Common things start-up founders tend to over or underestimate
When you’re in the midst of building a company, it’s hard to fully assess the significance of various activities and decisions- particularly for first-time entrepreneurs who don’t yet have the wisdom learned from prior mistakes.
As an investor (who was also once a first-time entrepreneur), I have noticed several key areas where founders either overestimate or underestimate the value to their company. Here they are…
5 THINGS FOUNDERS OFTEN UNDERESTIMATE
1. The value of a great hiring process
Your company won’t survive if you’ve got a great idea surrounded by a mediocre team. Founders should stay involved in every hiring decision for as long as possible. When you’ve reached the scale when it’s no longer possible to be hands-on in each decision, you need to make sure you have strong hiring methodologies in place – such as Jeff Bezos’ bar raisers that were implemented in Amazon’s early days to help weed out “cultural misfits.”
2. The need to build culture from the beginning
Founders often mistake culture with things like morning yoga, a company climbing wall or food truck lunches. But culture is deeper than just free perks and it’s also something you can’t just “switch on” down the road when you have time for it. From the start, you should be thinking about the type of company you want to build and then make sure your systems and decisions support that vision.
3. The importance of the right set of investors and advisors
This point might seem self-serving, but too often I’ve seen founders look at investors as checkbooks. Money is important but over and over again I’ve also seen just how important great investors and advisors can be in shaping an early stage company.
4. The value of focus
Your company and your product will never be all things to all people. And not every customer opportunity will be worth pursuing in the long run. You need to narrow your focus to a few key priorities, and then make sure this focus is communicated clearly and repeatedly throughout the company.
4 THINGS FOUNDERS OVERESTIMATE
1. The importance of money
No amount of money in the world is going to get you to product-market fit. And raising too much money before you find product-market fit will usually kill your start-up.
2. The importance of launch and fundraising announcements
Start-up founders typically want to make a big PR splash when they’re launching their product or closing a funding round. A major launch announcement can make a lot of noise in moment, but it’s more important to focus on generating continuous demand than your 15 minutes of fame. Likewise, fundraising announcements can drive investor interest for future financing rounds, but I’ve found it’s usually better to just stay under the radar and build the company.
3. The value of senior employees with industry experience
Young startups often feel compelled to bring on senior employees with impressive resumes and a deep knowledge of their vertical. While specific expertise can help in some cases, you should hire for smarts, passion and hard work, rather than experience.
4. The magic of a silver bullet
It would be great to find that silver bullet to take your business to the next level. The problem is that you rarely ever find them. When founders waste their time chasing after that one non-existent thing that will solve all their problems, they ignore all the small incremental improvements that will make a real difference.
About Devansh Lakhani
Director of Lakhani Financial Services, and a Chartered Accountant, he helps start-ups raise funds from his network of investors. He guides and advises start-ups to scale up by providing efficient sales, marketing, team building, and business management strategies. He has executed fundraising by block deals on the stock exchange and conducted IPOs and right issues on the SME platform to the tune of over Rs. 50 Crore. He is currently working with start-ups from various sectors to help them channelize their business models and investments.