I love meeting people who launch startups. Their energy and ambition inspire me. One of my life’s greatest joys is creating custom technology solutions that drive the uniquely powerful ideas generated by the startup community.
Unfortunately, I often hear of startup companies that never get much further than their founder’s kitchen table. This is especially frustrating because I am convinced their failure did not have to happen. With more than 20 years as a Chief Technology Officer, I make it my business to be well-versed on the strengths and weaknesses of startup business models, and I stay on top of technology trends to anticipate how they will affect our clients next month, next year and beyond. Over time, I’ve found three significant technology-based mistakes entrepreneurs make early in their business planning often doom the company, but are relatively simple to avoid.
1) They start with limited funds and watch the funds get smaller with no ROI
Undoubtedly, many startups begin life with very little capital. Friends, family, angel investors, and Kickstarter get hit up for whatever money can be raised. Everything is done as inexpensively as possible, from off the shelf websites to working from a home office.
One of the often-fatal consequences is companies fail to allocate enough of their (admittedly precious) resources to launching with a sound technology foundation. Technology, in almost all cases, is the only real “can’t fail” piece of their business model.
In the excitement to get themselves out there, many start with a patched-together technology they may realize is insufficient, but as one business owner I know said, they hope to “get cheap development and see what happens,” keeping fingers crossed the company brings in enough revenue to afford a professional technology makeover later.
I call this the “die on the vine” phenomenon. It happens when insufficient investment in technology means the company never really had a chance. When your success depends on software, it’s better to have your technology in first-class condition than to have a nice office or cool business cards, or even to have an office or business cards at all!
2) They try to do it themselves
This overlaps with mistake #1. When it comes to the customer-facing systems which live at the very heart of the company revenue model, capital-starved startups too often rely on friends or relatives who have varying levels of expertise and enthusiasm, a mistake I call, “Letting Uncle Stan develop your software.”
When it comes to customer interface, in a B2B or B2C environment, it’s suicidal to rely on hope and relatives. Any glitches in customer-facing systems are a big hit on your revenue stream and worse, saddle you with a reputation for unreliability. No business can survive loss of customer confidence. It can also make family get-togethers with Uncle Stan a little awkward!
3) They succumb to the allure of the offshore outsource.
Like a glittering mirage, the appeal of inexpensive offshore outsourcing never dies, except among those who have experienced it. While it is true you can find honest, hardworking and highly-trained developers and engineers overseas who cost less, it’s impossible to know for sure what you are getting until you are committed. It’s also much harder to exact consequences when there are mistakes or breaches, and you cannot possibly find the spirit of urgency and excitement your home team has.
Take accountability. Imagine meeting to review critical development responsibilities with a colleague you are meeting in person. There’s the handshake, the sit-down, the body language, eye contact, water bottles, walk-ins, little jokes — all the human elements that help build teams and reinforce our responsibilities to each other.
Now think of same meeting with someone thousands of miles away, who you’ve only seen on Skype, and you know you will never meet in person. It’s natural that people operating at such a distance from each other don’t feel the shared connection that drives the responsibility, accountability, and cooperative, mutual support shared by a real team.
Although it is understandable, I’m always more than a little surprised that so many super smart people think they can take on the challenge of developing their technology on their own. I liken it to building a house: would you hire a bunch of laborers and then start directing them — dig a hole here or put a pipe in a ditch there? The result is predictable: a complete disaster or, at the very best, a poorly built, rickety house that won’t survive the first storm to come along.
“You want your hard-won startup to do more than survive the storms of the business world. But like any house, every business needs a strong foundation. Today that means perfectly planned technology. Just as you work with an architect before you build a house, you should work with proven technology development people before you launch your startup!” Assim Gupta, CEO, Brown Deck Innovation
Next time: There are just a handful of key people that make the difference between startup technology success and failure. Do you know who they are? You’ll meet them in my next post!