9 Signs Your Startup Is Screwed!

THIS ARTICLE WAS ORIGINALLY PUBLISHED ON MY BLOG.

NAH, STARTUP FAILURE WON’T TOUCH ME

Startups are super sexy. You’ve seen the interviews of those 20-somethings from the Silicon Valley in Forbes magazine. They’re dressed down, have this dreamy demeanor, talk real fast and use techno savvy terms like AI, VR and how they will solve the world’s problem.

This fashion show is not just contained in the Silicon Valley anymore, in fact, today you hear a lot of those garage tinkerers and college room hustlers really close to you: Berlin, Paris, Portugal, Mumbai, Bangalore, even Lithuania!

Pretty soon you will — or at least you should, go through the following: isolation, really long hours, lots of cheering friends on the social network (or not!), your co-workers looking at you for a sign of the next play; basically, time seems to run out really quick and you desperately wanting to get through the famed angel round and want to get your first multi-million funding!

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But hold on! 👋 Are you doing the right things?

Here are 9 signs you should be careful about and also my personal note on each of those warning signs.

9 SIGNS WHY YOU’RE SOON-TO-BE UNICORPSE

SIGN #1: NOT KNOWING WHO YOU ARE

Your company should fully reflect your personality and the stuff you’re building your company with. Chasing enterprise or market “whitespaces” seems enticing and they may seem like perfect bets — especially when you are aiming for a humungous exit, but eventually you are prone to fall into the same trap as you get lost in the quagmire of vendors, competitors and buyers.

My experience: In my first startup, we constantly asked our co-workers to seek wisdom and search for excellence in what they did (including ourselves of course!). This was super difficult — especially when your employees are coming from traditional markets or with other expectations into the startup.

SIGN #2: FOCUSED ON EVERYTHING ELSE BUT THAT BIG IDEA!

Ideas are aplenty and often entrepreneurs are prone to love options. It is easy to get carried away by your product team’s next cool feature but options/features usually dilute your attention and focus.

A successful startups job is to get to the answer as quickly as possible. Fail fast is all fine but cracking the code and finding your product-market fit in as many little steps is what you should aim for.

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My experience: We hadn’t agreed on some hardcore principles on what one should do and what one shouldn’t; part because we wanted free flow of ideas. It was, however, frustrating to see most of the ideas being shot down when we were looking for “new avenues to generate attention and sales”.

SIGN #3: DRUNK ON VANITY METRICS

“We’re hiring top players and we’re doing it big!”

“We recently won the top #50 startups in …”

Do you identify metrics / KPIs like these in your tracking list? Add some more of such vanity benchmarks to the list and you are heading to the graveyard for sure.

My experience: In my first startup — in the first year at least, we just didn’t have the luxury to hire marketing analysts, customer success managers etc. We simply measured performance and they were all based on sales!

Here’s a list of some useful metrics from Andreessen & Horowitz site.

SIGN #4: BURNING CYCLES AND CASH ON DUMB THINGS

Networking, sponsoring conferences, meeting founders of other firms and spending cash on stationary and all other fancy swag. Sounds familiar?

Networking is cool when you’re doing it with your direct audience (read: customers)

Meeting founders is good if they are CEOs of your direct audience (read:customers)

Spending cash and goodies is good if it is for your direct audience (read:customers)

Are you getting the picture?

SIGN #5: BUILDING VITAMINS, NOT PAINKILLERS

There’s a lot of pain going around in the world. Customers or your audience markets can describe to you their specific pain and your job is to create the painkiller. How hard is that?

While vitamins address the problem holistically, they almost always end up becoming an incremental part of the painkiller, the bigger solution which someone else was building!

My experience: In my second startup I had envisioned building a full-stack social networking platform for the enterprise. This was pre- Slack days. I refused to work towards a narrow-focus, incremental solution. It makes no sense to get stuck in the large mess of partners, vendors and competitors; you make no money and have close to zero influence on the big idea.

SIGN #6: NOT BEING TEN TIMES BETTER (READ: BEING A MEDIOCRE)

It’s easy to be drawn into the startup’s near-pathological optimism about its business and all the blah-blah about the serviceable market, serviceable addressable market but the bigger enemy is market friction.

You need a highly sophisticated weapon of mass destruction to annihilate their military-grade defense mechanisms. And that weapon is: make your painkiller that works 10 times better!

My experience: In our first startup — with our uniquely positioned product and team composition, we dramatically reduced the price of our offerings. It was (nearly) 7x cheaper than the nearest competition.

Our product —which of course too was phenomenal, could enter F500 customers within the first year already! We didn’t make this explicit in the market, the competition figured out pretty soon but were pretty much helpless.

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SIGN #7: YOU’RE NOT ON THE MONOPOLY PATH

My LinkedIn feed is loaded with startups happily sharing photos of Macbooks, startup kool-aid stuff like “zero-to-one” book from Peter Thiel.

But I am can guarantee you that if I made a checklist from Peter Thiel’s book alone, 90% of the startups today are ignoring the biggest advice on the planet.

While many startups’ ideas have monopolistic characteristics, they stop thinking like a monopolist pretty soon. I have no idea why they stop thinking boldly so soon. It is critical to embolden this type of thinking into the fabric of a company’s psyche from Day One!

SIGN #8: NOT TEACHING SALES TO EVERYONE FROM DAY ONE!

This is a super biggie and a major warning sign! I see how startups scale from a handful of people to hundreds of people. But rarely do you see account managers, marketing managers, interns etc thinking like sales.

Revenue or sales are the end game. You need to get lots of stuff done and not everyone can focus on sales. I get it. But if you lose sight of revenue, you’re screwed.

My experience: In our startup we all were sales. All of us! We wanted everyone — new and old, to sit out the sales call. So everyone knew how we were doing. We coached our folks on regular teams and asked them to try and sell.

Remember, folks are joining your startup journey to be leaders someday. Make them those leaders in yours!

SIGN #9: NOT STORYTELLING ENOUGH FOR MARKET DOMINATION

This is another super biggie for me. The people who have signed up for your dream are in search of wisdom and some out-of-this-world crazy learnings. If you succeed, they will end up becoming leaders and someday build their own firms.

My experience: We did all kinds of crazy stuff to tell each other why we were going to break things and kill competition. We role-played, watched movies, we did read books (for eg: Herman Hesse’s Steppenwolf is one such book), envisioned ourselves as action heroes.

This helped us both understand and see the world as we had envisioned. A completely different experience, I can assure you but super enlightening!

SHAKEN UP? GOOD!

Did I piss you off? I hope so!

If you are on your way to budgeting the ping-pong tables, loads of inspirational books, meetings founders for learnings, or any other silly time wasting pursuits, then it is time to rethink why you started out in the first place.

Don’t lose heart; these warning signs are important to change your behavior, product, and pricing or anything else that is robbing you your valuable time which you should be spending with your customers.

According to Ben Horowitz: Startups are stupidly hard. The decision to pursue them is irrational because the experience can be such a torturous one. Sometimes "tada pan" — in Sanskrit means “suffering” and one I use often in my talks, is almost necessary to achieve the startup Nirvana (also a Sanskrit word, BTW).

THIS ARTICLE WAS ORIGINALLY PUBLISHED ON MY BLOG.

Notes on my experiences: We built our first startup out of a virtual office in Belgium. We worked from home and we were spread across the whole world (Europe, U.K. -- pun intended, U.S and India). Anyways, we built this business out and started opening offices after we had sales (recurring and new) running.