[This is a weekly series that brings you raw, first-hand experiences from founders and investors in the trenches. Their story submissions are anonymous, allowing them to share openly without fear of retribution. Every Wednesday, we’ll run one new story chosen by Dana Severson, who operates StartupsAnonymous, a place for startups to share, ask questions, and answer them in story-length posts, all anonymously. You can share your own story here.]
Starting up is hard and often riddled with mistakes and mishaps. Missed launch dates, bad hires, poor cofounder due diligence, etc. As an entrepreneur, you often feel alone in your mistakes, largely because nobody talks about them. Many times however, the mistakes you make are the same as everyone else and could have been avoided had you been able to learn from others.
So, in an effort to bring some transparency to real challenges that startups face, we asked founders to anonymously share with us their biggest mistakes and lessons learned:
Accepting a co-founder position and according equity with an unconditional 1-year cliff and almost no salary. Four months later, the company decided to change directions and let me go. I was left with no money or equity and there was nothing I could do about it. Don’t ever take a cliff without an accelerated vesting clause.
I bought into the pressure of our accelerator and pivoted way too soon, because it was more “fundable”. I truly believe that we’d still be around today if we had just stayed the course.
My biggest mistake was trying to be an entrepreneur when I should have continued on with my current job. I’m not an entrepreneur.
I got hung up on funding my last business and wasted five months not focusing on building the company. That company failed and now I’m building a company that’s focused on revenue, not venture capital. Lesson learned.
Quoting prices over the phone is one if the biggest lessons I’ve learned. Instead, tell them you aren’t able to provide a number until you know the scope of work when it comes to certain services.
Hiring the wrong cofounder and watching him walk off with our customers and IP.
The biggest mistake I made as an entrepreneur was trusting a business partner to source our development and marketing efforts. Little did I know at the time that the partner had hired a personal friend to develop and market our prototype web product. I inevitably learned not only that the vendor we had contracted with was not qualified to perform the work but that a side deal had been executed that siphoned funds directly to my partner. A civil lawsuit later and a wind-down of the partnership agreement eventually left me in control of the core company assets but it was a costly mistake. Today my partner is my twin brother and I will never have another business partner that is not family.
Our attorney ended up costing us over $50,000 after completing our seed round. He didn’t know shit about startups or funding rounds, which I found out later.
The biggest mistake I ever made was joining a startup without researching the background of my co-founders. If there are leans, judgements, unpaid taxes, then that will hurt the ability of the startup to raise funds. Also, I should have contacted previous employees who worked for them to find out if they had trouble retaining employees. The inability to raise funds and recruit and retain talent will doom any startup.
Biggest mistake is not delegating fast enough to other people.
We set a 24 hour countdown to our launch on our site. When the countdown ended, we were nowhere close to live. NEVER give a launch date unless you’re already ready to launch.
I hired a 25-year friend to do sales and consulting. I thought I knew the person well and I didn’t ask for a non-disclosure, non-compete agreement. After a few years the person took me by surprise by telling me he or she was leaving and taking the company’s biggest client along. I protested. The person said, “you didn’t have me sign an agreement.” To other entrepreneurs: get it in writing. To those who know their actions will be hurtful but who aren’t prohibited in writing from those actions: please think twice about whether it’s worth it.
I should have ended it with my cofounder at the first red flag. Fear of not being able to replace him kept me from seeing what needed to be done. Now we’ve failed and it’s largely his fault.
Being a mentor and coach to many startups, I was convinced that I would not make the same mistakes when I decided to launch my own venture. As I began to communicate to customers the many benefits of my product and listed with conviction the benefits they would receive and how I had discovered a “solution” to their problems, their response to my pitch only confirmed what I “knew” already. Later on, when a significant number of those first clients didn’t renew, I realized that I had drank my own “kool-aid” by falling in love with my product and losing sight of their customers’ problem by not listening to them. Focus on your customers.
As a serial entrepreneur, I’m always interested in the next best thing. As a result, I tend to focus on multiple projects at the same time. However, I’m a terrible multitasker, so usually nothing ends up working. This is a mistake I still repeat today.
We chose to not raise additional money in our seed round, when we could have. 12 months later, we were running low on funds and had to give away a significant amount of equity to bridge us to our series A. Had we just taken the extra money when we had the chance, we would have not given away an extra 5% of our company.
What’s the biggest mistake you’ve made?