Wednesday 13 November 2019

Three big mistakes that tech startups are making today

Another angle...

It's a huge mistake to compare your own small startup to a major corporation like Google and copy its way of working
It's a huge mistake to compare your own small startup to a major corporation like Google and copy its way of working

Dylan Collins

"It's often easier for one to give advice/Than it is for a person to run one's own life/That's why I can't be caught up in all the hype/I keep my soul tight and let these lines take flight." (- Gang Starr: 'You Know My Steez')

The sheer outpouring of startup experience shared today by founders and investors alike is unprecedented. For those who have grown up with nothing other than this level of transparency, it seems to be a required component of building a company. For those of us who built companies prior to this startup glasnost, it's really quite extraordinary.

And yet, despite the vast amount of knowledge-sharing, a lot of people are badly misapplying this data.

While I don't have a particular issue with business models themselves being copied, a lot of people seem to think that the lessons from other startups can literally be replicated for their company.

It's an error which usually manifests itself in one (or all) of three ways.

1 The first mistake is to assume similar paths for companies. The more companies I build, invest in or advise, the more I wonder whether I've learned anything at all. Regardless of business model or industry, every culture is different, every team is different and every company is on a completely different journey.

Forcing teams and founders down a path because it worked for another (even similar) startup is dangerous. Something (usually many things) will be different this time. Interestingly this is a lesson which I think a lot of second-time founders make after being successful with their first startup. Success can be rewarding but often it doesn't teach as much as you'd think.

2 The second mistake is making the wrong comparison in the first place. "But that's what they do in Facebook/Google" is an increasingly common refrain heard from startup teams. Before you dive into implementing whatever practice you're talking about, bear in mind you're comparing a sprawling 100,000-plus employee company with your startup of five people in a room.

What's working at very large-scale for those companies may not (and usually will not) work for you. I think this notion of 'what would Google do?' is a particularly dangerous mistake for early-stage founders to make. There are too many examples to choose from but here are two notable ones I've seen.

(i) 'Twenty-percent time' has no place in early-stage teams. Yes, it's a nice sentiment but actually your team is better off using the time to simply walk and let their subconscious solve some of the 80pc-time problems they're working on. Non-allocated brain cycles are important.

(ii) The notion of free food and interior design is nice but nothing beats good leadership, an interesting vision and continued execution in terms of hiring and retention.

Turn the clock back a surprisingly short amount of time and this was what Silicon Valley actually was.

This is also why you see quite a bit of senior turnover as companies scale, it's not just management techniques which need to change but management themselves are often optimised for different team sizes as well. Don't be fooled into thinking that what is in place today has always been there.

3 The third mistake is that the abundance of information on startup lessons inevitably leads to an outsourced thought process. Reading how a strategy works tricks you into thinking you understand it. Too many founders and managers today simply haven't thought deeply enough about the problems they're solving.

If you're borrowing a strategy from another company, think it through yourself. Can you answer every question on it? Can you explain its weakness and likely issues? If not, you haven't spent enough time properly parsing it.

My own mental hack for this is to assume that I have to explain the concept directly to the founder of whichever company I've borrowed it from with the objective of telling him something he or she didn't know about it.

Yes, it's hard. It may even be the point.

Previously I've written about ignoring most startup literature, and I stand by that position (duly noting the ironic existence of this column).

Don't just copy techniques of the successful companies. Be clear on what your objectives actually are and hone your reading on those precise points.

Forget everything else.

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