This article was published on September 22, 2013

30 startup tips for avoiding failure, from successful founders


30 startup tips for avoiding failure, from successful founders

Toying around with the idea of starting a company? Worried about things that may go wrong or making the wrong decisions? Did you just start a company but are concerned about how you are doing things? You are not alone, and you definitely are not in unchartered waters.

There are not only many thousands of people just like you who are working on starting their own company or have just launched their company, but there have been thousands of people who were once in your shoes who’ve gone on to grow some wildly successful companies, many of which you probably have heard of or even use on the regular basis.

While you are working away on your business plan, looking for ways to raise capital, finding the right people to hire, etc., part of the process involves asking others for their help and advice and doing lots of research to make sure you are on the right path. But have you ever had the opportunity to pick the brains of founders who created amazingly successful startups and companies like Envato, Backblaze, Simple, or Treehouse?

Being heavily interested in businesses and how they work, I chatted with some of the founders of nine well-known and/or growing startups – most of which you’ll have heard of – you may even use their services – to ask them about one of the toughest areas of starting your own company’ what mistakes did they make and how did they overcome them?

Few people like talking about their mistakes, but thankfully nine founders took some time to share some of their hard-earned knowledge with you. Let’s talk about some of the most common mistakes and how to avoid them, using the words from the founders of Envato, Dribbble, Freshbooks, 6Wunderkinder, Treehouse, Backblaze, Simple, Shapeways, and Statamic.

Starting a company with a mission and purpose

“[…] the biggest thing I’d recommend is to start a company that’s on a mission, not just a company that’s building a nifty product. At Treehouse, we’re trying to make technology education affordable and accessible to everyone on Earth, and doing that means that we’ll be working for a really long time and will likely always have more to do. Also, it’s made so many things, like hiring and other decisions, significantly simpler for us, because we can always look to our mission for help.”

Alan Johnson, Co-founder of Treehouse

“Solve a real problem that creates real value in the world. Focus on the problem => solution => value => profit chain of events, and try to make a pass through this sequence sooner than later. Also, be strategic. Find a competitive advantage. At Dribbble, we stumbled into ours – we were just building a side project, but it was a site for designers, and Dan is a designer with lots of recognition and credibility. As a result, we attracted a great set of initial users who posted incredible work. Things snowballed from there.”

Rich Thornett and Dan Cederholm, Co-founders of Dribbble

Find your niche

“I’d say the best advice would be just to get started and once you find something, focus and execute. Don’t try to be everything to everyone right away. If you pick one vertical and do it well, other folks will find you. From a narrow niche of IT professionals who were our early target market, we now have a wide variety of customers.”

Christian Reber, Founder and CEO of 6Wunderkinder

“Find your niche(s). Early on we believed that because online backup is something everyone needs and we provide the service in 11 languages to anyone in the world, that everyone should use it. While that would be great, especially in the early days you need smaller groups of people where you can get critical mass.”

Gleb Budman, CEO of Backblaze

Nothing is impossible

“Never take no for an answer. Starting a startup isn’t easy and there will always be people who tell you that something is impossible. Don’t listen. When I started Shapeways, complex software needed to be built and when I first reached out to developers, a lot of them laughed and told me it was impossible. I never took no for an answer and eventually found a great team that helped me build what Shapeways is today. Always push for yes! “

Pete Weijmarshausen, CEO of Shapeways

“On a macro level, one of the most daunting challenges was the prospect of entering a market with a fairly large entrenched player. Our strategy was to not even attempt to take them on head-to-head by trying to offer everything they did, instead, we sliced off a piece of the solution that we believed we could do better and that addressed a critical pain point for small businesses – invoicing.”

Levi Cooperman, Co-founder and VP of Operations of Freshbooks

Underestimating your potential

“Probably the biggest mistake we made early on was not believing the business was going to be a big success. So we did next to no planning ahead, instead just making decisions as they were convenient.”

Collis and Cyan Ta’eed, Founders of Envato

Working with and understanding your co-founders

“People often say having a cofounder is like getting married. What they don’t say is few people know how to date well. The five of us that started Backblaze had worked together for over a decade. Even so, we realized we weren’t clear about each person’s goals. Talk to each other about your expectations about work hours, funding or not, exit or not, decision making, etc.”

