038 Think Big Radio: Top 10 Biggest Mistakes Entrepreneurs Make

We often learn more from our failures than we do from our successes.  But we don’t want to make too many mistakes, or else our startup may fail.  To warn you of what mistakes to look out for in the startup world, this episode of Think Big Radio, Derek and Allison will give you insight into the top 10 mistakes entrepreneurs make.  

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038 Think Big Radio: Top 10 Biggest Mistakes Entrepreneurs Make

These mistakes include:

1. Starting a business for the wrong reason:  Don’t start a business just because you’re “bored”.  Start a business because there is a need in the marketplace.
2. Choosing the wrong partner:  Startups that run with only one founder are more likely to fail than those with two.  Startups that have more than two founders are even more likely to fail.
3. Not sharing your idea:  When you don’t share your idea, you are not setting yourself up for success.  Find a mentor, accelerator program or coworking space to share your idea with those who are in the same boat.
4. Avoiding the pivot: Your business needs to pivot (in other words, your idea needs to change and be reworked).  If you never change your original idea, your business cannot grow.
5. Putting off legal issues:  Address legal issues the moment they happen.  Find a lawyer who specializes in working with entrepreneurs.
6. Too much overhead:  Don’t pull a “Tom Haverford” at Entertainment 720.  Keep overhead costs low and focus on spending your money to build the business (i.e. product research and development).
7. Hiring too many employees too early: Wear a lot of hats the first few months (or years) of building your startup.  Hire slowly and carefully.
8. Lack of goals:  Write your business plan to include both your own individual professional goals and goals for your business.
9. Too much focus on the product:  Don’t be product-driven, be customer-driven!
10. Not learning from your mistakes: Entrepreneurs are not perfect.  Remember—if you’re not making mistakes, you’re not pushing yourself hard enough! 

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Silicon Valley Knows a Secret: It's Okay to Fail!

WRITTEN BY TYLER PROCHNOW, CO-FOUNDER OF THINK BIG PARTNERS


Right or wrong, there is a perception in the entrepreneurial/startup space that when looking for a place to start a technology business, there is Silicon Valley and then the rest of the country.  There is a commonly held belief, that most, if not all of the innovative and disruptive technologies being developed today come from roughly 1,500 square miles of northern California.  Perhaps the biggest question from the rest of the country is “Why?”  Sure, the Valley has a number of built-in advantages, including (in no specific order (i) a concentration of incredible research institutions; (ii) a robust job market; (iii) a highly skilled labor force; (iv) a well-established capital community; and (v) a pretty decent climate.  But other cities have many of these elements as well.  So the questions remains:  What makes Silicon Valley the hub of innovation and more importantly, how can the startup environment that has been built there be replicated in other cities?

In my role with Think Big Partners, I am fortunate enough to meet almost daily with incredibly sharp, incredibly talented and incredibly motivated entrepreneurs who are sure they are on track for building the next big thing.  Their enthusiasm and commitment to their idea/business is inspiring and one of the best things about being a part of an organization like Think Big.  While most of the entrepreneurs and a majority of the meetings are here in the Heartland, we have developed a very solid strategic partnership with several key players in Silicon Valley.  As such, I have had reason to interact on a relatively steady basis with some of the power players in the Valley over the past eighteen months.  In that time, I’ve noticed one very important aspect of the culture in the Bay area that does not exist here in Kansas City or in any of the other cities we work in.  It’s an attitude that is born out of entrepreneurial activity and one that is difficult to develop on your own.  The key ingredient:  IT’S OKAY TO FAIL!!

No one likes to fail.  No one sets out to fail.  For most of us, we are taught at a very early age that failure is bad.  Failure in school, failure in relationships, failure in sports.  All of it is terrible and something to be ashamed of.  In Kansas City and the rest of the country, the vast majority of business failures quietly fade away and the founders are doomed to years of humiliation and rejection.  No one wants to associate with a failure.  Yet somehow, that early life lesson seems to be nonexistent in the Valley.  

Some of today’s most powerful business leaders in Silicon Valley have also been the stewards of some spectacular failures.  Perhaps the most revered and famous failure of all, Steve Jobs, set the stage for today’s acceptance.  When Jobs was in his first go-around with Apple, he was very publicly and unceremoniously dumped by the Board of Directors.  Very few people who were paying attention to the tech world at that time were unaware of the humiliation heaped upon Jobs when he was sent packing.  But according to Jobs, it was a blessing.  At a commencement speech at Stanford in 2005, Jobs said, “I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”

Jerry Kaplan and GO Corp., Marc Andreessen and Loudcloud, Bill Coleman and DEST Systems--the list goes on and on. These entrepreneurs wear their failures like a badge of honor.   We’ve met with a number of VC groups in Silicon Valley who will not invest in entrepreneurs who have not failed at least once.  It is often repeated mantra that if four out of five of your startups don’t fail, you are not being bold enough.

Now let’s be clear about the concept.  Failure by itself is not a predictor of future success.  Thousands and thousands of entrepreneurs have failed because they didn’t understand their business, they didn’t understand their market and/or they were simply not capable of launching a business.  What appears to be pervasive in Silicon Valley is the attitude that it is only a failure if you don’t learn from it.  Many of these spectacular failures provided the necessary learning curve that was essential for the future successes achieved by such entrepreneurs. While discussing a very accomplished business , a well-respected Valley entrepreneur recently said to me, “During their startup phase, [the company] did everything wrong, but they didn’t do it wrong for very long.”  They learned from their failures and after many years of struggling to break even, they are now a publicly traded behemoth.

