30 tips for avoiding startup failure, from successful founders


Turner, Amber Leigh

September 22, 2013

Toying around with the idea of starting a company? Worried about things that may go wrong or making the wrong decisions? Did you just start a company but are concerned about how you are doing things? You are not alone, and you definitely are not in unchartered waters.

There are not only many thousands of people just like you who are working on starting their own company or have just launched their company, but there have been thousands of people who were once in your shoes who’ve gone on to grow some wildly successful companies, many of which you probably have heard of or even use on the regular basis.

While you are working away on your business plan, looking for ways to raise capital, finding the right people to hire, etc., part of the process involves asking others for their help and advice and doing lots of research to make sure you are on the right path. But have you ever had the opportunity to pick the brains of founders who created amazingly successful startups and companies like Envato, Backblaze, Simple, or Treehouse?

Being heavily interested in businesses and how they work, I chatted with some of the founders of nine well-known and/or growing startups – most of which you’ll have heard of – you may even use their services – to ask them about one of the toughest areas of starting your own company’ what mistakes did they make and how did they overcome them?

Few people like talking about their mistakes, but thankfully nine founders took some time to share some of their hard-earned knowledge with you. Let’s talk about some of the most common mistakes and how to avoid them, using the words from the founders of Envato, Dribbble, Freshbooks, 6Wunderkinder, Treehouse, Backblaze, Simple, Shapeways, and Statamic.

Starting a company with a mission and purpose

“[…] the biggest thing I’d recommend is to start a company that’s on a mission, not just a company that’s building a nifty product. At Treehouse, we’re trying to make technology education affordable and accessible to everyone on Earth, and doing that means that we’ll be working for a really long time and will likely always have more to do. Also, it’s made so many things, like hiring and other decisions, significantly simpler for us, because we can always look to our mission for help.”

Alan Johnson, Co-founder of Treehouse

“Solve a real problem that creates real value in the world. Focus on the problem => solution => value => profit chain of events, and try to make a pass through this sequence sooner than later. Also, be strategic. Find a competitive advantage. At Dribbble, we stumbled into ours – we were just building a side project, but it was a site for designers, and Dan is a designer with lots of recognition and credibility. As a result, we attracted a great set of initial users who posted incredible work. Things snowballed from there.”

Rich Thornett and Dan Cederholm, Co-founders of Dribbble

Find your niche

“I’d say the best advice would be just to get started and once you find something, focus and execute. Don’t try to be everything to everyone right away. If you pick one vertical and do it well, other folks will find you. From a narrow niche of IT professionals who were our early target market, we now have a wide variety of customers.”

Christian Reber, Founder and CEO of 6Wunderkinder

“Find your niche(s). Early on we believed that because online backup is something everyone needs and we provide the service in 11 languages to anyone in the world, that everyone should use it. While that would be great, especially in the early days you need smaller groups of people where you can get critical mass.”

Gleb Budman, CEO of Backblaze

Nothing is impossible

“Never take no for an answer. Starting a startup isn’t easy and there will always be people who tell you that something is impossible. Don’t listen. When I started Shapeways, complex software needed to be built and when I first reached out to developers, a lot of them laughed and told me it was impossible. I never took no for an answer and eventually found a great team that helped me build what Shapeways is today. Always push for yes! “

Pete Weijmarshausen, CEO of Shapeways

“On a macro level, one of the most daunting challenges was the prospect of entering a market with a fairly large entrenched player. Our strategy was to not even attempt to take them on head-to-head by trying to offer everything they did, instead, we sliced off a piece of the solution that we believed we could do better and that addressed a critical pain point for small businesses – invoicing.”

Levi Cooperman, Co-founder and VP of Operations of Freshbooks

Underestimating your potential

“Probably the biggest mistake we made early on was not believing the business was going to be a big success. So we did next to no planning ahead, instead just making decisions as they were convenient.”

Collis and Cyan Ta’eed, Founders of Envato

Working with and understanding your co-founders

“People often say having a cofounder is like getting married. What they don’t say is few people know how to date well. The five of us that started Backblaze had worked together for over a decade. Even so, we realized we weren’t clear about each person’s goals. Talk to each other about your expectations about work hours, funding or not, exit or not, decision making, etc.”

Gleb Budman, CEO of Backblaze

“If you have co-founders, make sure you document who owns what, how you’re going to pay yourselves, and who makes what decisions. Personally I believe in having a clear majority holder to make decisions easier (this may just be because I’m a bit bossy!).”

Collis and Cyan Ta’eed, Founders of Envato

Plan while you can, launch as soon as possible, and make changes as you go

“And, just do it! Planning and modeling out your business is always a good idea, but don’t get stuck planning too long, build something and push it out to your users as fast as you possibly can. If your product is getting good reviews and people are willing to pay for it, you’ve got something.”

Levi Cooperman, Co-founder and VP of Operations of Freshbooks

“Bootstrapping can be fun, you get to iterate quickly, turn on dimes, invent new features on the fly. We should have slowed down just a tad to plan a few steps further out when naming things. Variables, methods, folder organization… all of these areas came out of the gate with a few inconsistencies we’ve had to work at tightening up. Some things will just need to stay until 2.0 when we have an opportunity to break backwards compatibility a little bit.”

Jack McDade, Founder of Statamic

Great ! Thanks for your subscription !

You will soon receive the first Content Loop Newsletter