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Bear Traps: Attitudes to Kill Your Startup

Posted by Seth Elliott On October - 12 - 2010

Lack of self-confidence, or belief in your product/solution, can kill your startups chances. However, this risk characteristic is one that I rarely encounter amongst startups. Most entrepreneurs have a healthy dose of confidence – perhaps bordering on arrogance.

In fact, this other extreme can be just as dangerous to startup success. Over-confidence in your abilities, product or solution can destroy your prospects. Here are several attitudes to guard against as you grow your business:

“Business plans are old school.” Many entrepreneurs believe the change in the market environment means business plans are obsolete. The fact is that a properly constituted business plan is more important than ever. Naturally, you’ll need some form of overview to show investors if you’re seeking financing. More importantly, you need a business plan for yourself. The strategic planning process requires you to think through all the relevant components of your business. By writing it down, you can measure and manage relevant elements. Of course, what has changed is the form that business plans should take. Format and fluff take a backseat to substance and strategy.

”I’m the Prospective Customer.” Passion for your product/solution is a key ingredient for any success. Nonetheless, just because you love it doesn’t mean the market will. It’s critical that you rapidly acquire users, test their reactions and iterate your product. Successful entrepreneurs identify a market problem and tailor a solution to fit. Don’t produce a “solution” and then go looking for a “problem.” Don’t get so wedded to your design and aesthetic that you are unable to receive customer feedback and improve accordingly.

’Nobody Does It.” I can’t tell you how often I hear an early-stage entrepreneur tell me that there are no competitors to his solution. As we’ve discussed in the past, telling prospective investors that you have no competition is rarely a good idea. In general, you signal that you haven’t devoted the proper resources to researching your market, you’re dishonest or there simply isn’t a market for your solution. None of those scenarios are promising for you as an entrepreneur.

”We Are Agile and Nimble.” This comment is often made by technology entrepreneurs when discussing some of the “giants” in the field (IBM, Microsoft and increasingly Google are typical examples – but I’ve heard it applied to many other large companies). This is a perilous delusion to labor under. It may be true that a large company may not compete with you, but that’s likely because they find the market too small. If a large, “lumbering” firm decides to compete in your space, rest assured they will find a solution (it is true, however, that it may be appropriate to discuss the “buy vs. build” decision for large companies).

”Our Solution Will Go Viral.” I’ve recently discussed this “strategy” for achieving hyper growth by startups. Assuming that your solution is so fabulous that it will spread like wildfire via word-of-mouth and social networks is, at best, naïve. If you have a specific strategy that involves viral elements, be prepared to show specifics and back it up with the capital needed to achieve traction.

”We Have First Mover Advantage.” This belief essentially combines “no competition” and “agile and nimble” into a success perspective. It’s often trotted out by entrepreneurs that have no proprietary intellectual property or established brand name. While “First Mover Advantage” was popularized in a 1988 Stanford Business School paper, but its application in “startup world” is questionable. Steve Blank recently reviewed the facts, noting that first move advantage can actually be harmful.

”I’ve Got It Covered.” I’ve seen many a startup go the way of the dinosaur due to the ego of the founding CEO. Often, financings become impossible because the founder refuses to consider stepping aside in favor of a more experienced candidate acceptable to the funding source. Not all founders make good CEO’s. Not all founders can cover “all the bases” in the successful growth of a startup.

”If I Had a Million Dollars . . .” The end-game in your startup is not taking in a round of institutional capital. Money will not solve all of your issues. Indeed, once you’re funded the real work begins. After you receive capital, you have to buckle in and actually execute on your business plan (you do have a plan now, right?). If you think financing is the hard part, wait until you have to deliver results.

Of course, these are just a few of the “bear traps” that await overly confident entrepreneurs. What perilous attitudes have you encountered when operating in “startup world?”

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About the Author

I have spent the last 15 years advising entrepreneurs on starting and growing their businesses, as well as assisting in financing those growth efforts. I have also been an entrepreneur on several occasions myself. By writing this blog, I hope to provide actionable advice on how to achieve your goals and become more successful.