When you decide to work on a business that didn’t even exist before you got the idea of building it is no easy task. Running a business is tough but building it from scratch is even more challenging.

I’ve spend the last few years either building startups or helping others to build one. I came across many common mistakes that startups make. Here are 7 common mistakes startups make:

 1. Building the product in a cave.

As founders, we always want our customers to be happy with the product. They think of a problem and try to make what they think is “the most probable solution.” With time, they often get obsessed with their product. This increases their rigidity towards change.

The assumptions they make gives them the illusion that they’re working on a big problem. They think that their product is the right thing that their customers want, but this is never true and it’s a trap. It’s like selling a subway sandwich. You can’t make a perfect sandwich for your customer unless you know their veggies and sauce choices.

What to do: Talk to your customers. When you start working on a product, build a very scrappy MVP on a weekend and go to your customers. Remember the 50 percent rule of traction: spend 50% of your time on product and 50% on getting traction. You need users to tell you what to make and you can’t make a good product without their guidance.

While making a product, users are your best advisors, they can in fact guide you better than CEO of a big corp. Develop processes to understand the language of the market. The market is never wrong, follow what it says.

2. Being a feature freak.

Most founders start building the product and bloat it with so many features. They believe is a value add and with time they get lost. They loose the idea of the actual problem they were solving which confuses the customer.

I did the same mistake with Dealflow, which is exactly why we failed. Attention span of consumers is very small and we need to convey the value we’re offering in a crystal clear manner.

Like if you had to go for a ride, which one do you consider as a better vehicle if it’s your first ride? Making the first version of the product very simple and minimal is the best policy.

3. Lacking the ability to pivot.

My mentor once gave me a lesson: When a storm hits, be like palm trees. The tree that falls first is the most rigid and tall. We’re like a tree and we need to be very flexible. We need to bend in the direction of the wind and keep our roots deep into the ground to gain strength. The wind is like the market.

Founders always need to trust the market against our opinions. And the roots signifies the culture & our team, we need to keep it strong, it gives strength to the tree.

Founders think of an idea when they start building the product. 99% of successful startups don’t end up being the product they thought. Things change and we need to embrace the changes. The best startups are the ones that analyse what their customers want. We keep changing the product until they are happy. This is an iterative process.

4. Hiring the wrong people.

The old saying that people are your most important asset is completely wrong. The RIGHT people are.

Startups generally have 3–4 people with similar mindset working for a cause in early days. They work 18 hours a day to make it happen. When you hire a wrong person, they end up being 1/3rd of your company if there are 3 people. This makes your company almost paralysed.

We realized that skills can be taught. Creating a good curriculum might be a good fix for that. Then what you should focus on while hiring? We got our answer in culture.

When you talk to people about culture fit, they don’t really know what to expect. That’s why it’s important to set a culture code. I recommend reading Delivering Happiness by Tony Hsieh. We got our best people when we hired them based on culture.
Now we have 2 interview rounds. The first and most important round is about them being a good culture fit and second round is a technical round. This habit not only gets you the right people but they also end up enjoying to work with awesome people. We look at 4H in everyone (Being Happy, Humble, Honest and Hungry).

It’s okay to hire bad programmers but it’s not okay to hire wrong programmers. They can always be trained but they can never be changed.

5. Frugality.

Frugality is the most underestimated quality ever. It’s unbelievable how much you could do by being frugal. I’ve been crashing on the couch or on bunk beds since last 3 years and I feel better than ever. Startups are ALWAYS short on resources and frugality gives you the freedom to do more in crisis. I call it getting your insurance.

There’s also a difference between frugality and cost cutting. Cost cutting is about decreasing your cost.
Frugality is a quality which each team member needs to have. At Pesto, a useless bulb which is switched on creates an itch for everyone to turn it off. Even though it won’t save much cost but this quality can take you to places when your company grows.

6. Confront brutal facts.

Stockdale paradox: You must maintain unwavering faith that you will prevail in the end regardless of the difficulties and at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be.

Often, we try to live in the illusion that what we’re doing is awesome and try to get rid of hard truths by ignoring them. It not only makes you weak but those small things that you can afford to ignore today is a time bomb. Knowing when you suck and working hard to improve is one of the most important things in a founder’s life.

They need to create a culture of transparency and openness. This helps people to be frank and point out your weaknesses. I would treat people with a chocolate when they tell me the things I suck at, as this helps me improve everyday. Try to remove the illusion and face the reality and change your product based on that.

Remember the 1% theory. If you improve yourself by 1% every single day then by the end of the year you don’t end up being 3.65x (365%) better. You end up being 37x better than yourself a year ago. Consistency is the key. Compounding does the rest.

7. Not launching the product early.

Founders always think about launching the product and making it grand. Often we don’t realise that the world doesn’t give a shit. The first users of the product are mostly our team mates or friends, only if we force them to install our apps.
Early launch helps people leverage their feedback to keep iterating. At Pesto, we didn’t even have a proper website for first 5 months, yet we did good business.

Another thought process is that people who visit your product when it’s not great won’t come back. This’ll have a very bad impact on your brand. Let’s be very frank, there’s no brand until you build it. And there are billions of people out there. In early days, it won’t matter much if few people don’t like you.

In fact, I have seen so many cases when we made changes as people requested. This not only made them feel a sense of ownership but also made them our future brand ambassadors. They often end up being the most loyal customers and go a long way in your journey.
Entrepreneurs naturally are very ambitious and have grand visions. They’re often obsessed with the product that they’re building and tend to make it perfect in silence. They must know they’re doing it wrong.

Being defensive, the Product/Technology teams usually build a cannon for killing a bird. — Ajay Shrivastavaa

We end up building a product that is future ready and can take all challenges but it’s of no use currently. Stop thinking like an insurance company. This wastes a lot of resources and delays the time to launch in the market. I recommend reading this awesome article by Ajay Shrivastava.

So next time, move fast and break things.