After seeing startups from the inside and out, from seed rounds to billion-dollar companies, from board meetings and CEO dinners to coaching sessions and leadership retreats – three mistakes get made by companies time and time again:
- Underestimating the importance of narrative when fundraising (and expecting a good product/solution to speak for itself) Investors invest in (and employees join, and journalists write about) compelling stories, and your pitch deck is really just a vehicle for telling the story you want to tell. So, start first with the narrative and build the deck after you have it nailed. Firstly, outline your background and the current state of the market: How you were introduced to the problem and why you are an expert, the order of magnitude of the problem today (it should be big!) Secondly, describe your solution to the problem and why now is the ideal time for it Thirdly, how your solution will change the world. If you are generating sales, provide product traction (especially metrics/milestone focused traction), why your traction will continue. Your narrative must be concise and accessible. Anything that doesn’t powerfully support one of these points should be left out. If you have a powerful narrative you should be able to have a conversation with someone who is a novice at your industry and guide them through it, and at the end, they should think your company is amazing and probably going to be very successful. Getting the right narrative is the most important part of the pitch process, so I would make sure you spend a lot of time perfecting.
- Spreading solutions too thin and serving many customers poorly instead of a select group very well. You need to decide who your customer is. Many businesses try to serve everyone and as a result they serve everyone poorly. Only when you decide to focus on your primary target market will you find product-market fit. You need to focus on that customer. It is easy to get distracted by shiny new opportunities. For example, a business that is significantly bigger than any existing customer might come around with a big revenue opportunity. But servicing that revenue opportunity may result in considerable custom work. Do you take it? Many CEOs are tempted, but it won’t help you serve the customer base you set out to serve. In fact, it will hurt your ability to execute as well as you could for your original customer base. As your business grows, you can slowly expand to service your secondary and tertiary target markets.
- Neglecting to re-evaluate and reorganize talent for a startup’s current needs. Having the wrong people can manifest itself in executing slowly against goals. Mistakes get made, wrong paths get taken, and progress can grind to a halt. The remedy to this is for founders to have ongoing, assertive, and candid conversations with team members about the needs of the startup, and whether the team members are able to meet those needs, as well as what support is needed by the team members to meet them. If they aren’t able to do the job, the team members should be layered under someone who has more experience. You aren’t doing your business, your fellow team members or the individual involved any favors leaving them in a job they aren’t able to do. If you leave them there they will eventually become toxic, burn out and quit.
I’m not surprised that so many startups fail, half the people I know are below average