These are the top seven mistakes that entrepreneurs make, compiled in one list to help you avoid as many as possible. If nothing else, please try to make new mistakes.
1. MISTAKE: MULTIPLY BIG NUMBERS BY 1 PERCENT.
Entrepreneurs love to take an enormous potential market (such as the Internet security market), calculate that even a 1 percent market share will be huge and easy to attain, and then imagine the revenues they’ll achieve.
FIX: CALCULATE FROM THE BOTTOM UP.
Do a bottom-up calculation instead. You’ll see how hard it is to attain even a 1 percent market share when you start from zero. Once you ship, you’ll learn that your first-year results are closer to zero dollars than even 1 percent of the huge number.
2. MISTAKE: SCALE TOO FAST.
A consequence of multiplying a big number by 1 percent is concluding that you need to scale your infrastructure and headcount for huge, inevitable, impending success. So you increase your burn rate, which uses up your capital, which eventually gets you fired.
FIX: EAT WHAT YOU KILL.
Take the risk of foregoing sales and jeopardizing your service reputation by not scaling until sales are in hand. I’ve never seen a company fail because it couldn’t scale fast enough, and I’ve never seen a company ship on time. You may be the first, but the trend is not your friend.
“One of my life goals is that someday a teenage girl asks Jackie Chan if he’s Guy Kawasaki.”–Guy Kawasaki
3. MISTAKE: FORM PARTNERSHIPS.
Entrepreneurs love to use the P-word-“partnership”-especially when they can’t use the S-word-“sales.” Unless a partnership enables you to alter your spreadsheet, it’s bull shiitake. Most partnerships are a PR exercise and a waste of time.
FIX: FOCUS ON SALES.
Instead of spinning your wheels with partnerships, focus on sales. Tattoo this on your forearm: “Sales fix everything.” If a picture is worth a thousand words, a sale is worth a thousand partnerships. The longest you can stall using the P-word is six to twelve months. Then you’ll hear the F word: “fired.”
4. MISTAKE: USE TOO MANY SLIDES.
When you do have to pitch, don’t use fifty to sixty slides. I know that you know in principle that less is more, but you will be tempted to think you are the exception to this rule. You are not. If you need fifty slides to pitch your idea, your idea is flawed.
FIX: OBEY THE 10/20/30 RULE.
The optimal number of slides is ten. You should be able to give your presentation in twenty minutes. The ideal font size is thirty points. Even better, try to get away from slides and do a demo … which is another reason you need a prototype.
5. MISTAKE: PROCEED SERIALLY.
Entrepreneurs try to do things in a serial manner: raise money, then hire people, then create a product, then close deals, then raise more money. They want to do one thing at a time and do it well. This is not how startups work.
FIX: PROCEED IN PARALLEL.
Life for entrepreneurs is a parallel existence. Get used to it, understand it, and live it. You need to do many things at once, and good enough is good enough. You don’t have enough time to do things one at a time.
6. MISTAKE: USE PATENTS FOR DEFENSIBILITY.
Entrepreneurs read stories about how to patent infringers lose multimillion-dollar lawsuits, and they think that this means patents can protect their intellectual property. This is like reading that a burglar was arrested and therefore you don’t need to lock your door.
FIX: USE SUCCESS FOR DEFENSIBILITY.
Patent protection is a game for big companies with lots of lawyers and money. Does that sound like your startup? The only thing that makes a startup defensible is that it’s growing, succeeding, and sucking the oxygen out of the market. You won’t have the time or money to out-litigate anyone who’s worth suing.
7. MISTAKE: HIRE IN YOUR IMAGE.
Many entrepreneurs hire employees who match the rest of the company. Engineers hire engineers. MBAs hire MBAs. Men hire men. Fitting in is one thing, but this is going too far when everyone is young or male or techie or anything, really.
FIX: HIRE TO COMPLEMENT.
A startup needs a variety of skills, perspectives, and backgrounds to succeed. Rather than hiring mirror images, you should hire people who complement one another. The two most important complementary skills are making and selling, so cover these two bases right away.
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