The most important aspect of all of these examples is that the entrepreneurs didn’t read failure as an indication of their inability to succeed.  It was what it was; a failure of that product or service, in that market, at that particular time in history.  These entrepreneurs did not fold up their tents and go home, but rather, took the lessons learned in their failure and applied them to become better in the next go-round.

This is clearly something that can’t change overnight.  The fear of failure is a deeply-rooted attitude and one that will take years to change in both individuals and communities.  But it is obviously something that can be changed.  The advantage Silicon Valley has is not geographic or climatic (and thus unable to be replicated).  It is in large part, attitudinal and capable of evolving.  If our institutions, government, business, media and family can all begin to understand that failure is not a dirty word, and can come to embrace the educational aspects of failure, then the rest of the world can begin the process of emulating the startup culture of Silicon Valley.

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Ditching the Beer and Chugging the Tequila

Why the Impatient Startup is the First to Pass Out

What better way to bring in the weekend than with a guest blog from a young entrepreneur?  And what better topic to provide you with than partying?  Afterall, it's almost the weekend and almost time for you to relax and have a little fun.  Check out this blog by Adam Griffin, founder of BumblePost, written especially for our TBKC blog. 

You’re at a party. You’re enjoying yourself, sipping on a 6 pack, and having great conversation. Life is good. The night is progressing as it should. You go with the flow, just engaging in the friends and moments given to you. 

Then something happens. The front door swings open and slams into the door stopper. The music halts to a stop. Everybody at the party turns to look. Who barges in?  None other than that guy. You know the guy I’m talking about. The dude with a half empty bottle of tequila in hand, a profuse amount of sweat covering his t-shirt, and what seems like a megaphone announcing anything he says. He’s the guy that was destined to be belligerent from the first drink. Nothing was going to stand in the way of him getting from sober to sauced faster than anyone else at the party. Taking the slow and steady approach just wasn’t working for him on this particular night, so the beer was ditched and the big guns were pulled out.

Thirty minutes later he is passed out in the corner, bottle nearly empty, and a walking hangover in the making. He is officially that guy. Well today there seems to be a lot of that guy in the business world. The companies that are shot out of a cannon, make a lot noise in a short amount of time, and before you know it they are passed out. A flash in the pan. Another victim of the current climate for internet startups.

As the old story goes, 50% of businesses fail in the first year and 95% fail in the first five years.  I don’t know how accurate these numbers truly are, but I would imagine the number of failures for today’s internet startups is much higher. The internet has allowed anyone and everyone the opportunity to become an entrepreneur and own their own business. We are no longer in the era of creating a product, having physical space and inventory, and owning a business for decades or more. Today you don’t even need a product to sell. A good amount of online retailers don’t even have inventory of whatever they are selling! They are simply order takers, and the manufacturer drop ships whatever is sold. Ahh, the modern convenience of the internet. So in short, significantly fewer barriers of entry = significantly higher amount of businesses created, and thus many many failures along the way.

My generation’s mentality of “I want it now, and I don’t want to do a whole lot to get it” has created this massive flood of internet businesses that are around for a short period of time and are gone as quickly as they came. Bad news for them, but good news for you—if you take advantage of this reality that is. Choosing to sip your six pack of beer instead of chugging the bottle of tequila might be the difference in your business being around in 5 years. While others are in a rush to get to the pot of gold as fast as possible, you can methodically run the race and be one of the few to actually finish. And yes, I did use two completely different analogies in one sentence.

Taking advantage of today’s here and gone in an instant economy starts with the way you establish your business from the beginning. Ask yourself the following questions. Your answers could be the difference in “out of business and broke” and “in business and cash flowing”.

• Do I have to quit my job to start this? Another way of asking this question is “When things don’t go as planned (because they won’t) and I’m out of money in 6 months, am I going to have to give up my business and go back to a normal job?”
• Can I bootstrap this? Can you use your own cash and/or borrow from friends and family to get this started? Or is this company impossible to start without significant outside investment?
• Am I passionate about this or am I simply infatuated? Not a whole lot different than dating. There will be times when you ask yourself “Why the hell did I do this?” That’s a promise. The difference maker is how you respond to that question.
• Are my visions realistic? Are you banking on becoming the next big thing, or will you be content with slowly and methodically growing your business?
• Do I have supportive people around me? Whether that’s business partners, a supportive group of friends and family, or mentors within your field, do you have a group of people that can be a part of your journey with you?

These are basic yet vital questions. The reason these are vital is because if you can say “No, I don’t have to quit my job. Yes, I can use my own cash to start. Yes, I’m passionate about this. Yes, my visions are realistic. Yes, I have supportive people around me”, then the only missing ingredient is the attitude to keep plugging away and get it done. Go out there, kick ass, and do it in a way that is uncommon in today’s business world.

Cheers. J    

~Adam Griffin

Adam Griffin is a Kansas City native and lives in Denver, CO. His current startup is an online greeting card company, BumblePost, that launches in March 2011. His ultimate goal in life is to motivate those around him to pursue dreams and goals they wouldn’t have pursued otherwise. His thoughts on this and all things business can be found on his blog, Ideas Don’t Work.