New Startup

First-Time Startup Founders |Top 5 Mistakes

Starting a new business can be a real challenge, and you’re probably aware that the odds aren’t always in your favor. In fact, around 90% of startups don’t make it, and some don’t even survive the first year. But here’s the thing: if you’re a startup founder, you’re one of those brave souls who’s forging ahead despite the daunting statistics. Hats off to you!

I was in your shoes six years ago, and after successfully selling my own company, I’ve picked up a few valuable lessons along the way. I’d like to share them with you in the hopes that you can sidestep some of the common pitfalls and increase your chances of achieving your startup dreams.

Building a Full-Time Team Ahead of Finding Product-Market Fit

As Marc Andreesen wisely pointed out, reaching that sweet spot known as “product-market fit” is the holy grail during your company’s early years. It’s the moment when you discover if people truly love what you’re offering.

Simply put, until you hit that point, you’ll likely find yourself experimenting with numerous ideas, sometimes on a weekly basis. It’s a period of trial and error. However, if you have anyone on board besides a co-founder, they might start feeling the strain of these constant shifts in direction. They may even question if the compensation you’re offering is worth the rollercoaster ride.

I’ve been down that road, making this mistake not once, but three times. Looking back, it’s not the financial losses that bother me the most; it’s the fact that I subjected those early employees to such a turbulent and uncertain journey.

Reducing Emphasis on Offshore Talent

When you’re starting out, watching your expenses is crucial. It’s no surprise that giants like Google began their journeys in humble garages. However, one of the most significant costs in the early stages is labor. Given the incredible talent spread across the globe and the collaborative tools available, hiring offshore can be a game-changer for cost-saving.

Take, for example, The Factual, where we brought on board talented designers and engineers from Argentina at rates ranging from $35 to $50 per hour. What worked in our favor was the favorable timezone overlap with the U.S. West Coast. I’ve also seen fellow CEOs discover remarkable talent in places like Portugal, Spain, Ukraine, and Vietnam, often at rates starting from $20 per hour. Sometimes, we even hired skilled individuals in the U.S. and Canada from rural areas or locations where the cost of living was more budget-friendly.

One thing I’d like to stress is that while offshore talent can be incredibly impressive, they won’t magically solve your problems. Like most contractors, they’ll do precisely what you ask of them. So, it’s best to use them for specific and well-defined tasks rather than vague, open-ended assignments.

Clinging to Your Initial Idea for Too Long

It’s a common misconception that your very first idea will be a runaway success. You might have left your job to pursue what you believe is a brilliant startup concept. However, in the world of startups, particularly in the consumer realm, triumph often arises from unique insights that no one else has discovered. And these insights are rarely found in surveys; they usually emerge from the school of failure.

So, the key to success lies in swift idea iteration to gain those invaluable insights as quickly as possible. In my case, I went ahead and built a complete product based on my initial idea, only to realize later that people weren’t interested. A simpler landing page test could have delivered the same result with considerably less investment of money and time. It’s easy to underestimate the power of a landing page, thinking it can’t possibly capture the full promise of your product. But if you can’t convey your idea in written form and get users to sign up, you’re missing out on understanding the problem you’re solving and for whom you’re solving it.

Creating an MVP Larger Than Required

Many founders start with a grand vision to solve a complex problem and aim to build a comprehensive product, even if it’s done in stages. But creating product form factors like mobile apps or websites is often a bigger challenge than people initially realize, even when you try to keep the features to a minimum.

Just the process of setting up a site or app, establishing reliable login and authentication, designing a user-friendly onboarding process, and ensuring a responsive layout can consume a significant amount of time. And yet, you haven’t even started adding any actual features.

A more effective approach is to identify the smallest product area you can test. This might be something as simple as a newsletter, which surprisingly turned out to be our first successful product. The beauty of starting with a small, focused offering is that it naturally builds audience retention. This audience can be incredibly valuable when you’re ready to test a more robust product in the future. So, start small, build your audience, and then expand from there.

The Importance of a Co-founder with Marketing Expertise

The primary goal for investors when evaluating a startup is to see substantial growth, typically at a rate of 10% or more per month. This kind of growth serves as a clear signal that a business has found its product-market fit and is poised for scalability. However, achieving high growth is no walk in the park; it requires constant experimentation with new marketing strategies and channels.

This is precisely why having a marketing co-founder is crucial. Their primary focus remains on driving growth day in and day out, undistracted by other responsibilities. In our own startup, we had a technical co-founder and a product co-founder/CEO. With neither of us exclusively dedicated to growth, we struggled to consistently achieve that coveted 10% month-over-month growth rate. It wasn’t until we brought on a marketing co-founder five years into our journey that we realized our approach had been a little late. Had we made this move earlier, we likely would have experienced more consistent and substantial growth.

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