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Avoiding Common Startup Mistakes

Sumit Gupta
August 2010


I write a lot about how startups often ignore marketing till its too late. Here are some of the most common mistakes to look out for.

  • Not talking to enough prospective customers early on.
    • This means really spending time with a number of customers and figuring out customer pain points, how they buy product, barriers to adoption, key purchasing decision influencers, etc.

  • Not figuring out exactly what niche your product fills.
    • Often you have a product strategy, but then you also need to figure out a small wedge from which your product enters the market. Figuring out this tip of the spear is critical to success. This is ongoing process that starts on day 1.

  • Focus, focus, focus or lack there of.
    • The biggest mistake that startups make -- trying to be everything to everyone. Sure, product plans change, but figure out what your target market is, what your product strategy and sales strategy for that market is. Desperate for customers, startups often stray from their focus market, because they meet a customer who asks for something slightly different.
    • Read the book Good to Great. It does a great job in describing how to establish a revenue stream in one vertical / market segment and then broadening to others. This means saying no to customers who are not in your focus segment!

  • Not building a great team.
    • Your team is the most important asset your startup has. Again as Jim Collins said in Good to Great, first get the right people in the bus, then you will easily figure out where you have to go. The startup environment / office space is so small that you will become very close to each other and besides making sure you have personality matches, you also need to make sure each member is a rock star.

  • Focusing on technology, rather than products
    • Adding more cool features isn't why you are building the product. Addressing a customer's problems is why you build the product. Sounds easy, but this is often forgotten by technologists, who fall in love with the technology.

  • Not figuring out how to migrate customers from the incumbent product.
    • For example, a customer may have written tons of scripts for an existing software; you better have a migration story.

  • Lack of understanding of eco-system factors that lock a customer in to an incumbent.
    • There may be products from other 3rd party companies that your customer depends on, which also need to support your new product.

  • Not having a long term product differentiation and roadmap strategy.
    • Don’t be a one trick pony. How does your product evolve? How do you maintain your product differentiation? At some point, the large incumbent competitor will respond and their might may crush you unless you keep moving.
    • As a corollary to this, you need to position your product from day 1 as a first in a family of products.

  • Underestimating the time, effort, resources, and money it takes to successfully create, launch, and be successful with a product.
    • You not only have to get a few customers, you have to go mainstream and that takes a solid foundation, a solid team, a solid product, and a solid marketing and sales strategy.

  • Signing up bad investors and bad customers
    • There is good money (good investors) and there are good customers and there is bad money (bad investors) and bad customers. Figure out what you are looking for and stick to it. Don’t accept money from investors who don’t share your vision and don’t bring you any strategic value. Don’t tie yourself to customers who are constantly trying to make you defocus from your product strategy.

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Sumit Gupta
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