The 7 Deadly Startup Business Sins

So much has been written about startups and founders, it’s challenging to sort through it all and make sense of advice that often ‘depends’. Here’s my guide to entrepreneurial sins from 2 decades of entrepreneurship.

Taking an honest look at your startup — never an easy thing to do.

But you must.

Being too Early

A startup needs to be early to market, to disrupt while an early market is not yet conducive to incumbent self-disruption. But being too early is often deadly. No amount of brilliant entrepreneurship will save a venture that is too many years ahead of the convergence of factors necessary for success.

How many years is too many? This depends largely on capital, but a few years of prematurity may suffice.

What makes this business sin particularly deadly is founders can be totally ‘right’ about the innovation but simultaneously totally ‘wrong’ about the timing of market conditions.

Look for clear signs that what you (and your close competitors) have built is ‘way ahead of its time’ in a bad way.

Be honest about it.

‘Dumb Money’ Capital

“Their money is just as green as any other” says the smug founder raising capital, acting dismissively about the process. The inconvenient truth is that investors in your startup need to be value-add business partners.

This is a high bar but going beneath it will create drag for your venture, particularly in the long-term — particularly during tough times!

What most entrepreneurs unhappily discover about this business sin is — you can rid yourself of a bad hire, a bad product release, even a bad co-founder but you cannot fix a bad investor.

Scrutinize potential investors as you would a co-founder and business partner.

Think about that. You cannot fix it.

3–5 year Planning

Nearly everything learned in a typical MBA program is geared towards the management of an established business, where long-range planning is necessary. A startup is never a small version of a mature business.

The new business is analogous to an infant or toddler: the time horizon for planning is weeks and months, not years.

A business plan may be helpful for the team to check underlying assumptions, but confidence in multi-year plans for a nascent venture is a sign of delusion.

What else is the team delusional about?

Manage your early-stage startup as a parent nurtures their toddler. It’s all about running experiments and iterative learning.

Founder as a Verb

While plenty has been said about the unique importance of startup founders, nothing spells disaster like a founder that is no longer effective but believes the opposite to be true.

This is when founder is a verb rather than a noun and the venture suffers.

What works splendidly in early phases of a business venture may by ineffective later on, and some founders do not evolve accordingly.

At times the shift in skill-set needed is significant.

Surround yourself with high-quality people. When this ‘situational awareness’ is solely on the shoulders of those foundering, this becomes a knotted situation.

Lack of Integrity

No single quality of the immature business venture is more pillar than integrity, yet often this is out of focus.

Lack of integrity takes many forms, some obvious flavors:

• Employee discrimination (of any kind)
• Misleading stakeholders (employees, shareholders, partners)
• Mismanaging or misrepresenting financials (for any reason)

Impeccable integrity in the management team and Board of Directors is the starting point.

Lacking integrity is an attribute that can rarely be ‘put back’ into a person or team. Integrity is binary — it is either there or not. It flows downward into the organization.

“Is this person of utmost integrity?” should be the question to answer of a management candidate or investor.

Not Giving a Shit

It’s common for an entrepreneurial team to be faced with the kind of challenges where one fundamental question emerges: do we care enough to do what’s right? Consistently. Does what we are doing stand scrutiny?

This seems so basic, so simple, but in failed ventures it yields to other things: to convenience, ‘quick fixes’ and to shortsightedness.

We can look back at the way things are handled and ask ourselves: did we give enough of a shit about how this was handled?

Customers, partners and employees will feel when this is not happening. So be sure to give some.

Fatigue

Perhaps the most overlooked startup deadly business sin. Fatigue is the wearing down of passion, energy, patience, where time and the pressures common in startup efforts intersect.

It’s been said that overnight success is “seven years in the making” and seven years in a startup can feel like over a decade.

In the span of a typical career — let’s say 30 years, a 7 year journey is approximately 1/4 of it, so pace yourself!

What happens when you combine one or more deadly business sins with fatigue? Do what you do to decompress, to regain focus and re-energize.

And so there you have the 7 deadly business sins of entrepreneurship:

1. Prematurity
2. Dumb Money
3. Delusional Planning
4. Foundering
5. Lacking Integrity
6. Not Caring
7. Fatigue

One thing to note: all but the first are entirely under your control.