Nine common things that start-up founders tend to underestimate or overestimate

By boris, September 08, 2015

When you’re in the midst of building a company, it’s hard to fully assess the significance of various activities and decisions- particularly for first-time entrepreneurs who don’t yet have the wisdom learned from prior mistakes.

As an investor (who was also once a first-time entrepreneur), I have noticed several key areas where founders either overestimate or underestimate the value to their company. Here they are…

5 things founders often underestimate

The value of a great hiring process

Your company won’t survive if you’ve got a great idea surrounded by a mediocre team. Founders should stay involved in every hiring decision for as long as possible. When you’ve reached the scale when it’s no longer possible to be hands-on in each decision, you need to make sure you have strong hiring methodologies in place – such as Jeff Bezos’ bar raisers that were implemented in Amazon’s early days to help weed out “cultural misfits.”

The importance of reference checks

I’m always surprised at how often people still get hired without extensive reference checks. When you’ve got a good feeling about someone, it’s tempting to just move ahead without any kind of due diligence. But informal reference checks can be very revealing, particularly if you can talk to people that weren’t provided by the candidate, but know him or her very well.

The need to build culture from the beginning

Founders often mistake culture with things like morning yoga, a company climbing wall or food truck lunches. But culture is deeper than just free perks and it’s also something you can’t just “switch on” down the road when you have time for it. From the start, you should be thinking about the type of company you want to build and then make sure your systems and decisions support that vision.

The importance of the right set of investors and advisors

This point might seem self-serving, but too often I’ve seen founders look at investors as checkbooks. Money is important but over and over again I’ve also seen just how important great investors and advisors can be in shaping an early stage company.

The value of focus

Your company and your product will never be all things to all people. And not every customer opportunity will be worth pursuing in the long run. You need to narrow your focus to a few key priorities, and then make sure this focus is communicated clearly and repeatedly throughout the company.

 

4 things founders overestimate

The importance of money

No amount of money in the world is going to get you to product-market fit. And raising too much money before you find product-market fit will usually kill your start-up.

The importance of launch and fundraising announcements

Start-up founders typically want to make a big PR splash when they’re launching their product or closing a funding round. A major launch announcement can make a lot of noise in moment, but it’s more important to focus on generating continuous demand than your 15 minutes of fame. Likewise, fundraising announcements can drive investor interest for future financing rounds, but I’ve found it’s usually better to just stay under the radar and build the company.

The value of senior employees with industry experience

Young startups often feel compelled to bring on senior employees with impressive resumes and a deep knowledge of their vertical. While specific expertise can help in some cases, you should hire for smarts, passion and hard work, rather than experience.

The magic of a silver bullet

It would be great to find that silver bullet to take your business to the next level. The problem is that you rarely ever find them. When founders waste their time chasing after that one non-existent thing that will solve all their problems, they ignore all the small incremental improvements that will make a real difference.

This list is hardly exhaustive. What did I miss? I’d love to hear your thoughts on what else founders overestimate or underestimate…

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