Are you destined to fail if you go it alone in an entrepreneurial venture? Should a startup be wary of a major company showing interest? An entrepreneur takes a list of 18 potentially fatal errors and measures the theory against his own practical experience.
When launching a startup, where is the line between success and failure? How can you avoid bankruptcy and enter the hall of fame of visionary creators alongside Steve Jobs, Bill Gates and Mark Zuckerberg? These are questions asked by many an entrepreneur tempted by the thrill of embarking on a business venture. Now graphic artist Mark Vital has designed a road map in infographic format for startup founders. He has produced a set of 18 sketches representing the 18 mistakes to avoid if you want to to stay clear of the cemetery of aborted projects. Vital’s work is based on a long article by Paul Graham, an English computer programmer and business angel who co-founded Y Combinator, an incubator which has financed over 800 startups including Dropbox, Airbnb and Reddit. L’Atelier asked Paris-based Joan Burkovic, co-founder of startup Bankin’, a free-of-charge account management banking app, how far the principles set out in the infographic apply to his actual experience as an entrepreneur.
Don’t launch a company on your own; raise the funds at just the right moment
Paul Graham’s article makes the job of entrepreneur seem like a permanent balancing act. Entrepreneurs should on the one hand avoid launching a company all on their own, but at the same time ensure there is no conflict between themselves and their partner(s). Commenting on the article/infographic, Joan Burkovic agrees that “launching a company means a lot of work,” adding: “This is why going it alone is a mistake. You need co-founders. It’s best to have two or three people, as with four things may get a bit difficult.” He stresses that: “You should also avoid working with people you’ve never worked with before. It helps if you’ve already run some projects together, especially if there have been some problems. That way you know whether you’re likely to stick together when times get tough. Half of all startups fail due to problems within the team.” When it comes to funding, raising too little money or, on the other hand, raising too much money can be a big mistake. Graham writes that “once you take a lot of money, it gets harder to change direction.” To this Burkovic adds: ″When at the beginning funds are tight, this encourages you to be smart, to sort things out in a different way. When you have too much you tend to waste it, you don’t optimise what you have. So it can be good to have very little money at the beginning while you’re building your business model, your product and your road map. On the other hand, if you don’t have the funds you need, you can’t recruit or spend on marketing.”
Test your idea and work for yourself
Paul Graham’s article underlines that good ideas are one thing but the timing is crucial. “Timing is a key factor,” agrees Joan Burkovich. “Too soon, and the market is not ready for you; too late, and it might have become saturated.” On the other hand, he argues: “It’s better not to spend too much time polishing your product but to launch something as soon as possible, so as to obtain fast user feedback that will show us where improvements are needed.”
The Bankin co-founder also suggests that young entrepreneurs should not try at all costs to keep their idea secret. On the contrary, ″talking about your idea is the best way to test it, to obtain feedback. The idea itself isn’t really worth anything, it’s the execution that counts. Rest assured that no-one will steal your idea!” He reckons that the success of his own startup is partly due to the fact that his team did not want to work with a large established firm. “A number of large financial institutions suggested we work with them, but we turned them down. It would have been a mistake. In fact several of our competitors have already made that mistake. If we had agreed, it would have taken all our company’s energy and resources to develop a service for one single bank rather than for our customers.” This point of view is clearly opposed to the open innovation movement championed by many large firms and startups.
18 Mistakes That Kill Startups: infographic by Mark Vital, based on an article by Paul Graham.