Don’t Make These 9 Mistakes When Building Your Startup

I see many founders focusing on the wrong things when building their startup. I briefly mentioned this observation in my other post. Here’s a more expanded list of things which don’t matter.

All of this is my personal opinion, of course – but I thought I’d share it because not many people state this publicly, yet many people agree with me in private.

What You Should Focus On

Here’s what you should focus on:

Find a problem which people have which you can solve, and they should be willing to pay you for it.

That’s it.

All the other stuff below is what you should not focus on.

What You Should Not Focus On

1. Finding Investors

Unless you’re building rocket ships, chances are that you don’t need investors. Get your initial money by selling a simple solution to people’s problems. So don’t focus on:

• Finding investors
• “Networking” to find investors

Note: Some people think that finding investors and getting funded equals company success, because they see fancy pictures of happy founders collecting millions on dollars on TechCrunch. This is not true. The real message of getting funded is “we didn’t manage to make this company profitable on our own, and now we sold.

2. Applying For Public Grants

The benefit of public grants is that you don’t have to give away parts of your company. The huge drawback is that it takes forever to get them, and that the decisions are made even more randomly than by Venture Capital (VC) investors. Don’t focus on:

• Researching grants, especially EU grants
• Writing lengthy grant applications
• Organizing / joining a “consortium” for a grant application
• Talking to shady consultants who offer to write grants in exchange for taking a cut of the grant (crazy)

3. Joining An Incubator

I’ve been exposed to a few incubators, and I’m still not convinced that incubators offer any sort of benefit. They mostly make insecure founders feel less insecure by providing them with an illusion of security (meet other founders! attend our seminars!). The reality of founding a company is that you’re alone and that it’s painful.

For the record: It’s totally okay and normal to feel insecure! I was scared when I founded my company. But joining an incubator will only make you feel better, yet deliver no value for your startup.

Don’t focus on:

• Researching incubators to see which is the best one
• Writing applications for incubators
• Preparing your “pitch deck” (see above)
• Hoping that being accepted into an incubator will somehow equal success for your startup
• Participate in fancy photo-ops of incubators – it’s their incentive to show around pictures of happy founders so that they can attract more in the next batch

4. “Pitching”, Ted Talks, Forbes

Every minute you spend on creating a presentation is a minute you lose in which you could have been selling something to a customer. Don’t focus on:

• Creating a pitch deck / making it beautiful
• Rehearsing your fancy Ted talk
• Trying to get featured in Forbes 30 under 30 (terrible track record – many of those people ended up committing fraud)

5. Abstract Market Research

I consider abstract market research mostly useless. Some examples:

• Sending around questionnaires – I hate questionnaires! Talk to people instead. And when you talk to them.. don’t to this:
• Structured interviews – I hate structured interviews! Just talk to people and learn about their problems.
• Asking people “whether they would hypothetically pay money for solution x” – too abstract. Make them pay money now.

Instead, talk to people, ask them about their problems, propose a solution and ask them to pay you for the solution. This of course assumes that you can build the solution in one week (see below) and can set up a company fast enough to actually write an invoice (see below, too).

6. Software Development: Complexity

In simple terms, I consider software products too complex if it takes a capable engineer more than a week to build them. So don’t:

• Disappear into the “programming cave” and only re-emerge after multiple weeks / months / years with the first version of your product

Why? There’s a 100% chance you’ll have to make changes to your product before people will buy it, and there’s a 100% chance your product will have bugs. Making changes and fixing bugs is exponentially harder the more complex your product is. This will exponentially prolong the time until you make money. So keep you product simple. You can always add features once it’s making money.

7. Software Development: Tech Stack

This is a tricky one. Yes, you should focus on choosing the right tech stack for your software, but it’s likely not the one you currently have in mind. That’s because the criteria which influence your choice are not the right ones. Here’s the main criteria for choosing your tech stack: Choose technology with which you can ship your first product in a week (see above). If any technology gets in the way of shipping in a week, it’s likely the wrong choice.

Some examples – things not to do:

• Choosing a niche programming language (Clojure, Elixir) because it’s “superior”, has “better performance” and/or “scales”. No. Choose whatever enables you to ship in a week. That likely means you’ll choose a hosted platform (WordPress, Shopify, etc.) or a tech stack with (huge) batteries included (Rails, Django, Laravel).
• Setting up your own servers – epic time sink. Don’t do this.
• Elaborate comparisons of different programming languages and frameworks regarding performance – irrelevant, you can scale any sort of tech stack and deal with that problem later on when you have money and people to work on it.
• Comparing cloud providers based on arbitrary criteria: Scalability, abstract features (“it’s serverless!”), free credits, etc. – choose whatever provider enables you to ship in a week, likely a hosted platform (see above) or like Heroku (there are more modern, less evil alternatives).

8. Product Management

Chances are, if you’re a one- or two-person team, you don’t need any sort of formal product management structure. Don’t:

• Set up a fancy Jira board – I hate Jira! It’s slow and bureaucratic, just like Germany.
• Come up with a fancy product management structure (daily standups?) because large (incapable) companies are doing the same

Instead, your product management structure should answer these questions: What should we work on right now? Who works on which task? And when that’s done, what’s next?

A todo list is sufficient for this. Or a Google Doc. Or a todo list in a Google Doc. Don’t even start looking for more fancy tools (Asana, Clickup, Monday, etc.) – they all just make you feel nice inside because “you’re getting work done” (you’re not) while in reality providing you with a distraction from actually getting work done.

9. Company Incorporation & Bureaucracy

Choose the company structure which gets out of your way and enables you to write an invoice now. Remember, you talked to real people with real problems above, you promised them a solution and think you can build it in a week. So you really need to write an invoice now, so that they can pay, you can validate your idea, and your company becomes profitable.

Everything else gets in your way. Don’t focus on:

• Researching company structures beyond the bare minimum
• Elaborate consultations with lawyers on how to set up a company – look it up yourself
• Preparing for abstract, contorted legal scenarios which are disconnected from reality
• Considerations about offshoring and optimizing corporate taxes – you have no profits to tax right now (remember?) and can always optimize this later

Here are some specific anecdotes:

• In Germany, it’s easiest to set up a sole proprietorship – pretty much zero setup costs. I’ve heard it’s similarly easy (or even easier) to set up a LLC in the US.
• In Germany, you can always convert the sole priorietorship to a limited liability company later on if you want to have, well, limited liability and do more serious stuff like hiring people.
• You can always move the limited liability company into a holding company structure later on to optimize your tax situation.

One caveat here might be: If you’re multiple people founding one company, you might want to spend some time thinking about who gets how many shares and what happens if the founders no longer get along and someone wants to leave. That’s probably the one thing which can bite you in the end. Then again, if you’re a solo founder like me, all of these abstract problems disappear.

And Now?

Yup. That’s it! Go out there, talk to people, learn about their problems and sell them a solution.