Startups: Are You Making Enough Mistakes?

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Startups: Are You Making Enough Mistakes?

 


I think too many would-be startup entrepreneurs assume that successful startup founders make very few mistakes.  The thinking goes something like this:  “It is a well known fact that the mortality rate for startups is very high.  A large percentage of all startups fail.  This likely means that for the few that do succeed, the founders must have gotten all or most things right and made very few mistakes.”  This would seem like a rational argument.  And it is.  It just happens to be wrong.

I’m going to argue that more startups fail because of not making enough mistakes (instead of making too many).  This may sound a little backwards, and it is.  So, let me say it a different way:

“Most successful startups get a lot of things wrong, but a few things really, really right.”
 
If you are not getting a lot of things wrong either you are a) exceptionally brilliant and lucky or b) not doing very much.  Show me a startup that is making very few “mistakes” and I will show you a startup that is likely suffering some level of “strategic paralysis”.  Quite simply, they are starved of execution.  There is very little actual activity that is happening and hence the company is not moving forward.  

Regular readers of my blog will know by now that I have an uncanny knack for the mediocre metaphor.  So, here’s another one: 

I will posit that it is more important for a startup to be moving in the wrong direction than not moving at all.  Why?  Two reasons.  First, even as you are moving in the wrong direction, you are learning things.  You are developing the important “muscles” that you will need when you ultimately do figure out what the right direction is.  If you’re simply sitting in your chair and thinking about what the right direction is, when the time comes, your foot will have fallen asleep and you won’t be able to make much progress.  (See, I told you it was going to be a mediocre metaphor).  Second, it is quite often impossible to figure out what the right direction is until after you’re explored around for a while.  You simply can’t determine the right direction to head-in until you simply start walking and looking around.  

But, you might argue, aren’t startups dealing with really constrained resources?  Can they really afford to expend energy and money heading in a direction that is wrong?  This is a valid concern.  Startups are indeed resource-constrained.  But, there are often paths in the wrong direction that are strewn with cash.  For example:  You may end up taking on a custom consulting project that moves your company into a direction that seems misguided and totally misaligned with what you thought you wanted to do.  The direction probably is misguided.  But, let’s assume that it pays the bills.  It may even (gasp!) be profitable.  If this is the case, that means what you’re really losing is time.  But, you’re not really losing the time completely because if you do it right, you’re going to be learning a lot along the way – most important of which is how to make money, how to deliver to customers and why service companies are so hard.  The trick is to not get used to it, learn what you need to learn and then productize.  But, that’s just one example (and it happens to be the most common one, which is why I used it).  Put simply, kicking off a software company by focusing in the early stages on services revenue is an exceptionally good way to get started and an exceptionally easy way to live a life of quiet desperation if you’re not careful.  

I’ll plan to write more about this whole “service company to product company” concept in a future article as I think it is a topic of high importance and interest to a lot of you (or at least I think it is).

Meanwhile, I have some closing advice for the entrepreneurs reading this:  Even if it’s in the wrong direction (for now), get moving!

 

Posted by admin_onsoftwaredevelopment admin_onsoftwaredevelopment on Wed, Jul 19, 2006

COMMENTS

For some reason, I find many entrepreneurs not being risky enough. That is, they're moving in the right direction, but only moving 2 feet, when they should be moving a mile. It makes it very hard to make mistakes that way, and even if you do make mistakes they aren't magnified enough to notice them.

I think even more important than making mistakes is recognizing when you've made a mistake and learning from it. Like you said, mistakes don't have to be negative. Something could turn out incredibly well, but it still might be bad for the company overall, and as long as you learn from it and correct it you will be in a much better spot.

It all boils down to this: Most startups are concerned with the here and now- putting out fires and working tirelessly to develop the product that they have envisioned. Few take the time to stop and think about whether that vision is accurate based on what little feedback they have received so far. Those who can adapt will succeed.

posted on Wednesday, July 19, 2006 at 10:46 AM by


I would appreciate learning more about service companies on the web and the problems you see with start-ups who do this.

posted on Wednesday, July 19, 2006 at 11:58 AM by jenna


Interestingly enough, I think this ties in to the "Big Idea or Big Escape?" article you wrote last week. I would argue that startups tied to the Big Idea aren't doing very much because they're paralyzed by the fear of messing up that Big Idea. Conversely, startups based on the Big Escape are driven by a broader thought process, which frees them up to move in different directions. Also, when faced with mistakes, probably see it more as being the direction, not the thought behind the Big Escape. The Big Idea camp would see the problem being with the Big Idea, and consider the whole startup a failure.

posted on Wednesday, July 19, 2006 at 1:23 PM by


I agree with you, most of us don't make enough mistakes; however, I think Brad Feld makes a great point on his blog about lack of focus.

http://www.feld.com/blog/archives/001841.html

posted on Wednesday, July 19, 2006 at 1:52 PM by David Duey


Maybe a better metaphor is that it's better to be climbing some hill (even the wrong one) than to be sitting in the valley. At least from the wrong hill you might see the right one.

posted on Wednesday, July 19, 2006 at 4:53 PM by Alex Miller


I would like also to share this site

http://www.stevepavlina.com/blog/2006/04/10-stupid-mistakes-made-by-the-newly-self-employed/

It is not related to a startup mistakes ; actually to a Self-Employed's mistaktes

posted on Wednesday, July 19, 2006 at 10:22 PM by Mohamed ElZahaby


Here's a mistake that I've started worrying about making of late: spending too much time reading posts on this blog when I could be using it for my startup! :-)

adf471587879rzq

posted on Thursday, July 20, 2006 at 2:58 PM by Chris Jackson


Great article. Put a lot og things into perspective for me.
Btw, the URL for the articl, posted by Mohamed ElZahaby, is defunct.

posted on Tuesday, July 25, 2006 at 2:31 AM by Raseel


I think you have a great point. startups need to learn from mistakes and for that, they need to make mistakes to learn from them. However, there are some clear mistakes that the startups should avoid. Tried to analyze those from the 20 worst VC mistakes: http://startup-newbie.blogspot.com/2007/11/20-worst-vc-investments-what-went-wrong.html Let me know your thoughts on this.

posted on Tuesday, November 27, 2007 at 1:17 AM by startup-newbie


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