Tech start-up mistakes: the top 10
By Hayley Brooksbank
At TTP, we know how tech start-ups work, and we’ve helped a fair few of them succeed in the last 35 years. But many fail. So, Hayley Brooksbank, Marketing Director at TTP, spoke with consultants from across the business to identify the most common trip hazards we’ve seen in the sector, in the hope that it’ll help you avoid them. After all, it’s much better to learn from other people’s mistakes.
Anyone who’s spent time around the world of start-ups can probably reel off a list of classic reasons why they fail. The founders fall out. Their world-changing idea turns out not to work, or no-one wants it. They don’t listen to advice. They carry on running the business when they’re not good at and it doesn’t make them happy. They run out of money. But, in our experience as product and technology developers, these aren’t the main reasons why start-ups struggle and fall. Even great ideas and teams can run into avoidable issues which can endanger your overall success.
So, in no particular order, these are the top 10 start-up mistakes to avoid:
1. Don’t just build the product, build the business too.
The problem here is actually a misunderstanding of investor’s appetite for risk. Too many founders assume that investors want to buy a technology, but what they actually want to buy is a company with a product in the market. They want you to have done the really risky part before they get involved.
2. Don’t try to sell the dream without clear evidence to back it up
This creates a number of problems. For example, it can mean you don’t really know how much money you need to raise at each funding milestone. Too little, and you can’t afford everything you need. Too much, and you can dilute your holding so much you lose motivation, or fall prey to different investors having different agendas. A robust, evidence-based assessment of how much you need also makes you more credible in the eyes of investors. You become more investable, and more like a responsible steward of their money. Also, pitching the dream can mean the dream becomes the development goal, so the team shoots for the moon rather than developing the product incrementally.
3. Don’t tie yourself to funding milestones that only suit your investors
The balance between what you want for your business and what your investors want is a tricky one to maintain. Being too inflexible can deter potential backers and alienate existing ones. But allowing your investors to set your targets can mean you do the wrong thing at the wrong time in strategic terms. Once again, being able to articulate the big picture – and back it up with evidence – will go a long way to build trust between you and your backers.
4. Don’t drink your own Kool-Aid
The worst-case scenario is that founders become blinded by their vision. All too often they think their unique piece of IP can deliver more than the results suggest. It’s a sure-fire recipe for internal strife, as anyone expressing doubts is seen as disloyal or a troublemaker. So stay optimistic and positive but be ready to adapt to reality.
5. Don’t treat compromise as a dirty word
Any initial idea will inevitably have to change on its journey to becoming a product in order to be able to be manufactured at scale, to hit the required cost-per-unit, etc. First-time founders may not realise this, or they may be so wedded to their original vision that they can’t even consider compromising it. Even if they do recognise the need to compromise, they’re unlikely to have the experience to know which compromises will maintain the integrity of the original idea, and which will damage it, possibly fatally. They may also be unwilling to establish partnerships for fear of losing control.
6. Don’t be rigid – stay agile
Linked to the above, founders who are sold on their own vision can be reluctant to pivot when circumstances require. This can be strategic change, such as when a new market opportunity appears, or something more tactical. We worked with a medtech start-up that was so wedded to its development plan that, even when things were delayed, it couldn’t adapt to hit a key external event, in their case having their product ready to test during flu season!
7. Don’t be an island
One of the biggest challenges facing anyone growing a business is knowing where you personally can deliver most value, then surrendering everything else to other people. Some founders are best suited to developing and productising their idea. Others turn out to be great at selling the idea to investors. But most are so convinced that only they understand what’s required at every level of the business that they try to do everything. Unfortunately, that’s the way to burn-out for you, and disenchantment for everyone else.
8. Don’t hire for today without thinking about tomorrow
It’s easy to fall into the trap of recruiting for the skills you require right now, even if you won’t need them going forward. Don’t become so busy hiring the team you need to get off the ground, to think about the team you’ll need when you’re up and running. And don’t presume people you rate highly can succeed equally well in all areas. Different tasks need different skills and great people can fail in the wrong role.
9. Don’t focus solely on your unique bit of “wonder IP” and ignore all the other tech that needs to wrap around it
This falls under the broader heading of ‘Not seeing the big picture’, and it can be a particular problem for tech start-ups. Founders tend to be experts in a particular area of tech or process, which is how they can come up with a potentially brilliant start-up idea. But they often don’t have broad enough experience to know what else is required to deliver on their vision. From first principles of fluidics to human factors within product design and companion tech to market regulations, it’s likely that your idea will need to work as part of another, sometimes intangible, ecosystem.
10. Don’t assume that testing and transfer to manufacture are quick and easy; in reality they cost more and take longer than anything else
There is a real danger of running out of money before your idea is ‘productised’. Or of setting unrealistic launch dates. Or both. This can be another consequence of having too much faith in the idea, or of not having ‘big picture’ experience. And you need to think about getting the skills, capabilities and supply chain in place for even an initial production run to get your product to your first cohort of users.
All these are situations where an external partner can help. Our start-up clients come to us to get breadth and depth – when and how they need it. The right team with deep technical expertise in the right numbers for the right amount of time. We have the labs, equipment and supply chains ready to go, plus we can help with prototyping and initial manufacturing. And to help your tech start-up succeed we can offer true flexibility to bolster and advise, collaborating as a team while keeping you in control.
From concept to manufacture, building a tech start-up isn’t easy. As a founder you need to recognise when you’re in danger of making some or all of the mistakes in our top 10, and to know when asking for help is the best way of seeing your idea become a reality. Of course, you need to ask advice from the right people – and when it comes to products and technology, we have 35 years and many, many tech start-ups under our belt. We understand how tech start-ups work. We also know what success looks like, and just as importantly we know what agility looks like. And if we can pass on just one piece of advice it’s that you won’t get one without the other!
To find out more, get in touch.