Gleb Budman, CEO of Backblaze

“If you have co-founders, make sure you document who owns what, how you’re going to pay yourselves, and who makes what decisions. Personally I believe in having a clear majority holder to make decisions easier (this may just be because I’m a bit bossy!).”

Collis and Cyan Ta’eed, Founders of Envato

Plan while you can, launch as soon as possible, and make changes as you go

“And, just do it! Planning and modeling out your business is always a good idea, but don’t get stuck planning too long, build something and push it out to your users as fast as you possibly can. If your product is getting good reviews and people are willing to pay for it, you’ve got something.”

Levi Cooperman, Co-founder and VP of Operations of Freshbooks

“Bootstrapping can be fun, you get to iterate quickly, turn on dimes, invent new features on the fly. We should have slowed down just a tad to plan a few steps further out when naming things. Variables, methods, folder organization… all of these areas came out of the gate with a few inconsistencies we’ve had to work at tightening up. Some things will just need to stay until 2.0 when we have an opportunity to break backwards compatibility a little bit.”

Jack McDade, Founder of Statamic

Finding the right team

“Finding, motivating, and retaining good people has always been a challenge. I think we’ve done a good job at this and it shines through in Simple’s product and customer experience. I don’t have much wisdom to share beyond acknowledging that it’s difficult. One tip I can offer is to be incredibly passionate. Hopefully your passion will inspire other like-minded people who are smarter than you to jump on board.

“Hire great people… then get out of their way. You should strive to hire people who are smarter than you and, if you succeed, they will get irritated when you get in their way. Delegate and keep your eye on the important stuff.”

Shamir Karkal, CFO and Co-founder of Simple

“Securing funding and finding the right team was our toughest challenge. Building a product like Wunderlist requires a large upfront investment into technology. What’s more it also required a large team of smart engineers that had experience in programming cross-platform software. It was less a challenge to find candidates, it was harder to identify the great ones, the ones who are loyal and really want to build a product like Wunderlist.“

Christian Reber, Founder and CEO of 6Wunderkinder

Finding funding and capital

“Dribbble is what I like to call a “boot up,” or “organic startup” – a company that lives and breathes on revenue. […] For us, getting cash flowing in sooner than later was critical to give us resources to respond to the site’s rapid growth. I think we erred in letting our traffic and operational concerns outstrip our business model, where simply maintaining what we had was preventing us from advancing our product.”

Rich Thornett and Dan Cederholm, Co-founders of Dribbble

“We had angel funding lined up before we quit our jobs and started working on Simple full-time, but we always knew it was going to take a relatively large amount of capital to build and launch a viable banking product. It took us 10 months and conversations with 70+ VC firms to raise our Series A round. Again, a lot of it came down to persistence, sticking to what we believed in, and being creative about how we created buzz and demonstrated traction.”

Shamir Karkal, CFO and Co-founder of Simple

Not hiring soon enough

“If you like having control over your work and being involved in all aspects of a product operation, running your own business can be a beautiful thing. The flip side is that the work can quickly pile up and overwhelm you if things take off. I had the bad tendency to try to do too much myself, when often stepping back and figuring out how to outsource some of the effort is the best move.”

Rich Thornett and Dan Cederholm, Co-founders of Dribbble

Watch your pennies, but spend the good ones

“On a more philosophical note: Sweat the pennies when it comes to expenses, but at the same time don’t be afraid to back yourself and invest when you think it’s important. If you’re bootstrapping, or don’t think you’ll be able to raise a lot of funds, you’re probably better off starting a business when can feasibly make actual revenue early on – i.e. don’t go for a consumer-oriented home run business like Facebook!”

Collis and Cyan Ta’eed, Founders of Envato

“Stay lean for as long as possible. Figure out what your milestones are – customers, pageviews, revenue, etc. – and work towards hitting them as soon as possible. Be creative, and stay lean. Spending a ton of money early on can be a liability down the road. Scale rapidly. This is the flip-side of the above advice, but when you start seeing your metrics turn positive, be prepared to invest and grow rapidly. Success can creep up on you, and you need to be prepared when it hits. Staying lean early on will help you when you need to scale.”

Shamir Karkal, CFO and Co-founder of Simple

Listening to your users/customers

“Customer feedback has been critical to our success from the beginning. We occasionally would push out features that were a bad user experience and made our service worse not better and our users told us right away when something was wrong. In fact, our first version included a feedback form upon logout and that along with phone calls gave us plenty of information to learn from. The key in those early days (and even now) was to be nimble and open to feedback.”

