5 common mistakes first time startup founders make and how to avoid them

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Following is a guest post by Arjun Murthy, founder of The Factual. Arjun and I have known each other for a long time, originally when he was a member of the HubSpot leadership team. He is one of the smartest people that HubSpot has come across recently. Dharmesh

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Startups are tough. 90% fail, 10% in the first year itself. If you are a startup founder then you already know these statistics and yet you are proceeding irrationally. Praise! I did the same thing six years ago and after successfully selling my company I have learned some hard lessons which I will share below in the hope that you avoid them and improve your chances of success.

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product-market-fit. before hiring full-time employees

As Mark Andresen said, product-market fit is the only thing that matters in the early years of your company. Simply put, do you have something that people really like. By this point you may have been trying multiple ideas several times, sometimes weekly. Anyone other than a co-founder during this time will soon become frustrated with the change of direction and eventually wonder whether the compensation they are paying elsewhere is worth it.

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I made this mistake three times before I learned this lesson and I feel worse than the money I lost that put those early employees through this schizophrenic period.

Prioritizing Offshore Talent

It is important to save money in the early days. No wonder Google and many other great companies started out in the garage. But the biggest expense is labor and given the quality of talent around the world, and the equipment to collaborate with them, hiring offshore quickly is the best way to save money.

At The Factual we hired talented designers and engineers for $35-50/hr in Argentina, where the timezone overlap with the US West Coast was great. CEOs I know found equally impressive talent in Portugal, Spain, Ukraine and Vietnam for $20/hr or more. Sometimes, we hire US and Canadian talent to work in rural cities or from cheap areas abroad. And with few exceptions, we found Offshore Talent to be reliable and easy to work with.

I should mention that while offshore talent is impressive, they won’t solve the problems for you. Like most other contractors, they will do what you tell them. So use them for precise efforts rather than vaguely defined tasks.

stick to the first thought

Your first idea is likely to fail. This may sound like a gross generalization, especially since you just quit to launch your startup, which you think is great. But success with startups, at least in the consumer, usually comes from insight that no one else has. And such insights are rarely read or found in a survey, but rather learned from failure. So the key to success is to iterate rapidly through ideas and get those insights quickly.

I created an entire product for my first idea before finding out that people wouldn’t use it. A simple landing page test would have told me the same for very little money and time. It’s easy to think that a landing page can’t possibly deliver on what the product promises, but if you can’t write it in text and get users to sign-up you don’t know what problem you can fix. and who are you to solve it.

Creating a bigger MVP than necessary

Most founders have a grand vision for solving a thorny problem and are ready to build an elaborate product, albeit in stages. But a product form factor like a mobile app or website is a much bigger undertaking than people realize, even if you actually try to narrow down the feature set. Just setting up a site or app, getting reliable login/authentication, having useful onboarding, ensuring responsive layout etc takes a ton of time and you haven’t even found a feature yet.

Instead, find the smallest product area you can test with. It may be a simple newspaper but it was our first hit product. And its inherent retention means you’re building an audience first, which will be important when you have a more robust product to test.

Not being a marketing co-founder

The number one investors look for in startups is high growth, typically 10% month-on-month or more. That’s because it’s a handy sign of product-market-fit and a business that scales. But achieving high growth is very difficult and requires constant experimentation with new marketing channels and strategies.

A marketing co-founder is essential so that he is focused on growth every day and not distracted by other things. In our startup we had a technology co-founder and a product co-founder/CEO. So none of us focused exclusively on growth and we never consistently hit the 10% mommy growth rate. By the time we finally hired our marketing co-founder (5 years into the journey), it was too late and we would have had more stable growth if we had done it earlier.

Bonus Lessons:

Some of the best ideas above have come from other startup co-founders. Talking with other founders was often the best source of advice and I had a regular group of four founders who met every quarter for dinner. Beyond the suggestions, it was great to get in touch with them and realize that my mistakes are not unique. Hope you find your tribe during this incredible journey and if you have any questions drop me a line: arjun.murthy at gmail.com.

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