Common startup mistakes
A few comments from Sergey Belousov, a well-known entrepreneur, about the mistakes of people who start startups.
– The first mistake: “we all know ourselves.”
The other day I met with a startup who asked for investments. When its founder told me that he knew exactly where and how he would develop, I asked how old his company was and what its turnover was. He replied that six, and this year they plan to make $ 1.2 million. Do I need to comment on his words somehow? For so many years, a person who “knows everything” has not achieved truly serious success. Where is the line that separates the confident entrepreneur, whom we, as a fund, want to see in front of us, from self-confident and stubborn? Frankly – I do not know, this is “chemistry.” But I know for sure that even people really wise by experience understand one thing: they don’t know much and they always need to learn. And even more so, this statement applies to startups.
– The second mistake: “we do not need partners.”
In fact, this problem often arises from the first – startups believe that they do not need partners, because everyone knows without them (although it happens that they are just afraid of something). One way or another, an intelligent entrepreneur is always looking for smart partners. By them I mean people who benefit from helping him grow his business: investors, major shareholders, mentors, and strong employees. But in practice, many startups are afraid to share their power, “steering”. It looks not only funny, but also stupid. The most successful technology businesses were created by people who ultimately owned 10-30% of their companies. At the same time, they earned much more and created more significant products than those who had full control in their own organizations. Look for examples yourself: Steve Jobs, Bill Gates, Larry Ellison, Sergey Brin, etc. etc. I know only one large private company – SAS, and it also has several co-owners.
I can give a very real example when a company (more or less well-known in the industry) with a good product and strong engineers for twenty years has not been able to overcome the ten millionth threshold, and to this day remains a startup (in my understanding, this stage is not determined by the age of the company , and its size, development and capabilities). And it will not overcome – precisely because its founder does not know how to work with partners.
– The third mistake: “underestimation of the window of opportunity.”
Too often, I see people who tell me that they have some unique technology that cannot be duplicated or copied to anyone, so the whole world is in their pocket and you can take your time in a hurry. This is a huge mistake – any business has a “window of opportunity”. It is determined by many factors: competition in the market, the need for a product, the willingness of consumers to buy it, timeliness, etc. This applies to absolutely any product, there are no exceptions, so remember: until recently, nobody needed your invention and will soon cease to interest people again. Therefore, if your product has begun to be sold, you must scale your business as soon as possible.
– The fourth and final mistake is “reassessment of the old team.”
Often we see entrepreneurs who proudly say that over the past ten years, even twenty years, their team has practically not changed. I do not want to generalize, but overall this is a stupid position. Moreover, it can greatly harm the business. The team must be constantly updated, this is correct and normal. Many of those who started with you will not be able to grow to a more serious level – this is a fact. From the side, their dismissal may look like a cruel or ugly act of the founder, but often there is no other way. At some point, even the partner may no longer meet the business requirements. Remember how Jobs broke up with Wozniak or Gates – with Allen. Unfortunately, once any entrepreneur makes such a choice. This is actually normal. Over the course of my career, I have lost about 100 top people – I fired someone, someone left myself. At first I regretted the loss of each, but now I understand that these were emotions – now I really regret only five of them.