This past Sunday I had the honor of judging the University of Michigan Startup Weekend. Before the ten teams presented their companies, Ben Kazez (Founder of Mobiata) and Michael Gaiss (Senior VP at Highland Capital Partners) enlightened the crowd with their entrepreneurial wisdom.
Michael Gaiss outlined 9 mistakes he sees entrepreneurs make with their first startup, followed by some of his and my suggestions to avoid these mistakes:
1. Don’t research and understand the competition
Research and understand the competition. If your company has “no competitors” that often signals that the opportunity is not interesting enough to pursue.
2. Haven’t talked to customers
Talk to customers. Who better to get feedback from than the folks that pay for your product/service?! Understand their pain and what they want to see in a solution. And most importantly, LISTEN to their feedback and USE when it makes sense. Don’t talk to customers for the sake of talking to customers. Talk to them to learn and react to build a stronger value proposition and company.
3. No repeatable customer acquisition strategy
Acquiring your first 50 customers may differ from the next 100, and so forth. Develop a strategy to acquire your first customers, but also to continue building customers as the company scales. (And don’t forget about retention – customer service is very important!)
4. Don’t tell a good story
Tell a story when you talk about your company. Whether you are pitching to investors, customers, recruiting, or even just telling your friend about it…a story is always more interesting and engaging.
5. Know nothing about investors they are pitching
Do your due diligence on the investors you are pitching! Know their backgrounds, what they have invested in, and their expertise. Look for an investor that is relevant to your company and will be a value add partner.
6. Make stuff up instead of saying “I don’t know”
Don’t do this. Period.
7. Seek only confirming, not disconfirming evidence
If you are going to get feedback or do research, and you are only looking to confirm what you already believe and are not open to opposing views…that’s a problem. Challenge your beliefs, and if you are to err on the side of seeking confirming or disconfirming evidence….choose disconfirming. You’ll learn a lot more that way.
8. Pick advisors that are easily accessible, not relevant
If you have a big name on your advisory board that may look fancy and catch eyes, but if you speak to that advisor once a blue moon then what good is that really doing you? There may be a role for big name advisors, but in general, when you are starting your first company you’ll want accessible advisors that add value to your company’s development. A quality advisory team also highlights a team’s ability to attract talent.
9. Treat fundraising like it’s an end, not a means
The purpose of raising money is to support entrepreneurs in building a company. Money is the means to building a successful, sustainable company, and that is where the focus should be. Think about it this way, once you raise money, you aren’t done. Now it’s time to use that money to focus on nailing your value proposition and building a successful and sustainable company.
You have been forewarned.
Have you made mistakes or observed mistakes to add to this list?
MEL aka Venture Gal
- 15 mistakes young entrepreneurs make, but don’t have to (finance.fortune.cnn.com)