I just did a podcast recording the other day for someone who asked me the biggest mistakes founders make and what to do about them. I divided my response into “early stage” and “later stage” founders. Here’s a summary of what I said about early stage founders.
- They cling to a “good enough person” or someone who is a good performer but a weak cultural fit because they either feel beholden to that person for their output, or worse, they’re actually afraid of losing them because they’ll miss a milestone or maybe trigger some other departure.
The “what to do” of course is to have courage and make the change! I wrote an essay years ago in Brad Feld and David Cohen’s book, Do More Faster, entitled Hire slowly, Fire quickly, in which I compared a poor cultural fit to a cancer that can infect the whole body of your company. A “good enough” person obviously isn’t quite that toxic, but someone like that can still prevent you from achieving your potential. In either case, the faster you realize what’s going on and make a move, the better off you are.
- They get the balance wrong between “leading with vision” and “listening to customers”. Both are important for founders, but you can’t do too much of either. It’s really easy to get led to a too-narrow Product/Market Fit definition that has you building something awesome that only a dozen customers will be excited about That said, founders also have to listen if enough potential customers people say no. Your vision could just be too far ahead of the market.
You have to get around this by constantly checking your enthusiasm with a mix of cold hard logic. Lots of market traction is great — but is all that traction coming from the same type of customer? Have you run your idea or wireframes by different segments, different buyers, different sizes of company (if B2B) or lots of different demographics (if B2C)? Are all of them equally enthusiastic and willing to buy? A complete lack of market traction when you’re sure your vision right is equally vexing. If literally everyone is saying “no” or worse, some polite but noncommittal version of yes, are you working to shape the vision, or at least shape how you articulate it? Sometimes your vision might be right, but your messaging might be off. Try different ones on for size.
- They focus on fundraising and valuation over business fundamentals. Especially in this day and age, it’s really easy to get caught up in the “more money” hamster wheel. Raise, raise, raise. Finish one round, immediately start working on the next.
In the end, business fundamentals matter — no fundamentals, no business (e.g., no next round). More than that, spend more time caring about your customers and learning and telling stories about how you made their lives better with your product or service. That’s more important to your next fundraise than just blowing through one round of money to get to the next.
Next week: the later stage founder answer (link won’t be live until 12/16/2021).