Founding A Startup: Learning From The 10 Mistakes We’ve Made Thus Far
6 months. I’ve survived 6 months of starting my own company. Can I take a moment here and slow clap, because this 6 months has felt more like 3 years? The possibility of what you can learn by throwing yourself into starting your own company is limitless. And coming into the startup world naïve may have been the best thing we could have done. At Hatch, we decided to make our own path — we just made the damn thing. We launched our beta, shuffled together some money to loan to the company, told our friends and family to spread the word, and vwah-la! We’re rich!
Nope. That’s not how it works. I’m here to spread the word on 10 mistakes we’ve made so far, and how to avoid them for all you future aspiring entrepreneurs:
1. Act like you aren’t making a salary 6 months before that’s actually reality — I can’t stress how important this is. Money, unfortunately, is everything in the lifespan of your runway that your startup can survive. And living in New York, runways can disappear faster than you think. We all had nicely padded paying jobs in advertising before, but didn’t change our spending habits to “Hi, I’m a poor entrepreneur and I’m unsure whether I can go out to eat with my friends anymore!” until we quit our jobs. So for those of us who don’t have their parents bankrolling their venture, start acting that way sooner to give yourself a nice blanket of financial safety.
2. Find a co-founder who can code (and code well) — when we started our company, we were staffed with a designer, a strategist, and a business person. We’ve all worked on building websites before, so figured we’d outsource a quick build and then march onto our expertise of marketing to everyone we knew. Reality check — that’s not how it works. You need a tech co-founder invested in your company, and I would say the same about each of our specialties. Giving our tech co-founder equity has resulted in a 180 degree shift in his mentality — now we’re all in this together. And if we fail, we fail together, not just professionally but now personally.
3. Stop worrying about your titles, they don’t matter — we wasted a ton of time talking about job titles unfortunately. What I’ve gained from all of our investor meetings and chats with other entrepreneurs — job titles mean close to nothing. The only title that matters is CEO for the investors — the rest of us might as well be called “Chief/VP/President of everything that f*&king happens because this is chaos”. Investors know this, so make yourself a title that makes sense for what you want to grow into, or have fun with it “VP of being a badass”. Okay, maybe too far, but you get what I’m saying.
4. Don’t be delusional about your runway, search for funding sooner rather than later — Being naïve about the startup world, we truly thought our business model could turn into a profit so we could self sustain starting in January. Don’t fall into the trap of reading “Business for Punks” or some inspirational blog post about how you don’t need funding, because you probably do. There are so many costs that sneak up on companies, especially when you’re testing out how to target a difficult market and need to get a product built quickly. Investors create more of a purpose than just providing money, they provide feedback, direction and help. Once they’re a part of the company, they want it to succeed just as much as you do. And if you’re being greedy about equity, remember that having 60% of something is much better than 100% of nothing.
5. Find a good law firm now, don’t wait until you’re raising a round — while sitting in a coffee shop on a Sunday morning, Rachel and I struck up a conversation with another entrepreneur who recommended this “cheap online startup lawyer” we should use to incorporate and write our T&C for our site. So we took his not-so-great advice, and worked with a lawyer who… basically copied and pasted all of our legal copy from a competitor. The price was right, but the quality was poor.
A few months later while searching for funding, an advisor recommended we get a truly experienced law firm on our team to advise us. We chatted with Lowenstein Law Firm, and they were not only helpful, but truly professional and understanding of our current bootstrapped situation. The feedback we’ve gotten from them to date was beyond helpful, and without them we’d be in serious legal trouble that was avoided on just doing our due diligence with them as a company.
6. Stop worrying about financial projections, everyone knows they’re bullsh*t — Ah, it hurts me a little to write about financial projections because it’s consumed my life as of late. Back in May when we decided to start this company, I spent my Sunday at a coffee shop writing our 15 page business plan. That’s when I created our first financial projections, basically proving “hey! This business model is actually super profitable! Look at the proof other co-founders who hate finance and math!”
Since then, I’ve probably revised those 50+ times based on new learnings and variables. People will tell you from the beginning to hone in on your projections, but I’m telling you it’s a waste of time. There are SO many variables you don’t know when starting a company, especially regarding your target market, how you’ll reach them, what’s effective, how long the product takes to build, etc etc etc.
Thankfully, we’ve learned from investors that they also know it’s all bullshit too. You need them for your deck, but don’t spend hours upon hours obsessing on the exact validity of those variables, because there’s no way to be absolutely perfect on your projections. Just do your due diligence to get them as accurate as you can.
7. Find your entrepreneur BFF’s, they’ll help you in more ways than you know — Having come from the advertising world where we all had connections at nearly every large agency around the city, we unfortunately had no entrepreneur connections. We were all first time entrepreneurs. Making friends can prove more helpful than just having a few new LinkedIn contacts or Instagram followers on your list. They can provide guidance on what the hell is going on, because this world is more chaotic than you’ll ever know.
Also, if they like your idea, having a successful startup founder vouch for your startup to other investors while you search for funding can be some of the best klout you can get. But most importantly, being an entrepreneur can be incredibly lonely. None of your friends, family, significant other, truly understand what you’re doing. Making friends who have been in your situation before is beyond helpful — so go find these people sooner rather than later.
8. Don’t make assumptions, get data to back up your go-to-market strategy now — coming from advertising, we all were potentially too confident in the way we could get users on our site. Hey, after all we did post on NY Ad Group’s Facebook page and had 300 freelancers sign up before we even had a live site! That has to say something, right? But we were missing a big group of our business model — the organizations. I had wondered why there weren’t many companies out there targeting nonprofits, it was like they had been left behind in the age of the startup boom.
But what we learned is that they are a difficult market to reach. The people who work at nonprofits aren’t going to be swayed by a catchy banner ad or social post, they need to be targeted and serviced differently. Our original go-to-market strategy had a robust digital marketing plan (something we were more than used to putting together). And when we finally tested this plan, we realized it was useless.
So we started talking to advisors who knew the space better than us, and realized we had it all wrong — a grassroots strategy was the best way to actually reach these organizations, who were already stretched for time and needed to be contacted directly and recommended by people they trust. Luckily, we found this out before we spend any major dollars on marketing, so be sure you test before you almost make the same mistake.
9. Don’t stretch your personal connections too soon — I know the excitement you get starting a company, you want to shout it out to the world, blast it all over your social channels, take over dinner conversations talking about it, yada yada yada. It consumes your world, so it’s easy to have it consume every conversation you have, but I’d recommend to hold back. In the summer, we started taking calls with nonprofits and contacting our connections on Facebook to connect us with potential users so we could start building our user base and gathering potential clients.
While this led to tons of phone calls and great insights, it didn’t lead to paying clients because our site was in beta. And we learned that if you think your site is going to launch in July, plan to have it launch months later and not even have it close to ready for nonprofits to come on and easily use. So by the time we actually launched, we had stretched many of our personal connections to clients and didn’t catch them in the moment to actually sign up and use our site. So breath, keep this excitement to yourself, and stretch for those personal connections when you’re ready, not when you want to.
10. Don’t take feedback or push-back from your other co-founders personally — pushback is good! Being agreeable is easy, and defending your ideas is hard. But the more your co-founders invest in the business, the more they should be arguing and defending their opinions on something they created. Because if you fail, you all fail together. So being equally invested is crucial to the success of a company. Have four people’s heads together is better than one, so respect everyone’s opinions and make sure you are all thinking strategically to work towards the greater good of the company at every move.