What Are You Likely To Get Wrong When You Start Your Business?
I had been building semiconductor businesses for almost twenty years when I started my company. I KNEW the playbook inside out about what to expect.
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Yet, I still got not one thing, but a lot of things really wrong when I was starting my company. In fact, the first thing I'm going to tell you about I got wrong not just by a small amount. What was it that I got wrong?
It took a lot more time and a lot more money to gain traction and get to cash flow positive.
How could I be so wrong? I was experienced after all. I allegedly knew what I was doing.
It was mistake number one you're likely to make as an entrepreneur:
You assume that everyone knows you exist once you start marketing your business.
The reality is that building traction takes time. And building traction takes a relentless effort on your part.
I remember meticulously planning our launch for months beforehand. We had everything ready.
I had done a bunch of interviews with the trade press in advance of the launch under “embargo”. The interviews would all be released simultaneously on launch day in the trade publications that our customers read.
We had the advertising set up to go.
Launch day came and we had a huge bump to our website traffic. Awareness grew and orders starting coming in.
However, the orders weren’t nearly at the rate we needed to hit the numbers in our plan.
It turned out that the whole engineering community didn’t know we existed.
Awareness built over time. Each launch built on the traction and the awareness of the previous launches.
It took a good two years worth of launches before we started hitting the revenue numbers we expected to hit right from the start.
That was first thing we got wrong. There were many more to follow.
Here are some of the other things you are likely to get wrong:
A. Raising money will get easier over time.
It should, but things don’t always work the way you want them to. Consider all the outside forces you don't have any control over:
- What if the economy tanks?
- What if a competitor leapfrogs your position?
- What if the end market for your product or service radically changes?
Don’t assume that you will always have easy access to money. Stuff happens.
B. Your vendors will always be reliable.
Of all the things that surprised me, vendor mistakes is at the top of my list.
We made a conscious decision to pay more and work with the best fabrication facilities in the world. And yet these same fabs that had great reputations still made horrible mistakes.
Our first product launch was delayed by three months because our fab inverted a mask layer, so the product was a dead short. Oops. I wished the problems stopped there, but they didn’t.
The takeaway for you is assume that your vendors are going to make mistakes, and these mistakes will cost you time and money.
C. Your founders will be there for the duration of the company.
I am the poster child for bad founders. I had two founders quit (and steal the IP) before we even got funded.
Two other founders were gone within one year of us getting funded.
The takeaway for you is your founder relationships may not all work out, so you need to protect yourself and the company. Make sure your cofounders equity vests over time with at least a one year cliff.
For more, read: What Are The Eleven Steps You Can Take When A Co-Founder Quits?