Busting common start up myths

Busting the common startup myths is just as important as understanding the reasons why startups fail. The myths, combined with poor founder behaviours, will accelerate failure. There are a few steps you can take to avoid this.

Step 1: Be patient

Don’t panic! Especially in the early days, you have plenty of time. I am all for the hustle and getting things done. However, one of the best things you can do to improve the success of your startup is to take your time. Don’t rush in. It is highly unlikely a competitor will beat you to market.

I meet a lot of founders who are super eager to quit their day job and start working on their startup. I love their enthusiasm, but more often than not I advise against it. If you have a day job, you can work on your startup at night or on the weekends without having to take the risk of losing your regular income.

You can use this time to research your target market and customers. You can create and refine your pitch deck. Later in this book, I will teach you how you can cheaply and quickly create wireframes and prototypes of your product so you can test them with your target customers.

All of this can be done gradually and with minuscule risk or cost. Being patient means you will have a head­start when you do decide to take the leap and work on your startup full time. It will also mean that you have done your homework and are prepared for your initial product launch and capital raise.

Start up business: what nobody dares tell you

Step 2: Study people and problems

Most great founders I know are keen observers of human behaviour. Understanding why people do what they do is an unbelievably useful skill to have as a founder. You need to develop and hone those skills. ftis is often called ethnographic interviewing or human ­centred design. It means watching your target customer in their environment, doing the activity that you want to improve or experiencing the problem you are hoping to solve. ftis observation, along with asking lots of questions, will give you an increased insight into why your customers do what they do. An even more valuable skill is being able to predict what your customers will do before they do it.

Also start thinking about problems. If you have an idea, think deeply about what problem your idea solves. Is it a big problem? Can the current problem be worked around easily? Are there competitors or other substitutes? Some startups fail because the problem they are trying to solve either isn’t considered a significant problem by the customer or isn’t perceived as big enough. Finding and solving big, real and hard problems is the key. So get to understand your customers’ problems well. Ask them how they have tried in the past to solve those problems and why those solutions didn’t work.

Step 3: Join the community and get educated

One of the wonderful things about founding a startup is that you get to join an amazing, vibrant community, all of whose members are on a similar journey to you. I highly encourage you to seek out and join the startup community in your local area. There will be a host of options available, including founder meetings, hackathons, meet­ups and other events, often hosted by incubators, co­working spaces or VCs. Use these events to connect to other founders and investors. It’s important to do this well before you need to raise capital, or even before you have a startup. You never know, you may even meet your co­ founder at one of these events.

It is also important to keep up to date on what is happening in the startup ecosystem and to educate yourself in areas such as venture capital, product management, ‘tech stacks’ and current affairs. Who is doing what in the startup field? A host of websites and printed publications — known as the trade press — will keep you in the loop. ftat knowledge will be invaluable, informing you of areas that are ‘hot’ right now, giving you a sense of what other founders are doing. It will also provide you with a bunch of tools and tips you can experiment with.

Your connection with the community, along with a well ­rounded education, will help with your first external funding round. ftis experience is often overwhelming for first­ time founders. Who should you approach? Should you raise an angel round first or go straight to a VC? Who are the best angels to work with? What VCs are funding startups in your market segment? How much money should you raise and what is the range of valuations being placed on comparable businesses at your stage? I discuss capital raising in chapter 9. Being connected to the startup community and being across pertinent current news is an excellent way to improve your confidence. There is nothing more helpful than talking to an experienced founder about how to navigate those challenges.

Edited extract from Unicorn Tears (Wiley $29.95) by Jamie Pride, an insider’s view into what it takes to make a startup successful and what it takes to get funded. Find out more at www.jamiepride.com