
5. If the model doesn’t work at $1, it most likely won’t work at $100m, believe that.
6. Pivot fast. Don’t wait for the roof to come down on you before you know you should iterate. Run smaller market tests on different pivot ideas constantly. A startup is essentially a search engine. It keeps searching for a profitable and repeatable business model.
7. Branding is too expensive, it can wipe out your capital. Sell first, brand later. Sales validate your idea. Profits validate the business model. Every other thing is secondary including speaking at events, branding t-shirts, super-nice offices, Logo, website, wall art, media publications and interviews, employing experienced staff, product packaging and so on.
Just get to the market and establish a sale first. The sales will teach you what and how to brand going forward.
8. The method that will eventually work for you may not have been written or taught by any ‘business coach’ ever. You will most likely be the first to carve your own path out.
9. If you are doubtful, go back to paid employment.
10. Don’t run multiple companies when you have the capacity of one. If it involves a delivery to the customer, you are running at least 2 companies — One that manufactures the product, and one that supplies it. Even if you contracted out the supplies, there is still a heavy overhead. Your startup may not survive it if you aren’t very careful.
This also applies to building apps, be careful with the number of features you introduce into your app, each feature could well represent a whole company, eg:
1. Chat feature — that’s a whole company called whatsapp
2. Posting — that’s a blogging company eg. Blogspot
3. Commenting — that’s a commenting company eg. Disquss
4. Sharing — That’s a social sharing company eg. Addthis
5. Selfies and picture upload — that’s a social media company eg. Snapchat, Instagram
The list is endless, don’t plague your startup with more companies than you can carry.
11. Popularity does not equal profitability. Some startups are popular because they are still pumping lots capital into publicity not because they are now successful. Copying a startup’s model just because of its popularity alone may spell doom.
12. There is no spoon. Do not try to bend the spoon.
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