5 energy sinks that can drain your startup — and how to fix them (part 1)
Chess, like building startups, requires focus, sustained energy, and thinking ahead — and rewards the act of learning from others’ games.
For startup founders and chess players, focus is everything. To maintain the momentum needed to produce a revolutionary product, founders must conserve and direct their team’s energy to where it counts the most. Like a chess player concentrating on the parts of the board where there is most opportunity for advancement or defeat, founders need to look past distractions and keep their team members coordinated towards a strategic common goal. This article describes how to overcome five common mistakes that distract and drain otherwise-successful startup teams.
This article could be titled “Five Energy-Draining Mistakes I’ve Made While Founding Startups” because I (and many other founders) have learned these lessons the hard way. Fortunately, these errors don’t have to derail ventures — learning from others’ experiences can equip founders with the troubleshooting skills to overcome these challenges.
Leading a growing technology enterprise is not an inborn skill — it takes time and experience to learn how to lead. However, mentors — such as venture capitalists (VCs) and advisory board members — can accelerate their founders’ learning processes. Use the playbook below to troubleshoot common challenges to your team’s focus.
Sink #1: Building a Minimum Viable Product (MVP) that’s not so…Minimum
The book The Lean Startup helped popularize the MVP approach to starting companies: figure out the least-complicated, most straightforward way to help your customer with their problem, name this solution the MVP, and build it quickly with as few resources as possible. This is easier said than done. Put a bunch of smart and creative engineers in a room with a whiteboard, and you tend to get something more like a “Maximum Viable Product,” a solution that is sophisticated, elegant, relatively complete — and has a completion date years in the future.
There are two main thought patterns that lead into the trap of a “Maximum Viable Product”: oversized problem scope and overcomplicated technical solution. Starting at the beginning of the innovation process, it’s tempting to bite off more of a problem statement than your team can chew. Hard-bitten management consultants might call this “boiling the ocean” or “trying to save the world.” The truth is, it’s much easier to make an impact in targeted, managed ways within narrowly-scoped problem statements that your founding team can handle.
Once the effectiveness of your team’s solution is proven, your team can scale up the problem scope (and add personnel) to tackle other aspects of your customers’ problems. It is much easier to pitch “our product cleaned your small warehouse, let us clean your big one too” (and triple your revenue) than to say “we believe we can make the blueprint for totally obviating your need to clean — can you just seed us with a million dollars to try building it?”
Even with an appropriate problem statement and fit-to-purpose solution definition, it is still possible to fall into the mistake of building a “Maximum Viable Product.” How? By overcomplicating the technology stack. Here’s a perfect example: One time I worked with a small team of engineers to develop educational materials. We decided to build a web app to push out our content — but this turned into a trap when our team of mechanical engineers had to learn foreign concepts like web development, server security, and visual content formatting. If we had chosen a lighter-weight distribution option that was a better match with our skillsets, we could have saved months of development time.
What’s the takeaway? Think about your team’s strengths in addition to your product goals, and take the required level of effort to self-train new skills into account when choosing product direction. When deciding what to build first, always ask yourself: “Is there an easier/faster way for us to get our core value-add into customers’ hands?” Use the startup version of Occam’s Razor (“what is the simplest possibility that can work?”) to prune all aspects of your startup.
Sink #2: Going it Alone
Once the product plan is in place, all that’s left is to sit down and build it, right?
While building the product is the linchpin of any successful startup, it is the rare startup CEO who can spend the majority of their time developing hands-on. The realities of running a business require CEOs to perform customer and partner acquisition, market research, talking with customers, making sales, and many other activities that fall outside of product-building. Depending on the scope of the product and the founder’s skill sets, it may be necessary to bring on additional teammates early in the process. Sometimes, the entire MVP can be built by a single founder, but this isn’t common due to the need for multiple specialized skillsets when building a business.
The biggest obstacle to bringing on new contributors is founder paranoia. Many people with excellent startup ideas believe that secrecy and limited staff are the key to capturing the value inherent in their notions. This couldn’t be more wrong in most cases: at the idea stage, startups have almost no competitive moat.
The only way to lock in sustainable value for the startup enterprise is to actually build the product that customers want and gain customer mindshare. This process can usually be greatly accelerated by bringing on capable and trustworthy people as cofounders or early employees — otherwise, startups may miss the window of market opportunity they were targeting in the first place, often, ironically, being scooped by a faster-moving company with the same idea.
According to billionaire Paypal cofounder Peter Thiel:
“Properly defined, a startup is the largest group of people you can convince of a plan to build a different future.” (emphasis mine)
Sink #3: Marketing to the Wrong Customers — or No Customers
Finally, everything is going well within your startup. The product vision is strong, the team is built out, and development is coming along swimmingly. There is one major pitfall that your team may encounter at this point: losing focus on your customer.
Two ways to fall into this trap are failing to iterate on design and getting locked into serving only your first customers. Failing to iterate on design happens when your team gets so invested into the initial product roadmap and user research conclusions that they stop talking to customers. The problem with this is that it severs the iterative development feedback cycle, allowing the product to drift until it makes contact with confused user feedback — not what your team was hoping for. The solution to this is fortunately easy: keep users involved all along the way. Simple methods include using a beta test group to respond to features as they roll out, or “soft launching” and collecting feedback through surveys, interviews, and analytics. As entrepreneur Christian Kaman says,
Entrepreneurs can waste months and years on things that consumers neither want nor value. All too many startups fail not because they build the wrong products but because they create products no one wants.
Some startups fall into this trap later as they enter into partnerships with a few initial clients and then abandon any efforts to understand and acquire additional customers. It turns out, the first customer is not always the best customer! One of my projects initially began working with a government agency that badly needed the product we were building (in fact, they had been struggling to build something similar themselves for over a year.) But when we offered to supply them with our product for free if they would help guide the co-development process, government upper management stepped in and began to squeeze the project because it did not fit well into the agency’s internal software roadmap.
We ultimately had to abandon the partnership due to the management pressure, taking us from one customer to zero — how demotivating. We lost all of the developers and I had to solo develop the project for a while. Fortunately, our outreach team’s persistence paid off, and we successfully pivoted to serving nonprofit agencies rather than government — resulting in several stable long-term partnerships for co-development. Pivoting customers can be exhausting, but sometimes it pays in spades to serve the users who can really benefit from the product your team is bringing to the table.
Want to learn more about how to supercharge your startup? This is the first article in a two-part series on how to build a better startup by overcoming energy-draining management mistakes. To view the second article in this series, click here.
