In my last two posts (here and here), I talked through 10 mistakes you don’t have to make as a young entrepreneur working on your first startup.
Here are 5 more fails you can avoid. Enjoy!
#5: You seek confirming, not disconfirming evidence.
A basic axiom of the scientific method is that you can never prove a hypothesis to be true, only false. The same goes for theories about your business.
The best entrepreneurs I know are obsessed with proving that their world view is incorrect. As David Cancel notes here, you should always have one dashboard that management can go to and figure out “where you suck the most.”
It’s a big mistake to drink too much of your own Kool-Aid. I’ve never met a great entrepreneur without conviction and vision, but I’ve also never met one who wasn’t interested in seeing data that proves him wrong.
#4: You pick advisors who are easily accessible, not particularly relevant.
The most impressive, accomplished person a college student knows is probably one of his professors. So, it’s no surprise that these are the first people a student turns to when he wants advice for his startup.
Just because it’s easy to get a professor involved in your startup, however, doesn’t mean you should do it. The vast majority of professors, especially those with tenure, live in a world antithetical to a startup’s. There are obvious exceptions, but the vast majority of academics will take purely intellectual interest in what you’re doing, when what you need is tactical assistance.
So, focus instead on finding the best tacticians. These are people who can help you recruit, build, and sell. And, they’re probably not on campus.
#3: You hire for short-term needs, not long-term fit.
When you have a short-term need (“I need a Ruby developer” or “I need a guy who knows accounting”), it’s tempting to reach out into your social network and pull in someone who can fulfill it. One piece of advice: it’s way easier to hire than to fire someone, especially when that person is a close friend.
In an early stage company, every full-time hire should be given the same scrutiny as the one before it. And that all leads back to employee #1, i.e. you! Relaxing that criterion creates a downward spiral of mediocrity in your organization which can be incredibly difficult to unwind.
Guy Kawasaki calls this phenomenon the “bozo explosion.”
#2: You treat fundraising like an end, not a means.
I estimate that 80% of venture capital blog posts are about raising money. I think this does a great disservice to the craft of entrepreneurship. Yes, as Fred Wilson has pointed out, one job of the CEO is to make sure there’s always cash in the bank. And yes, someone who is twice your age handing you millions of dollars will certainly make your mother proud of you.
But, fundraising is just a small part of what an entrepreneur needs to do to build a great company. If you do everything else right, fundraising will be relatively easy. Don’t treat the VC dollars like they’re the goal, when they’re just a means to an end.
#1: (drumroll, please!) You do more than one business plan competition.
Some business plan competitions are good for you. You can get feedback from the startup community, network to find teammates, see how others are doing things, and gain publicity for your venture. Who knows? Maybe you’ll win some cash!
Please don’t do more than one of these. There are severely diminishing returns to the marginal business plan competition. Why? Because (a) your business plan is probably as good as it’s going to get already, (b) your business plan is largely irrelevant anyway, and (c) you’re not building your business, just the plan. Put differently, would you rather spend another 3 months getting feedback from a whole new set of people for the potential to win $10,000, or spend 3 months building a product for the potential of earning $10,000 in revenue from actual customers?
Business plan competitions are fun. Lots of people will tell you how awesome you are. Someone will blog about you. You get to put a nice logo on your webpage if you win.
Yet, none of this matters nearly as much as getting your product out the door. Use your time wisely.