There are things every founder should know to make their journey easier. Thousands of companies make these mistakes over and over again without realizing that they don’t have to.
We’ll help you avoid them, starting now.
The Importance of Learning From People Who’ve Been There Before
Let’s start with a simple fact that every founder needs to become comfortable with: even if you’re disrupting an entire industry, you’re still better off using most of the same tools and strategies as everyone else. Don’t try to re-invent everything just because you’re re-inventing one thing.
Many entrepreneurs insist that they need to come up with their own unique solution to every problem, only to find out that there are already some pretty great answers in place that work in 99% of companies.
Even game-changing startups can have the same project management and HR systems as established Fortune 500 companies. Steve Jobs wore the same thing every day so he could free his mind to focus on the important decisions—rather than spending his time re-inventing clothing.
Here’s What Founders Need to Know
Here are three things that are important to understand:
Your Launch Announcement Really Doesn’t Matter
Ready to tell the world that you’ve received some funding or that you’ve launched a new version of your app? There’s nothing wrong with this, and it can certainly drive traffic to your website. However, all too many founders overthink this moment. They delay, delay, and delay some more. They wait for that perfect moment when the stars will align, when the product is perfectly polished for a first version, and when it’s so amazing that everyone who reads about it will either come to work for the company or become a customer/advocate for life.
The problem is that the moment never comes. Things will never be perfect, and waiting too long is problematic for a number of reasons.
First, you can’t build a perfect product without customer feedback.
Reid Hoffman, founder of LinkedIn, says it best:
“If you’re not embarrassed by the first version of your product, you’ve launched too late.”
Successful companies make decisions based on data, not just by listening to listening to their gut. Take the opportunity to start learning from your customers ASAP. .
Second, waiting is likely to frustrate your team, since it often means you’ll constantly redefine the project, creating more work for everyone. We call this “negotiating against yourself” where you keep making decisions to please imaginary customers. You won’t know what people actually want until you watch them use your product.
All-in-all, launching earlier than you’re comfortable with is almost always the right answer—especially for consumer (B2C) startups.
Customer Acquisition Costs Are Key
The sooner you start to look at your customer acquisition costs and your unit economics, the better off you’ll be in the long run. Yes, it may seem silly to calculate these numbers when you’ve only sold four or five copies of your product, or when you’ve only brought in revenue via experiments.
But the earlier you start to track these numbers, the better chance you’ll have of building a sustainable business. In the words of tech analyst Ben Thompson, “The single biggest factor that differentiates multi-billion dollar companies is a scalable advantage in customer acquisition costs.”
You calculate your cost to acquire a customer (CAC) for a time period by dividing the total money you spend on sales and marketing by the number of customers you acquired.
So if you spent $5,000 in a month and acquired 125 new customers, your CAC is $40 for that month.
The sooner you figure your numbers out, the sooner you can start optimizing. And the better off everyone at your company will be.
Your Founding Team Isn’t Always Your Exit Team
One of the hardest things for founders is often that the starting team isn’t necessarily the people they’ll be working with when they sell or IPO their business years down the line. Fred Wilson describes this as “turning your team.”
The people who are great at starting a company aren’t necessarily the people who are great at managing a 500-person team. They’re completely different jobs.
Mark Zuckerberg famously made this transition when Facebook really started to take off, precisely because he wanted to keep being the CEO.
How to Avoid Rookie Mistakes
These mistakes are so common that founders should have to memorize them before getting a dime of funding. Ignore them at your own peril.but the reality is that these fallacies are so common that founders should have to memorize them before… Click To Tweet
Mistake #1: Appeal to Authority
Our first mistake is known as deferring to authority, which is when you defer to one person’s opinion because they’ve accomplished more than anyone else in the conversation. This is common in startups, especially when it’s a small group of people with wildly different levels of experience. The problem is that just because something worked in the past doesn’t mean it will necessarily work for you. Evaluate all of your options before deciding on a course of action.
To avoid making this mistake, try to separate the idea from the person as much as possible. The main exceptions to this are circumstances where the qualifications truly do matter, as in legal, regulatory, or accounting expertise.
Mistake #2: Slippery Slope
This one that can quickly get out of hand. The slippery slope is when one person suggests an idea only to be shot down by someone claiming that if they do X, what’s to stop them from doing Y, and then who knows where it will go. This may seem like an enticing argument, but the answer to the question is that you, the founder, don’t suddenly lose control if things go too far in one direction. The slippery slope isn’t actually a hill, it’s a flat road and you can use your brakes at any point.
Mistake #3: Proof by Assertion
This simply means saying something the loudest and most frequently. If someone is constantly mentioning the same idea and wearing out resistance, it doesn’t make them right. It just makes them stubborn. Avoid committing this mistake by evaluating ideas objectively based on merit, not on someone’s insistence.
Mistake #4: Historian’s Fallacy
You see this whenever someone argues you should take a course of action because Successful Company A made the same decision when they were getting started. The problem with this argument is that Company A may have made the decision, but they did it at a different time, under different circumstances. This doesn’t mean it’s the right decision for you. This is part of the reason we recommend mentoring and masterminds at 10xU: so you can shape your strategy to your specific situation. Think of it like this: Apple made its initial mark selling electronics via physical stores. Does that make it the best strategy for a hardware startup today? Probably not, at least to start.
Mistake #5: False Dilemma
You have two choices: either launch now with bugs or wait six months to try to fix everything.. It turns out there are very few situations in which you only have two options and no middle ground. Realize that there are dozens of options available to you for most decisions. Perhaps you can spend two weeks fixing bugs, launch an imperfect product, and use the usage data to focus on the biggest customer problems.
Mistake #6: Moving the Goalposts
This means starting a project with one set of specifications only to change those specs repeatedly over the course of the project. We’re huge fans of experimentation at 10xU, which means gathering data in order to make decisions. If instead your team is making decisions without collecting the necessary information, then you may just be moving the goalposts. We’ve seen this add years and millions of dollars to development projects.
Don’t Let the Past Dictate Your Path
You’ll make your best decisions when you combine your intuition with actual data. Try to get something into your potential customers’ hands as quickly as possible. Then look at both analytics (what) and conversations (why) to figure out how to improve the experience. Draw on the diverse opinions of your team and keep asking why until you get to the root of any issues.
There’s no one right way to run a company—since that would mean that we could just follow a formula to be successful—but there are best practices that founders can use to maximize their chance of success. Learn as much as you can from others, adapt everything to your specific situations, and avoid the common mistakes we’ve listed here.