Startups have no right to make mistakes. But what type of mistake?
Startups are so fragile that they cannot afford making mistakes. But what type of mistakes a startup needs to avoid?
The following three are mistakes that are commonly considered very important by entrepreneurs:
1. Not protecting Intellectual Property well enough
2. Launching imperfect products that can destroy company’s reputation
3. Diluting equity too early and loose control of the company.
I do believe that these points are very important but they are not the MOST important ones at the start up stage. Startups forget other elements that are much more crucial. Here they are:
1. Taking too much risk in developing a product that is not validated as being a solution for a problem
2. Overcharging products with non-essential features such that its selling price will be non-competitive
3. Building a team that consumes resources but does not deliver value
4. Launching too late so that the cost of rework after that the product is not fit for the market is too high.
5. Premature scaling, that is investing too much resources in “unnaturally” acquiring customers (e.g. through aggressive marketing) and building unjustified capacity.
I advocate for the above 5 mistakes to avoid (instead of focusing exclusively on the previous 3) because these are the issues that can truly destroy a company. Burn rate dramatically increases if those mistakes are made and commitment of resources to that activities do not guarantee any tangible return.
You are warned. Now you can decide if you want to waste resources and take unnecessary risk or if you want to achieve “much more, with so much less” by embracing the Lean philosophy.