Levi Cooperman, Co-founder and VP of Operations of Freshbooks

“When Backblaze launched and customers started showing, we thought “Yay!” What we should have done is realized that some of those earliest customers are also thought leaders and fans, and focused on engaging with them. While we focused on providing a good experience with the service and being open to feedback, we did not work to engage, nurture, and build those early fans into advocates.”

Gleb Budman, CEO of Backblaze

Expect (and prepare for) the unexpected

 “[…] there were some crazy stuff that happened: [the] financial meltdown [where] we actually had to cut back on spending and stop hiring as a direct result of the financial crisis at the end of 2009 – it was a challenging time, but we came out the other side a stronger organization. [Then] a truck running into our datacenter [knocked us] out for almost an entire day, but were able to recover and our customers were surprisingly understanding, needless to say we learned a lot about our IT infrastructure to ensure that never happened to us again.”

Levi Cooperman, Co-founder and VP of Operations of Freshbooks

“One of our biggest lessons learned is that in startups, everything takes much longer than you think it will. We originally planned to launch a beta and start acquiring customers in 9 months. It took us more than 18 and even longer to refine that beta and get regulatory approvals to do a full launch. This is endemic to regulated industries. Plan your runway adequately.”

Shamir Karkal, CFO and Co-founder of Simple

Learn from your mistakes

“Early on we made lots of mistakes. I think that’s pretty normal, because we were total business newbies! You make mistakes, and you learn from them. You just have to make sure you’re not making the same mistake over and over!”

Collis and Cyan Ta’eed, Founders of Envato

“I would doubt that there is any founder who doesn’t make mistakes when he or she is starting out ;). Of course, I made thousands of mistakes. But that’s part of the process. I strongly believe, as soon as you think you ‘know everything,’ and learned enough to create repetitive success, you will immediately fail. Building a company is so complex, it never will be the same. Especially in technology the markets are moving so fast, key learnings from one company are often worthless in the next.”

Christian Reber, Founder and CEO of 6Wunderkinder

Dedication and giving it your all

“Your [code/product/service] is one of the smallest parts of a successful startup/app/company/whatever it is you’re doing. To be successful you need to give it 110% above and beyond the product you’re building. Invest in your customers.

“Give the best support you possibly can. Care too much. I believe it shows, and in an world where dozens of apps shut down every day, it pays to show people you mean business and you’re not just slinging spaghetti at the wall, hoping it sticks, and moving on to the next idea. To quote Ron Swanson: ‘Don’t half-ass two things. Whole-ass one thing.’”

Jack McDade, Founder of Statamic

“Sometimes I think I should write a book about all the ups and downs we’ve had. I know they aren’t over yet, but I am sure any startup veteran has similar stories. Tenacity is the key to success. Keep plugging away, and good things will happen.”

Shamir Karkal, CFO and Co-founder of Simple

Never stop learning

“Just keep learning, and you will be successful. Seriously, I have met many people who have told me ‘This won’t work, I know this, I’ve been doing this for 10+ years.’ It’s wrong. Experience is great and critical for the long-term success of any business, but it can’t beat a hungry and fast-learning founder who is willing to do things anyway, no matter what someone tells them.”

Christian Reber, Founder and CEO of 6Wunderkinder

“And finally, read online! Starting your own business is deciding you want to start back at zero in a new endeavor. You have to be ready to learn everything you can. There are some amazing sources of knowledge for the newbie entrepreneur. I love these sites: Hacker News for startup/entrepreneurial advice, TechCrunch and The Next Web for keeping up with trends, [and] Inbound.org for SEO/marketing.”

Collis and Cyan Ta’eed, Founders of Envato

Tough, but rewarding work

“There are so many parts to the overall picture beyond just the app you’re building. Building a store to sell and track licenses, setting up a support system, marketing, social media, writing documentation… All of these, honestly, take more time than building your app. It was a big challenge getting coverage on all these areas while bootstrapping the company on the side of your “day job.” But we made it work, and we’re still here, and cruising ahead!”

Jack McDade, Founder of Statamic

“The startup life will be hard on [friends and family]. Insulate them from the ups and downs as well as you can, but you will need to lean on them for support to get through the hard times.”

Shamir Karkal, CFO and Co-founder of Simple

Image credit: Thinkstock

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